ArticlePDF Available

Relationship between corporate social responsibility and business success: Case of the global tobacco industry

Authors:

Abstract and Figures

This study evaluates the relationship between corporate social responsibility (CSR) and the financial performance of companies operating within the global tobacco industry. According to the Forbes Global 2000 list, the research covers almost the entire industry, more accurately nine companies whose value is about 99% of the total market capitalization of the industry. Analysis of this research problem covered a five-year period, from 2011 to 2015. To evaluate CSR of the companies involved in research, the CSRHub rating list was used. An aforementioned list gives ratings for the four criteria of CSR: community, employees, environment, and governance. To assess the financial performance of the companies and to obtain representative results, two indicators were used: ROA, as a measure based on the accounting records of the company and Tobin’s Q ratio, as a measure of the market success of the company. The research results indicate that there is no statistically significant correlation between the CSR and the financial performance at the tobacco industry level, but statistically significant correlation can be confirmed only selectively at the level of individual companies and individual indicators.
Content may be subject to copyright.
157
RELATIONSHIP BETWEEN CORPORATE SOCIAL
RESPONSIBILITY AND BUSINESS SUCCESS: CASE OF
THE GLOBAL TOBACCO INDUSTRY
Marcela Mišura*
Ljerka Cerović**
Vesna Buterin***
Preliminary communication
UDC 005.915:005.35>663.97
Received: 6. 9. 2017
Accepted: 7. 4. 2018
DOI https://doi.org/10.30924/mjcmi/2018.23.1.157
Abstract
This study evaluates the relationship betwe-
en corporate social responsibility (CSR) and the
nancial performance of companies operating
within the global tobacco industry. According to
the Forbes Global 2000 list, the research covers
almost the entire industry, more accurately nine
companies whose value is about 99% of the total
market capitalization of the industry. Analysis of
this research problem covered a ve-year period,
from 2011 to 2015. To evaluate CSR of the com-
panies involved in research, the CSRHub rating
list was used. An aforementioned list gives ratin-
gs for the four criteria of CSR: community, em-
ployees, environment, and governance. To assess
the nancial performance of the companies and to
obtain representative results, two indicators were
used: ROA, as a measure based on the accounting
records of the company and Tobin’s Q ratio, as
a measure of the market success of the company.
The research results indicate that there is no sta-
tistically signicant correlation between the CSR
and the nancial performance at the tobacco in-
dustry level, but statistically signicant correlati-
on can be conrmed only selectively at the level of
individual companies and individual indicators.
Keywords: corporate social responsibility,
the tobacco industry, nancial performance
1. INTRODUCTION
It is expected that modern companies
contribute to social well-being with their
business activities. Particular emphasis is
placed on multinational corporations which,
as “global citizens”, have a strong impact on
society. It is clear that the growth model of
a company which in its strategy does not in-
clude the socially responsible activities is not
sustainable long-term.
In current studies, the relationship be-
tween CSR and the company’s nancial
success is strongly considered. The re-
sults of such studies vary from the positive
M. Mišura, Lj. Cerović, V. Buterin
RELATIONSHIP BETWEEN CORPORATE SOCIAL...
*Marcela Mišura, PhD Candidate at Faculty of Economics, University of Rijeka, Croatia, Phone: +385 95 5708
497, e-mail: mmisura55@gmail.com
** Ljerka Cerović, PhD, professor, Faculty of Economics, University of Rijeka, Croatia, Ivana Filipovića 4, Rijeka,
Phone: +385 51 355 147, e-mail: ljerka.cerovic@efri.hr
*** Vesna Buterin, PhD, assistant professor, Faculty of Economics, University of Rijeka, Croatia, Ivana Filipovića
4, Rijeka, Phone:+385 51 355 122, e-mail: vesna.buterin@efri.hr
Journal of Contemporary Management Issues
158
effects, through neutral to negative effects.
According to Margolis and Walsh (2003),
who summarized over 120 studies between
1971 and 2001, examining the empirical
relationship between CSR and nancial
performance, the results were inconsistent.
These differences in results can be partly ex-
plained by the various criteria, variables, and
methodology that the scholars used as the
input parameters of analyses. Nevertheless,
majority of studies on this subject show a
positive relationship between CSR and busi-
ness success of companies. On that trail,
Choi et al. (2010, 291) “nd a positive and
signicant relationship between corporate
nancial performance and the stakeholder-
weighted CSR index, but not the equal-
weighted CSR index”. Jo and Harjoto (2011)
provide additional insight on CSR’ strong
impact on US rms’ market value, measured
by Tobin’s Q ratio.
Another aspect of this issue is the fact
that the relationship between CSR and -
nancial performance of the company is dif-
ferently assessed in the existing literature,
which makes the topic particularly interest-
ing for further research. Although there are
numerous papers dealing with this topic, the
CSR level is usually dened only binary,
with grade 0 (the company is not socially
responsible) or 1 (the company is socially
responsible) and the nancial indicators of
a company that is (not) socially responsible
are calculated consequently.
Even though forty years ago Sturdivant
and Ginter (1977) emphasized the need to
take the entire industry into account when
studying CSR, there is an evident lack of
comprehensive studies on this topic (the
relationship between CSR and company’s
nancial performance) at the industry level,
especially in controversial industries, such
as the tobacco industry. This industry is
faced with increasingly rigorous legislation
and invests great efforts in shaping the soci-
ety’s perception of the industry and its prod-
ucts being placed on the market.
The purpose of this paper is to draw at-
tention to the importance that CSR has for
companies within the tobacco industry, but
having in mind Palazzo & Richter (2005)
who stated that possibility of social responsi-
bility in the tobacco industry has been heav-
ily criticized. Therefore, this paper will seek
to contribute to the overall understanding of
the relationship between CSR and business
success of the global tobacco industry by
identifying the relationship of CSR activi-
ties and industry-level nancial performance
and by investigating the differences between
companies within the tobacco industry in
this respect.
2. CSR CONCEPTUALIZATION
Since the beginning of the populariza-
tion of the CSR concept, there were differ-
ent opinions about its role in the context of
business operations. One of the rst econo-
mists who publicly spoke about this concept,
Milton Friedman (1970), pointed out that
the only social obligation of companies is to
meet the demand of their shareholders and
increase prots within the law and business
ethics.
Stakeholder theory, which is based on
respecting the needs of all stakeholders in
decision-making in business operations,
is a signicant contributor to understand-
ing the CSR and its implementation in the
business philosophy of the company. In this
aspect, the contribution of business vision-
ary Peter Drucker (Lee, 2008) is particularly
signicant. According to Smith (2011, 2),
“the inclusion of strategic philanthropy, in-
novation, environmental sustainability and
transparency demonstrate how diverse and
159
Management, Vol. 23, 2018, No.1, pp. 157-171
M. Mišura, Lj. Cerović, V. Buterin: RELATIONSHIP BETWEEN CORPORATE SOCIAL...
far-reaching CSR has become embedded
into management strategy”.
Controversies have arisen over the attrib-
utes of the concept of “corporate social re-
sponsibility” – CSR, since the 1930’s, when
it started to be mentioned in the literature,
and different scholars put forward different
views and, more or less accepted denitions.
