Carroll (1991) encouraged researchers in Social Issues Management (SIM) to continue to measure Corporate Social Performance (CSP) from a variety of different perspectives utilizing a variety of different measures. In addition, Wolfe and Aupperle (1991) (and others) have asserted that there is no, single best way to measure CSP and that multiple measures and perspectives help develop the field. However, Pfeffer (1993) suggest that a lack of consistent measurement has constrained organization studies (and by implication, the field of social issues (...) management,) in its development as a field. It may be in the best interest of social issues management researchers to try to development a common body of measures and data. Recently, Kinder, Lydenberg and Domini & Co. (KLD — a social choice investment advisory firm) has made available their social performance database. The KLD data have potential to become a widely accepted set of CSP measures. The purpose of this paper is to present a construct validity study comparing the KLD data to other measures of CSP. (shrink)

The Valdez Principles have been formulated to guide and evaluate corporate conduct towards the environment. While at first glance the code appears to impose enormous new responsibilities on firms, a closer analysis indicates that existing regulations and business practices already require businesses to meet many of the environmental goals sought by its proponents. Likely corporate response to the code is examined against this background and with reference to the experience with other voluntary codes of conduct. It would appear that compliance (...) with the code will yield minimal benefits and non-compliance will impose minimum costs for the environmentally-responsible firm. (shrink)

Firms and industries increasingly subscribe to voluntary codes of conduct. These self-regulatory governance systems can be effective in establishing a more sustainable and inclusive global economy. However, these codes can also be largely symbolic, reactive measures to quell public criticism. Cross-sector alliances (between for-profit and nonprofit actors) present a learning platform for infusing participants with greater incentives to be socially responsible. They can provide multinationals new capabilities that allow them to more closely ally social responsibility with economic performance. This paper (...) examines learning facilitators in cross-sector alliances that enrich corporate understanding of stakeholder concerns. It suggests that these organizational learning experiments can translate into globally responsible practices and processes that improve the content and effectiveness of voluntary corporate codes. (shrink)

We leverage insights and theories from the extensive inter-firm alliance literature to explore the effect of the sector of the partners on Firm-NGO (B2N) alliance governance. Our analysis suggests that the sector of the partners has an important impact on alliance governance, not only because it constrains the availability of some governance mechanisms but also because it makes alternative mechanisms available or relevant to the partners. Specifically, we predict that B2N alliances will rely on contracts, a restricted scope, and non-equity (...) hostages, such as reputational hostages and stakeholder involvement, rather than equity, leading to limited protection against opportunism. As a consequence, B2N alliance partners will need to rely on trust-based governance mechanisms to a greater extent than B2B alliance partners, although trust will be harder to build in B2N alliances. (shrink)

Do environmental policy statements accurately represent corporate commitment to environmental sustainability? Because companies are not required by law to publish environmental policy statements or to verify that these statements are true using independent third parties, external stakeholders often wonder when a published commitment to a policy translates into actual policy implementation. The authors analyzed two independent databases to predict the circumstances under which large, leading-edge corporations in industry sectors will commit to and/or implement proactive corporate environmental policies and when it (...) is unlikely they will do so. The authors found that commitment to specific environmental policies does not vary greatly between industry sectors; however, policy implementation does. (shrink)

Building on earlier work on the relationship between corporate social performance (CSP) and a firm’s financial performance, this integrative empirical study supports the theoretical argument that the higher a firm’s CSP the lower its financial risk. Specifically, the relationship between CSP and risk appears to be one of reciprocal causality, because prior CSP is negatively related to subsequent financial risk, and prior financial risk is negatively related to subsequent CSP. Additionally, CSP is more strongly correlated with measures of market risk (...) than measures of accounting risk. Of all CSP measures, reputation for social responsibility appears to be the most important one in terms of its risk implications. (shrink)

