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Does it really pay to be good, everywhere? A first step to understand the corporate social and financial performance link in Latin American controversial industries: •••
... This information failure is usually known as information asymmetry [22], and it is part of every day's business environment in Latin American countries [23]. Furthermore, the latter singularity within the mentioned context is aggravated by the circumstance that there is not apparent remuneration for companies due to their CSR initiatives [24]. In consequence, the fact of possessing and controlling more or better material knowledge than the public and using it for its benefit (even by transgressing ethical principles) is what ultimately makes a company become an OVC greenwasher. ...
... Colombia is a typical example of a hierarchical market economy, where state-owned companies, multinational firms, and business groups dominate the economic dynamics [27]. In this spirit, the country (like any other Latin American country) reports high levels of ownership concentration, which in turn, leads to the establishment of environments with significant information asymmetry between companies and the society at large [24]. Cases of oppressive labor conditions, corporate misconduct, and abuse of power are part of the economic history of this nation [28] - [30]. ...
... Although this duty could represent enough of a reason, failure to do so also implies an enormous risk and unnecessary costs to the environment and society. Moreover, although it could provide apparent financial results for these companies [24], it can also be negatively associated with other organizational outputs like customer retention, reputation, credibility, and even employee engagement in the long run [7]. ...
This work addresses the question of how companies belonging tothe natural resource industryuse togreenwash their processes. For this purpose, a multi-case approach with five different cases in the Colombian context is adopted. Through the data analysis, an exemplification of each value chain greenwashing transgression at the company level is provided. Besides highlighting a real-life problematic with several implications in a sensitive context, the contributions of this work are twofold. First, this work contributes to reinforcing the notion of greenwashing and related transgressions by clarifying a concrete way of identifying certain deceptive practices related to the organizational value chain under conditions. Second, this work promotes the transferability of the concepts used for elucidating the reality of the value chain greenwashing phenomenon at different levels and in various contexts
... Frequent challenges to legitimacy mean that companies in such industries, like tobacco, gambling or armaments, typically communicate their social and environmental activities more, and more often, than companies in other industries (Dhandhania and O'Higgins, 2022;Kilian and Hennigs, 2014), making controversial industries, ironically, an ideal site to examine best practice in SER. There is a growing literature on controversial industries, which has to date focused on understanding how these companies report their social and environmental activities, and how this reporting supports legitimacy (Aqueveque et al., 2018;Cai et al., 2012;De Roeck and Delobbe, 2012;Dhandhania and O'Higgins, 2022;Du and Vieira, 2012;Eabrasu, 2012;Jo and Na, 2012;Jo et al., 2016;Leung and Snell, 2017;Leung, 2019;Loh et al., 2015;Rodrigo et al., 2016;Song and Wen, 2019). ...
... Most articles on controversial industries focus on how controversial companies communicate sustainability issues (see for example, Aqueveque et al., 2018;Cai et al., 2012;De Roeck and Delobbe, 2012;Dhandhania and O'Higgins, 2022;Du and Vieira, 2012;Eabrasu, 2012;Frynas, 2005;Jo and Na, 2012;Jo et al., 2016;Kilian and Hennigs, 2014;Lindgreen et al., 2012;Lindorff et al., 2012;Rodrigo et al., 2016;Song and Wen, 2019). These studies explore sustainability reporting by controversial companies and the methods used by companies to depict themselves as a force for good in society (Leung and Snell, 2017;Palazzo and Richter, 2005). ...
Purpose
This article explores how companies in multiple controversial industries report their controversial issues. For the first time, the authors use a new conceptualization of controversial industries, focused on harm and solutions, to investigate the reports of 28 companies in seven controversial industries: Agricultural Chemicals, Alcohol, Armaments, Coal, Gambling, Oil and Tobacco.
Design/methodology/approach
The authors thematically analyzed company reports to determine if companies in controversial industries discuss their controversial issues in their reporting, if and how they communicate the harm caused by their products or services, and what solutions they provide.
Findings
From this study data the authors introduce a new legitimacy reporting method in the controversial industries literature: the solutions companies offer for the harm caused by their products and services. The authors find three solution reporting methods: no solution, misleading solution and less-harmful solution. The authors also develop a new typology of reporting strategies used by companies in controversial industries based on how they report their key controversial issue and the harm caused by their products or services, and the solutions they offer. The authors identify seven reporting strategies: Ignore, Deny, Decoy, Dazzle, Distort, Deflect and Adapt.
Research limitations/implications
Further research can test the typology and identify strategies used by companies in different institutional or regulatory settings, across different controversial industries or in larger populations.
Practical implications
Investors, consumers, managers, activists and other stakeholders of controversial companies can use this typology to identify the strategies that companies use to report controversial issues. They can assess if reports admit to the controversial issue and the harm caused by a company's products and services and if they provide solutions to that harm.
Originality/value
This paper develops a new typology of reporting strategies by companies in controversial industries and adds to the theory and discourse on social and environmental reporting (SER) as well as the literature on controversial industries.
... Embora tenham conhecimento dos impactos ambientais causados pelas empresas, os gestores costumam tomar decisões com a finalidade principal de promover a maximização de valor para os acionistas. Contribui para isso o fato de que as evidências encontradas na literatura que relaciona performance financeira e investimentos em boas práticas ambientais, sociais e de governança serem, por vezes, contraditórias (Busch e Friede, 2018;Friede et al., 2015;Margolis et al., 2009;McWilliams e Siegel, 2001;Rodrigo et al., 2016;Surroca et al., 2010). Mas, se as ações empresariais benéficas à sociedade como um todo promoverem melhor desempenho financeiro da firma, os gestores irão querer atuar de modo a evitar ou minimizar os impactos sociais e ambientais causados diretamente por sua atuação empresarial. ...
... Os resultados também mostram que os CEOs também transferem contribuições para fundações de maneira oportunística, e essas grandes transferências reduzem valor para os acionistas. Rodrigo et al. (2016) também encontram uma relação negativa entre investimentos socioambientais e desempenho financeiro para uma amostra de empresas de países da América Latina. ...
Esta pesquisa analisa se empresas com melhores práticas socioambientais (ES) apresentam melhor desempenho que as demais empresas em momentos de crise. Utilizamos o choque exógeno causado pela pandemia da COVID-19 como estratégia de identificação. A amostra consiste de empresas brasileiras de capital aberto negociadas na B3, a bolsa brasileira. Os resultados mostram que firmas com maiores notas ES tiveram, durante o primeiro semestre de 2020, retornos anormais significativamente mais altos, menores volatilidades e melhores desempenhos operacionais medidos pelo ROA, margem operacional e giro de ativo. Nossos resultados contribuem para a literatura ao mostrarem que o investimento em boas práticas socioambientais desempenham um papel positivo nas empresas brasileiras, especialmente em períodos de crise.
... Therefore, institutional weaknesses in developing countries are rooted in governments' inability to confront social needs (S a de Abreu et al., 2015). CSR produces varied institutional consequences (Jamali & Karam, 2016) that have an impact on countries' welfare because it addresses social issues and benefits thousands of people (Rodrigo, Duran, & Arenas, 2016). Scherer and Palazzo (2011) note that responsible businesses provide public goods, playing a state-role (Frynas & Yamahaki, 2016) in what they describe as "political CSR," which, according to Aguilera et al. (2007), can be encouraged by governments (i.e., promoting social inclusion). ...
... Latin America presents specific institutional weaknesses such as a lack of enforcement (Rodrigo et al., 2016), inequalities, and poor education (Lindgreen, C ordoba, Maon, & Mendoza, 2010). In Mexico, the government does not promote social protection (Weyzig, 2007) (Husted & Allen, 2009). ...
Este caso de estudio se basa en la definición, conceptualización, diseño y ejecución de la estrategia de Responsabilidad Social Corporativa (RSC) de BBVA. El caso aborda el concepto de RSC desde diferentes perspectivas, a nivel teórico y práctico. Para ello, se ponen de manifiesto las motivaciones que subyacen a las estrategias de RSC y sus posibles resultados, en el contexto del sector financiero. Además, el caso permite relacionar el efecto de las acciones de RSC con el progreso en la consecución de los Objetivos de Desarrollo Sostenible (ODS) a nivel global.
... Fallah and Mojarrad (2019) researched a sample of 104 firms in ESI and concluded that these firms required to focus more on CSR activities because of higher exposure to environmental or social issues. Rodrigo et al. (2016) analyzed the CSP-CFP relationship focused on five ESI sectors in six Latin American countries and found a negative bidirectional association relationship for the sample data. Hence, there is an additional need to study ESIs independently, as their approach to CSP may differ from non-ESI firms, and a different behavior may be expected for CSP-CFP relationships. ...
... The significant contribution of the ESG variable into models of ROA showed a moderate negative slope of the relationship. Rodrigo et al. (2016), established a negative linkage between CSP and future CFP where the association was negative bidirectionally, for models using only social models. A neutral link was suggested when using composite and purely environmental model of CSP. ...
Abstract This paper aims to explore the relationship between corporate sustainability performance (CSP) and corporate firm performance (CFP) for a sample of the top 500 Indian firms covering the period from 2008 to 2018. CSP variables have been considered at both aggregate and disaggregate levels of environmental, social and governance performance. CFP has been evaluated in both accounting and market-based measures. Rigorous statistical methods have been used to evaluate the bidirectional causality and intensity of the CSP-CFP relationship using the Granger causality test and multiple regression for panel data. A sectoral level trend analysis is presented dividing the firms in various industries and classifying them in ESI vs non-ESI sectors. The findings indicate the absence of causality among CSP and CFP variables in either direction and suggest that the CSP-CFP linkage is mostly insignificant for Indian firms at the aggregate level. At an individual level, some negative association is found between CSP and CFP. This relationship has an adverse impact on CSP-CFP linkage in both cases, which means that Indian firms don’t get the financial performance benefits of investments done for sustainability. Our findings with mostly insignificant results for this relation also means that firms with higher or lower CSP on ESG dimensions will perform likewise in terms of CFP. The findings have practical implications for corporates, academicians, and policymakers alike given sustainability as a high focus area for all.
... While there is abundant empirical evidence regarding the financial effects of a firm's CSR initiatives, the existing knowledge about their consequences for the intended beneficiaries is scant (Banerjee, 2014;Blowfield, 2007;Idemudia, 2014;Idemudia & Osayande, 2016;Rodrigo, Duran, & Arenas, 2016). As pointed out by Blowfield (2007), Idemudia (2014) and Rodrigo et al. (2016), this is particularly true in the case of pro-poor CSR initiatives in developing countries. ...
... While there is abundant empirical evidence regarding the financial effects of a firm's CSR initiatives, the existing knowledge about their consequences for the intended beneficiaries is scant (Banerjee, 2014;Blowfield, 2007;Idemudia, 2014;Idemudia & Osayande, 2016;Rodrigo, Duran, & Arenas, 2016). As pointed out by Blowfield (2007), Idemudia (2014) and Rodrigo et al. (2016), this is particularly true in the case of pro-poor CSR initiatives in developing countries. ...
There is a growing demand by United Nations development agencies and governments for a higher engagement of firms in sustainable development goals, including that of eradicating poverty. Nevertheless, the social issue of poverty has not traditionally been covered by firms’ corporate social responsibility (CSR) initiatives. In addition, there is a need to integrate theories in order to better explain pro‐poor CSR in developing countries. Relying on a review of both conceptual and empirical research articles on CSR for poverty alleviation, this study contributes to the CSR research agenda by proposing an integrated research framework for assessing and explaining a firm's contribution to poverty alleviation. Besides discussing the existing evidence, the following issues are critically analysed with the general purpose of obtaining the framework and suggesting avenues for future research: the assessment of a firm's contribution to poverty alleviation, types of pro‐poor CSR initiatives that could be adopted by firms, and the factors influencing a firm's contribution. The framework, which intends to be useful for future research, can also assist the United Nations to increase the firms’ contribution to its alleviating poverty sustainable development goal.
