Content uploaded by Marc Orlitzky
Author content
All content in this area was uploaded by Marc Orlitzky on Apr 27, 2016
Content may be subject to copyright.
chapter 5
...............................................................................................................
CORPORATE
SOCIAL
PERFORMANCE
AND FINANCIAL
PERFORMANCE
A RESEARCH SYNTHESIS
...............................................................................................................
marc orlitzky
Introduction
..........................................................................................................................................
What is the relationship between corporate social performance (CSP) and corpo-
rate financial performance (CFP)? The community of Business and Society scholars
has been investigating this question for over 30 years. The typical conclusion, based
on narrative reviews of this literature, is that the empirical evidence is too mixed to
allow for any firm conclusions (e.g. Ullmann, 1985). In these reviews, poor measures
and weak theory construction are often mentioned as causes of this apparent
variability in findings (see e.g. Griffin and Mahon, 1997; Wood and Jones, 1995).
The assumption that this research stream is inconclusive has persisted until after
114 perspectives on csr
the turn of the millennium (Godfrey, 2005; McWilliams and Siegel, 2001;Schuler
and Cording, 2006).
So, what may be required at this point is a critical examination of the evidence
that seems to have motivated these (inconclusive) conclusions. In this chapter I
will argue that certain types of literature review should be treated with caution. I
will propose an alternative and use this more rigorous methodology of literature
reviews in order to assess the cumulative evidence on the two core constructs which
are defined at the beginning of this chapter. Then I will present the general con-
clusions from this research program. The next three sections will describe possible
mediators, moderators, and confounds in greater depth. The chapter will conclude
with some suggestions of future research needs in the corporate social-financial
performance domain.
Superficially, a literature review looks like an easy task. A researcher tabulates
the empirical evidence pro and con a particular research hypothesis. In this type
of research review, the real difficulty, it is assumed, lies in including all relevant
studies, not so much in the actual technique of reviewing the literature. In the end,
it is argued, all we need to do is count the vote tally that supports, or fails to sup-
port, the research question that motivated the review. This classic solution of vote
counting of statistically significant and non-significant results sounds reasonable,
but comes with a host of pitfalls and weaknesses (Chalmers and Lau, 1994;Hedges
and Olkin, 1980; Hunt, 1997). In psychology and medicine, such simplistic literature
reviews are now held in disdain (Hunt, 1997). In contrast, certain communities of
researchers within Organizational Behavior and Organization Theory continue to
rely on vote counting, or what is labeled the ‘box-score method’ (Schwab, 1999:
301), although statisticians, psychologists, and at least one prominent economist
have long argued that a rigorous literature review requires a quantitatively more
sophisticated underpinning than that afforded by the typical narrative literature
review (e.g. Cohen, 1994; Hedges and Olkin, 1985; Hunter and Schmidt, 2004;
McCloskey, 1998). Because the errors can be grave (Orlitzky, 2002), such reliance on
classic types of literature review ought to become as much of a taboo in this research
stream as it is in other disciplines and research programs. Meta-analysis avoids these
methodological and logical mistakes and, thus, will be the type of research synthesis
on which this literature review is based.
Meta-analysis is a type of literature review that goes beyond the outcomes of
statistical significance tests (Schmidt, 1992). Instead, it focuses on effect sizes, such
as the correlation coefficient ror effect size d(Rosenthal, 1984; Rosenthal and
DiMatteo, 2001). One particular method of meta-analysis, called ‘psychometric
meta-analysis’, not only takes into account sample size differences, but also corrects
for measurement error (unreliability in measures), dichotomization of variables,
and several other study artifacts that typically affect primary studies (Hunter
et al., 2004). Because of their ability to correct for these study artifacts, meta-
analytic research syntheses have become very influential in the social sciences
csp and financial performance 115
(Cooper and Hedges, 1994; Hunt, 1997).Forthisreasonitmakesgoodsensein
this review to rely primarily on two award-winning meta-analyses (Orlitzky and
Benjamin, 2001; Orlitzky et al., 2003),1which problematized and relativized the
aforementioned typical conclusions about the seemingly ‘equivocal’ relationship
between CSP and CFP.
The Two Core Constructs
..........................................................................................................................................
Corporate Citizenship and Corporate Financial Performance
The first core concept at the heart of this literature review is corporate social
performance (CSP). Wood (1991:693) defined CSP as a ‘business organization’s
configuration of principles of social responsibility, processes of social responsive-
ness, and policies, programs, and observable outcomes as they relate to the firm’s
societal relationships’. This comprehensive definition assumes that CSP is broader
than corporate social responsibility (CSR), which consists of three norms at dif-
ferent levels of analysis: institutional, organizational, and individual (Wood, 1991).
In addition, CSP includes organizational processes of environmental assessment,
stakeholder management, and issues management, but also, and perhaps most im-
portant, various measures of its external manifestations and societal effects, such as
social impacts. The apparent complexity of the definition of CSP can be untangled
conceptually by visualizing Wood’s model as a relatively straightforward systems
model of inputs, throughputs, and outputs. In retrospect, because the construct
conceptually and operationally includes considerations of company performance
vis-à-vis the natural environment, a better term for it may be corporate citizenship
(Davenport, 2000). At best it is awkward, at worst false, to include the caveat that
corporate social performancealsoreferstocorporateenvironmental performance
(cf. also Holliday et al., 2002). There are many other good reasons to prefer the
term ‘corporate citizenship’ (CC), or regard CC as slightly different from CSP
(Gunther, 2004; Matten and Crane, 2005), but for the purpose of this chapter I will
1Orlitzky and Benjamin (2001) won the 2001 Best Article Award given by the International Associ-
ation for Business and Society (IABS) in association with California Management Review.Orlitzky,
et al. (2003) won the 2004 Moskowitz award for outstanding quantitative research relevant to the
social investment field. The sponsors of the Moskowitz Prize are Calvert Group, First Affirmative
Financial Network, KLD Research & Analytics Inc., Nelson Capital Management, Rockefeller & Co.,
and Trillium Asset Management Corporation. The Moskowitz Prize is awarded each year to the
research paper that best meets the following criteria: (1) practical significance to practitioners of
socially responsible investing; (2) appropriateness and rigor of quantitative methods; and (3)noveltyof
results. Both award-winning papers were based on my doctoral dissertation, which was completed in
July 1998.
116 perspectives on csr
consistently use CC as a (conceptually equivalent, yet rhetorically superior) syn-
onym of CSP.
In contrast, corporate financial performance (CFP), the other core construct of
this review, is usually considered less ambiguous and, thus, less contentious, than
CC. The view of CFP as the ‘financial viability of an organization’ (Price and
Mueller, 1986:128) seems clear enough. So, CFP is the degree to which a firm is able
to achieve its economic, or financial, goals (Venkatraman and Ramanujam, 1986).