The contribution of this work is a classification of corporate social action underlying the Social Ratings Data compiled by Kinder Lydenburg Domini Analytics, Inc. We compare extant typologies of corporate social action to the results of our exploratory factor analysis. Our findings indicate four distinct latent constructs that bear resemblance to concepts discussed in prior literature. Akey finding of our research is that positive and negative social action are both empirically and conceptually distinct constructs and should not be combined in (...) future research. Additionally, we recommend that some prior research results be reconsidered to determine whether these newly derived measures might clarify some previous findings. (shrink)

This paper aims to contribute to the present debate about business ethics and Corporate Social Responsibility (CSR) that the Journal of Business Ethics is hosting. Numerous contributions argued theoretical frameworks and taxonomies of CSR practices. The authors want to ground in this knowledge and provide further evidence about how companies adopt CSR practices to address stakeholders’ claims and consolidate their trust. Evidence was provided by a longitudinal case study about an Italian food company that is one of the largest producers (...) of baby food. This company reshaped its corporate strategy along three decades through the adoption of CSR practices in order to win stakeholders’ trust about food safety and supply chain behaviour. The empirical exercise was informed by a literature review of the relevant contributions in terms of CSR business practices and levels of efforts to adopt them. In light of this review, the authors adopted for the research framework the taxonomy of business practices proposed by Spiller (2000, “Ethical Business and Investment: A Model for Business and Society”, Journal of Business Ethics 27, 149-160) and the levels of commitment towards CSR proposed by Stahl and Grigsby (1997, Strategic Management; Total Quality & Global Competition (Blackwell, Oxford)). The main findings are discussed in order to argue theoretical implications and identify further areas of research and debate. (shrink)

In this paper, we examine the relation between corporate social responsibility (CSR) and firm risk in controversial industry sectors. We develop and test two competing hypotheses of risk reduction and window dressing. Employing an extensive U.S. sample during the 1991-2010 period from controversial industry firms, such as alcohol, tobacco, gambling, and others, we find that CSR engagement inversely affects firm risk after controlling for various firm characteristics. To deal with endogeneity issue, we adopt a system equation approach and difference regressions (...) and continue to find that CSR engagement of firms in controversial industry sectors negatively affects firm risk. To examine the premise that firm risk is more of an issue for controversial firms, we further examine the difference between non-controversial and controversial firm samples, and find that the effect of risk reduction through CSR engagement is more economically and statistically significant in controversial industry firms than in non-controversial industry firms. These findings support the risk-reduction hypothesis, but not the window-dressing hypothesis, and the notion that the top management of U.S. firms in controversial industries is, in general, risk averse and that their CSR engagement helps their risk management efforts. (shrink)

The relationship between corporate social responsibility and corporate financial performance has long been a central and contentious debate in the literature. However, prior empirical studies provide indefinite conclusions. The purpose of this study is to review systematically and quantify the CSR–CFP link in a meta-analytic framework. Based on 119 effect sizes from 42 studies, this study estimates that the overall effect size of the CSR–CFP relationship is positive and significant, thus endorsing the argument that CSR does enhance financial performance. Furthermore, (...) this work sheds light on the causal relationship between CSR and CFP. Subsequent financial performance is associated with prior social responsibility, while the reverse direction is not supported. This finding supports the instrumental stakeholder theory. As predicted, the meta-analysis results indicate that the measurement strategies of the two key constructs of CSR and CFP explain some variations of the CSR–CFP relationship. Last, this study examines the moderating effect of the environmental context on the CSR–CFP link. This work proposes that CSR in the developed world, with a relatively mature institutional system and efficient market mechanism, will be more visible than CSR in the developing world. The results show that the CSR–CFP relationship is stronger for firms from advanced economies than for firms from developing economies. (shrink)