International standard ISO 26000 was devel-
oped in 2010 with the purpose of unifying
the denition of CSR. It provides guidelines
for social responsibility of private and pub-
lic sector organizations and it sets out seven
basic criteria, all contained in the current
denitions of CSR (organizational govern-
ance, involvement in the community and
its development, human rights, labor prac-
tices, environment, fair operating practices,
consumer issues). However, the standard
neglects guidelines on the use of key man-
agement practices in terms of achieving the
overall goals of CSR and is of limited sig-
nicance for global corporations.
There is a vast literature on the topic of
CSR, which somehow complicates the sys-
tematization and classication of the results
of earlier researches, especially since clas-
sication can be based on principles, strate-
gic tools, dimensions, activities of CSR, and
more.
Different authors use different principles
in CSR’s denition; for example, Carroll
(1979) points out three fundamental prin-
ciples that dene the activity of CSR: sus-
tainability, accountability, and transparency.
According to Carroll (1991), a socially re-
sponsible company must be making a prot,
obey the laws of the country in which it op-
erates, act ethically, and be responsible for
the social effects of its operations.
The company’s strategic tools according
to the Wood’s CSP model - Corporate Social
Performance Model (1991), are divided
into three groups: the company’s effects on
community, the community programs that
the company introduces to carry out CSR,
politics that the company is developing to
address the social issues and stakeholder
requirements. Vilanova et al. (2009) empha-
size ve dimensions of CSR: vision, com-
munity relations, workplace, responsibility,
market.
3. LITERATURE REVIEW
Because of the different needs of stake-
holders and the abilities of CSR to create
added value for the company, the interest in
the analysis of the interdependence of CSR
and the company’s nancial results, as well
as the characteristic activities of the compa-
ny to be taken into account, increased. Some
authors (Karnani, 2010) state that CSR ac-
tivities increase costs without satisfactory
benets, badly affecting the performance
and that they are in conict with the activi-
ties that maximize the benets. Examples of
such activities are voluntary donations, de-
veloping plans for community improvement,
business practices that reduce pollution, and
others. On the other hand, Ullmann (1985)
analyzed 13 studies on US-based compa-
nies regarding the relationship between CSR
and nancial results and he failed to prove
that there is an unambiguous tendency.
Nevertheless, most studies show a positive
relationship between CSR and nancial per-
formances of companies, as can be seen in
the following parts of this paper.
Pava and Krausz (1996) systematized the
results of 21 studies, 12 of which showed a
positive relationship between CSR and the
nancial results of the company. Waddock
and Graves (1997) conrm that CSR and
nancial results are interdependent. Preston
and O’Bannon (1997) and Choi et al. (2010)
take CSR activities as dependent variables,
Journal of Contemporary Management Issues
160
and parameters of nancial success as inde-
pendent variables, and show a positive re-
lationship. Sims (2003) and Kotler and Lee
(2009) argue that CSR (independent vari-
able) leads to protability (dependent vari-
able) in the long run.
Orlitzky et al. (2003) with meta-analysis
conducted at 52 studies conrm that book
value of the company (measured by ROA)
is more responsive to activities of CSR than
market value (measured by Tobin’s Q ra-
tio). Incompatibility in results may be due
to different methodological approach and
the choice of variables, as well as due to the
choice of subject, place and time of analysis.
When examining the relationship be-
tween CSR and nancial performance, other
factors affecting this relationship have been
observed. Robertson and Nicholson (1996)
determine industry as a factor which af-
fects the type of CSR program implement-
ed, given the company’s direction towards
specic interest groups. Thus, pharmaceuti-
cal and chemical industries are focused on
employees, and the industry of consumer
goods, tobacco and newspaper industries to
consumers. Grifn and Mahon (1997) sug-
gest that studies of the relationship between
CSR and nancial performance should be
carried out on companies grouped by in-
dustry, as companies in different industries
focus on different social problems, and the
degree of stakeholders’ engagement is differ-
ent. McWilliams and Siegel (2000) state that
the size of the company, the industry envi-
ronment, the business culture and exposure
to risks need to be taken into consideration
when examining CSR. Several studies have
demonstrated the inadequacy of CSR exami-
nation if the industry is not included as a var-
iable in the model. Sweeney and Coughlan
(2011), after analyzing 28 FTSE4Good com-
panies1, concluded that the industry in which
1 FTSE4Good companies belong to the stock market index based on a range of CSR criteria. The FTSE4Good In-
dex was launched in 2001 by FTSE Group, a British provider of stock market indices (wholly owned by the London
Stock Exchange Group).
the company operates has a signicant im-
pact on the choice of stakeholders that the
company “addresses” in its annual report.
Cai, Jo & Pan (2012), using an extensive US
sample from 1995 to 2009, found that CSR
engagement of rms in controversial indus-
tries (such as tobacco, gambling, alcohol,
weapons, oil...) positively affects rm value
after controlling for various rm characteris-
tics. Kavaliausk and Stancikas (2014) have
examined the attitude of the population to-
wards companies that declare themselves as
socially responsible in the sectors of nance
and telecommunications and found that in
these sectors consumers prefer the quality of
service and customer satisfaction. The schol-
ars Gherghina et al. (2015) conducted a com-
prehensive survey on a sample of US com-
panies that are listed on the NASDAQ stock
market in the period 2008 - 2011. Using the
panel data regression models, the study con-
rmed that social responsibility has a posi-
tive effect on the value of the company, and
as factors affecting the CSR, they used rm
size, nancial leverage, growth and listing
on the stock market. They also found a sig-
nicant negative relationship between CSR
index and rm size.
Without going into further analysis of the
results of earlier studies, all those mentioned
so far clearly indicate the direction, focus,
and purpose of further research. Furthermore,
several specic questions which have arisen
and encouraged this research are: If there is
a need to group companies by industry when
examining the relationship between CSR
and business success, what kind of relation-
ship can be found in one controversial indus-
try, such as the global tobacco industry? Do
the results vary when business success in the
industry is measured using accounting com-
pared with market-based measures? Is there
a difference between companies operating
within the global tobacco industry in this
161
Management, Vol. 23, 2018, No.1, pp. 157-171
M. Mišura, Lj. Cerović, V. Buterin: RELATIONSHIP BETWEEN CORPORATE SOCIAL...
respect? Thus, the purpose of this research is
to ll the research gap in understanding the
relationship between CSR and business suc-
cess of the global tobacco industry.
4. METHODOLOGY
In the next chapter the research meth-
odology is presented, as well as the reasons
behind the selection of methods, data sam-
ples, and variables. The research approach is
based on the results of earlier studies of the
relations between CSR and nancial perfor-
mance, while the choice of the tobacco in-
dustry as the object of research determined
the nal design of this research.
4.1. Research methodology
The research will use descriptive statis-
tics methods, regression analysis, and cor-
relation analysis. Descriptive statistics will
be used to describe data samples of chosen
companies, a regression analysis to deter-
mine the extent of a connection between two
or more variables, and a correlation analysis
to determine the nature and degree of cor-
relation between the activity of CSR and
nancial performance of the company. The
obtained empirical results will be tested on
the example of companies operating within
the global tobacco industry. The abovemen-
tioned statistical methods were used by many
other scholars when they empirically evalu-
ated the relationship between corporate so-
cial responsibility and nancial performance
and they proved to be relevant in explaining
this relationship. On that trail, those methods
are used by Setiawan & Tjiang (2012) when
assessing correlation between nancial per-
formance and CSR activities of Indonesian
consumer goods industry and by Škare &
Golja (2012) when analyzing the impor-
tance of socially responsible behavior with
regards to nancial performance of CSR and
non-CSR corporations.