However, different measures of financial performance seem to diverge rather than
converge (Meyer and Gupta, 1994). Therefore, although we can distinguish between
two main CFP operationalizations, namely market and accounting measures, we
cannot a priori assume that CC has questionable measurement properties, while
CFP is clear-cut and uncontroversial. In fact, a closer measurement examination
has generally shown that the construct validity of both core constructs is far from
perfect, but still useful for research synthesis (Orlitzky, 1999). Construct validity
refers to the degree of correspondence between a variable’s operationalization and
the conceptual definition, or mental image, of the construct that such a measure
is designed to represent (Schwab, 1980). While measurement error is caused by
random errors, lack of construct validity is produced by systematic errors (Hunter
et al., 2004; Nunnally and Bernstein, 1994). Both types of error can render a research
literature uninterpretable. In this case, we deal with constructs which are imperfect
(as is typical in all social science research domains; cf. Hunter and Schmidt, 2004),
but their measurement properties can be judged good enough to allow for meta-
analysis (Orlitzky, 1999).
The General Conclusions
..........................................................................................................................................
Overall, the meta-analysis by Orlitzky, Schmidt, and Rynes (2003)supportsa
positive relationship between CC and CFP. Specifically, the meta-analytically
determined true score correlation Òwas +0.36. Sampling and measurement errors
alone accounted, on average, for 24% of the variance in observed correlations
across studies. In general, reputation measures of CC were better predictors of
CFP than social-audit disclosures, and the economic impact of CC was stronger
on accounting measures than market measures of a firm’s economic performance.
Orlitzky and his colleagues also addressed concerns about availability bias—the
possibility that studies which fail to show a relationship between CC and CFP were
unlikely to get published. File drawer analysis is a technique useful for assessing
this concern. The file drawer analysis indicated that over 1,000 such unpublished
studies excluded from the meta-analysis would be needed to change the overall
conclusions of the meta-analysis.
csp and financial performance 117
CC also seems to reduce business risk (Orlitzky and Benjamin, 2001). Again,
these effects are most likely mediated by organizational reputation. By balancing a
multitude of stakeholder interests, a firm may increase various stakeholder groups’
confidence that the firm will be understanding and non-adversarial in resolving
future stakeholder conflicts (Jones, 1995). In turn, this may reduce the variability
of accounting rates of return and share prices because the investment community
will not respond to temporary company set-backs by panic-selling of its shares, for
example. Conversely, less business risk may lead to higher CC because discretionary
spending on CC is facilitated by greater predictability of future cash-flows and slack
resources. A corresponding causal model is depicted in Orlitzky and Benjamin’s
(2001)article.
In addition, the meta-analysis suggests that the organizational activities entailed
by CC and CFP can be considered mutually reinforcing. Through the use of time
lags, Orlitzky and his colleagues found that CFP is a positive predictor of future CC,
and that CC also predicts CFP. In other words, the meta-analytic findings suggest
that a business can develop mutually beneficial relations with stakeholder groups,
which might pay offsurprisingly fast for the socially responsible firm. In turn, these
positive economic effects of CC might translate into more slack resources available
for future investments in CC. Over time, these dynamics might constitute a virtuous
cycle for the socially responsible firm (Waddock and Graves, 1997a).
Mediators:The Causal Mechanisms
that Link CC and CFP
..........................................................................................................................................
In conjunction with primary studies, the meta-analytic evidence can also shed more
light on the possible mediators or causal linkages between the two core constructs.
The empirical evidence accumulated to date indicates that CC and CFP are most
likely positively correlated because CC helps improve managerial knowledge and
skills and enhance corporate reputation (Logsdon and Wood, 2002; Orlitzky et al.,
2003). When stakeholders are engaged constructively (rather than treated as ad-
versarial forces or ‘side constraints’) they may look more favorably upon a socially
responsible company. For example, firms high in CC may attract better and more
committed employees (Backhaus et al., 2002; Greening and Turban, 2000; Turban
and Cable, 2003; Turban and Greening, 1996). Also, external stakeholders, such as
customers, may become more willing to buy the company’s products or pay a pre-
mium for the goods from socially responsible firms (Auger et al., 2003). Although
the meta-analysis suggested that internal competency-building was a less important
factor than external reputation in the economic performance-enhancing effects
118 perspectives on csr
of CC, socially responsible organizations can develop learning mechanisms and
other internal resources which will facilitate adaptation to various environmental
uncertainties (Russo and Fouts, 1997).
In short, there seem to be a variety of causal mechanisms responsible for the
observed positive relationship between CC and CFP. In the following section I will
only describe the most likely and important mediators. Orlitzky (2006) elaborates
on many of these theoretical links and introduces several others. Frank (1996)
provides another interesting overview of possible theoretical linkages.
Enhancing Organizational Reputation
From theoretical and practical perspectives, organizational reputation ranks as one
of the most important mediating variables linking CC to CFP (e.g. Fombrun and
Shanley, 1990;Read,2004). Because of their own moral convictions and value
systems, customers and suppliers may be, or become, more willing to deal with
companies with a good CC track record. ‘Ethical investors’ may be willing to pay a
premium for stocks of companies with high CC disclosures (Anderson and Frankle,
1980; Simon et al., 1972). Thus, when studying external reputation effects, it may
be important to consider information intensity and consumer decision processes
(Schuler and Cording 2006).
Not all reputation effects are external, though. Employees may show more
goodwill toward their high-CC employer and, because of increased organiza-
tional commitment and task motivation, produce better results and demonstrate
more organizational citizenship behaviors (Davis, 1973;Hodson,2001;McGuire
et al., 1988). The external and internal effects, in aggregate, could explain an
increase in CFP as a consequence of increasing CC, mediated by organizational
reputation.
The empirical research accumulated over 30 years lends strong support to repu-
tation as a mediator (Orlitzky et al., 2003). The true score correlation (Ò) between
CC reputation measures and CFP (0.49)was36% larger than the overall true score
correlation (of 0.36; see previous discussion). However, the variance of this meta-
analytic, corrected correlation was also much larger (0.32), which suggests that
the way in which organizational reputation is manifested and managed by top
management serves as an important moderator. For example, a further subdivision
of the reputation CC data shows that company disclosures of CSR in annual reports
or shareholder letters tend to contribute to organizational reputation only to a
minor extent (Orlitzky et al., 2003:417–19).