... Nevertheless, further and more refined knowledge is still needed regarding the connection that may exist between these two concepts (Glavas & Godwin, 2013). In particular, this need is tangible within contexts where aspects such as the environmental and social impact generated by the dynamics of organizations are critical to the construction of the future development of their societies (Jamali & Karam, 2016;Rodrigo, Duran & Arenas, 2016). ...
... Additionally, according to the knowledge and understanding of the authors, this paper is the first empirical partial validation of a recently proposed theoretical model. The fact that the research proposed by Donia & Tretault-Sirsly (2016) was carried out in the context of a Latin American country (with non-conventional results partly different to the original theoretical proposal), opens the door to identifying nuances in the formulated theory that might make one think of context as an explanatory element of the results (Jamali & Karam, 2016;Rodrigo et al., 2016). However, it is essential to acknowledge that the latter requires further research to arrive at more definite conclusions. ...
Greenwashing implies the predominance of the fallacious application of the corporate social responsibility (Symbolic CSR) over its authentic practice (Substantive CSR). It represents, by definition, a conceptual conflict, worth it to observe in light of its impact on the organizational identification of employees. This work examines this impact by carrying out a cross-sectional investigation and analyzing it through structural equation modeling. The study is applied to a sample of two hundred and twenty professional employees in Colombia. Results obtained are mainly in line with the theory; they show a positive effect of Substantive CSR on employees’ organizational identification, as well as a futile character of Symbolic CSR on this same attitude. However, the study also finds a direct correlation between Symbolic CSR and Substantive CSR, which suggests a possible tacit acceptance of greenwashing as a valid organizational practice. This work contributes to enhance the theory, given the fact that a recently proposed conceptual model was academically tested for the first time ever. Likewise, at a practical level, results suggested that the decision-making process when related with CSR is under continuous scrutiny by employees, in function of its sense of authenticity and therefore with consequences that may affect their behavior.
... Furthermore, the sample is focused on sensitive or controversial industries, as companies in these industries were found to have a better disclosure behaviour with respect to nonfinancial information utilities; chemicals; materials/resources; transport and industrials (Garcia et al., 2017;Kilian & Hennigs, 2014;Marrone & Oliva, 2020;Radhouane et al., 2020;Reverte, 2009;Rodrigo et al., 2016;Songini et al., 2020;Vitolla, Raimo, Rubino, & Garzoni, 2019). By comparison, financial services seek legitimacy, credibility, and a favourable image for the overall market and investors, as it has suffered from the last economic crisis (Alonso-Almeida et al., 2014). ...
Over the past two decades, Integrated Reporting (IR) has evolved into a consolidated global corporate reporting practice, used by financial analyst in evaluating companies. Considering the existing strong regulations on nonfinancial reporting for European companies, current study analyses the impact of voluntary IR adoption and implementation on the European capital markets, exploring also the presentation of which dimensions from the IR Framework have the highest impact on analyst forecasts. The study uses a balanced panel sample formed of 420 integrated reports for the 2013–2022 period issued by publicly listed environmental and social sensitive European companies from the IR Examples Database. IR adoption and implementation is measured through a previously validated Alignment Index Score. The results highlight that IR partially reduces the analyst forecast errors, the disclosed information on company governance, strategy and resource allocation being the most relevant elements for the analysts. Thus, IR remains partially relevant for European capital markets. Current research enriches existing knowledge by analysing the market‐level effects of IR adoption and implementation in a voluntary setting, focussing on sensitive industries. To the author's knowledge, this study examines the effects of IR over the longest duration, spanning from 2013 to 2022.
... The Latin America and Caribbean region, which showed disproportioned COVID-19 deaths reported when compared to sample size (Table 1), is the worst performer on all IMD World Competitiveness Rankings for all periods except for the business performance ranking. This region has a long history of public sector corruption, social controversies and environmental damage because of the growth of extractive industries such as mining and forestry (Neshkova & Kalesnikaite 2019;Rodrigo, Duran & Arenas 2016). ...
Orientation: Many shareholders rely on dividends for income. During crisis periods, managers, however, tend to retain rather than distribute earnings. Most prior research during the coronavirus disease 2019 (COVID-19) pandemic focussed on company-specific factors and industry association that favour earnings retention. As far as could be ascertained, no studies to date have investigated the role that macro-level factors could have played.Research purpose: The authors hence examined the extent to which government efficiency, business efficiency, infrastructure, economic performance, uncertainty avoidance, long-term orientation and indulgence influenced earnings retention at listed companies in 62 countries from 2019 to 2021.Motivation for the study: Additional insights were uncovered regarding the earnings retention decision during an economic crisis.Research approach/design and method: Earnings retention data were downloaded from Bloomberg database, and country-level data from the International Institute for Management Development, the World Bank, Hofstede Insights and the World Federation of Exchanges. Panel regressions were used to examine hypothesised relationships.Main findings: Contrary to expectation, earnings retention was negatively associated with the cultural dimension that measures uncertainty avoidance. The notion that less earnings would be retained in countries with high indulgence scores was, however, supported. Significant differences in earnings retention were observed across geographic regions and income groups. This descriptive study provides support for the dividend signalling theory in some countries.Practical/managerial implications: Shareholders who rely on dividends should be mindful of signalling behaviour during economic crises.Contribution/value-add: The findings enrich the extant literature on the earnings retention decision during an economic crisis by highlighting the importance of cultural dimensions, notably uncertainty avoidance and indulgence. Recommendations are offered to managers, shareholders and policymakers.
... The literature on this topic shows contrasting results. If it is true that the majority of studies highlight a positive correlation between sustainability (or "ESG") performance and financial performance/market value (see for example Griffin and Mahon 1997;Orlitzky et al. 2003;Margolis et al. 2009;Naeem et al. 2021;Zhou et al. 2022), other studies do not show any statistical significance (Surroca et al. 2010;Billio et al. 2021), while other researchers have found a negative correlation (Branco and Rodrigues 2008;Rodrigo et al. 2016). Starting from these considerations, the objective of this study is to analyse the reaction of the financial markets to a change of the score (i.e., an upgrade/downgrade) periodically communicated by two of the most relevant ESG rating agencies (MSCI and Refinitiv). ...
In recent years, the field of “ESG finance” has seen rapid growth, resulting in the emergence and expansion of ESG ratings and rating agencies. This study investigates how financial investors react to updates in ESG ratings provided by two prominent ESG rating agencies, namely MSCI and Refinitiv. The main objective is to determine whether any positive or negative changes in a company’s sustainability ratings directly impact its market value. The Event Study methodology was used for this investigation, which analyses the Cumulated Average Abnormal Returns (CAARs) of economic events to assess their influence on corporate valuations. We analysed over 840 rating updates (events) using a sample of 75 companies across various industries, all listed on major stock exchanges. Our findings indicate that shifts in sustainability ratings, as evaluated by the two rating agencies, do not significantly impact companies’ market capitalisation. Furthermore, these outcomes remain consistent over time, suggesting that financial markets are not assigning increasing significance to ESG ratings. We offer potential explanations for these findings, which are discussed in light of the existing literature on the subject.
... During the GFC & ESDC periods, it is worth noting that the energy and conventional stock markets of Mexico and Sweden are negatively correlated during the 64-128 days' period. At one end, Mexico holds a strong positive correlation during the GFC and ESDC crisis periods (16)(17)(18)(19)(20)(21)(22)(23)(24)(25)(26)(27)(28)(29)(30)(31)(32) days', whereas, during the COVID-19 period, we notice a correlation in both directions. That is, the correlation appears negative during the (8)(9)(10)(11)(12)(13)(14)(15)(16) days' and (64-128) days' periods while positive for the rest of the scales. ...
This paper aims to examine the potential for portfolio returns by adding together conventional and energy stocks with varying proportions. We examine the risk and return characteristics of a portfolio comprising energy and non-energy stocks from twenty countries. The period for daily data ranges from 2nd July 1999 to 2nd July 2021. We use multiscale Sharpe and VaR ratios to examine the risk and returns behaviour of a portfolio with varying composition between energy and non-energy stocks across different investment periods. Our results highlight optimal returns for the equally weighted portfolio during normal and crisis periods except COVID-19 during which more proportion of conventional stocks is preferred. Risk estimates advocate an equally weighted portfolio for all periods however risk varies with the holding period. These results carry useful investment implications during short- and long-run holdings of conventional and energy stocks in a portfolio.
... These results tend to contradict the mainstream conclusion of positive impact of ESG scores on a company's value. However, similar results were obtained by Garcia at al. (2020) which are consistent with the results of Aras et al. (2010) for Turkish companies, Kapoor and Sandhu (2010) for Indian companies and Rodrigo et al. (2016) for Latin American companies. We can speculate that the main reason for such results is that these studies focused on emerging markets, but there are also international studies that indicate similar regression results such as Landi and Sciarelli (2019) and Marsat and Williams (2011). ...
The literature are abound with studies on the impact of environmental, social, and governance (ESG) factors on a company‘s value, or more broadly, on its financial performance. However, most analyses concern developed markets, mainly because the largest rating agencies operate in these markets, as well as because these are markets where ESG awareness and regulations have developed much faster. In developing markets, the number of studies in this area is disproportionately smaller. Therefore, the purpose of this article is to examine the relationship between the environmental, social, and governance ratings (ESGR) of Polish listed companies included in the WIG-ESG index and their value. This study covered 36 companies listed in WIG-ESG in the period of 2019–2023. We used market data, financial data from examined companies and ESG data provided by Refinitive. The empirical results were negative but a non-statistically significant influence of ESGR and a company’s value. Further analysis indicated that none of the sub-ratings (environmental rating (ER), social rating (SR) and governance rating (GR)) had significant impact on value. The Polish market does not seem to recognize the potential of ESG factors in building the long-term value of companies and believes that the costs of ESG factors outweigh the benefits. Investors seem to disregard or underestimate ESG criteria when valuing companies, which may seem irrational when looking at the long-term effects of ESG factors.
This article contributes to the existing literature by being part of the research on ESG factors and company value. The article expands the field of analysing the relationship between ESGRs and corporate value by examining this relationship not only using the overall ESGR, but also its individual sub-ratings. We also attempt to answer the question of where the channels of transmission of ESGRs on the value of the company are located, and which areas affect ratings. To the best of our knowledge, this is the first study of this type for the Polish market.
... The study sought to address an enduring question facing EMNCs: what types of CSR investments should be made for the greatest financial return? Investing in CSR might be expected to lead to performance gains, yet the empirical evidence remains mixed with positive associations reported (e.g., Wang and Sarkis, 2017) alongside mixed or non-significant findings (e.g., Barnett and Salomon, 2012;Rodrigo et al., 2016). An explanation for this ambiguity is the tendency to aggregate CSR investments, rather than examine the performance effects of different types of CSR investments independently such as investments targeted at the internal or external environment of the firm, as well as the lack of consideration of moderating variables (Orlitzky et al., 2003). ...
... There has been a prolonged academic debate about whether corporate social responsibility (CSR) and corporate financial performance (CFP) have a positive link (Zhao & Murrell, 2016). The inquiry in this research tradition asks if firms with successful engagement in social and environmental issues can achieve financial success due to their CSR practices (Rodrigo et al., 2016). ...