Interest in Corporate Social Responsibility (CSR) has proliferated in academic and business circles alike. In the context of CSR, the spotlight has traditionally focused on the role of the private sector particularly in view of its wealth and global reach. Other actors have recently begun to assume more visible roles in the context of CSR, including Non-governmental organizations (NGOs) which have acquired increasing prominence on the socio-economic landscape. This article examines five partnerships between businesses and NGOs in a developing country (...) context that fall in the realm of CSR. The article starts with a literature review, delineating foundational underpinnings that have to be carefully designed and crafted to promote the success of collaborative ventures. An empirical study of five selected partnerships between businesses and NGOs in Lebanon is then presented, allowing to derive interesting insights into types of existing alliances, their relational characteristics as well as salient factors considered most determinant of success or failure in this regard. (shrink)

This paper capitalizes on an institutional perspective to analyze corporate social responsibility (CSR) orientations in the Lebanese context. Specifically, the paper compiles a new theoretical framework drawing on a multi-level model of institutional flows by Scott (Institutions and organizations: ideas and interests, 2008 ) and the explicit/implicit CSR model by Matten and Moon (Acad Manag Rev 33(2):404–424, 2008 ). This new theoretical framework is then used to explore the CSR convergence versus divergence question in a developing country context. The findings (...) highlight the usefulness of the compiled multi-layered institutional framework and the varied nuances and profound insights it offers in analyzing CSR in context. They also suggest that a cosmetic level of global convergence in explicit CSR may materialize in light of mimetic isomorphic pressures, but that the path dependence hypothesis is indeed salient in light of national history trajectories and socio-politico configurations. The findings correspond most closely to patterns of CSR crossvergence, combining elements of both convergence and divergence, and reflecting in complex hybridized CSR expressions. The findings and their implications are presented and assessed. (shrink)

In 2004, the United States Sentencing Commission amended the Federal Sentencing Guidelines to allow firms that create “effective compliance and ethics programs” to receive better treatment if prosecuted for fraud. Effective compliance and ethics, however, appear to be limited to activities focused on complying with the firms’ internal legal and ethical standards. We explored a potential connection between the firms’ external corporate social responsibility (CSR) behaviors and internal compliance: Is there an organizationally valid relationship between these two firm activities? That (...) is, when organizations demonstrate CSR with behaviors external to the firm, such as employee volunteerism, are their employees more likely to demonstrate uncompromised legal and ethical compliance behavior internally? We collected data from 164 working professionals enrolled in a top-tier MBA program in the southeastern United States regarding their employer-sponsored volunteer activities and their intentions to comply in various organizational compliance vignettes. We found that employer-sponsored volunteerism is associated with uncompromised compliance choices in one of the three vignettes. This finding indicates preliminary support for further inquiry into the relationship within the firm between external CSR behaviors and policies regarding organizational compliance. Post hoc analyses suggest that employer-sponsored volunteerism is strongly associated with a positive organizational identity, but organizational identity is not associated with the significant compliance vignette. This evidence suggests that the underlying mechanism that connects external CSR behaviors and internal compliance intentions is complex and requires future study. (shrink)

The concept of sustainability was developed in response to stakeholder demands. One of the key mechanisms for engaging stakeholders is sustainability disclosure, often in the form of a report. Yet, how reporting is used to engage stakeholders is understudied. Using resource dependence and stakeholder theories, we investigate how companies within the same industry address different dependencies on stakeholders for economic, natural environment, and social resources and thus engage stakeholders accordingly. To achieve this objective, we conducted our research using qualitative research (...) methods. Our findings suggest that the resource dependencies on different stakeholders lead to development of different stakeholder relationships and thus appropriate resources within the company to execute engagement strategies that are informing, responding, or involving. Our research explains why diversity exists in sustainability disclosure by studying how it is used to engage stakeholders. We find that five sustainability reporting characteristics are associated with the company’s stakeholder engagement strategy: directness of communication, clarity of stakeholder identity, deliberateness of collecting feedback, broadness of stakeholder inclusiveness, and utilization of stakeholder engagement for learning. Our study develops the literature by providing insight into companies’ choices of stakeholder engagement strategy thus explaining diversity in sustainability reporting based on the characteristics and relationships with specific stakeholders. (shrink)