When examining the relationship be-
tween the activities of CSR and nancial var-
iables of the model, a simple linear regres-
sion model within the Excel Data Analysis
tool will be used. This model is often used to
evaluate the relationship between independ-
ent and dependent variables so Simpson and
Kohers (2002) use it to assess the impact
of CSR on the nancial performance of the
company, as well. The intensity of the con-
nection will be read from the R-squared val-
ue, and the results will be considered reliable
with the signicance level not less than 5%.
4.2. An exploratory sample
The tobacco industry has been chosen as
a subject of this research, precisely because
of the controversy it is causing in the pub-
lic. Companies within the tobacco industry
supply the market with products of whose
health hazards they warn the public, but con-
sumers still consume them, being (more or
less) aware of the risks of their consumption.
The research sample is based on objec-
tive, reliable and generally accepted stand-
ards, such as those provided by the global
media company Forbes. Ranking accord-
ing to Forbes Global 2000 (annual rank-
ing of the top 2,000 public companies in
the world) is based on a composite rating
obtained from equally weighted measures
of sales revenue, prot, assets, and market
value. The 2016 list (published in 2017),
which was used for this research, according
to Forbes (2016) “features public companies
from 63 countries that together account for
$35 trillion in revenue, $2.4 trillion in prot,
$162 trillion of assets, and have a combined
market value of $44 trillion”. To secure the
assumptions for a comprehensive research
framework, the largest companies operat-
ing in the global tobacco industry were cho-
sen from the 2016 Forbes Global 2000 list.
The nine largest companies, which together
make up 99% of the market capitalization of
Journal of Contemporary Management Issues
162
this industry in 2016 are Imperial Tobacco
Group, Philip Morris International, British
American Tobacco, Japan Tobacco, Altria
Group, Reynolds American, ITC, Gudang
Garam, KT & G (Statista, 2016).
As the Forbes Global 2000 list provides
insight only to the “size” of the compa-
nies, not to the CSR of the companies, due
to the need for a relevant CSR rating, the
sample of the companies will be formed ac-
cording to the CSRHub (Corporate Social
Responsibility) rating list.
For the calculation of nancial indica-
tors, annual reports publicly available on
the websites of the companies will be used.
Balance sheet, income statement and cash
ow statements will be used.
This approach to data enables longitu-
dinal research without dispersing signi-
cant resources on data collection. Since the
same research sample is used throughout the
observed period, panel analysis is the most
appropriate.
4.3. Model variables
There is no consensus among scholars
on the choice of parameters to be taken into
consideration when assessing the nancial
results of companies. Among the different
indicators and approaches, some scholars use
accounting-based measures such as Return
2 ROA estimates the success of the company through the economic efciency and protability of invested assets.
3 Tobin’s Q ratio assesses the performance of the company by comparing the market value of the company and the
replacement cost of assets or market and book value of assets and is an indicator of overvaluation/undervaluation of
the company.
4 Today, many companies put the focus on their activities and performance in the area of social responsibility.
However, this information is not always formally reported, and even if it is reported, it is not codied. For example,
with Fortune 1000 provided by the American business magazine Fortune (which contains 1,000 most successful US
companies ranked by revenue) 70% mentioned CSR on their website, but only an estimated 27% provide a report on
CSR. The percentage of smaller companies providing their CSR report is even lower. (CSRHub 2016).
5 CSRHub is the only company that aggregates and normalizes the data sets on the community, employees,
the environment and governance gathered from reliable sources and creates a “broad, consistent rating system and
database search” (CSRHub 2016). These sources are the leading ESG (Environment, Social and Governance) or-
ganizations such as “ASSET4 (Thomson Reuters), CDP (Carbon Disclosure Project), IW Financial, MSCI (ESG
Intangible Value Assessment, ESG Impact Monitor, GovernanceMetrics, and Carbon Tracker), RepRisk, Trucost &
Vigeo EIRIS” (CSRHub 2016).
on Assets (ROA), eg Moon et al. (2014);
other scholars use market-based measures
such as market value per share, eg Martinez
Ferrero and Valeriano (2015); while the
third approach combines both groups of
performance indicators. Thus, for example,
McGuire et al. (1988) argue that the CSR
is strongly linked with indicators based on
book value compared with indicators based
on the market value of the company.
In order to obtain representative results,
this study will use a third, joint approach,
with ROA2 as a measure based on accounting
data of companies and the Tobin’s Q ratio3 as
a measure of market value of the company.
As scientically founded research is not
based on subjective assessments and infor-
mal information4, but on generally accepted
standards, in this research, as a source of esti-
mation of CSR for companies in the sample,
the CSRHub will be used as a standard. It is
a tool that provides access to the ratings and
information on socially responsible and sus-
tainable business for 17,487 companies from
535 industries and 134 countries (CSRHub
2016). CSRHub ranks 12 indicators, three
for each of the categories: employment, the
environment, community, governance ac-
tions5. According to CSR rating from 2016,
tobacco companies in the sample Forbes
Global 2000 are ranked as follows (Table 1).
163
Management, Vol. 23, 2018, No.1, pp. 157-171
M. Mišura, Lj. Cerović, V. Buterin: RELATIONSHIP BETWEEN CORPORATE SOCIAL...
Table 1 shows top nine largest companies
in the global tobacco industry by net sales
revenue (and their composite score on the
Forbes Global 2000 list), ranked by the high-
est CSR rating. The CSR rating in four cate-
gories (community, employees, the environ-
ment, and governance) is taken into account
when calculating the average CSR rating of
the company.
If the overall CSR rating and net sales
revenue are compared, it is clear that the
company which achieved the highest net
sales revenue, Imperial Tobacco Group Ltd,
has the highest overall CSR rating. This cer-
tainly is not the rule for other companies in
the sample. For example, the company Philip
Morris International Inc., ranked second in
net sales revenue, is ranked seventh in the
overall CSR rating. The company KT&G
Corp, which achieved the lowest net sales
revenue, is not rated with the lowest CSR
rating but is in the middle (fth place) of the
rating list.
Preferences towards the composite score
(derived from equally weighted measures
of sales revenue, prot, assets and market
value), shown in the Forbes Global 2000
column, are at lower values (if the compos-
ite rating is lower, the value of a company is
higher). It is interesting to note that the last
one on the Forbes Global 2000 list is also the
last one on the CSR rating list, and next to
last by the net sales revenue (Gudang Garam
Tbk Ltd). However, this coincidence is an
exception and not a rule, which is clear from
the other companies in the sample.
Here already lies an argument in favour
of the weak connection between CSR and
the performance indicators of the companies
in the global tobacco industry.
While CSR is compared with the compos-
ite score of the company’s performance and
the net sales revenue in Table 1, the follow-
ing research will test (separately) connection
between CSR and book value (through ROA)
and market value of the company (through
the Tobin’ Q ratio). With this approach, we
will move away from structuralism to func-
tional connections and relationships that are
deeper and more complete. Namely, in the
composite score, a large number of hetero-
geneous factors are involved, but they can
be mutually “offset” and make it difcult
to conclude if a company has a higher value
on the Forbes Global 2000 list because of its
book value or market value, or both. On the
basis of the results of previous researches,
Table 1: CSR rating in the world’s largest com-
panies of the tobacco industry in 2016.