Objetivo: Este trabalho investiga como a diferenciação em diferentes práticas de responsabilidade social corporativa (RSC) pode afetar o desempenho financeiro de empresas brasileiras.Método/abordagem: Utilizou-se uma amostra de 110 empresas brasileiras listadas na B3, cobrindo os anos de 2011 a 2019, e totalizando 774 observações. Para representar as práticas de RSC, utilizou-se informações do banco de dados CSRHub. Além disso, também foram utilizadas informações financeiras coletadas por meio do pacote GetDFPData, para mensurar o desempenho financeiro e demais variáveis de controle.Contribuições teóricas/práticas/sociais: Os resultados obtidos mostram que, considerando o contexto brasileiro, as empresas têm um maior incentivo a adotar práticas de RSC similares a de seus pares, isto é, adotar uma estratégia de conformidade quanto às práticas de RSC.Originalidade/relevância: O trabalho contribui para a literatura de RSC-Desempenho Financeiro de duas maneiras. Primeiramente, ao abordar a ideia de conformidade versus diferenciação. Em segundo lugar, a pesquisa utiliza dimensões específicas da RSC, em vez de tratar o conceito por meio de uma variável única.
... However, companies' efforts to alleviate poverty are seldom the subject of academic study (Banerjee, 2018;Chang et al., 2021). Yet, whereas empirical research on the financial repercussions of a firm's CSR efforts is considerable, there is limited literature on the ramifications for intended beneficiaries, especially in countries with pro-poor CSR initiatives (Banerjee, 2014;Rodrigo et al., 2016). As CSR and sustainable management practices have not adequately addressed poverty alleviation, research has revealed ambiguities in techniques for evaluating firms' social effects (Medina-Muñoz et al., 2016;Wood, 2010). ...
This study examines the impact of targeted poverty alleviation (TPA) activities on firm value and how this relationship is influenced by corporate governance factors using data from Chinese listed firms from 2016 to 2019. The results under fixed effect estimation with robust standard errors show that firm value is positively affected by both corporate governance and TPA activities, and the integration of governance structure and social responsibility performance can enhance firm value. Internal corporate governance has a significant impact on firm TPA activities and can boost firm value. The study also highlights the importance of the fraction of independent directors to management, the board size, and ownership concentration in moderating the relationship between TPA activities and firm value. The theoretical contribution of this paper lies in its identification of the synergistic effects of corporate governance and social responsibility performance on firm value in the context of poverty alleviation. These findings have implications for firms aiming for long-term growth through social contribution and policymakers seeking to devise effective policies to foster optimal involvement in poverty reduction.
... Studies on companies' contributions to poverty reduction are infrequent [15]. However, although empirical evidence on the financial implications of a firm's CSR activities is extensive, there is little literature on the ramifications for intended beneficiaries, particularly in nations with pro-poor CSR programs [19]. Furthermore, studies have found vagueness in the approaches for quantifying enterprises' social impact to poverty alleviation, since it has not been sufficiently addressed by CSR activities and sustainable management practices [20]. ...
This study examines the impact of firms' targeted poverty alleviation activities on corporate value and how corporate internal governance regulates this relationship. This study uses Fixed Effects and System GMM estimations to test hypotheses by analyzing data from Chinese non-financial listed firms from 2016 to 2021. The results demonstrate that corporate targeted poverty alleviation and internal corporate governance control affect company value and governance. Corporate value increases as a result of effective internal governance. Internal governance control enhances the positive relationship between the firm's targeted poverty reduction and value creation. This study's findings are robust to alternative measures of poverty alleviation initiatives. Furthermore, heterogeneity analysis reveals that non-SOE firms, small and low-leverage firms engaging in anti-poverty activities are in a better position to achieve value creation. This study adds to the literature on poverty reduction, sustainable corporate value creation, and corporate internal governance control. Study results may help policymakers and managers in evaluating their business strategies by focusing more on fulfilling social responsibilities to eradicate poverty from the region by improving governance policies to generate sustainable value for the firm.
... Consequently, scholars were asked to keep delving into this relationship by adopting a contingent approach, as fitting CSP practices within the specific industry context can help explain such differences in this relationship. On this ground, academic literature has begun to fill this gap, and recent studies have emphasized the importance of CSP in controversial industry sectors (Cai et al., 2012;Jo and Na, 2012;Reast et al., 2013;Rodrigo et al., 2016). The emerging literature focusing on this field has defined them as sectors with extremely salient social and environmental externalities: for example, tobacco, alcohol and gambling industries (Lindgreen et al., 2012). ...
Purpose
This study aims to explore the impact of controversial firms’ corporate sustainability assessments on their risk exposure according to the environmental, social and governance (ESG) paradigm.
Design/methodology/approach
This study conducts a cross-sectional study using the ordinary least squares approach to test how corporate social responsibility practices affect firms’ risk exposure, testing the three single impacts of ESG components and the impact of an overall ESG assessment. This study considers the largest Standard & Poor’s (S&P) 500 stock market index companies and focus on a double-risk measurement – systematic and idiosyncratic – developing an empirical study on 132 controversial companies listed on the S&P index.
Findings
Empirical findings indicate that the overall ESG assessment and the environmental and social sub-dimensions decrease idiosyncratic firm risk. At the same time, no significant results are found according to the systematic risk component.
Originality/value
This study fits into the domain of risk management research, investigating whether additional and non-financial disclosures regarding sustainability issues decrease information asymmetries, improving investors’ decision-making and stakeholders’ relations. Prior literature has shown limited evidence on the relationship between corporate social performance (CSP) and firm risk based on controversial companies. The main contribution is to consider the controversy as an independent factor from the industry sector, given that the implications of CSP actions and practices are mainly firm-specific.
... Knowledge of the unusual application of employees in industry, or what is called a controversial industry, seems to need to be further deepened. This is because the commitment to work in this kind of industry is not only to fulfill life needs and improve company performance in general (Rodrigo et al., 2016), but also dealing with negative perceptions of the effects of this controversial industry on social and environmental spheres (De Roeck and Delobbe, 2012). ...
... En el documento se evidenció que, en materia de RSE, los directivos intermedios de filiales tienen un mayor impacto de influencia sobre grupos de interés (stakeholders), en comparación con los gobiernos locales. En esta misma tendencia se encuentran otros estudios que arrojan datos empíricos a la literatura sobre RSE en América Latina, que incluyen elementos nuevos a los reportados en los documentos clásicos en temáticas como el compromiso social de empresas multinacionales y sus filiales en países en desarrollo o las estrategias de responsabilidad social de empresas controversiales y los mercados emergentes (Hilson, 2012;Rodrigo et al., 2016;Sierra-García et al., 2014), lo que proporciona a la discusión bases empíricas que permiten esclarecer la función que desempeña la RSE en empresas de países en vía de desarrollo, particularmente en aquellas mineras o de extracción, debido a la inexistencia de vínculos directos con su público o consumidores. ...
Este estudio tiene como finalidad realizar una revisión de la literatura asociada a la investigación de la responsabilidad social empresarial (RSE) y América Latina, a través de un análisis de mapeo científico apoyado en herramientas bibliométricas. La metodología aplicada se compone de una búsqueda en la base de datos Web of science, seguida de un análisis y clasificación de documentos mediante la analogía del árbol. Dicha clasificación se compone por tres grupos, que se organizan como raíz, tronco y hojas, establecidos específicamente como documentos clásicos, estructurales y recientes. Cada grupo aporta un análisis de impacto y relevancia frente al tema de RSE, cuyos resultados permiten conocer la estructura de esta área de conocimiento, hallando así un enfoque que permita brindar orientación conceptual a las empresas interesadas en optar por estrategias de RSE en el marco de la divulgación, el rendimiento financiero y el desarrollo sostenible.
... The relationship between corporate environmental performance (CEP) and CFP has been a central and controversial debate in the field of industrial ecology (de Souza Cunha et al., 2020;Rodrigo et al., 2016). This relationship "constitutes one of the most puzzling phenomena pertaining to research on organizations and the natural environment" (Endrikat et al., 2014, p. 735). ...
The number of companies with highly ambitious carbon emission targets is increasing rapidly. So‐called science‐based emission‐reduction targets (SBTs) are aligned with the aim of the Paris Climate Agreement to limit global warming to below 2°C and preferably to 1.5°C. These voluntary corporate emission targets are substantially more challenging than companies’ prevailing reduction objectives, because climate science guides the target setting. By 2021, more than 2200 companies had publicly engaged in SBTs, covering more than a third of the global market capitalization. The number of participating firms has essentially doubled every year since the first SBTs in 2015. Despite this increased empirical relevance, the impact of SBTs on firm outcomes remains unclear. Notably, their effect on corporate financial performance (CFP) is unknown. The present study addresses this research gap by empirically examining the relationship between corporate carbon emission performance (CCP) and CFP of firms with SBTs from 2015 to 2020. The cross‐country panel comprises 2014 observations of 465 firms. Our findings indicate a positive association between CCP and CFP for firms engaging in SBTs, implying a positive relation between decarbonization efforts and financial results. We thereby advance research on the important question of when it pays to be green. On a practical level, we provide transparency on the effects of SBTs for managers and climate‐change advocates.
... Contrary to researchers supporting a positive relationship, a limited number of authors in the literature argue that the relationship between CSR and FP is negative or neutral (Rodrigo et al., 2016;Buallay, 2019; Duque-Grisales and Aguilera-Caracuel, 2021). The negative relationship is likely due to CSR activities without proper implementation or institutional support; increasing the costs of CSR activities and decreasing stakeholders' support (Abdi et al., 2022). ...
The global pressure to reduce carbon emissions on high-carbon-emitting economies has intensified significantly in recent years. However, these efforts’ effect on the firm’s financial performance (FP) has been a major concern. This research investigates the relationship between environmental performance (EP) and FP of Chinese firms considering the effect of the COVID-19 outbreak. Data was collected from Refinitiv DataStream and span the period of 2017–2020. In addition to the fixed-effects regression, the novel dynamic panel bootstrap corrected fixed effects and panel corrected standard errors methods were utilized to test the hypotheses. Obtained results revealed two key findings. First, there is weak evidence that higher EP increases firms’ FP. Second, the relationship between EP and FP is positive in times of economic distress, meaning that firms must continue investing in environmentally ethical and sustainable projects during the crisis. Our empirical findings extend the existing literature by showing that even in times of crisis, such as COVID-19, an environmentally friendly business model positively affects the firm’s financial structure. We discuss the policy recommendations implied by our findings for investors, business owners, managers, and officials in the conclusion section.
... Sin embargo, el taman o de la empresa, representado por el nu méro de empleados (NE), adéma s de por los gastos en personal (GPER), no présénto ningu n efecto en el ROA. Con respecto a R 2 (0.61) del modelo, ésta en lí néa con los resultados obtenidos en otros trabajos como Barnett y Salomon (2012) y Rodrigo et al. (2016). ...
Debido a la importante contracción de la actividad económica y del empleo en todo el mundo provocada por la Covid-19, resulta especialmente pertinente seguir avanzando en el estudio del efecto que tiene la implantación de prácticas socialmente responsables sobre la rentabilidad. Así pues, en esta investigación empírica, realizada con una muestra de 6.186 empresas, se pretende profundizar en la relación existente entre el esfuerzo que realiza el tejido empresarial español dentro del sector manufacturero en políticas de responsabilidad social y los resultados que obtienen en sus indicadores financieros. Para ello nos centramos en las relaciones que mantiene la empresa con sus stakeholders externos, con los recursos humanos y las políticas relativas a la gestión de la calidad, y analizamos cómo contribuyen a mejorar la rentabilidad económica de la empresa (ROA), utilizando un panel de datos. Los resultados muestran que la implementación de políticas de colaboración para aumentar y mejorar las relaciones con proveedores, competidores e instituciones tiene un efecto positivo significativo en el aumento del ROA. Sin embargo, la colaboración con los clientes tuvo un impacto negativo en el ROA. Además, la aplicación de prácticas de recursos humanos tendentes a mejorar las relaciones con los empleados y la implementación de políticas de calidad también tienen un impacto positivo y relevante en el ROA.