Fromaslightlydifferent angle, the fact that environmental performance is re-
lated to financial performance to a negligible (but still positive) extent might be
seen as evidence corroborating the importance of organizational reputation as a
mediator (Orlitzky et al., 2003:414–15). Anecdotal evidence suggests that at present
csp and financial performance 119
many consumers, especially US consumers, are not particularly concerned about
a company’s environmental track record (Gunther, 2004;Read,2004).2At the
moment, environmental performance is typically either just a small blip on an
organization’s radar screen or treated as a cost only (not as an investment). That
is, many organizations treat the natural environment as a legal (i.e. regulatory
compliance) issue rather than an essential aspect of organizational reputation that
needs to be managed proactively. Some observers claim that only when environ-
mental activists institutionalize environmental concerns in the form of influential
social movements do organizations respond (Gunther, 2004; cf. also McVeigh et al.,
2003).3But by that time, it may be too late to derive strategic benefits from re-
actionary adherence to already widely institutionalized norms of environmental
responsibility.
Improving Internal Resources and Skills (Efficiency)
Another quite influential variant of the pro-CSR paradigm implicates organization-
internal resources and skills as an important mediator between CC and CFP. Advo-
cates of the internal-resources view of CC predict that CC enhances managerial
competencies with respect to the efficient use and allocation of resources (e.g.
accounting return measures such as return on assets or return on equity). Increased
internal efficiencies may directly translate into savings from higher CC (Holliday
et al., 2002:83–102). Also, CC may help top management develop better scanning
skills, processes, and information systems which increase the organization’s antici-
pation of, and preparedness for, external changes or turbulences. Know-how with
respect to corporate environmental performance has been argued to be especially
important in growing industries (Russo et al., 1997). According to this view, whether
CC measures are disclosed or not is largely irrelevant because organizational learn-
ing and the development of internal capabilities do not depend on the communi-
cation of the corporation’s commitment to CSR to various stakeholders.
The integration of prior CC-CFP research shows that, although the internal-skills
perspective is substantiated empirically to some extent, the internal learning effects
of CC tend to be 33% smaller than the reputation effects emanating from high CC.
As tabulated in Orlitzky et al. (2003:418), the effect sizes pertaining to the internal-
efficiency versus external-reputation explanations were 0.33 and 0.49,respectively.
However, 0.33 is still a quite sizeable mean true score correlation (Ò). In addition,
2In the future consumers may exhibit greater environmental awareness, for example, because of
sharp increases in energy prices or catastrophic climate shifts. These possible attitudinal changes may,
in the future, result in the emergence of a company’s concern for the natural environment as the most
important dimension of CC reputation.
3Of course, there are industry- and firm-specific exceptions to this rule (e.g. Interface and
Patagonia). These exceptions illustrate the importance of executive values in managing company
reputation for high CSR (cf. also Orlitzky and Swanson, 2002).
120 perspectives on csr
the empirical analyses (Orlitzky et al., 2003:418) point to the greater generalizability
of the internal-skills effects relative to the CSR reputation effects (which may be
industry- or firm-specific). In sum, this meta-analytic evidence reaffirms CC as an
important, but not essential, internal resource.
Increasing Rivals’ Costs
A company may become relatively more efficient not only by decreasing its own
costs but also by raising competitors’ costs. Thus, a related resource-based argu-
ment focuses on the effects of CC as a political strategy to increase rivals’ costs
(McWilliams et al., 2002). High-CC firms can try to make their new technology
an industry standard through which they effectively restrict access to substitute
resources. It can be shown that companies, especially large ones, can use occupa-
tional safety and health as well as environmental regulations strategically to raise
rivals’ costs. Some organizations may concentrate on those social or environmental
criteria that they already find relatively easy to meet or exceed, and then push their
various stakeholder coalitions for broader adoption of those policies in their orga-
nizational fields. McWilliams and her colleagues (2002)presentedvariousexamples
of CC as indirect rent-seeking strategy. Ultimately, strategic actors will adopt those
CC practices that make the firm-specific resources valuable, rare, and costly to
imitate in order to render the company’s competitive advantage more sustainable.
This explanation is not only consistent with the resource-based view of the firm,
but also the view of CC as a signal to government about expected compliance costs
with future costly and rigid government regulation (Heyes, 2005).
Attracting a More Productive Workforce
Firms with high CC may also attract better employees. There is some empirical
support for this explanation (Backhaus et al., 2002;Greeninget al., 2000; Turban
and Greening, 1997). CC may serve as a signal to potential applicants that the
organization is a socially responsible employer and upholds ethical values. Because,
as a result of these signals, applicants may experience positive affects, such as an
enhanced self-concept (Greening et al., 2000), they will be more attracted to high-
rather than low-CC firms. This association between CC and company attractiveness
as an employer has been found at the organizational level (Turban and Greening,
1997) as well as the individual level of analysis (Backhaus et al., 2002;Greeninget al.,
2000). When competitive advantage increasingly depends on a quality workforce
(Huselid, 1995;Pfeffer, 1994,1998), a large labor pool from which to select employees
is usually beneficial to companies. Companies with low CC inadvertently restrict
the labor pool from which they can recruit by appearing unattractive to potential
csp and financial performance 121
job applicants and, thus, are at a human resource and economic disadvantage
relative to companies with high CC (cf. also Orlitzky, 2007c).
Boosting Sales Revenues
Probably the most direct explanation of a positive effect of CC on CFP is the view of
CC as a revenue generator—especially in the long run. Firms that enjoy favorable
reputations for their CC may be able to charge premiums for their products and
services (Auger et al., 2003). Consumers may value social responsibility so highly
that they are willing to pay more for products and services from socially responsible
companies. In addition, by conveying important information about how products
have been manufactured in a socially or environmentally responsible manner, com-
panies may increase market share relative to competitors that are poor corporate
citizens (Miller, 1997). Whether the effect is through increased prices or a larger
customer base, CC may help the business generate more sales revenues. Authors in
the popular business press adhere to this revenue-generating view of CC to some
extent (e.g. Read, 2004), although the academic experimental research evidence is
more tenuous (Elliott and Freeman, 2001; Folkes and Kamins, 1999;Roberts,1996).
Certain customer segments (e.g. members of Amnesty International, older women,
or Generation Y) have been found to be willing to pay premium prices for products
from high-CC firms, but these purchasing decisions may not be generalizable to
the whole population of consumers (Auger et al., 2003;Read,2004). However, the
currently weak corroboration of this mediator does not strike a fatal blow to the
positive view of CC-CFP linkages because, as I argue in this chapter and elsewhere
(Orlitzky, 2006), there are so many other mediating variables that have received
strong empirical support.
Reducing Business Risk
Firms may also financially benefit from CC because it tends to reduce business
risk (Orlitzky and Benjamin, 2001). CC can decrease business risk by allowing
firms to anticipate environmental upheavals more effectively (King, 1995). Good
CC is typically characterized by effective environmental assessment (Wood, 1991),
which helps companies address stakeholder concerns proactively or interactively
(Waddock, 2002). By balancing a multitude of stakeholder concerns, firms can
potentially lower their legal costs because it is precisely the unaddressed stakeholder
concerns that usually turn into lawsuits against neglectful companies.