Company
Community
Employees
Environment
Governance
Total CSR rating
Net sales revenue
(bn USD)
Forbes
Global 2000
Imperial
Tobacco
Group Ltd
57 72 71 65 66 39,1 194
ITC Ltd 61 69 64 67 65 6,3 781
British
American
Tobacco Plc
55 65 67 60 62 20 177
Altria Group
Inc 53 61 63 55 58 18,9 226
KT&G Corp 57 64 58 45 56 3,6 1216
Japan
Tobacco Inc.
222
Philip Morris
Internati -
onal Inc
44 57 66 53 55 26,2 184
Reynolds
American
Inc
46 58 57 50 53 10,7 269
Gudang
Garam Tbk
Ltd
51 52 47 34 46 5,3 1387
Source: Authors’ research according to data by
the CSRHub 2016, Statista 2016, Forbes Global
2000, 2016
5163 62 475619,2
Journal of Contemporary Management Issues
164
which indicate different reactions of ac-
counting compared with market indicators
on CSR activities, it is considered that the
selected approach to analysis is informative,
relevant and scientically based.
5. RESULTS
As earlier stated, the relationship be-
tween CSR and the coefcients of ROA and
Tobin’s Q ratio will be analyzed below. Data
related to the entire sample (99% of the in-
dustry) are presented in descriptive form (cf.
table 2), and then tested on the statistical
signicance of the connection between CSR
and performance indicators are conducted
(cf. Tables 3 and 4).
With the exception of the second year
(2012), Table 2 shows a slight growth trend
in the mean value of CSR. Median supports
this trend, with an exception in the fourth
year of observation (2014).
Regarding the mean value of nancial in-
dicators, while ROA shows a slight growth
trend over the years, the Tobin’s Q ratio does
not show a predictable trend of movement.
The median value of ROA is signicantly
lower (almost twice) than the mean value in
each observed year, indicating more low val-
ues in the sample. The mentioned phenom-
enon is even more featured with the Tobin’s
Q ratio. The difference between the min/
max value in the observed period is up to 1.4
times higher with the CSR (uniformly), up
to 44 times higher with the Tobin’s Q ratio
(max 2012) and up to 49 times with ROA
(max 2012).
Exploring the reasons behind this differ-
ence between the min/max of ROA (with a
focus on 2012), the largest is, among other
things, the one related to Imperial Tobacco
Group Ltd. In that year, the company
achieved a signicant drop in ROA, which
may be explained by a decline in the value of
Table 2: Descriptive statistics at the (99%) level of the industry
Year Variable Mean Median Standard
deviation
Minimum
(min)
Maximum
(max)
Sample
size
2011
CSR 53,47 53 6,07 44 62 9
ROA 0,20 0,12 0,24 0,06 0,83 9
Tobin’s Q 4,57 1,78 7,79 0,74 25,18 9
2012
CSR 52,44 51 5,45 44 61 9
ROA 0,21 0,12 0,29 0,02 0,97 9
Tobin’s Q 5,05 1,79 9,20 0,68 29,47 9
2013
CSR 55,31 54 5,50 47 64 9
ROA 0,21 0,13 0,29 0,03 0,96 9
Tobin’s Q 4,69 1,59 8,48 0,85 27,21 9
2014
CSR 55,64 53 5,65 48 65 9
ROA 0,21 0,11 0,30 0,05 1,00 9
Tobin’s Q 4,35 2,02 6,73 1,15 22,16 9
2015
CSR 56,78 54 7,11 48 67 9
ROA 0,23 0,15 0,30 0,06 1,01 9
Tobin’s Q 4,48 2,17 6,59 1,24 21,88 9
Source: Authors’ research according to data by the CSRHub 2016, nancial reports of the
companies and Stock exchange value (NYSE, LSE, NSE, TSE, KRX, JSX) of the companies at
the end of the reporting period
165
Management, Vol. 23, 2018, No.1, pp. 157-171
M. Mišura, Lj. Cerović, V. Buterin: RELATIONSHIP BETWEEN CORPORATE SOCIAL...
intangible assets by £1.2 billion in Altadis,
Spain (one of their three key subsidiaries)
during the economic crisis in that country
(Imperial Tobacco Group Ltd: Annual Report
2012). Investigating the Tobin’s Q ratio for
the companies within the sample, the most
signicant inuence is from company ITC
Ltd. The company achieved a strong growth
in the market value of total assets in 2012
and outperformed the market trend; S&P
CNX Nifty index6 fell by 9%, and the shares
of this company increased by more than 24%
(ITC Ltd: Annual Report 2012).
After presenting descriptive statistics,
the simple linear regression model of the re-
lationship between the variables, ROA and
Tobin’s Q ratio as nancial indicators, and
CSR (cf. Table 3), was performed for compa-
nies from the sample of the tobacco industry.
At the level (99%) of the industry or the
sample (cf. Table 3), regression results show
6 S&P CNX Nifty is the benchmark stock market index for Indian equity market and it’s composed of 50 the largest
and most liquid stocks found on the National Stock Exchange of India.
that the value of the coefcient “p” for the
ROA and the Tobin’s Q ratio is higher than
the signicance level of 0.05 for the observed
period. It could be concluded that there is no
statistically signicant relationship between
CSR and ROA variables and between CSR
and Tobin’s Q ratio. Also, the coefcient of
variation (VŶ) shows extremely high values,
which brings into question the representa-
tiveness of the sample. If only the correlation
coefcient (r) was observed, it is clear that
only in the last two years there is a weak cor-
relation of both ROA and the Tobin’s Q ratio
with the CSR. The correlation coefcient for
CSR - ROA ratio in 2014 is 32%, while in
2015 it is 44%. The correlation coefcient
for CSR - Tobin’s Q ratio in 2014 is 38%,
and in 2015 it is 49%.
As can be seen (cf. Table 2), companies
in the sample have made more efforts in CSR
at the end of the observed period (average
Table 3: Regression results at the (99%) level of the industry
CSR
Indices Coefficient 2011 2012 2013 2014 2015
ROA
P-value * * * * *
r0,01 0,05 0,05 0,32 0,44
VŶ127,86% 144,18% 142,09% 140,09% 125,78%
R20,00 0,00 0,00 0,10 0,19
N9 9 9 9 9
Tobin’s
Q
P-value * * * * *
r0,08 0,10 0,00 0,38 0,49
VŶ181,51% 193,92% 193,27% 152,60% 137,28%
R20,01 0,01 0,00 0,15 0,24
N9 9 9 9 9
Source: Authors’ research according to data by the CSRHub 2016, nancial reports of the
companies and Stock exchange value (NYSE, LSE, NSE, TSE, KRX, JSX) of the companies at
the end of the reporting period
Note: * statistically insignicant
Journal of Contemporary Management Issues
166
rating at the level of the industry is growing
from 53.47 in 2011 to 55.64 in 2014 and to
56.78 in 2015), which may be a partial expla-
nation of the increase in correlation coef-
cients in the last two years for both ROA and
Tobin’s Q ratio. However, for 2014 and 2015
the empirical level of signicance (p) shows
that results cannot be considered reliable
(initial results for “p” in Table 3 are marked
with symbol * - statistically insignicant).