... The most common institutional and corporate governance challenges in developing nations include a shortage of funds, lack of openness in financial markets, inadequate infrastructure, and corruption (Rodrigo, Duran, & Arenas, 2016). Institutional concerns deter corporations in developing countries from extensively investing in ESG and sustainability. ...
The role of corporations in society is an age-old debate among practitioners and academics. The corporations’ primary goal is to excel, prosper, and expand financially is no longer suitable for the community. Unfortunately, the need for financial prosperity leads to hazardous workplaces, chemical exposure, and urban decay. Therefore, companies now view internal and external corporate responsibility as a critical business strategy for sustainable management. Thus, examining the impact of firm life cycle stages on business activities, notably sustainability programs and CSR investments, can shed light on a company’s CSR initiatives and sustainability choices. This study uses 420 firm-year data samples from 2013 till 2018 in examining the association between CSR proxied by corporate sustainability performance (CSP) index and firm life cycle for firms listed in the S&P/EGX ESG index. A thorough search of the relevant literature shows that this is the first study to demonstrate this association in Egypt empirically. Our findings show a significant relationship between CSP and firm life cycle stages. The results also show that the firm life cycle has greater explanatory power for CSP levels than previously thought. Therefore, organizations should choose and implement CSR initiatives based on their life cycle stage to ensure long-term value and growth
... Second, industries that potentially harm the health of the environment or the individual can be regarded as controversial (Cai et al., 2012;van Bommel, 2018;Vollero et al., 2019). These include biotechnology/pharmaceuticals (Günther and Hüske, 2015), energy/oil (Abitbol et al., 2019;Du & Vieira, 2012), mining (Jenkins and Yakovleva, 2006;Rodrigo et al., 2016), transport (including automobiles and airlines), and food and resource industries (Hao and Kang, 2019;Kilian and Hennigs, 2014). Establishing a socially responsible model for the business practices of these industries is more difficult than in others (van Bommel, 2018). ...
Corporate social responsibility (CSR) initiatives are signals used by organizations to reduce information asymmetries within the market and to make their commitment to sustainability observable. The present study aims at investigating the hypothesis that responsible companies operating in controversial industries (i.e., companies whose core business or production processes are perceived as questionable by society given current environmental, social, or/and ethical issues) are likely to be more active in using different types of CSR signals. Through ANCOVA, we assess how firms belonging to both controversial and non-controversial industries differ in the way they manage CSR signals. The empirical results show that companies in controversial sectors are significantly more focused on developing CSR policies and transparency tools since they expect these signals to be really visible and distinctive to stakeholders. However, companies in controversial industries seem to be similar to non-controversial companies in signaling CSR governance, suggesting that organizations expect receivers to attribute little relevance to the least visible signals. Therefore, these signals do not grant a sufficiently large reputational payoff, discouraging firms from taking advantage of the implementation of CSR governance structures. The study supports the idea that firms, in designing different types of CSR signals, take into account the peculiarities of different receivers. At the same time though, this could make firms underestimate the receivers’ ability to decode the signals and to generate countersignals, thus failing in assessing properly the expected return from their CSR signaling.
... In addition, CSR increases productivity, sales, and profits. Organizations' CSR practices facilitate the achievement of better performance and financial results, thereby positively affecting productivity, competitiveness, and competitive success (Boulouta & Pitelis, 2014;Gallardo-Vázquez & Sánchez-Hernández, 2014a;Rodrigo, Durán, & Arenas, 2016). More recently, Hameed et al. (2016) have asserted that CSR initiatives can generate increased performance and value. ...
Corporate social responsibility (CSR) strategies have become an important research topic in recent years as they can generate numerous benefits for organizations, especially when an adequate market orientation (MO) has been defined. In this sense, several research questions arise: do companies have enough CSR information to implement appropriate strategies? Does the information that they have gathered allow them to define a complete set of CSR activities (response) based on the triple bottom line approach? And, once they have carried out their initiatives, do these companies ensure adequate dissemination of the results to stakeholders?. In order to answer the above questions, this study sought to examine companies’ CSR orientation from a MO perspective. Working with data on a sample of 165 firms in Spain, during January 15th and February 15th, 2017, structural equation modeling was used to test a set of research hypotheses. The results reveal an important link between information, response, and diffusion and help extend the MO strategy concept. CSR information has a positive, direct influence on the development of initiatives covering three dimensions (economic, social and environmental). In addition, a direct relationship exists between the development of social and environmental initiatives and CSR disclosure. This research’s findings contribute to the literature on interest groups and business sustainability. Also, they confirm that the development of social and environmental initiatives contributes positively to CSR dissemination and to the generation of competitive advantages. This way, collecting CSR information constitutes a valuable asset. With respect to the limitations of the study, the answers reflected each SME leader’s subjective opinion, the variables’ measurement was dealt with through reflective models using the PLS technique based on variance and only Spanish companies already oriented toward CSR participated in the study.
... Recent studies have also included companies involved in emerging environmental, social, or/and ethical issues in controversial industries (Cai et al., 2012;Kilian & Hennigs, 2014; van Bommel, 2018), such as pharmaceuticals (Günther & Hüske, 2015), energy (Abitbol et al., 2019;Du & Vieira, 2012), mining (Jenkins & Yakovleva, 2006;Rodrigo et al., 2016), transport (including automobiles), and food (Hao & Kang, 2019;Kilian & Hennigs, 2014). ...
To reduce information asymmetries with stakeholders and increase stakeholder engagement, firms frequently adopt corporate social responsibility (CSR) signals in order to highlight their commitment to sustainability. The paper explores how organizations in controversial industries use CSR signals, which play a key role in sustainable marketing strategies. These organizations are more likely to be affected by the skepticism of stakeholders, however it is not clear if and how they are involved in CSR signaling. Through a content analysis of corporate websites, CSR signaling is explored at the levels of strategic management (CSR policies), and operative management (CSR reporting). Companies in controversial industries show a degree of involvement in CSR reporting, while being less active in adopting CSR policies. These findings suggest that controversial organizations should embrace a more strategical and organic approach to CSR signaling. In addition, inter-sectoral comparisons are used which show that companies operating in the most environmentally unfriendly sectors (materials, energy and utilities) are keener to engage in CSR policy signaling than companies in other controversial industries.
... Following these criteria, as a field of study we chose Chilean extractive industries for two reasons. First, the economy of this nation is strongly dependent on these sectors [55], so these companies impact thousands of citizens and firms oftentimes address the concerns of these people, for example, through dialogue. In fact, evidence suggests that Chilean managers have increasingly recognized the value of stakeholder engagement [56], and this is especially true in this country's extractives industries, where these companies already engage their stakeholders [57]. ...
Although scholars have studied stakeholder dialogue, we lack studies that understand the effect of context on the structure and form of dialogue. To address this gap, in this research we focus on local rural communities that can be classified as fringe stakeholders to develop a comprehensive model of “fringe community dialogue”. As these neglected groups have been marginalized from society and face grave serious socio-environmental issues, we argue that these characteristics will affect the way dialogue occurs. Therefore, we posit that these instances need to be tailored to this specific stakeholder. To assess this, we follow a theory-building grounded theory approach, and as field of research we extract information from three different research sites. Findings indicate that, because of the characteristics of fringe communities, dialogues must follow three sequential dimensions, which are connected by two enabling mechanisms. We contribute by evincing that, because of this stakeholder’s characteristics, the dialogue process has a particular structure and key variables, differing from what the past literature asserts.
... Esta pesquisa contribui com novos resultados a respeito do papel da RSC sobre a agressividade fiscal das firmas, sobretudo em contextos emergentes, uma vez que o entendimento do que vem a ser uma atitude socialmente responsável varia conforme o ambiente institucional no qual a firma se insere, devido a questões culturais e econômicas (Aguinis & Glavas, 2012;Rodrigo, Duran, & Arenas, 2016;Jamali & Karam, 2018). Assim, pretende-se contribuir para a literatura que investiga a relação entre agressividade fiscal e responsabilidade social das firmas, fornecendo evidências sobre a referida relação no contexto das empresas brasileiras de capital aberto. ...
Esta pesquisa analisa os efeitos das dimensões da responsabilidade social corporativa (RSC) sobre o nível de agressividade fiscal das companhias brasileiras de capital aberto. Para tanto, identificou-se o desempenho em relação à RSC das empresas a partir das dimensões ambiental, social e de governança. Após isso, foi empregada uma variável agregada que representa a média geral das companhias em todas as dimensões. A agressividade fiscal foi mensurada a partir do cálculo da taxa de imposto efetiva (effective tax rate – ETR). O período de análise compreendeu os anos de 2010 a 2018 e os modelos analisados foram operacionalizados a partir de regressões múltiplas de dados em painel com estimação por mínimos quadrados generalizados factíveis (FGLS). Os resultados revelam relação significativa entre RSC e agressividade fiscal, indicando que adotar mais ou melhores práticas de RSC, independentemente de sua dimensão, acarreta menor nível de agressividade fiscal para as empresas analisadas na amostra. No geral, os achados encontrados reforçam a noção de que a RSC pode afetar as decisões organizacionais.
... In addition to the aforementioned, the relationship between corporate social performance (CSP) and corporate financial performance (CFP), although widely studied, has mostly produced controversial results. Although some studies showed a positive result in the CSP-CFP relationship (Griffin & Mahon, 1997;Margolis, Elfenbein, & Walsh, 2009;Orlitzky, Schmidt, & Rynes, 2003), some researchers found negative effects (Branco & Rodrigues, 2008;Rodrigo, Duran, & Arenas, 2016), and others concluded that there was, in fact, no relationship between CSP and CFP (Surroca, Tribó, & Waddock, 2010). ...
Considering the institutional, cultural, and regulatory differences across countries, this research investigates the association between environmental, social, and governance (ESG) performance and financial performance of companies from emerging and developed countries. The institutional difference hypothesis (IDH) suggests that institutional weaknesses in emerging markets affect the relationship between financial performance and corporate social performance (CSP) of companies. This can occur because, under such circumstances, firms are more likely to prioritize the capital accumulation and not recognize the potential strategic benefit of socially responsible investments. To investigate this hypothesis, we performed a regression analysis of panel data study comprising 2,165 companies from developed and emerging countries, covering the period between 2007 and 2014. Our results suggest that there is a prevalence of the institutional environment in relation to the financial and ESG performances of companies. These results are in line with the logic of the IDH.
... At the same time, socially responsible organizations have a better performance (Erhemjamts, Li & Venkateswaran, 2013;Inoue & Lee, 2011). Literature has lengthily shown the relationship existing between CSR and performance in organizations (Herrera, Larrán, Martínez, & Martínez-Martínez, 2016;Mason & Simmons 2011;Rodrigo, Durán & Arenas 2016). Jones (2010) showed that employees engaged in social activities in their companies should get a better performance. ...
The approval of the 17 Sustainable Development Goals (SDG) within the 2030 United Nations Agenda represents a historic mark for sustainable development, allowing to companies to seek solutions that add value and solve the greatest global challenges, by linking organizational strategies and global priorities. Thus, listed companies will need to be able to assess their impact on the SDGs and review their strategies accordingly. Therefore, reporting can play a key role by informing the progress of listed companies in alignment with the SDGs. This article aims to analyse how Portuguese listed company reporting includes their contributions toward the SDGs. The study methodology is based on content analysis of the sustainability reports (SR) and non-financial statements (NFS) published in 2017, seeking to characterize the Portuguese listed companies that are concerned with SDG-related disclosure. The results indicate that from a sample of 46 listed companies, only 12 published SR or NFS, but 9 companies made the alignment with the UN goals.