There is strong evidence that the higher a firm’s reputation for its CC, the lower
the business risk (Orlitzky and Benjamin, 2001). That is, CC and business risk have
been found to be inversely correlated. However, the negative CC-risk associations
122 perspectives on csr
also exhibited relatively large variabilities around the meta-analytic means (Orlitzky
and Benjamin, 2001:385). This implies that such study artifacts as sampling error
and measurement error explained only modest amounts of cross-study variability
in findings. The only notable exception was the relationship between CC and total
market risk, which was not only the largest correlation found (true score correlation
coefficient Òof −0.57), but also had the smallest true score variance around it
(Orlitzky and Benjamin, 2001:385). Of all CC measures, reputation tended to
reduce risk to the greatest extent (Òof −0.32), followed by social audits, processes,
and outcomes (−0.13), CC disclosures (−0.10), and management social respon-
sibility values (−0.07). The order of these corrected correlation coefficients was
generally consistent with theoretical expectations (Orlitzky and Benjamin, 2001).
Interestingly, and contrary to expectations, corporate environmental performance
was related to risk to only a negligible degree (−0.02). However, a major caveat
applies to this last finding because the number of quantitative studies that were
integrated in the meta-analysis was small (only eight).
Reverse Causation?
So far, the discussion has implied that CC was the causal determinant, and thus
temporal antecedent, of CFP. However, there are also strong theoretical arguments
for reverse causation, with CFP as the precursor of CC. The arguments about
reverse causation may generally be subdivided into two broad categories: the slack
resources view and the (normative) ‘noblesse oblige’view.
First, previously high levels of CFP may provide the slack resources necessary for
a company to engage in corporate social responsibility and responsiveness (Cyert
and March, 1963; Ullmann, 1985). CC often represents an area of relatively high
managerial discretion (Carroll, 1979), so that the initiation and maintenance of
voluntary social and environmental policies may depend on the availability of
excess funds (McGuire et al., 1988). While executive leadership (cf. also Orlitzky
and Swanson, 2002,2006;Orlitzkyet al., 2006) and organizational culture (cf. also
Swanson, 1999) must be supportive of CC, profits and thus slack resources represent
the necessary conditions for high CC. In other words, a firm’s prior profit level, if it
is low, may act as a factor inhibiting CC activities and investments.
Second, a consistent track record of organizational success may create a sense
of obligation among executives to give back to the community (Economist,2006).
This normative obligation may not only be felt by top managers on an individual
level, but these communitarian values may also be expressed in the organizational
activities initiated by those leaders. In his seminal institutional theorizing, Selznick
(1949) demonstrated how normative commitments affected organizational behav-
ior at the Tennessee Valley Authority. Internalized and legitimized shared norms
can explain the persistence of organizational activities at the macro level as well (e.g.
Kilduff,1993). Above and beyond regulative pressures, network embeddedness and
csp and financial performance 123
consequent network dependencies may stabilize and maintain organizational
practices (Powell, 1991), such as industry-wide voluntary product standards
(Hemenway, 1975; Scott, 1995:79). In short, the slack resources argument, an
instrumental explanation, may be insufficient by itself to explain the diffusion
and maintenance of CC in organizational fields. Institutional theory (Powell and
DiMaggio, 1991; Scott, 1995) can provide important additional insights focusing on
normative pressures, which are likely to increase with increasing CFP.
The meta-analytic evidence accumulated by Orlitzky, Schmidt, and Rynes (2003)
supports this view of reverse causality (CFP →CC) to about the same degree as a
CC →CFP link. Regardless of the temporal order of the two core constructs, the
true score correlation Òwas 0.29. Interestingly, the strongest meta-analytic correla-
tion was found when both constructs were measured concurrently (Òof 0.44)—i.e.,
in the same quarter or year. This meta-analytic evidence supports Waddock and
Graves’s (1997a,1997b) good management argument. CC and CFP may reinforce
each other in a virtuous cycle because good managers are capable of taking positive
strategic action in both economic and social domains. Astute managers are able
to identify and implement specific CSR activities through which their organiza-
tion’s reputation can be enhanced in social or environmental domains—and they
also ensure that slack resources are invested wisely to promote and exploit these
opportunities. Furthermore, skillful executives can sidestep the perception that the
socially responsible activities by their companies are merely marketing ploys. They
are able to convey to internal and external stakeholders that their company’s CC is
in fact rooted in top managers’ deeply felt commitments to social and environmen-
tal causes.
Moderators:The Contingency
Factors on which the CC-CFP
Relationship Depends
..........................................................................................................................................
The main moderators that Orlitzky, Schmidt, and Rynes (2003) and Orlitzky and
Benjamin (2001) proposed were the measurement strategies associated with CC and
CFP, respectively. Unlike a narrative literature review, a meta-analysis can empiri-
cally examine the strength of moderator (or interaction) effects by disaggregating
the overall meta-analytic data set into relatively homogeneous subgroups (which
are categorized by the postulated moderator). When (a) the mean correlations
differ in those subgroups and (b) the study artifacts explain more cross-study vari-
ability in these subgroups compared to the overall meta-analytic data set, a meta-
analysis can demonstrate the existence of contingencies. Both meta-analyses by
Orlitzky and his colleagues showed that the way CC and CFP were operationalized
124 perspectives on csr
exertedagreatimpactonthestudyeffects found. Thus, any new primary study
that attempts to measure only one specific dimension of CC may not capture the
full economic impact of CC.
Because Orlitzky et al., found only a few instances in which study artifacts
explained between 75%and100% of cross-study variability in the CC-CFP effect
sizes, several other contingency factors are likely to affect this relationship as well.
One of them, already confirmed in a primary study of one dimension of CC, is
industry growth. Russo and Fouts (1997) found that industry growth, as a modera-
tor, strengthened the relationship between corporate environmental performance
and profitability. That is, CC was a more important internal resource when an
industry was growing relative to when it was stable. Most likely, this moderator
effect exists because a firm operating in a growing industry requires the kind of
environmental assessment and management for which CSR provides the normative
(rather than instrumental) foundation and benefits more from the resource-based,
internal benefits of CC under those growth conditions. Generally, though, a lot
more research is required to examine the moderator effects that have been pro-
posed in the literature. The theoretically most compelling argument for moderator
effects is presented by McWilliams and Siegel (2001) in their supply and demand
model of CSR. Their proposed moderators included an organization’s size, level of
diversification, research and development, advertising, government sales, consumer
income, labor market conditions, and stage in the industry life cycle. All of them
require empirical follow-up research.
Confounding Variables
..........................................................................................................................................