After regression analysis was performed
at the (99%) level of the industry (question-
ing the sample representativeness), the sim-
ple linear regression model was performed
for the companies in the sample throughout
the observed period from 2011 to 2015 (cf.
Table 4).
The regression results for ROA show
that the coefcient “p” is lower than the
0.05 signicance level for two companies:
Philip Morris International Inc and Reynolds
American Inc. For both companies, there is a
strong positive correlation between the CSR
and the book value of the company repre-
sented by the ROA indicator. The correlation
coefcient (r) for company Philip Morris
International Inc is 93%, while for Reynolds
American Inc it is 94%. The regression re-
sults for the Tobin’s Q ratio show the coef-
cient “p” lower than the signicance level of
0.05 only for company ITC Ltd. This com-
pany shows a strong positive correlation (r
= 90%) between CSR and the market value
of the company represented by the Tobin’s
Q ratio. These results may be linked to the
Table 4: Regression results at the company level in the period 2011 – 2015.
CSR
Coefficient
Imperial Tobacco
ITC Limited
British American
Altria Group Inc
Philip Morris
International
Japan Tobacco Inc
KT&G
Reynolds American Inc
Gudang Garam Tbk
ROA
P-value * * * * 0,022 ** 0,020 *
r0,65 0,57 0,35 0,71 0,93 0,10 0,48 0,94 0,27
VŶ30,64% 7,32% 13,13% 16,28% 3,88% 15,55% 14,73% 5,14% 22,74%
R20,42 0,32 0,12 0,50 0,87 0,01 0,23 0,87 0,07
N5 5 5 5 5 5 5 5 5
Tobin’s Q
P-value *0,04 * * * * * * *
r0,73 0,90 0,03 0,79 0,15 0,10 0,00 0,18 0,25
VŶ13,72% 6,65% 7,50% 22,83% 5,33% 18,38% 10,37% 30,16% 32,23%
R20,53 0,80 0,00 0,62 0,02 0,01 0,00 0,03 0,06
N5 5 5 5 5 5 5 5 5
Source: Authors’ research according to data by the CSRHub 2016, nancial reports of the companies
and Stock exchange value (NYSE, LSE, NSE, TSE, KRX, JSX) of the companies on the end of the re-
porting period
Note: * statistically insignicant
167
Management, Vol. 23, 2018, No.1, pp. 157-171
M. Mišura, Lj. Cerović, V. Buterin: RELATIONSHIP BETWEEN CORPORATE SOCIAL...
results of the research by the aforementioned
authors McGuire, Sundgren & Schneeweis
(1988), which conclude that CSR is strongly
associated with indicators based on book
value compared to indicators based on the
market value of the company.
Philip Morris International Inc, for which
the regression analysis shows a strong posi-
tive correlation between CSR and ROA (r =
93%) is ranked as seventh of the nine com-
panies in the sample, according to the 2016
ranking. However, it is the only company in
the sample that has achieved continuous pro-
gress in CSR rating throughout the observed
period (CSRHub 2016).
Reynolds American Inc., for which the
regression analysis also shows a strong posi-
tive correlation between CSR and ROA (r =
94%) is only at the eighth place of the nine
companies in the sample, according to the
ranking from 2016. Even though the compa-
ny has not achieved a continuous improve-
ment in CSR rating, it is worth mentioning
that in the years in which it recorded the
growth of ROA, it also achieved growth in
the CSR rating (2013 and 2014), and vice
versa (CSRHub 2016; Reynolds American
Inc. 2013, 2014).
ITC Ltd, for which the regression analy-
sis shows a strong positive correlation be-
tween CSR and Tobin’s Q ratio (r = 90%)
is ranked second from a total of nine com-
panies in the sample, according to the 2016
ranking. It is interesting to add that the com-
pany has become one of the most successful
companies in the sample according to the
CSR rating only in the last two years (2014
and 2015) (CSRHub 2016).
Table 4 shows a medium strong positive
correlation between CSR and ROA for the
companies Imperial Tobacco Group Ltd, ITC
Ltd and Altria Group Inc., and between CSR
and Tobin’s Q ratio for Altria Group Inc. and
Imperial Tobacco Group Ltd. However, the
coefcient “p” in the regression analysis in-
dicates insufcient statistical signicance.
It is possible that expanding the time frame
of observation of these companies would
contribute to the increase of statistical sig-
nicance. However, given their stronger
implementation of CSR only in recent years
(cf. Table 2), the extension of the time frame
could affect the greater dispersion of the val-
ues in the sample.
6. CONCLUSION
In this paper the analysis of the correla-
tion between the CSR and the nancial per-
formance of the companies operating within
the global tobacco industry for the period
2011-2015 was performed, on a sample
whose value is about 99% of the total mar-
ket capitalization of this industry. Results of
the research suggest that it is not possible to
determine the scientically based correla-
tion of CSR and selected performance indi-
cators, ROA and Tobin’s Q ratio. Obtained
results conrm the results of earlier studies
in which no statistically signicant correla-
tion and unambiguous tendency between
these variables have been demonstrated. As
the focus of this research is on the tobacco
industry, which invests signicant resources
in CSR, largely because of public pressure,
the ndings could, among other things, be
burdened by the cost inefciency of invest-
ing in CSR activities.
In the second part of the empirical re-
search conducted on the company level,
only a few regression analyses (3 out of
18) expressed the value of the coefcient
“p” below 0.05 in the observed period of
2011 - 2015. A strong positive correlation
between CSR and nancial performance for
three tobacco companies was conrmed - for
two through ROA and for one through the
Journal of Contemporary Management Issues
168
Tobin’s Q ratio. When applying a regression
analysis to a single company, the dispersion
of the ROA and Tobin’s Q ratio from the
mean value decreased, which is in favor of
the representativeness of this approach.
Although review of previous research
mostly revealed a positive relationship be-
tween the CSR and nancial performances
of the companies, results of this research
suggest otherwise. Important scientic con-
tribution of this research is that it conrms
the importance of industry in examination of
the relationship between CSR and nancial
performance. Nevertheless, it allows differ-
ent understanding of the importance of CSR
in the industry which core function is in in-
herent contradiction with CSR. The impor-
tance of having short-term nancial benets
in such industry falls into the background and
other stakeholders’ interests, which might be
perceived as the fact that increased brand eq-
uity resulting from the investments into CSR
is gaining in importance. Observed from a
different point of view, business success in
this industry seems to be inuenced by other
factors to a larger extent than by CSR.
A number of important limitations need
to be considered. Firstly, due to difculties in
nding a universally accepted CSR standard
and in ensuring scientically based research,
this paper focused on CSRHub as a standard
of CSR. Although it is evident which criteria
this standard evaluates, it’s not fully transpar-
ent how CSRHub rating system is created.
Secondly, almost no research has been made
on the topic of relationship between CSR
and business success in industries which are
under the watchful eye of the public, such as
the tobacco industry. It is, therefore, difcult
to compare results between papers and dis-
cover potential disadvantages and space for
progress. Thirdly, due to the difculties in
obtaining nancial data as well as CSR score
at the regional or the country level, the focus
was on the global tobacco industry though
this approach provides a good overview and
a basis for further research.