... At the same time, socially responsible organizations have a better performance (Erhemjamts, Li & Venkateswaran, 2013;Inoue & Lee, 2011). Literature has lengthily shown the relationship existing between CSR and performance in organizations (Herrera, Larrán, Martínez, & Martínez-Martínez, 2016;Mason & Simmons 2011;Rodrigo, Durán & Arenas 2016). Jones (2010) showed that employees engaged in social activities in their companies should get a better performance. ...
Corporate social responsibility (CSR) is a current important strategy in organizations today. Numerous factors that affect the global functioning of organizations have determined the need to incorporate a look towards sustainable development. This implies considering the integration of not only economic, but also social and environmental concerns in the day-to-day of the companies. We move, therefore, under the perspective of the Triple Bottom Line. In addition, the exercise of CSR will motivate the achievement of competitive advantages for organizations. Given this, this article seeks to analyze the numerous benefits derived from the implementation of socially responsible actions in companies. These are structured from different organizational approaches: personal sphere, organizational field, personal and organizational fields and financial area. Together with them, the implementation of the CSR may entail the need to incur certain costs, which are also referred to in the study. Finally, we propose some future lines of research
... There are many other authors, however, who conclude that there is a negative relation between CSR and FP (see Brammer, Brooks, & Pavelin, 2006;Lima, De Souza, & Vasconcellos, 2011;Makni, Francoeur, & Bellavance, 2009;Wang & Bansal, 2012), or do not appreciate significant relations between these variables. Once again, among the latter are those who consider CSR an independent variable (see Garcia-Castro, Ariño, & Canela, 2010;Mahoney & Roberts, 2007;Yang, Lin, & Chang, 2010), those who consider it dependent (see Chih, Chih, & Chen, 2010;Consolandi, Jaiswal-Dale, Poggiani, & Vercelli, 2009;Reverte, 2009), and even those who, based on bidirectional relations, do not obtain conclusive results in either sense (see Zhao & Murrell, 2016) or find a negative association (Rodrigo, Duran, & Arenas, 2016). ...
The relation between corporate social responsibility (CSR) and financial performance (FP) has been widely dealt with in specialized literature. This study has two points of interest: first, we develop a new tool which financially quantifies the value contributed to companies that are committed to CSR; then, we make a practical application of this tool through an empirical study focused on Spanish companies. This study is especially innovative because of the fuzzy methodology used and the way it defines CSR through the IQNet SR10 certification of social responsibility systems. In addition, the measurement of CSR through IQNet SR10 certification is a completely new approach to the subject. An interesting conclusion can be drawn from the empirical study: IQNet SR10 CSR certification increases the value of businesses. However, neither size nor the economic sector they belong to influence this relationship significantly.
... This evolution was progressed by a set of new institutions driving new practices representing fundamental shifts in the rules of the game regarding what firms must do to sustain their legitimacy -or the perceived appropriateness of an organization to a social system in terms of rules, values, norms, and definitions (Deephouse et al., 2017) -among stakeholders (Waddock, 2008). Further evidence also suggests that institutional factors have a strong influence on the adoption of CSP practices (Rodrigo et al., 2016), an influence manifested via three types of isomorphic pressure -coercive, mimetic, and normative (DiMaggio and Powell, 1983;Mazutis, 2018). ...
In the present study, we integrate research from the dynamic institutional theory literature to develop a set of theory‐driven hypotheses regarding how the institutionalization of corporate social performance (CSP) in the organizational field over the period 1991–2008 impacts the CSP‐ corporate financial performance (CFP) relationship for firms in the marketplace. The results of our panel time series and dynamic linear estimation models suggest that early CSP adopters are more likely to experience both greater firm profitability and increased stock market valuation as a result of their higher CSP levels. However, they also tend to incur more firm‐idiosyncratic risk for being ahead of the market’s CSP expectations. We also demonstrate that the significant rise in CSP adoption and activities over time, as CSP has become institutionalized, has resulted in CSP becoming a weaker driver of both firm profitability and stock market valuation.
... The patrons of this stockholder theory contend that the only responsibility of business is to maximize profits and returns for its stockholders (Friedman, 1970). The studies by Brammer et al. (2006), Mittal et al. (2008); Tilakasiri (2013), Fu et al. (2014), Peng and Yang (2014), Rodrigo et al. (2016), further lend support to this argument. Also, some studies (Aupperle et al., 1985;Hackston and Milne, 1996;Preston and O'Bannon, 1997;McWilliams and Siegel, 2001;Makni et al., 2009;Aras et al., 2010;Luethge and Han, 2012;Kolsi and Attayah, 2018) indicate non-existence of any relationship, either positive or negative, between CSR and CFP. ...
Purpose
Despite continuous research efforts, the literature is still inconclusive about the relationship between corporate social responsibility (CSR) and financial performance. With an aim to address this problem, this study aims to analyze the impact of CSR on financial performance in the Indian context.
Design/methodology/approach
Using a panel of top 137 companies from CNX-500 for 10 years (2008-2017), the impact of CSR on three indicators of financial performance, namely, Return on Assets (ROA), Return on Equity (ROE) and Net Profit Margin (NPM), is evaluated using the panel data regression analysis. The technique of content analysis is used to collect data on CSR from the annual reports of selected companies.
Findings
The study finds that the impact of CSR on financial performance may be neutral (with ROA and NPM) or negative (with ROE). The negative influence of CSR on ROE of firms supports the theory by Friedman (1970) that the only responsibility of business is to maximize profits and returns for its shareholders.
Originality/value
After amendments in Companies Act, 2013, there is limited literature addressing this scientific inquiry in the Indian context. The study period (2008-2017) includes CSR disclosures from both periods, before reforms and after reforms, which adds to the uniqueness of this research study. In addition, this study uses a research instrument consisting of a total of 178 CSR activities divided across 46 themes for collecting data from annual reports of the companies. The utilization of such a comprehensive research instrument, for the study, also adds to its peculiarity.
... Another emphasis for research in developing countries is the relationship between CSR for firms belonging to sensitive industries and their value. This is not only because whether the firms of sensitive industries could be socially responsible is still an open question [56,57], but because the reality that the quantity of economy development is more important than economy quality in developing countries complicates the question further. Sensitive industries with social taboos, moral debates, and great impact on social environment, include sinful industries, such as tobacco, alcohol, gambling, weapons, nuclear, oil, and adult entertainment [58,59]. ...
Compared to the rapid development of Corporate Social Responsibility (CSR) practices in developing countries, especially in China, the research about the effect of CSR on firm value has evolved more slowly. This paper examines the relationship between CSR and firm value used by listed Chinese companies from 2010 to 2017. The results for the whole sample show CSR significantly reduces firm value. Additionally, there are no significant differences for the effect of CSR on firm value between state owned enterprises (SOEs) and non-SOEs or sensitive industry and non-sensitive industry. To explore whether the relationship changes over time, we divided the period into two sub-periods. During 2010–2014, the results are similar with those obtained by the whole sample. However, the results significantly change during 2015–2017. Specifically, the negative and significant relationship between CSR and firm value becomes non-significant in the second sub-period. Compared to the weakening effect of CSR for non-SOEs on firm value, CSR for SOEs alleviates the effect, and CSR of SOEs increases firm value significantly. Similar results are obtained for non-sensitive industry and sensitive industry. The changes are the result of increasing awareness by government, companies, and investors on sustainable development after 2015. This finding enriches the research on the dynamic effect of CSR on firm value in developing countries.
This study aims to examine the potential effect that ESG Scores have on the financial performance of any organisation using the moderating role of independent directors and women directors. To find out the moderating effect between ESG and the firm's performance with the moderating effect of board characteristics, the authors have applied regression analysis where they have selected Top 100 Companies Listed in NIFTY 100. Out of these 100 companies, they have chosen 93 companies who have also been ranked as per the ESG parameters. The results of the research suggest that there is no relationship between a company's financial performance and its commitment to corporate social responsibility (identified from the ESG scores). So according to the test results, they have seen that even if a firm spends more on CSR operations there may not be a proportionate increase in the firm's financial performance. In Addition, this study contributes to the promotion of the relationship between sustainable practises and independent directors. The findings of this study have practical implications and extra incentives for practitioners, especially CEOs and other high-ranking corporate governance authorities. It has significance for international regulators and decision-makers further on providing data to the reader a better understanding of how to evaluate the company's financial performance and potential for future growth in a setting where corporate governance and social responsibility play a major role in business valuation.
En este artículo se plantea un análisis crítico del género del informe de sostenibilidad en tres de las principales variantes dialectológicas del idioma español, a saber el español chileno, el mexicano y el peninsular, que a su vez se corresponden con tres zonas con diferentes niveles de implementación de Responsabilidad Social Corporativa (RSC). El corpus se compone de los informes de seis empresas de los sectores extractivo y financiero, especialmente sensibles a la sostenibilidad y con grandes desafíos para alcanzar el equilibrio entre las personas, el planeta y el beneficio. Partimos del supuesto que el discurso de la RSC es una forma de comunicación empresarial híbrida que desempeña, además de su papel informativo primordial, las funciones comunicativas de legitimar las acciones de la empresa, gestionar su reputación y establecer un diálogo sostenible con las partes interesadas. Mediante un análisis léxico-semántico discursivo que hace uso de la modelización de temas o topic modeling se comparan los informes de los tres subcorpus y se llega a la conclusión de que en el subcorpus peninsular la comunicación de la RSC es principalmente de índole estratégica, mientras que en los subcorpus chileno y mexicano también es claramente responsiva, lo que se puede explicar desde una perspectiva transcultural e institucional. En cuanto a los interdiscursos que sirven para reforzar el discurso general de RSC, llama la atención que los informes chilenos y mexicanos recurren significativamente más a las estrategias comunicativas de la legitimación y la reputación, de manera que quieren claramente explotar el potencial de promoción del informe más de lo que parece ser el caso en el subcorpus peninsular. Finalmente, al tomar en cuenta los factores extratextuales, se observa que la estrategia de la omisión también ejerce una influencia importante en el discurso de este género.
Purpose
Drawing on the relational view and contingency theories, this study explores supply chain relationship conditions' roles in interrelationships between environmental, social and supply chain performance (SCP), i.e. triple bottom line (TBL).
Design/methodology/approach
The data from industries and structural equation modeling (SEM) were used to validate the proposed model. Interviews with industry experts were conducted to further understand the findings.
Findings
The authors find that relationship conditions, such as inventory information sharing, dependency, opportunistic behavior and conflicts, moderate TBL linkages. Interestingly, power asymmetry does not moderate the linkages. Social performance mediates between environmental and SCP. This indirect effect is stronger than the effect of environmental performance on SCP.
Originality/value
This research is perhaps the first to bring a much-needed nuanced view on the importance of relationship conditions for TBL performance linkages. The research further underlines the importance of social performance in an emerging economy.
Environmental success can only become a reality when the financial goals of firms are not compromised. Based on this proposition, the study aimed to investigate four relationships, including the effect of corporate social responsibility (CSR) on financial performance, the mediation of green dynamic capabilities (GDCs) between CSR and green innovation (GI), the mediation of GI between CSR and financial performance, and the moderation of perceived environmental volatility in the GI and financial performance nexus. A sample of 655 manufacturing firms was collected from Pakistan to test the proposed hypotheses, and structural equation modeling was conducted. The results demonstrate a significant positive influence of CSR on financial performance. In addition, the mediation of GDCs and GI has also been confirmed. Furthermore, the results demonstrate that high environmental volatility weakens the GI and financial performance nexus. The study results offer unique contributions to the literature and interesting suggestions for practicing emerging economy managers.