The empirical impact of confounding variables must be distinguished from these
postulated moderator effects. Moderators interact with exogenous variables to
affect the dependent variable under consideration. That is, moderators are mod-
eled mathematically as multiplicative effects. Confounding variables act differently.
Confounding variables may create spurious relationships if the study design or data
analysis does not control for their impact. Their impact is (usually) additive. The
importance of these potential confounds explains the fact that potential confounds
are typically entered first in multiple regression models. Variance explained (R2)
is often considered a pretty good indicator of the impact of potential unmeasured
confounds, but not of the magnitude of contingency effects. The higher R2,the
lower the probability that important confounds have been ignored. However, R2
mayalsobedeceptivebecauseanyeffect size between CC and CFP may be arti-
ficially inflated because the conceptual model is incomplete or misspecified. Such
csp and financial performance 125
Innovation
CC CFP
robs = + or 0
robs = 0
robs = +
p3 p2
p1
Fig. 5.1 Innovation as confounding variable
misspecifications are sometimes labeled ‘errors of the third type’ (cf. also Leamer,
1983).
Innovation
Innovation, often operationalized as a firm’s level of investments in research and
development, can be considered a potential confound of the CC–CFP relationship.
McWilliams and Siegel (2000,2001) emphasize that the association between CC
and CFP cannot properly be understood without consideration of organizational
innovation. McWilliams and Siegel (2000) argued that if studies statistically con-
trolled for firms’ investments in research and development (R&D), the positive
association between CC and CFP would vanish. Such a postulated confound-
ing effect is shown in Figure 5.1. However, the direct association between CC
and CFP might also be zero or statistically non-significant if innovative activi-
ties were mediating the relationship between CC and CFP, as shown in Figure
5.2. In my view, Figure 5.2is as plausible as Figure 5.1(cf. Geroski, 1994 on the
Innovation
CC CFP
robs = +
robs = 0
robs = +
p3 p2
p1
Fig. 5.2 Innovation as mediating variable
126 perspectives on csr
innovation–financial performance relationship; Waddock et al., 2002 on the CSP–
innovation relationship). Moreover, from the methodological literature (Schwab,
1999), we can infer that innovation tends to inflate the zero-order correlation
between CC and CFP if the association between CC and innovation (p2) is positive
rather than zero, or statistically nonsignificant. Hence, because the main difference
between Figures 5.1and 5.2tends to boil down to the causal arrow of p2(i.e.IsCC
a causal predictor of innovation or is innovation a causal predictor of CC?), this
particular facet of the CC–CFP research program certainly represents an area in
need of future empirical study. From a theoretical viewpoint, it will be important
to go beyond the consideration of R&D expenditures as a control variable—and
study designs will have to reflect that.4
Organization Size
Another variable which may confound the CC–CFP relationship is organizational
size. Large firms may both exhibit greater financial performance and engage in
more socially responsible activities as they tend to have more slack resources (which
are needed not only for CSR investments but also for other investments that may
allow a given firm to stay ahead of its competitors). If this argument, which Orlitzky
(2001) presented in greater depth, were true, the CC–CFP relationship may, in fact,
be spurious.
The meta-analytic data do not support this view. When size is added as a variable
influencing both CC and CFP (in a similar way as ‘Innovation’ in Fig. 5.1), the
path-analytic model shows that the ‘true score’ correlation Òbetween CC and CFP
remains high (Ò=0.37) despite this statistical control (Orlitzky, 2001). Importantly,
this meta-analytic finding suggests that large and small firms can financially benefit
from being or becoming good corporate citizens, albeit (most likely) due to differ-
ent causal mechanisms. Why this is the case awaits future research.
Conclusions:Research Politics and
Future Directions
..........................................................................................................................................
In conjunction with a meta-analysis of event studies (Frooman, 1997), this research
program has generated some generalizable knowledge:
4Though interesting in theory, the direction of the causal arrow of p2(CSP→innovation or
innovation →CSP?) may not be so important in practice.
csp and financial performance 127
rOverall, there is a positive, but also highly variable, relationship between CC
and CFP.
rCC and CFP tend to be mutually reinforcing organizational activities.
rCC and CFP are positively correlated, most likely because social performance
helps enhance corporate reputations, and, to a lesser extent, improve manage-
rial learning and internal efficiencies.
rThe large variability of findings in studies is partly due to primary-study
artifacts.
rCC may also reduce business risk.
rOrganization size does not confound the relationship between CC and CFP.
rThe large variability of the CC–CFP relationships suggests several moderators
(e.g. measurement strategies, industry growth, etc.) which should be examined
in future research.
Because of this variability, scholars in this area should probably reformulate the
question that introduced and motivated this research synthesis as follows: How can
we characterize the relationship between corporate citizenship (CC) and corporate
financial performance (CFP)? Rephrasing the question this way is sensible for two
main reasons. First, it acknowledges that a company can become a responsible
corporate citizen through more routes than only high social performance(seealso
Holliday et al., 2002). Second, and more important, the reformulation puts the
researcher and the community of researchers at center stage (Orlitzky, 2007a). This
is vital in any research domain in which construct validity is a key problem. For
example, what some people regard as the epitome of CSR (e.g. affirmative action)
is denounced by others as morally questionable organizational conduct. Value rel-
ativism demands a balanced attention to the normative foundation of every single
dimension of CC. We cannot assume that the manifestations of CC in a particular
domain are self-evident. At the same time, though, an ‘anything-goes’ definition
of CSR (e.g. ‘CSR is whatever market participants consider CSR’) may, in fact, be
as damaging to future refinement as an absolutist insistence on certain ideologies.
Conceptually, we need to come to a consensus about the types of activities that
have a net positive impact on business environments. To ‘better society’ is hardly a
sufficient guide for a scientifically useful definition of CSR. I agree with Rowley and
Berman (2000) that, at present, CSP as a construct probably raises more questions
than it answers. At the same time, I think the correct research strategy is not a
moratorium on the CC–CFP research stream, but instead an intensified, politically
aware examination of the philosophical underpinnings of CC, so that it becomes
useful for social scientists of all political persuasions.
As a case in point, some writers (e.g. Entine, 2003) argue that CSR represents
advocacy of an inherently Liberal or even irrational conception of business activity.
To some extent, these criticisms are a call to arms for CC researchers to demonstrate
that their actual operationalizations of CC do not give priority to a particular
128 perspectives on csr
political view of societal governance. Instead, our objective measures must reflect
societal values which every reasonable person would deem ‘positive’. This research
may lead to a more limited view of CC because it would imply that we shift our
focus from the motivations of CC to the actual social and environmental impact of
CC. In this effort, our measurement of CC must become more sophisticated and ask
the actual stakeholders about their satisfaction with an organization’s CC activities
(Orlitzky, 2007b). Consistent with the advocacy of more verifiable measures of the
‘triple bottom line’ (Elkington, 1998), we must demonstrate the validity (see e.g.