Options for further research are numer-
ous, from the selecting of other performance
indicators as model variables, their dening
as independent or dependent, to an exten-
sion of the time frame of observation for the
companies in the sample. As certain CSR ac-
tivities need longer period of time to show
results, it would be interesting to conduct
research with differentiation between short-
term and long-term impact of CSR on busi-
ness success. Another important endowment
would be examination of the relationship
between CSR and business success in other
controversial industries (like gambling and
alcoholic drinks) to compare thus obtained
results. Of course, there is a dilemma as to
whether such industries as tobacco should be
evaluated, in terms of CSR, with the indica-
tors of nancial success or should such in-
dustries and analyses of the relationship be-
tween CSR implementation and the business
philosophy of the company be analysed with
some other companies’ indicators? At any
rate, the controversial industries, such as the
tobacco industry, are an interesting area for
research as the one presented in this paper.
169
Management, Vol. 23, 2018, No.1, pp. 157-171
M. Mišura, Lj. Cerović, V. Buterin: RELATIONSHIP BETWEEN CORPORATE SOCIAL...
REFERENCES
1. Cai, Y., Jo, H. & Pan, C. (2012), ‘Doing
well while doing bad? CSR in contro-
versial industry sectors’, Journal of
Business Ethics, vol. 108, no. 4, pp. 467
– 480.
2. Carroll A. B. (1979), ‘A three-dimen-
sional conceptual model of corporate
performance’, Academy of Management
Review, vol. 4, no. 4, pp. 497 – 505.
3. Carroll, A. B. (1991), ‘The pyramid of
corporate social responsibility: Toward
the moral management of organizational
stakeholder’, Business Horizons, vol.
34, no. 4, pp. 39 – 48.
4. Choi, J. S., Kwak, Y. M. & Choe, C.
(2010), ‘Corporate social responsibility
and corporate nancial performance:
evidence from Korea’, Australian
Journal of Management, vol. 35, no. 3,
pp. 291 – 311.
5. CSRHUB 2016, CSRHUB Sustainability
management tools, Available at: <htt-
ps://www.csrhub.com/> (Accessed 10th
of April 2017)
6. Forbes 2016, The World’s Biggest
Public Companies, Available at: <htt-
ps://www.forbes.com/global2000/
list/#tab:overall> (Accessed 15th of
March 2017)
7. Friedman, M. (1970), ‘The social re-
sponsibility of business is to increase its
prots’, The New York Times, Available
at: <http://www.umich.edu/~thecore/
doc/Friedman.pdf> (Accessed 1st of
December 2016)
8. Gherghina, Ş. C., Vintilă, G. &
Dobrescu, D. (2015), ‘An empirical re-
search on the relationship between cor-
porate social responsibility ratings and
US listed companies’ value’, Journal of
Economics Studies and Research, vol.
2015, pp. 1 – 12.
9. Grifn, J. & Mahon, J. (1997), ‘The cor-
porate social performance and corporate
nancial performance debate’, Business
& Society, vol. 36, no. 1, pp. 5 - 25.
10. Imperial Tobacco Group Ltd (2012),
Annual Report and Accounts, Available
at: <http://static.globalreporting.org/rep
ortpdfs/2012/5688212f78c6a4f3cb70d5
de9a5ecd19.pdf> (Accessed 10th of June
2017)
11. ITC Ltd (2012), Report and Accounts,
Available at: <http://www.itcportal.
com/about-itc/shareholder-value/annu-
al-reports/itc-annual-report-2012/pdf/
report-accounts-2012.pdf> (Accessed
10th of June 2017)
12. Jo, H. & Harjoto, M. A. (2011),
‘Corporate governance and rm value:
The impact of corporate social responsi-
bility’, Journal of Business Ethics, vol.
103, no. 3, pp. 351 - 83.
13. Karnani, A. (2010), ‘The case against
corporate social responsibility’, The Wall
Street Journal, Available at: <http://
www92.homepage.villanova.edu/nan-
cy.heck/Articles/Case%20Against%20
Social%20Responsibility%20WSJ%20
8-23-10.pdf> (Accessed 20th of
November 2016)
14. Kavaliauske, M. & Stancikas, A.
(2014), ‘The importance of corporate
social responsibility in Lithuania’s -
nance and telecommunication indus-
tries’, Procedia - Social and Behavioral
Sciences, vol. 110, pp. 796 – 804.
15. Kotler, P. & Lee, N. (2009), Društveno
odgovorno poslovanje, Suvremena te-
orija i najbolja praksa, MEP Consult,
Zagreb
16. Lee, M. D. P. (2008), ‘A review of the
theories of corporate social respon-
sibility: Its evolutionary path and the
road ahead’, International Journal of
Management Reviews, vol. 10, no.1, pp.
53. – 73.
Journal of Contemporary Management Issues
170
17. Margolis, J. D. & Walsh, J. P. (2003),
‘Misery loves companies: Rethinking
social initiatives by business’,
Administrative Science Quarterly, vol.
48, no. 2, pp. 268 - 305.
18. Martinez - Ferrero, J. & Valeriano, F.
A. (2015), ‘Relationship between sus-
tainable development and nancial
performance: International empirical
research’, Business Strategy and the
Environment, vol. 24, no. 1, pp. 20 – 39.
19. McGuire, J. B., Sundgren, A. &
Schneeweis, T. (1988), ‘Corporate social
responsibility and rm nancial perfor-
mance’, The Academy of Management
Journal, vol. 31, no. 4, pp. 854 – 72.
20. McWilliams, A. & Siegel, D. (2000),
‘Corporate social responsibility and -
nancial performance: correlation or mis-
specication?’, Strategic Management
Journal, vol. 21, no. 5, pp. 603 – 9.
21. Moon, S. G., Bae, S. & Jeong, M. G.
(2014), ‘Corporate sustainability and
economic performance: an empirical
analysis of a voluntary environmental
program in the USA’, Business Strategy
and the Environment, vol. 23, no. 8, pp.
534 – 46.
22. Orlitzky, M., Schmidt, F. L. & Rynes,
S. L. (2003), ‘Corporate social and -
nancial performance: a meta-analysis’,
Organization Studies, vol. 24, no. 3, pp.
403 – 41.
23. Palazzo, G. & Richter, U. (2005), ‘CSR
Business as Usual? The Case of the
Tobacco Industry’, Journal of Business
Ethics, vol. 61, no. 4, pp. 387 – 401.
24. Pava, M. L. & Krausz, J. (1996), ‘The
asso ciation between corporate so-
cial-responsibility and nancial per-
formance: The paradox of social cost,
Journal of Business Ethics, vol. 15, no.
3, pp. 321 - 57.
25. Preston, L. E. & O’Bannon, D. P.
(1997), ‘The corporate social – nancial
performance relationship’, Business &
Society, vol. 36, no. 4, pp. 419 – 29.
26. Reynolds American Inc (2013, 2014),
Financials and lings, Available at:
<http://reynoldsamerican.com/Investors
/Financials-and-Filings/Annual-
Reports/default.aspx> (Accessed 10th of
June 2017)
27. Robertson, D. C. & Nicholson, N.
(1996), ‘Expressions of corporate social
responsibility in U.K. rms’, Journal
of Business Ethics, vol. 15, no. 10, pp.
1095 - 106.
28. Setiawan, E. & Tjiang, G. J. (2012),
‘Corporate Social Responsibility,
Financial Performance, and Market
Performance: Evidence from Indone-
sian Consumer Goods Industry’,
Proceedings in ABRC’s 2012: the 6th
Asian Business Research Conference.