Chapter 5 investigates the role of sustainable governance in value generation for companies. It examines theoretical propositions, including agency theory, institutional theory, and stakeholder theory, to understand their influence on sustainable governance practices. The chapter emphasizes the significance of a strategic and long-term approach to ESG issues at the business level, elucidating how sustainable governance can enhance overall value creation for companies.
Employees have their own understandings of corporate social responsibility (CSR) motives. This study investigated whether employees' different perceptions of CSR motives, including substantive CSR attribution and symbolic CSR attribution, influence their work attitudes, job satisfaction, and turnover intention. Moreover, we explore the mediating role of person‐organization fit in the relationships among CSR attribution, job satisfaction, and turnover intention. We collected 687 responses for an overall response rate of 16%. The results of structural equation model (SEM) analyses show that substantive CSR attribution decreases employee turnover intention and that symbolic CSR attribution increases employee turnover intention. Based on these results, we provide relevant theoretical and managerial implications.
Los estudios comparativos de abstracts en diferentes lenguas relevan que las diferencias
culturales pueden influir en la legibilidad del texto cuando no son tenidas en cuenta. Este trabajo busca indagar sobre dichas diferencias entre abstracts en español argentino e inglés dentro del campo de la lingüística aplicada, analizando 30 abstracts de revistas reconocidas en inglés y en español argentino del campo de la lingüística aplicada publicados entre 2016-2019. Los resultados muestran, por un lado, que los abstracts en inglés traducidos del español presentan los mismos movimientos que sus versiones originales. Sin embargo, se presentan diferencias en las frecuencias de los movimientos y
sub-movimientos presentes dependiendo de la lengua original en que el abstract fue escrito. Es por ello importante sensibilizar a los aprendientes sobre estas diferencias para que sus abstracts sean comprendidos correctamente en la lengua meta.
This research aims to analyze the role played by firm visibility in moderating the relationship between Corporate Social Responsibility (CSR) and Firm Financial Performance (FFP). Based on the legitimacy theory, a firm’s responses to stakeholder’s expectations would be affected by its public visibility; we hypothesize a positive link between CSR and firm visibility. Moreover, visibility is expected to moderate the CSR-FFP relationship. We applied a Moderated Regression Analysis using the aggregate ESG scores as a CSR proxy on a panel data of listed French Companies (SBF120) over the period 2008–2017. Our findings are in line with legitimacy theory, suggesting that social initiatives would be mean to strengthen the legitimacy and to secure “license to operate”. Furthermore, firm visibility would be a contingency variable that moderates positively CSR-FFP relationship.
Social responsible investing (SRI), also called as sustainable investing, is a new approach to investment that considers integrating environmental, social, and governance factors (ESG factors) in the portfolio construction by investors.A large number of the studies on SRI (Sustainable Responsible Investing) have done on developed Western markets, but in case of India, we have not found study particularly related to sustainable investment approach and stock price reaction. The study is evaluating the stock price reaction of selected Indian study evaluates short term reaction of Environmental, Social and Governance (ESG) news on firm stock prices and efficiency of the market by using market model. This study has used the event study methodology. The study concludes that ESG events have effected the share performance return significantly for one-week duration but not affected much on two-week duration. The study proved that the Indian stock market in terms of ESG is semi-efficient. The study will benefit for institutional investors and retail investors to invest responsibly into sustainable firms. Another side it will also help firms to emphasize ESG issue for better performance. Regulators also can refer it for giving importance to ESG disclosure and reporting. JEL: E22, Q01, Q56
Purpose
The purpose of the present study is to analyze the impact of corporate social responsibility (CSR) disclosures on firms' profitability and its persistence.
Design/methodology/approach
The study has been conducted for listed firms operating in India from 2008 to 2017. Content analysis has been utilized to estimate the CSR disclosures score. Further, dynamic panel regression has been utilized to estimate the relationship between CSR disclosures and profit persistence.
Findings
The results confirm positive profit persistence for Indian companies. The results further show that different dimensions of CSR disclosure have differential impact on firms' profitability. CSR dimensions concerning total community development and product-related disclosures have a positive relationship, whereas dimensions related to environmental and customer-related disclosures have a negative relationship with financial performance. The results also indicate that CSR disclosures are significantly related to profit persistence.
Originality/value
The study is first of its kind that analyzes the impact of CSR disclosure on profit persistence for Indian companies. The results can provide useful implications for managers and regulators in terms of formulation of overall CSR policies.
To explore the motivations underpinning corporate social responsibility (CSR) decisions in China, a country characterized by extensive government intervention, this paper investigates whether building a good relationship with the government is a political incentive that is driving firms to conduct CSR by examining the effects of political connections on the latter. Our results indicate that politically connected firms exhibit better CSR. However, the effect is considerably more significant for firms with existing political relationships. Additionally, findings show that the effect is more prominent in firms for which political connections are more valuable, namely, non‐state‐owned enterprises, small firms, and firms operating in less market‐oriented cities, indicating that CSR can serve as a differentiation strategy to compete against other bidders. Dividing CSR activities into economic, environmental and social aspects, we find that the social‐based activities are more likely to be driven by political motivations. By categorizing CSR and political connections, this paper not only expands the scope of political CSR and renders the generated results that have been mixed together more distinguishable, but also provides a more precise understanding of the fundamental drivers of CSR in China from the perspective of resource exchange.
This study aims to evaluate the contribution of the Indian corporate world towards sustainable development. We propose a framework of Corporate Sustainability Performance derived from factors suggested by Sustainable Development Goals (SDGs), a component of a global agenda for sustainability. This framework is further applied to evaluate the sustainability performance of Indian firms to identify potential gaps in their sustainability efforts. The impact of factors like firm‐size, ownership structure, and environmental sensitivity of firms has been statistically tested for these firms. The paper uses a mixed‐method where content analysis has been applied to generate the data by analyzing disclosure reports of the top 100 Indian firms for the year 2016–2017, and a mathematical model is used to arrive at sustainability performance factors at various levels. Statistical tools like descriptive analytics, t test, and analysis of variance are used to test various hypotheses. The findings suggest a significant gap in the full potential and current status of sustainability investments by Indian corporates and hence confirm a huge improvement potential. “Cement” is the best performing sector, whereas “Media” is at the bottom of the performance stack. The Indian corporate world aligns its maximum effort along the “Education and Learning” dimension, whereas minimum effort is made for “Oceans, Sea, and Marine.” A significant difference was found for the performance based on environment sensitivity and firm‐size. Differences across firms based on ownership identity and concentration could not be established. The study highlights the implications for the regulatory mechanism that needs to change if the contribution from the private sector is required for SDGs.
Purpose
The purpose of this paper is to critically review the existing literature on corporate social responsibility (CSR) to develop a framework to analyse the impact of CSR on employee commitment to the organisation.
Design/methodology/approach
Using the scoping review, this paper reviewed the published articles on CSR and employee commitment and how CSR and employee commitment were defined, theoretically supported and conceptualised for a comprehensive understanding of current and future research directions in the field.
Findings
This paper presents a framework developed through the analysis of existing literature on the impact of CSR) on employee commitment to the organisation. This framework aims to explore the impact of internal CSR and external CSR on employee commitment while using the contractual position of employees as an intervening variable.
Originality/value
During a time where employee attraction and retention is widely discussed as a competitive advantage, this framework could be used by any industry, especially those with high staff turnover such as mining. The researchers propose to use this framework to explore how perception towards external CSR (directed towards external stakeholders) and perception towards internal CSR (directed towards the own employees) can influence organisational identification and commitment levels. To address several gaps in the literature, this model is based on the Maslow’s Hierarchy of Needs and Social-Identity Theory.
Corporate SCorporate Social Responsibility (CSR) has been forming very dynamically and intensively for several decades. The rapid development, as well as the relatively large scope of this concept, which is cross-sectionally related to a number of different social disciplines, so far causes a very significant terminological inconsistency. The paper focuses on the relationship between CSR and the financial performance of companies, or on the positive consequences of applying the concept of CSR in business on the example of a selected company Deutsche Telekom AG, which applies CSR in its business and which achieves positive results not only from this point of view, but also from the point of view of company profitability. When analyzing the company from the point of view of the global market, it quantitatively monitors the impact of the measured indicators on the profitability of total assets (ROA) and on net profit, by testing the basic assumptions made on the classical linear regression model. The main goal of the paper was to find out the impact of CSR on the financial results of the parent company Deutsche Telekom AG for the period 2001-2021 and to find the relationship between CSR and economic benefits.
Offered here is a conceptual model that comprehensively describes essential aspects of corporate social performance (CSP). The three dimensional model address major questions of concern: (1) What is included in the definition of CSR? (2) What are the social/stakeholder issues the firm must address? and (3) What is the organization's strategy/mode/philosophy of social responsiveness.
The first dimension is the source of the original four-part definition of CSR originated: economic, legal, ethical, and discretionary (later termed philanthropic). It was later presented at the CSR Pyramid (1991).
As responsible corporate citizens, all businesses should contribute to social development of the country. However, from a business perspective, the shareholders of a company are interested in the return for their investment. They would prefer to have a quantifiable method to know the exact impact of the investment on CSR on company profitability. If there are no proper information on the benefits of CSR, it is difficult to persuade the corporate to pump in scarce resources to CSR initiatives, which otherwise could have been used to generate definite benefits. This research attempted to fill this gap by developing a set of data on the financial benefits of CSR initiatives. A questionnaire-based survey was carried out among the listed companies in the Colombo Stock Exchange. On average the companies spend about 6.6% of their turnover on CSR related activities, including training, research and community work. In the case of relationships between CSR activities and financial performance, only in employee relations and customer/supplier relations show significant positive correlations with financial performance. In addition to these two, community relations also show a significant positive correlation with perceived benefits of CSR. Community relations and environment is not significantly correlated with any of the financial indices.
If Corporate Social Responsibility (CSR) activities are beyond a firm’s legal obligations and potentially require a sacrifice in short-term profits, why do firms promote CSR? This question motivates this investigation of the impact of CSR on a firm’s Corporate Financial Performance (CFP). This relationship is examined for the period from 2004 to 2013 in South Africa. We assess the short-term impact of CSR announcements on financial returns of firms included in or excluded from the Johannesburg Securities Exchange Socially Responsible Investment Index and determine whether there is a difference in the long-term CFP between these two groups for the entire period. The event study methodology shows that investors were rewarded in 2004 and 2012, when firms entered the index, and were penalized in 2013, when firms exited the index. When using regression analysis, the various industries provide mixed results between CSR and CFP for firms over the long term. Based on these results, we find that CSR activities lead to no significant differences in financial performance. © 2015, Wyzsza Szkola Finansow i Zarzadzania w Warszawie. All rights reserved.
This study reviews and synthesizes the contemporary business literature that focuses on the role of corporate social responsibility (CSR) to enhance firm value. The main objective of this review is to proffer a precise understanding of what has already been investigated and the findings of those investigations regarding the value-enhancing capabilities of CSR for public firms. In addition, this review identifies gaps in the existing literature, evaluates inconsistent findings, discusses possible data sources for empirical researchers, and provides direction for exploring other promising avenues in future studies. The thrust of the CSR literature largely acknowledges the value-enhancing capabilities of firms’ social and environmental activities. However, the predominance of inconsistent theoretical grounds in major CSR-benefits-related areas suggests that there is ample room for future research to contribute to the extant literature. Anecdotal evidence, the prevalence of theoretical arguments, and the availability of large cross-sectional firm-level data suggest that future research will enrich the literature by investigating the real insights behind several unanswered questions, by establishing implicit understandings regarding recognized findings, and by developing new theories in this emerging field.
Inconsistent findings have resulted from studies of the relationships among social disclosure, social performance, and economic performance of U.S. corporations. No clear tendency can be detected. The main reasons for these inconsistencies are: (a) a lack in theory, (b) inappropriate definition of key terms, and (c) deficiencies in the empirical data bases currently available. Suggestions are made as to how this situation can be improved.