Sharfman, 1996) and reliability of our chosen measures—without succumbing to
theillusionthatourmeasures will ever be perfect.
Better measures will enable us to answer the moderator and mediator questions
with greater confidence, but we also need to make sure that our study designs and
dataanalysesareinlinewiththetheoreticalcomplexityofthesequestions.For
example, the postulation of CC as a causal determinant of CFP requires much more
than the concurrent measurement of both constructs in the same time period. In
turn, for the investigation of lagged effects, it will be important to use theory as a
guide for possible lead-lag times and mediating variables (Orlitzky, 2006;Orlitzky
et al., 2003;SchulerandCording,2006).
This being said, the meta-analytic evidence does not point to the overall equivo-
cality and inconclusiveness of this research stream. Researchers of corporate social
and financial performance must not repeat the same mistakes that have been made
in so many other social science research literatures which, until the introduction of
meta-analysis, were littered with the false appearance of conflicting results (Hunt,
1997; Schmidt, 1992). When, based on narrative reviews, many different moderators
effects were postulated, social scientists would conduct contingency studies, which
only resulted in a more complex variability of findings. Ultimately, researchers
would conclude that the variable under consideration actually had no ‘general-
izable’ effects, and the research community ultimately turns to more ‘tractable’
problems. Over time, history shows that the same social science research pattern
seems to repeat itself in many different areas of research (Schmidt, 1992). Taking
the method of meta-analysis more seriously prevents this pattern because, based
on meta-analytic findings, social science studies are, in fact, about as generalizable
as studies in the natural sciences (Hedges, 1987). But overcoming this pattern will
not be easy because, at first at least, the proposition of contingencies generally leads
to the funding of more primary studies because the previous ‘flawed’ literature has
only produced ‘ambiguous’ evidence and, therefore, additional new research should
be supported (according to the typical argument). In this context it is no surprise
that other academics emphasize the variability of findings reported by Orlitzky,
Schmidt, and Rynes (2003) much more than practitioners and journalists, who
focus on the means (e.g. Kelly, 2004).
We must confront the research politics not only of ‘inconclusive’ findings, but
also of positive relationships. Researchers that believe in a positive relationship
between CC and CFP are really caught between a rock and a hard place. On the
csp and financial performance 129
one hand, they will be attacked by conservatives who believe that the ‘business of
business is business’ (e.g. Friedman, 1970; Levitt, 1958). On the other hand, they
will have to defend their findings against attacks from the Left. Social democrats
and believers in big government may dislike the implications of positive CC–CFP
correlations. Based on non-negative CC–CFP correlations, researchers can in fact
argue that business will not always be reluctant to embrace CSR. Market forces may
signal where the business opportunities for discretionary spending on CSR lie and
in turn these market signals may turn out to be more reliable indicators of genuine
social responsibility than government regulations emerging from interest-group
politics. Those on the political Left know the case for governmental regulation
would be much stronger if CC–CFP relationships were negative.5Occupying a
middle ground between these views on the political right and left, the advocates
of a generally positive CC–CFP association will be in a much better position to
justify their views if they develop more defensible measures and study designs in
illuminating these empirical relationships.
In the corporate social-financial performance research domain there is no short-
age of rich theory (e.g. McWilliams and Siegel, 2001;Orlitzkyet al., 2003;Schuler
and Cording, 2006). Before turning to the development of even more complex
theory, though, we must be clear about two questions. First, are the findings really
as equivocal as they appear? I hope this chapter has contributed to answering this
question. The second question, though, is of a different, more philosophical nature:
What is CSR? One important element of better conceptualization will have to heed
Friedman’s (1970) caveat about the socialist overtones of the doctrine of ‘social re-
sponsibility’. But is CSR necessarily a collectivist doctrine? When we recognize (and
can convincingly demonstrate) that ‘socially responsible’ behavior can also serve
a firm’s enlightened self-interest, we may be able to abandon the common-sense
notion of ‘social responsibility’ as synonymous with ‘altruism’ or ‘self-sacrifice’
(see also Dalai Lama and Cutler, 1998;Rand,1964). The second question requires
an in-depth normative analysis by business ethicists. In fact, a comprehensive
conceptual clarification of corporate responsibility is a necessary precondition for
more valid and reliable measurement of CSP, CSR, and/or CC—and for better
theory.
References
Anderson,J.C.,andFrankle,A.W.1980. ‘Voluntary Social Reporting: An Iso-beta Prot-
folio Analysis’. Accounting Review,55:467–79.
5A negative relationship implies an economic disincentive emerging from CC. In turn, those
businesses that show the greatest profits and steepest share price increases would be least likely to
engage in CC. This means that, according to this view, market forces work at cross-purposes with
non-market issues and interests—and only government intervention, it is argued, can correct this
market–non-market discrepancy.
130 perspectives on csr
Auger, P., Burke, P., Devinney,T.M.,andLouviere,J.J.2003.‘WhatwillConsumersPay
for Social Product Features?’ Journal of Business Ethics,42(3): 281–304.
Backhaus, K. B., Stone,B.A.,andHeiner,K.2002. ‘Exploring the Relationship between
Corporate Social Performance and Employer Attractiveness’. Business & Society,41:292–
318.
Carroll,A.B.1979. ‘A Three-dimensional Conceptual Model of Corporate Social Perfor-
mance’. Academy of Management Review,4:497–506.
Chalmers,T.C.,andLau,J.1994. ‘What is Meta-analysis’? Emergency Care Research Insti-
tute,12:1–5.
Cohen,J.1994.‘TheEarthisround(p<.05)’. American Psychologist,49:997–1003.
Cooper,H.M.,andHedges,L.V.1994.The Handbook of Research Synthesis.NewYork:
Russell Sage Foundation.
Cyert,R.M.,andMarch,J.G.1963.A Behavioral Theory of the Firm. Englewood Cliffs, NJ:
Prentice Hall.
Dalai Lama,H.H.,andCutler,H.C.1998.The Art of Happiness: A Handbook for the
Living.NewYork:RiverheadBooks.
Davenport,K.2000. ‘Corporate Citizenship: A Stakeholder Approach for Defining Corpo-
rate Social Performance and Identifying Measures for Assessing it (Dissertation Abstract)’.
Business & Society,39(2): 210–19.
Davis,K.1973. ‘The Case for and against Business Assumptions of Social Responsibilities’.
Academy of Management Journal,16:312–17.
Economist. 2006.‘Billanthropy’,The Economist,380:11.
Elkington,J.1998.Cannibals with Forks: The Triple Bottom Line of the 21st Century.Oxford:
Capstone.