Bangkok, Thailand.
29. Sims, R. R. (2003), Ethics and corpo-
rate social responsibility – Why giants
fall. Praeger, Westport, USA
30. Simpson, W. G. & Kohers, T. (2002),
‘The link between corporate social and -
nancial performance: Evidence from the
banking industry’, Journal of Business
Ethics, vol. 35, no. 2, pp. 97 – 109.
31. Smith, R. E. (2011), ‘Dening corporate
social responsibility: A system approach
for socially responsible capitalism’,
Master of Philosophy thesis, University
of Pennsylvania, Philadelphia,
Pennsylvania.
32. Statista (2016), Global tobacco mar-
ket: leading companies 2016, based on
net sales, Available at: <https://www.
statista.com/statistics/259204/leading-
10-tobacco-companies-worldwide-
based-on-net-sales/> (Accessed 20th of
March 2017)
33. Sturdivant, F. & Ginter, J. (1977),
‘Corporate social responsiveness,
171
Management, Vol. 23, 2018, No.1, pp. 157-171
M. Mišura, Lj. Cerović, V. Buterin: RELATIONSHIP BETWEEN CORPORATE SOCIAL...
management attitudes and economic
performance’, California Management
Review, vol. 19, no. 3, pp. 30 – 9.
34. Sweeney, L. & Coughlan, J. (2011),
‘Do different industries report corpo-
rate social responsibility differently? An
investigation through the lens of stake-
holder theory’, Journal of Marketing
Communications, vol. 14, no. 2, pp. 113
- 24.
35. Škare, M. & Golja, T. (2012), ‹Corporate
social responsibility and corporate
nancial performance – Is there a link?›,
Ekonomska istraživanja, vol. 25, no. 1,
pp. 215 – 42.
36. Ullmann, A. A. (1985), ‘Data in search
of a theory: A critical examination of
the relationship among social perfor-
mance, social disclosure, and economic
performance of U.S rms’, Academy of
Management Review, vol. 10, no. 3, pp.
540 – 57.
37. Vilanova, M., Lozano, J. M., Arenas,
D. (2009), ‘Exploring the Nature of
the Relationship Between CSR and
Competitiveness’, Journal of Business
Ethics, vol. 87, no.1, pp. 57 – 69.
38. Waddock, S. A., Graves, S. B. (1997),
‘The corporate Social Performance
Financial Performance Link’, Strategic
Management Journal, vol. 18, no. 4, pp.
303 – 19.
39. Wood, D. (1991), ‘Corporate Social
Performance Revisited’, The Academy
of Management Review, vol. 16, no. 4,
pp. 691 – 717.
SAŽETAK
Istraživanje ocjenjuje odnos između druš-
tveno odgovornog poslovanja (DOP) i nancij-
skih performansi poduzeća koja posluju unutar
duhanske industrije. Prema listi Forbes Global
2000, istraživanjem je obuhvaćeno devet podu-
zeća koja čine 99% tržišne kapitalizacije u ovoj
grani, što ukazuje na obuhvaćenost analizom go-
tovo cijele industrije. Analiza ovog istraživačkog
problema obuhvatila je razdoblje od pet godina,
2011. - 2015. Za ocjenu DOP-a poduzeća iz uzor-
ka korištena je CSRHub rejting lista koja ocjenju-
je četiri kriterija DOP-a, uključenost poduzeća u
društvenu zajednicu, brigu o zaposlenima, brigu
o okolišu te upravljanje poduzećem. Kako bi se
dobili reprezentativni rezultati, za ocjenu nancij-
skih performansi poduzeća koristila su se dva po-
kazatelja, ROA, kao mjera temeljena na računo-
vodstvenim podacima poduzeća, i Tobin Q indeks,
kao mjera tržišnog uspjeha poduzeća. Rezultati
istraživanja upućuju na zaključak da na razini
industrije nije moguće uočiti statistički značajnu
povezanost između DOP-a i nancijske uspješno-
sti poduzeća duhanske industrije, već je istu mo-
guće potvrditi tek selektivno, na razini pojedinih
poduzeća i pojedinih pokazatelja.
Ključne riječi: društveno odgovorno po-
slovanje, duhanska industrija, nancijske
performanse
ODNOS IZMEĐU DRUŠTVENE ODGOVORNOSTI I
USPJEŠNOSTI POSLOVANJA PODUZEĆA:
SLUČAJ GLOBALNE DUHANSKE INDUSTRIJE
... The results find partial support to the hypothesis that corporate social responsibility is a move from the shareholders wealth to a multi-stakeholders welfare target. Marcela et al. (2018), carried out a research on the relationship between corporate social responsibility and business success. The study was carried out using secondary data through the use of annual reports and accounts of Tobacco industry. ...
... The empirical findings of hypothesis one showed that corporate social responsibility cost has a positive and significant relationship with return on equity. This result is consistent with the findings of (Achmad, 2018; Dickson & Nwosu, 2018;Orlitzky, 2001;Amadi & Ndu, 2018;Boafo & Kokuma, 2018;Dickson & Nwosu, 2018;Dilashenyi et al., 2018;Ernfjord & Voigt, 2018;Giltahi et al., 2018;Hang & Ngoc, 2018;Irfan & Faizen, 2018;Kouzoumi, 2018;Leonardo et al., 2018;Marcela et al., 2018;Miner et al., 2018;Niresh & Silva, 2018;Obafemi et al., 2018;Okwemba et al., 2018;Olaoye & Oluwadare, 2018;Onyekwelu et al., 2018;Resmi et al., 2018;Taridi, 2018;Umar et al., 2018;Umoren et al., 2018;Adeniyi, 2017). ...
Article
Full-text available
This study examined the mediating effect of firm size on the relationship between corporate social responsibility cost and financial performance of listed non-financial companies in Nigeria. The content analysis approach was adopted and data collected from secondary sources. The collected data were analyzed using the ordinary least square techniques. The results revealed that companies with higher or equal to the median value expend more on corporate social responsibility while companies with the value below the median expend less on corporate social responsibility. The study also revealed that there is a positive and significant relationship between corporate social responsibility cost and return on equity. It further revealed that there is a positive and significant relationship between corporate social responsibility cost and firm size. Also, the results showed that there is a positive and significant relationship between firm size and return on equity. Finally, the results from the analysis showed that firm size partially mediates the relationship between corporate social responsibility cost and return on equity. The study concludes that large companies are investing more on corporate social responsibility than smaller companies. The study recommended that for corporate companies in Nigeria to improve their image/reputation they should engage in CSR operations in all its aspects, thereby growing their returns. Corporate companies should spend fair sums of their profits on social donation which in essence would result in a rise in their earnings.
... Mujahid and Abdullah (2014) defined CSR as the progressing organizational commitment to work for the betterment of the workforce of the organization to attain ethical values as well as to improve the overall performance of the organization that can also contribute to the economic development of that country. Mišura, Cerović and Buterin (2018) evaluate the relationship between corporate social responsibility (CSR) and the financial performance of companies operating within the global tobacco industry. To evaluate CSR of the companies involved in research, the CSRHub rating list was used. ...
... Three most widely used measures of CSR (amount spent on education, health and environment) were used in this study whereas return on assets was used to proxy financial performance of the sampled companies (Mišura, Cerović and Buterin (2018), Rana and Asad (2018) 2018)). Data analysis was achieved using OLS-Regression model drawn to examine the impact of Corporate Social Responsibility on Nigerian Insurance firm's financial performance. ...