This study examines how the sell-side analysts interpret firms’ corporate social responsibility activities. Specifically, we examine the differential impact of overall, legal, and normative CSR on the analysts’ earnings forecast dispersion, stock return volatility, cost of equity capital, and firm value. Employing a sample of U.S. public firms during 1993–2009, we find that overall CSR intensities reduce analyst dispersion of earnings forecast, volatility of stock return and cost of capital , and increase firm value. However, its impact is reduced for (...) firms with better accounting and disclosure quality. When we disaggregate CSR into legal and normative CSR, we find that legal CSR decreases analysts’ dispersion, stock return volatility, and COC, while legal CSR increases firm value. The sell-side analysts tend to have less information asymmetry regarding the net benefits of pursuing CSR that is required by laws. We find, however, that the benefit of having normative CSR realized in 1 year lag such that analyst dispersion, stock return volatility, COC decrease, respectively, and firm value increases. Furthermore, we find that the benefit of normative CSR is offset for firms with higher accounting and disclosure quality. (shrink)

This study examines the relation between corporate social responsibility and institutional investor ownership, and the impact of this relation on stock return volatility. We find that institutional ownership does not strictly increase or decrease in CSR; rather, institutional ownership is a concave function of CSR. This evidence suggests that institutional investors do not see CSR as strictly value-enhancing activities. Institutional investors adjust their percentage of ownership when CSR activities go beyond the perceived optimal level. Employing the path analysis, we also (...) examine the mediating effect of institutional ownership on the relation between CSR and stock return volatility. We find that CSR decreases stock return volatility at a decreasing rate through its effect on institutional ownership. Our results remain robust under several different CSR measures and estimation methods. (shrink)

In this article, we document the growing influence of non-governmental organizations (NGOs) in the realm of socially responsible investing (SRI). Drawing from ethical and economic perspectives on stakeholder management and agency theory, we develop a framework to understand how and when NGOs will be most influential in shaping the ethical and social responsibility orientations of business using the emergence of SRI as the primary influencing vehicle. We find that NGOs have opportunities to influence corporate conduct via direct, indirect, and interactive (...) influences on the investment community, and that the overall influence of NGOs as major actors in socially responsible investment is growing, with attendant consequences for corporate strategy, governance, and social performance. (shrink)

This article extends earlier research concerning the relationship between corporate social performance and corporate financial performance, with particular emphasis on methodological inconsistencies. Research in this area is extended in three critical areas. First, it focuses on a particular industry, the chemical industry. Second, it uses multiple sources of data-two that are perceptual based (KLD Index and Fortune reputation survey), and two that are performance based (TRI database and corporate philanthropy) in order to triangulate toward assessing corporate social performance. Third, it (...) uses the five most commonly applied accounting measures in the corporate social performance and corporate financial performance (CSP/CFP) literature to assess corporate financial performance. The results indicate that the a priori use of measures may actually predetermine the CSP/CFP relationship outcome. Surprisingly, Fortune and KLD indices very closely track one another, whereas TRI and corporate philanthropy differentiate between high and low social performers and do not correlate to the firm's financial performance. (shrink)

ABSTRACT:The literatures of business ethics and international business have generally had little influence on each other. Nevertheless, the decline in the power of nation states, the emergence of non-governmental organizations, the proliferation of self-regulatory bodies, and the changing responsibilities, roles, and structure of multinational corporations make constructive engagement between these two disciplines imperative. This changing institutional landscape creates many areas of common concern. In this article, we describe the changing institutional context of global business and suggest ways in which both (...) business ethics and international business may inform each other more fruitfully. (shrink)