Elliott,K.A.,andFreeman,R.B.2001. ‘White Hats or Don Quixotes? Human Rights
Vigilantes in the Global Economy’. Cambridge, Mass: National Bureau of Economic
Research.
Entine,J.2003. ‘The Myth of Social Investing: A Critique of its Practices and Consequences
for Corporate Social Performance Research’. Organization & Environment,16:352–68.
Folkes,V.S.,andKamins,M.A.1999.‘Effects of Information about Firms’ Ethical
and Unethical Actions on Consumers’ Attitudes’. Journal of Consumer Psychology,8(3):
243–59.
Fombrun,C.,andShanley,M.1990. ‘What’s in a Name? Reputation Building and Corpo-
rate Strategy’. Academy of Management Journal,33:233–58.
Frank,R.H.1996. ‘Can Socially Responsible Firms Survive in a Competitive Environment?’
in D. M. Messick and A. E. Tenbrunsel (eds.), Codes of Conduct: Behavioral Research into
Business Ethics. New York: Russell Sage Foundation, 86–103.
Friedman,M.1970. ‘The Social Responsibility of Business is to Increase its Profits’. New
York Times Magazine,33 ff.
Frooman,J.1997. ‘Socially Irresponsible and Illegal Behavior and Shareholder Wealth: A
Meta-analysis of Event Studies’. Business & Society,36(3): 221–49.
Geroski,P.A.1994.Market Structure, Corporate Performance and Innovative Activity.
Oxford: Oxford University Press.
Godfrey,P.C.2005. ‘The Relationship between Corporate Philanthropy and Share-
holder Wealth: A Risk Management Perspective’. Academy of Management Review,30(4):
777–98.
csp and financial performance 131
Greening,D.W.,andTurban,D.B.2000. ‘Corporate Social Performance as a Competitive
Advantage in Attracting a Quality Workforce’. Business & Society,39:254–80.
Griffin,J.J.,andMahon,J.F.1997. ‘The Corporate Social Performance and Corporate
Financial Performance Debate: Twenty-five Years of Incomparable Research’. Business &
Society,36:5–31.
Gunther,M.2004.‘TheMosquitointheTent’.Fortune,149(9): 68–73.
Hedges,L.V.1987. ‘How Hard is Hard Science, How Soft is Soft Science? The Empirical
Cumulativeness of Research’. American Psychologist,42(2): 443–55.
and Olkin,I.1980. ‘Vote Counting Methods in Research Synthesis’. Psychological
Bulletin,88:359–69.
1985.Statistical Methods for Meta-analysis. Orlando, Fla.: Academic Press.
Hemenway,D.1975.Industrywide Voluntary Product Standards. Cambridge, Mass.: Ballinger.
Heyes,A.G.2005. ‘A Signaling Motive for Self-regulation in the Shadow of Coercion’.
Journal of Economics and Business,57(3): 238–46.
Hodson,R.2001.Dignity at Work. Cambridge: Cambridge University Press.
Holliday, C. O., Schmidheiny,S.,andWat t s,P.2002.Walking the Talk: The Business Case
for Sustainable Development. San Francisco: Greenleaf.
Hunt,M.1997.How Science takes Stock: The Story of Meta-analysis. New York: Russell Sage
Foundation.
Hunter,J.E.,andSchmidt,F.L.2004.Methods of Meta-analysis: Correcting Error and Bias
in Research Findings,2nd edn. Thousand Oaks, Calif.: Sage.
Huselid,M.A.1995. ‘The Impact of Human Resource Management Practices on Turnover,
Productivity, and Corporate Financial Performance’. Academy of Management Journal,38:
635–72.
Jones,T.M.1995. ‘Instrumental Stakeholder Theory: A Synthesis of Ethics and Economics’.
Academy of Management Review,20(2): 404–37.
Kelly,M.2004.‘HolyGrailFound’.Business Ethics Magazine online,3.
Kilduff,M.1993. ‘The Reproduction of Inertia in Multinational Corporations’, in S.
Ghoshal and D. E. Westney (eds.), Organization Theory and the Multinational Corpora-
tion.NewYork:StMartin’s,259–74.
King,A.1995. ‘Avoiding Ecological Surprise: Lessons from Long-standing Communities.’
Academy of Management Review,20:961–85.
Leamer,E.1983. ‘Let’s Take the Con out of Econometrics’. American Economic Review,73:
31–43.
Levitt,T.1958. ‘The Dangers of Social Responsibility’. Harvard Business Review,36(5): 38–
44.
Logsdon,J.M.,andWood,D.J.2002. ‘Reputation as an Emerging Construct in the
Business and Society field: An Introduction’. Business & Society,41(4): 365–70.
Matten ,D.,andCrane,A.2005. ‘Corporate Citizenship: Toward an Extended Theoretical
Conceptualization’. Academy of Management Review,30(1): 166–79.
McCloskey,D.N.1998.TheRhetoricofEconomics,2nd edn. Madison: University of
Wisconsin Press.
McGuire, J. B., Sundgren,A.,andSchneeweis,T.1988. ‘Corporate Social Responsibility
and Firm Financial Performance’. Academy of Management Journal,31:854–72.
McVeigh, R., Bjarnason,T.,andWelch,M.R.2003. ‘Hate Crime Reporting as a Success-
fulSocialMovementOutcome’.American Sociological Review,68(3): 843–67.
132 perspectives on csr
McWilliams,A.,andSiegel,D.2000. ‘Corporate Social Responsibility and Financial
Performance: Correlation or Misspecification?’ Strategic Management Journal,21:603–9.
McWilliams,A.,andSiegel,D.2001. ‘Corporate Social Responsibility: A Theory of the
Firm Perspective’. Academy of Management Review,26:117–27.
Van Fleet,D.D.,andCory,K.D.2002. ‘Raising Rivals’ Costs through Political
Strategy: An Extension of Resource-Based Theory’. Journal of Management Studies,39(5):
707–24.
Meyer,M.W.,andGupta,V.1994. ‘The Performance Paradox’. Research in Organizational
Behavior,16:309–69.
Miller,C.1997.‘MarketersWeightheEffects of Sweatshop Crackdown’. Marketing News,
31(10): 1,19.
Nunnally,J.C.,andBernstein,I.H.1994.Psychometric Theory,3rd edn. New York:
McGraw-Hill.
Orlitzky,M.1999.‘A Meta-analysis of the Relationship between Corporate Social Perfor-
mance and Firm Financial Performance’. Unpublished doctoral dissertation thesis, The
University of Iowa, Iowa City, IA.
2001. ‘Does Organizational Size Confound the Relationship between Corporate Social
Performance and Firm Financial Performance?’ Journal of Business Ethics,33(2): 167–80.