Corporate social responsibility (CSR) has the potential to make positive contributions to the development of society and businesses. Organisations are beginning to see the benefits from setting up strategic CSR agendas. The increasing attention to CSR is based on its capability to influence firms' performance. The CSR movement is spreading over the world and in recent years a large number of methods and frameworks have been developed, the majority being developed in the West. This study focuses on developing economies and on Nigeria specifically. Using a sample of forty audited financial statements of quoted companies in Nigeria, this study examines the impact of CSR activities on financial performance measured with Return on Equity (ROE) and Return on Assets (ROA). The results show that CSR has a positive and significant relationship with the financial performance measures. These results reinforce the accumulating body of empirical support for the positive impact of CSR on financial performance.
The aim of this paper is to clarify the relationship between companies' sustainable behavior and their financial performance (FP), which has been studied for several years without reaching a consensus on the effect and the direction of it. Hypotheses are tested for an unbalanced sample of 1960 multinational non-financial listed companies from 25 countries and one administrative region for the period between 2002 and 2010. Due to the use of an international database and the differences among countries, it is possible to observe divergence between institutional settings. For this reason, a corporate governance system (Anglo-Saxon, Germanic, Latin and Asian) is used as characteristic of the macro-environment. Results obtained via the generalized method of moments estimator allow us to support the existence of a positive bidirectional relationship between corporate social responsibility and FP, evidencing the existence of a synergistic circle. The use of market value indicated that investors are able to identify economic, social and environmental practices generating a positive effect on FP. These relationships differ between corporate governance systems, due to the specific characteristics of each system. Findings are robust for each sustainable sub-index (society, human rights, environmental and board). Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment
The objective of this paper is to offer a revision of the corporate social performance (CSP) model. CSP exemplifies how corporate social responsibility translates into an organization's practice by focusing on three key features of performance: principles, processes and outcomes. However, the development of the model has not kept pace with the literature on social and environmental responsibility. This study builds on an argument that if corporate social responsibility in general – in which CSP plays an important role – is to respond to the challenges of sustainable development, the CSP of businesses could be more profoundly planned in order to design knowledge outcomes that contribute to meeting those challenges. The paper thus answers the recent call for the development of a CSP model by revising some of the key elements in the existing model and also by adding a knowledge creation dimension. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment
Building on the theoretical argument that a firm's ability to profit from social responsibility depends upon its stakeholder influence capacity (SIC), we bring together contrasting literatures on the relationship between corporate social performance (CSP) and corporate financial performance (CFP) to hypothesize that the CSP‐CFP relationship is U‐shaped. Our results support this hypothesis. We find that firms with low CSP have higher CFP than firms with moderate CSP, but firms with high CSP have the highest CFP. This supports the theoretical argument that SIC underlies the ability to transform social responsibility into profit. Copyright © 2012 John Wiley & Sons, Ltd.
The growing number of academic studies on the impact of Corporate Social Performance (CSP) on Corporate Financial Performance (CFP) and the mixed findings they report complicate efforts among managers and academics to identify the outcomes of corporate social responsibility. These mixed findings and the growing interest of managers on having satisfied corporate social policy point to the value of empirically synthesizing the evidence on the relationship between CSP and CFP. Although many reviews of these studies have been published (Ullman, 1985 ; Griffin & Mahon, 1997 ; Roman, Haybor & Agle, 1999 ; Margolis & Walsh, 2003), there have been little attempts to use formal statistical tools to synthesize the results (Orlitky & Benjamin, 2001 ; Orlitky, Schmidt & Rynes, 2003). Orlitsky et al. (2003) obviously made valuable contributions, presenting the first meta-analysis of the empirical evidence on the impact of CSP on firm financial performance. However, since this last meta-analytic review, dozens of studies examining the link between CSP and CFP have been published in academic journals and recent studies have also focused on the effect of CSP on CFP in a broader international context. To this end, we conduct a new meta-analysis of the reported findings on the CSP/CFP relationship. We document that CSP is strongly related to CFP on average. We also find that measurement and method that characterize the research often moderate relationship strength between CSP and CFP. Finally, we discuss the implications surrounding these effects and offer several directions for future research.
Controversial industry sectors, such as alcohol, gambling, and tobacco, though long-established, suffer organizational legitimacy problems. The authors consider various strategies used to seek organizational legitimacy in the U.K. casino gambling market. The findings are based on a detailed, multistakeholder case study pertaining to a failed bid for a regional supercasino. They suggest four generic strategies for seeking organizational legitimacy in this highly complex context: construing, earning, bargaining, and capturing, as well as pathways that combine these strategies. The case analysis and proposed bidimensional model of generic legitimacy-seeking strategies contribute to limited literature on organizational legitimacy in controversial industry sectors. In addition, beyond organizations active in controversial contexts, this study and its implications are useful for individuals and organizations supporting or opposing the organizational legitimacy of organizations in controversial industries.
Online gambling companies claim that they are ethical providers. They seem committed to corporate social responsibility (CSR) practices that are aimed at preventing or minimising the harm associated with their activities. Our empirical research employed a sample of 209 university student online gamblers, who took part in an online survey. Our findings suggest that the extent of online problem gambling is substantial and that it adversely impacts on the gambler’s mental and physical health, social relationships and academic performance. Online problem gambling seems to be related to the time spent on the Internet and gambling online, parental/peer gambling and binge drinking. As our findings show that there are harmful repercussions associated with online gambling, we argue that companies in this controversial sector cannot reach the higher level of CSR achieved by other industries. Nevertheless, they can gain legitimacy on the basis of their CSR engagement at a transactional level, and so, by meeting their legal and ethical commitments and behaving with transparency and fairness, the integrity of the company can be ensured. We also argue that current failures in the implementation and control of CSR policies, the reliance on revenue from problem gamblers’ losses, and controversial marketing activities appear to constitute the main obstacles in the prevention or minimisation of harm related to online gambling. As online gambling companies must be responsible for the harm related to their activities, we suggest that CSR policies should be fully implemented, monitored and clearly reported; all forms of advertising should be reduced substantially; and unfair or misleading promotional techniques should be banned. The industry should not rely on revenue from problem gamblers, nor should their behaviour be reinforced by marketing activities (i.e. rewards). We realise, however, that it is unrealistic to expect the online gambling industry to prioritise harm prevention over revenue maximisation. Policy makers and regulators, therefore, would need to become involved if the actions suggested above are to be undertaken. CSR is paramount to minimise harm and provide a healthier user experience in this business sector, but it also poses marketing dilemmas. We support a global collaborative approach for the online gambling industry, as harm related to gambling is a public health issue.
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.
Being a controversial industry, oil companies turn to corporate social responsibility (CSR) as a means to obtain legitimacy. Adopting a case study methodology, this research examines the characteristics of CSR strategies and CSR communication tactics of six oil companies by analyzing their 2011–2012 web site content. We found that all six companies engaged in CSR activities addressing the needs of various stakeholders and had cross-sector partnerships. CSR information on these companies’ web sites was easily accessible, often involving the use of multimedia technologies and sometimes social media platforms. Furthermore, to boost the credibility of their CSR messages, these companies utilized a variety of tactics, such as factual arguments and two-sided messages. In sum, this research unveils the interconnectedness among business strategy, CSR practices, and CSR communication in oil companies’ attempt to gain legitimacy in an environment of controversy. The article ends with a discussion of the theoretical and practical implications of the research findings.
Little is known about employees’ responses to their organizations’ initiatives in corporate social responsibility (CSR). Academics have already identified a few outcomes regarding CSR’s impact on employees’ attitudes and behaviours; however, studies explaining the underlying mechanisms that drive employees’ favourable responses to CSR remain largely unexplored. Based on organizational identification (OI) theory, this study surveyed 155 employees of a petrochemical organization to better elucidate why, how and under which circumstances employees might positively respond to organizations’ CSR initiatives in the controversial oil industry sector. Findings first support that perceived CSR (i.e. environmental CSR) positively relates to employees’ OI which is known as an important antecedent of employees’ outcomes (Riketta, J Vocat Behavior, 66(2):358, 2005). Furthermore, results highlighted that the relationship between perceived CSR and employees’ OI is mediated by organizational trust. Finally, this study also revealed that some contingency factors such as employees’ attributions of self-centred motives to their organization’s investment in environmental issues can moderate the relationship between perceived CSR and organizational trust. Based on these findings, it is argued that CSR initiatives can support organizations’ efforts to maintain a strong relationship with their employees, and gain their support even in a controversial industry sector.
In this article, we examine the empirical association between firm value and CSR engagement for firms in sinful industries, such as tobacco, gambling, and alcohol, as well as industries involved with emerging environmental, social, or ethical issues, i.e., weapon, oil, cement, and biotech. We develop and test three hypotheses, the window-dressing hypothesis, the value-enhancement hypothesis, and the value-irrelevance hypothesis. Using an extensive US sample from 1995 to 2009, we find that CSR engagement of firms in controversial industries positively affects firm value after controlling for various firm characteristics. To address the potential endogeneity problem, we further estimate a system of equations and change regression and continue to find a positive relation between CSR engagement and firm value. Our findings support the value-enhancement hypothesis and are consistent with the premise that the top management of US firms in controversial industries, in general, considers social responsibility important even though their products are harmful to human being, society, or environment.
Researchers have reported a positive, negative, and neutral impact of corporate social responsibility (CSR) on financial performance. This inconsistency may be due to flawed empirical analysis. In this paper, we demonstrate a particular flaw in existing econometric studies of the relationship between social and financial performance. These studies estimate the effect of CSR by regressing firm performance on corporate social performance, and several control variables. This model is misspecified because it does not control for investment in R&D, which has been shown to be an important determinant of firm performance. This misspecification results in upwardly biased estimates of the financial impact of CSR. When the model is properly specified, we find that CSR has a neutral impact on financial performance. Copyright © 2000 John Wiley & Sons, Ltd.
Efforts to identify the determinants of environmental policy success at the national level have largely been anecdotal and case study based. This article seeks to identify empirically the factors that drive environmental performance as measured by levels of urban particulates and sulfur dioxide and energy use per unit of GDP. Although the data are imperfect and causal linkages cannot be definitively established, the statistical analysis presented suggests that environmental results vary not only with income levels as suggested by the environmental Kuznets Curve literature but also with both the sophistication of a nation's regulatory regime and, perhaps more notably, its broader economic and social context. Thus, at every level of development, countries face policy choices that determine environmental quality in important ways. Strong environmental performance appears to be positively correlated with competitiveness, putting into question the presumed trade-off between economic progress and environmental gains. Although preliminary, these results provide evidence that environmental decision making can be made more data driven and analytically rigorous.
We develop a two-tiered agency model that shows how rent-seeking behavior on the part of division managers can subvert the workings of an internal capital market. By rent-seeking, division managers can raise their bargaining power and extract greater overall compensation from the CEO. And because the CEO is herself an agent of outside investors, this extra compensation may take the form not of cash wages, but rather of preferential capital budgeting allocations. One interesting feature of our model is that it implies a kind of "socialism" in internal capital allocation, whereby weaker divisions get subsidized by stronger ones.