This research examines whether and how firms can meet both business goals and social needs through their innovation activities. We examine antecedents and consequences of innovation that addresses social needs, in addition to business goals, using data collected from European for-profit firms. We find that innovation including social intent is more likely under conditions of high market turbulence, which represents an important form of demand-driven threats. Meanwhile, we find no relationship with competitive intensity, a form of pressure driven threats. Together, (...) these findings suggest that customers and other stakeholders are more likely to drive firms to focus on the social dimension than competitors. The findings also indicate that innovation including social intent is positively related with customer acceptance, which supports the notion that innovation can meet both business goals and social needs. This relationship is partially mediated by perceived market turbulence, which highlights the importance of customers and their demands for social responsibility. This research advances both theory and practice as we add to existing discourses on innovation by providing a broader than common perspective that includes the social dimension as a potential part of innovation conducted to meet business goals. Furthermore, we shed light on how and when firms are likely to include intended social outcomes in their innovation and when they are less likely to do so, which highlights a potential untapped opportunity. (shrink)

Firms engage in corporate social responsibility (CSR) because they consider that some kind of competitive advantage accrues to them. We contend that resource-based perspectives (RBP) are useful to understand why firms engage in CSR activities and disclosure. From a resource-based perspective CSR is seen as providing internal or external benefits, or both. Investments in socially responsible activities may have internal benefits by helping a firm to develop new resources and capabilities which are related namely to know-how and corporate culture. In (...) effect, investing in social responsibility activities and disclosure has important consequences on the creation or depletion of fundamental intangible resources, namely those associated with employees. The external benefits of CSR are related to its effect on corporate reputation. Corporate reputation can be understood as a fundamental intangible resource which can be created or depleted as a consequence of the decisions to engage or not in social responsibility activities and disclosure. Firms with good social responsibility reputation may improve relations with external actors. They may also attract better employees or increase current employees’ motivation, morale, commitment and loyalty to the firm. This article contributes to the understanding of why CSR may be seen as having strategic value for firms and how RBP can be used in such endeavour. (shrink)

Do firms benefit from their voluntary efforts to alleviate the many problems confronting society? A vast literature establishing a “business case” for corporate social responsibility appears to find that usually they do. However, as argued herein, the business case literature has established only that firms usually benefit from responding to the demands of their primary stakeholders. The nature of the relationship between the interests of business and those of broader society, beyond a subset of powerful primary stakeholders, remains an open (...) question despite this vast literature. This article develops a set of propositions that highlight constraints on firms’ ability to profit from CSR and outlines a set of managerial challenges on which researchers must focus their attention to truly determine whether and when firms can profit by responding to the needs of society. (shrink)

This paper explores the role of NGOs in corporate social responsibility (CSR) through an analysis of various stakeholders’ perceptions and of NGOs’ self-perceptions. In the course of qualitative research based in Spain, we found that the perceptions of the role of NGOs fall into four categories: recognition of NGOs as drivers of CSR; concerns about their legitimacy; difficulties in the mutual understanding between NGOs and trade unions; the self-confidence of NGOs as important players in CSR. Each of these categories comprises (...) the various elements analysed in the paper. We found some discrepancies between the perception of others and the self-perceptions of NGOs, which explains why their role is often controversial. The research confirms that secondary stakeholders, such as NGOs, are key players in CSR, but their role is still regarded as controversial and their legitimacy contested. Deep-seated misunderstandings and mistrust among various stakeholder groups (particularly between NGOs and trade unions) are a possible hurdle to the integration of social and environmental concerns in business activity and corporate governance in Spain. The study finds that business managers need to take a less firm-centric and a more contextual approach, and look more closely into the relationship with and among stakeholder groups. For NGO managers, the research shows that NGOs are not always aware of the stereotypes they generate and the problems caused mainly by what is seen as ambivalent roles: critic and counsellor, accuser and judge, idealist and fund raiser. (shrink)

The impact of corporate social performance on firm financial performance has been examined previously with mixed results. This study examines the possibility that corporate social performance enhances financial performance by allowing the firm to differentiate, and that this effect may be moderated both by innovation, which also drives firm differentiation, and the level of differentiation in the industry. Hypotheses concerning both direct and moderating effects are developed and tested using secondary data. Our results support both innovation and the level of (...) differentiation in the industry as moderators for a positive relationship between corporate social performance and financial performance: corporate social performance most strongly affects performance in low-innovation firms and in industries with little differentiation. (shrink)