2002.People and Profits? The Search for a Link between a Company’s Social and Financial
Performance by J. D. Margolis and J. P. Walsh [book review]. The International Journal for
Organizational Analysis,10(2): 191–4.
2006. ‘Links between Corporate Social Responsibility and Corporate Financial Perfor-
mance: Theoretical and Empirical Determinants’, in J. Allouche (ed.), Corporate Social
Responsibility, Vol. 2: Performances and Stakeholders. London: Palgrave Macmillan, 41–64.
2007a. ‘Doing Well by Doing Good: Objective Findings, Subjective Assumptions, or
Selective Amplification.’ Best Paper Proceedings, Academy of Management Conference,
Philadelphia.
2007b. ‘The Meaning and Measurement of “Doing Good” at the Company Level of
Analysis’. Paper presented at the Academy of Management Conference, Philadelphia.
2007c. ‘Recruitment Strategy’, in P. Boxall, J. Purcell, and P. M. Wright (eds.), The
Oxford Handbook of Human Resources Management. Oxford: Oxford University Press,
273–99.
and Benjamin,J.D.2001. ‘Corporate Social Performance and Firm Risk: A Meta-
analytic Review’. Business & Society,40(4): 369–96.
Schmidt,F.L.,andRynes,S.L.2003. ‘Corporate Social and Financial Performance: A
Meta-analysis’. Organization Studies,24(3): 403–41.
and Swanson ,D.L.2002. ‘Value Attunement: Toward a Theory of Socially Responsible
Executive Decision Making’. Australian Journal of Management,27, Special Issue: 119–28.
2006. ‘Socially Responsible Human Resource Management: Charting New Ter-
ritory’, in J. R. Deckop (ed.), Human Resource Management Ethics. Greenwich, Conn.:
Information Age Publishing, 3–25.
and Quartermaine,L.-K.2006. ‘Normative Myopia, Executives’ Personality,
and Preference for Pay Dispersion: Toward Implications for Corporate Social Perfor-
mance’. Business & Society,45(2): 149–77.
Pfeffer,J.1994.Competitive Advantage through People: Unleashing the Power of the Work-
force. Boston: Harvard Business School Press.
csp and financial performance 133
1998.The Human Equation: Building Profits by Putting People First. Boston: Harvard
Business School Press.
Powell,W.W.1991. ‘Expanding the Scope of Institutional Analysis’, in Powell and DiMaggio
(1991).
and DiMaggio,P.J.1991.The New Institutionalism in Organizational Analysis.
Chicago: University of Chicago Press.
Price,J.L.,andMueller,C.W.1986.Handbook of Organizational Measurement,2nd edn.
Marshfield, Mass.: Pitman.
Rand,A.1964.The Virtue of Selfishness: A New Concept of Egoism. New York: New American
Library.
Read,E.2004. ‘Green Means go for Picky Buyers’. The New Zealand Herald:C4.
Roberts,J.A.1996. ‘Will the Real Socially Responsible Consumer Please Step Forward?’
Business Horizons,39(1): 79–83.
Rosenthal,R.1984.Meta-analysis Procedures for Social Research.BeverlyHills,Calif.:Sage.
and DiMatteo ,M.R.2001. ‘Meta-analysis: Recent Developments in Quantitative
Methods for Literature Reviews’. Annual Review of Psychology,52:59–82.
Rowley,T.J.,andBerman,S.2000. ‘A Brand New Brand of Corporate Social Performance’.
Business & Society,39:397–418.
Russo,M.V.,andFouts,P.A.1997. ‘A Resource-Based Perspective on Corporate
Environmental Performance and Profitability’. Academy of Management Journal,40:
534–59.
Schmidt,F.L.1992. ‘What do Data really Mean? Research Findings, Meta-analysis, and
Cumulative Knowledge in Psychology’. American Psychologist,47:1173–81.
Schuler,D.A.,andCording,M.2006. ‘A Corporate Social Performance-Corporate Fi-
nancial Performance Behavioral Model for Consumers’. Academy of Management Review,
31(3): 540–58.
Schwab,D.P.1980. ‘Construct Validity in Organizational Behavior’, in B. M. Staw and L. L.
Cummings (eds.), Research in Organizational Behavior, vol. 2. Greenwich, CT: JAI Press,
3–43.
1999.Research Methods for Organizational Studies. Mahwah, NJ: Lawrence Erlbaum.
Scott,W.R.1995.Institutions and organizations. Thousand Oaks, Calif.: Sage.
Selznick,P.1949.TVA and the Grass Roots. Berkeley, Calif.: University of California Press.
Sharfman,M.1996. ‘A Concurrent Validity Study of the KLD Social Performance Ratings
Data’. Journal of Business Ethics,15:287–96.
Simon,J.G.,Powers,C.W.,andGunnemann,J.P.1972.The Ethical Investor: Universities
and Corporate Responsibility. New Haven, Conn.: Yale University Press.
Swanson ,D.L.1999. ‘Toward an Integrative Theory of Business and Society: A Re-
search Strategy for Corporate Social Performance’. Academy of Management Review,24:
506–21.
Turban,D.B.,andCable,D.M.2003. ‘Firm Reputation and Applicant Pool Characteris-
tics’. Journal of Organizational Behavior,24(6): 733–51.
and Greening,D.W.1996. ‘Corporate Social Performance and Organizational Attrac-
tiveness to Prospective Employees’. Academy of Management Journal,40(3): 658–72.
1997. ‘Corporate Social performance and Organizational Attractiveness to
Prospective Employees’. Academy of Management Journal,40:658–72.
Ullmann,A.1985. ‘Data in Search of a Theory: A Critical Examination of the Relationship
among Social Performance, Social Disclosure, and Economic Performance’. Academy of
134 perspectives on csr
Management Review,10:540–77.
Venkatraman,N.,andRamanujam,V.1986. ‘Measurement of Business Performance in
Strategy Research: A Comparison of Approaches’. Academy of Management Review,11:
801–14.
Waddock,S.A.2002.Leading Corporate Citizens: Vision, Values, Value Added.Boston:
McGraw-Hill.
Bodwell,C.,andGraves,S.B.2002. ‘Responsibility: The New Business Imperative’.
Academy of Management Executive,16(2): 132–48.
and Graves,S.B.1997a. ‘The Corporate Social Performance-Financial Performance
Link’. Strategic Management Journal,18:303–19.
1997b. ‘Quality of Management and Quality of Stakeholder Relations: Are they
Synonymous?’ Business & Society,36(3): 250–79.
Wood,D.J.1991. ‘Corporate Social Performance Revisited’. Academy of Management Re-
view,16:691–718.
and Jones,R.E.1995. ‘Stakeholder Mismatching: A Theoretical Problem in Empir-
ical Research on Corporate Social Performance’. International Journal of Organizational
Analysis,3:229–67.