Multinational enterprises face numerous challenges due to the difficulties of operating in various markets and the usual cultural differences between the countries. As opposed to local firms, multinational firms are usually exposed to global pressure groups both in home and host countries. In addition, in order to gain license to operate in foreign markets, they are required to be regarded as socially responsible agents that contribute to sustainable development. Finally, apart from the moral reasons, high levels of corporate social performance will lead multinational enterprises to increase their reputation and legitimacy in the areas where they have operations and consequently increase their revenues and levels of financial performance. Traditionally, the literature has focused on studying the relationship between international diversification and corporate results, with very few studies on the effects of internationalisation on firms’ social performance. The aim of this study is to analyse the influence of international cultural diversification of a multinational enterprise on its corporate social performance and to investigate the moderating effect of slack financial resources on this relationship. The present empirical analysis is based on a sample of 113 multinational enterprises from the United States that operate in the chemical, energy and industrial sectors. The results demonstrate that international cultural diversification is positively correlated with the social performance of firms and that a high level of slack financial resources leads multinational enterprises operating in markets with different cultural profiles to improve their corporate social performance. The implications for academia, managers and policy makers are discussed.
The study contributes to building an understanding of the impact of political forces on the information environment of listed firms in a developing economy. Specifically, it investigates the tensions between politico-institutional factors and accounting regulation on the prolonged and incomplete implementation of the International Financial Reporting Standards (IFRS) in Bangladesh from 1998 to 2010. Two phases of interviews were conducted in 2010–2011 and IFRS-related enforcement documents from 1998 to 2010 were evaluated. The study contributes that IFRSs are being diffused to developing countries like Bangladesh, but they invariably interact with local institutions (political institutions in this case), with variable outcomes (i.e. negative outcomes of IFRS implementation). Coercive, normative and mimetic isomorphisms are low in Bangladesh. Notably, political forces have been undermining mimetic isomorphism because of the high level of government intervention and the high level of political lobbying. Political institutional pressures stand in the way of mimetic isomorphism and constitute negative forces that add further tension to accounting regulation (e.g. the implementation of IFRS) in Bangladesh. Regarding the low level of normative isomorphism, there is evidence of a ‘blame culture’, with state institutions and professional accountancy institutions in the country blaming each other for the poor progress in IFRS implementation. Although the study focuses on Bangladesh, its results have implications for international policy makers (the International Accounting Standards Board, the International Monetary Fund and the World Bank), as well as the governments and regulators of other developing economies facing similar challenges in implementing IFRS.
Multinational enterprises (MNEs) venturing into emerging economies operate in relatively unfamiliar environments that, compared with their home countries, often display a high degree of administrative distance (i.e., differences in social rules, regulations, and governmental control and enforcement mechanisms). At the same time, many MNEs face the question of how intensely to commit to corporate social responsibility (CSR) in emerging economies, given the often relatively lower social standards in those countries. This research addresses the question of how administrative distance, MNE subsidiary size, and experience in the host country relate to the extent to which MNEs strategically commit to CSR in their emerging economy subsidiaries. We argue that the greater the administrative distance between MNEs’ home and host countries, the lesser the MNE subsidiaries strategically commit to CSR. At the same time, we predict that the larger the size of MNE subsidiaries (as a proxy for local subsidiaries’ available resources), and the longer their experience in the host country, the more the MNE subsidiaries strategically commit to CSR. To test our hypotheses, we use data from a large-scale, cross-industry survey of 213 subsidiaries of Western MNEs in Asia, Eastern Europe, and Latin America. We complement the survey data with country-level data from the World Bank Governance Indicators.
This study explores the role that business schools have in developing favorable attitudes toward business involvement in corporate social responsibility (CSR). Two cohorts of incoming students from two internationally accredited MBA programs in Chile and two cohorts of graduating students from the same institutions were compared in terms of their attitudes toward the role of business in alleviating social ills and the role they assigned to business schools in preparing managers to effectively address social issues. The attitudes expressed by graduates of the two programs changed after program completion. Faculty attitudes toward business involvement in CSR may play a role in the observed differences between the graduates of both institutions.
The main objective of this research is to provide knowledge on the impact that nonparticipation in controversial business can have on corporate financial performance. Accordingly, the stakeholder theory perspective was adopted and the effect of nonparticipation in controversial business on corporatefinancial performance was tested by using market-based and accounting-based economic measures. In addition, the effect of primary stakeholders' management activities on corporate financial performance was tested, whereby it can be seen whether this nonparticipation in controversial business reveals a different causal relationship with certain aspects of economic performance.
Despite the high relevance of corporate social responsibility (CSR) in current business practice and the considerable research on CSR outcomes in consumer markets, investigations of its influence on organizational business relationships are scarce. Relying on instrumental stakeholder theory, the authors develop and empirically test a framework of the influence of a supplier's CSR engagement on organizational customer outcomes. Findings from an examination of 200 cross-industry supplier-customer dyads reveal positive effects of two facets of a supplier's CSR efforts on customer loyalty through distinct mechanisms. Business practice CSR fosters customers' trust, whereas philanthropic CSR strengthens customer-company identification. The authors distinguish a supplier's actual CSR engagement and customers' perception of these CSR activities. In addition, they consider central contingency factors reflecting uncertainty and dependence in business-to-business relationships that determine the effectiveness of CSR.
Extractive industries such as mining and oil, as well as the forestry industry, are in the forefront concerning Corporate Social Responsibility (CSR). The research body concerning CSR in these industries is substantial. The purpose of this study is to review the part of the research in this field that primarily focuses on the ‘how’ issues of CSR in order to provide valuable information concerning which subareas of CSR that have been addressed and the characteristics of those areas. The identified research concerning extractive industries is focused mainly on CSR practices in Africa, Oceania and South America. Even if research concerning forestry to a large extent includes European activities there seem to be a lack of knowledge regarding CSR development in Europe. Several differences and similarities have been identified in how the industry sectors are practicing CSR. Forestry seems to be practicing CSR mainly through environmental issues and mining companies are focusing primarily on community involvement and development as well as environment issues. The most comprehensive and applied CSR practice is found in the oil industry. Despite the fact that most of the literature claimed to address the practical side of CSR, it still remains unknown how some CSR issues are practiced in real company life.
Theoretical discussions and empirical studies on the nexus between corporate social responsibility/corporate social performance and corporate financial performance have never ceased since the origin of the concepts. The development trajectories of such studies should be articulated with a view to informing practical corporate social responsibility applications and theoretical studies in the future. This paper presents a critical review of relevant empirical research articles on the nexus between corporate social performance and corporate financial performance published during the ten-year period from 2002 to 2011. Using mixed-methods of content analyses and statistical analyses, the paper reviews 84 empirical studies of this kind published during the period. The results indicate that, despite the enormous amount of previous studies, the corporate social performance and corporate financial performance nexus is a line of inquiry that remains inconclusive. The pattern of corporate social performance-corporate financial performance relationship research in the decade examined has shifted towards exploring the linkages between specific aspects of the two constructs. The positive relationships between these specific aspects in dual directions are confirmed by most of the studies examined in this paper. The paper also examines the impact of time and space change on the corporate social performance-corporate financial performance nexus. The findings show that researchers have gradually recognized that the relationship is not static but changes over time. Furthermore, the paper finds that corporate social responsibility has been increasingly debated in developing countries and in specified industrial settings. The review concludes that to explore the corporate social performance-corporate financial performance nexus by contextualizing it in a specified community, and/or examine its dynamics is a promising research area that can yield significant academic and practical values.
This paper provides an exploratory comparative assessment of the institutional pressures influencing corporate social responsibility (CSR) in a developed country, UK, vs. a developing country, Brazil, based on a survey of different actors. Information on sustainability concerns, organizational strategies and mechanisms of pressure was collected through interviews with environmental regulatory agencies, financial institutions, media and non-governmental organizations. Our results confirm that the more advanced awareness and CSR responsiveness in the UK is a consequence of a predominance of coercive and normative forces on the organizational field. The institutional forces tend to build a Brazilian organizational field that is relational based and risk intensive. The findings lend support to the view that CSR responses are unlikely to be easily transformed into uniform standardized practices across the globe. This paper contributes to a collective understanding of the organizational field and a common template for CSR in the context of developed and developing countries.
Studies done in developed economies have demonstrated a positive relationship between financial resource availability and CSR. Arguments that we term the Institutional Difference Hypothesis (IDH) drawn from the institutional literature, however, suggest that institutional differences between developed and developing economies are likely to result in different CSR implications. Integrating the logic of IDH with insights from slack resources theory, we argue that there exists a negative relationship between financial resource availability and CSR expenditures for firms in Ghana, a sub‐Saharan African emerging economy. We use lagged data from the Ghana Investment Promotion Centre and find that Return on Sales, Return on Equity, and Net Profitability were consistently associated with lower CSR expenditures. We highlight the implications of our findings for research and managers. Copyright © 2013 John Wiley & Sons, Ltd.
While a growing body of research shows how corporate action on sustainability can improve financial performance, the focus to date has been on companies in developed markets. Based on an analysis of more than 240 case studies from over 60 countries, this study focuses on addressing the gap. It analyses the business case for sustainability in emerging markets, identifying opportunities for businesses to reduce costs, increase sales, reduce risks, develop human capital, build reputation and enhance access to capital from better corporate governance, improved environmental practices, and investments in social and economic development. A business case matrix demonstrates graphically where the strongest links exist, while the discussion highlights some variations by region as well as company type. Overall, the study confirms that there are compelling commercial reasons for emerging market companies to take action on sustainability.
Commentaries, controversies, new ideas, essays and insights that aim to be provocative and engaging, raise the important issues of the day and provide observations on what is too new yet to be the subject of empirical and theoretical studies.
The role of various organizational pressures in influencing performance of firms has been an interesting research topic in a variety of fields and has received the attention of researchers working in the field of environmental strategy. Although there are previous studies that have looked at the influence of various pressures in influencing firms’ environmental strategies, our study provides a more holistic analysis considering a variety of such pressures in a single framework. We discuss a research study to analyze how pressures from internal and external stakeholders of a firm, economic pressures, environmental regulations, and pressures of environmental compliance have affected environmental performance of firms using data collected from manufacturing firms in the United Kingdom. We have found that internal stakeholders provide the greatest impact in shaping environmental performance of firms, closely followed by economic pressures, environmental regulations, and external stakeholders in that order. Fears of penalties due to environmental compliance have the least impact, although this pressure also has a positive and significant impact on environmental performance.
Using KLD data on the performance of 188 companies over a three-year period in seven areas of corporate social responsibility (CSR) – environment, community, corporate governance, diversity, employee relations, human rights, and product quality – this study examines whether CSR initiatives have a greater impact on company performance (CP) if the company prioritizes the CSR issues that matter most to it and approaches CSR initiatives in a strategic way, than if it approaches them based on generic rationale unrelated to the company's strategy. The results show that when a company pursues CSR initiatives that are linked to stakeholder preferences and allocates resources to these initiatives in a strategic way, the positive effect of its CSR initiatives on CP strengthens in terms of both market-based and accounting-based measures of performance. However, this relationship was not observed across the board for all of the seven areas of CSR. The main conclusion of this study is that companies need to link their CSR initiatives to the likely preferences of their stakeholders and undertake the corporate social actions that are relevant to the company's strategy. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.
Despite the tremendous number of publications concerned with the relationship between corporate environmental performance (CEP) and corporate financial performance (CFP), inconsistent empirical findings persist and the overall picture remains vague. Drawing on a hybrid theoretical framework (combining the theoretical reasoning of the natural-resource-based view (NRBV) with instrumental stakeholder and slack resources arguments), we address the apparent lack of consensus by meta-analytically integrating the findings of 149 studies. We pay particular attention to two highly material issues: the direction of causality and the multidimensionality of the focal constructs. Meta-analytic results indicate that there is a positive and partially bidirectional relationship between CEP and CFP. In addition, our findings suggest that the relationship is stronger when the strategic approach underlying CEP is proactive rather than reactive. Furthermore, we reveal moderation effects of methodological artifacts, which may provide explanations for the inconsistency of the results of previous studies. Based on our findings, we discuss the implications and outline avenues for further research.