Article
Full-text available
... The results find partial support to the hypothesis that corporate social responsibility is a move from the shareholders wealth to a multi-stakeholders welfare target. Marcela et al. (2018), carried out a research on the relationship between corporate social responsibility and business success. The study was carried out using secondary data through the use of annual reports and accounts of Tobacco industry. ...
... The empirical findings of hypothesis one showed that corporate social responsibility cost has a positive and significant relationship with return on equity. This result is consistent with the findings of (Achmad, 2018; Dickson & Nwosu, 2018;Orlitzky, 2001;Amadi & Ndu, 2018;Boafo & Kokuma, 2018;Dickson & Nwosu, 2018;Dilashenyi et al., 2018;Ernfjord & Voigt, 2018;Giltahi et al., 2018;Hang & Ngoc, 2018;Irfan & Faizen, 2018;Kouzoumi, 2018;Leonardo et al., 2018;Marcela et al., 2018;Miner et al., 2018;Niresh & Silva, 2018;Obafemi et al., 2018;Okwemba et al., 2018;Olaoye & Oluwadare, 2018;Onyekwelu et al., 2018;Resmi et al., 2018;Taridi, 2018;Umar et al., 2018;Umoren et al., 2018;Adeniyi, 2017). ...
Article
Full-text available
This study examined the mediating effect of firm size on the relationship between corporate social responsibility cost and financial performance of listed non-financial companies in Nigeria. The content analysis approach was adopted and data collected from secondary sources. The collected data were analyzed using the ordinary least square techniques. The results revealed that companies with higher or equal to the median value expend more on corporate social responsibility while companies with the value below the median expend less on corporate social responsibility. The study also revealed that there is a positive and significant relationship between corporate social responsibility cost and return on equity. It further revealed that there is a positive and significant relationship between corporate social responsibility cost and firm size. Also, the results showed that there is a positive and significant relationship between firm size and return on equity. Finally, the results from the analysis showed that firm size partially mediates the relationship between corporate social responsibility cost and return on equity. The study concludes that large companies are investing more on corporate social responsibility than smaller companies. The study recommended that for corporate companies in Nigeria to improve their image/reputation they should engage in CSR operations in all its aspects, thereby growing their returns. Corporate companies should spend fair sums of their profits on social donation which in essence would result in a rise in their earnings.
... shareholders, employees, the community, suppliers and customers) in consideration of the environment and sustainable development (Sanclemente-Té llez, 2017). The term could also be used for corporate citizenship and sustainability (Banerjee, 2008) and covers commitments and actions related to varieties of activities including, but not j SOCIAL RESPONSIBILITY JOURNAL j limited to accountability, transparency and performance reporting (Cormier et al., 2011;Mišura et al., 2018). ...
... It is proxied by the country's CSR overall rating as recorded by CSRHub. The use of the CSRHub database as a reliable data source is consistent with prior literature (Mišura et al., 2018;Thanetsunthorn, 2015). A country's overall CSR rating is computed by CSRHub from four categories of measures proxied by three indicators in each case. ...
Article
Purpose The purpose of this study is to examine the effect of public governance and economic growth on corporate social responsibility (CSR) performance in Egypt, Morocco, Mauritius, Nigeria and South Africa. It also assesses the trend of CSR performance in these countries over time. Design/methodology/approach The study is based on a sample of five countries in Africa for the period 2012-2017. The multivariate regression model was used in testing the research questions/hypotheses. Robustness tests were performed to provide evidence to strengthen the findings of the study. Findings Findings suggest that both good governance and economic growth are significantly positively associated with CSR performance. However, while good governance has a relatively substantial effect size, economic growth has a small effect size. Overall, both variables have a considerably low confidence interval ratio and therefore stand a good chance of holding up in future research. Research limitations/implications The analysis is limited to within-country effects, thereby forgoing the opportunity to explain between-countries effects. Second, the sample size is relatively small because of the limitation of data availability on CSR in Africa; hence, population generalization is not intended but theory generalization. Practical implications Findings have implications for studies on CSR performance in Africa that fail to consider the socio-political and socio-economic level of development as contextual variables in the research design. Originality/value Prior studies on CSR have focused majorly on CSR performance–corporate financial performance relationship. Furthermore, there are several calls in the literature for research for a new direction on CSR in the context of developing countries, especially Africa. This paper responds to these literature gaps.
... The finished products from mango processing face a quality problem because some units do not master or do not process according to quality standards. This negatively impacts the nutritional value of mango and derived products, and consequently competitiveness [16]. Chemical changes are observed during drying and can strongly impact the nutritional quality of the processed product. ...
Article
Full-text available
The Ziguinchor region (Kaguitte village), where the mango samples were collected, is an area that is very affected by post-school losses of seasonal fruit in general. Faced with this problem, the women in the GIE (economic interest group) have been processing mangoes into by-products for several years, particularly drying, which is one of the mwain techniques for preserving agricultural and food products. It is a process that is used in the production of many food products. To carry out this drying, three techniques were used: the one used by the women of the locality (Normal) and two others with osmotic dehydration for two hours and three hours respectively. After peeling, it was found that the improved varieties Knt and Kt had the highest pulp yields (60% of their total mass) and that the Sl variety had the lowest yield. In this work, we followed the variation of polyphenol contents and antioxidant powers according to the technique and the mango variety. For total polyphenols, the Folin-Ciocalteu method was used and antioxidant activity was assessed with 2,2-diphenyl-1-pycrilhydrazyl (DPPH°). The results showed that the antioxidant power, significantly decreases after treatment of the four varieties (example: Knt normal-AAR=0.83%, Treatment-2h-AAR=0.69% and Treatment-3h-AAR=0.59%) with the exception of Dr variety (Normal-AAR=0.68% and Treatment-2h-AAR=0.79% and Treatment-3h-AAR=0.78%). The determination of total polyphenols in these samples showed a much more obvious variation between varieties and less important after the treatment. Thus we have: Knt (Normal-0.07g/100g, treatment-2h-0.03g/100g and treatment-3h-0.19g/100g), Kt (Normal-0.27g/100g, treatment-2h-0.07g/100g and treatment-3h-0.06g/100g) and Sl (Normal-0.11g/100g, treatment-2h-0.07g/100g and treatment-3h-0.21g/100g) Analyses (of Variance and linear models) show that the varieties Knt (treatment-2h-0.0087g/100g and normal-0.0033g/100g), Dr (treatment-2h-0.0023g/100g and normal-0.0019g/100g) and Sl (treatment-2h-0.0023g/100g and normal-0.0017g/100g), respectively, have quite high flavonoid contents. These experimental results show that the technique used (Normal) by the local units preserves the antioxidant compounds well and in some cases it is necessary to treat the different varieties before drying them.
... According to Carroll (2021), the CSR discourse focused mainly on businesspeople going beyond monetary interest (Jiang, 2021) or legal requirements (Mišura et al., 2018) by promoting social activities such as volunteering (Dropulić & Čular, 2019). Over the years, a series of research have been developed to understand the subject from different contexts, thus generating a proliferation of approaches and theories (Prutina, 2016;Torugsa et al., 2012) such as corporate social performance (e.g., Alonso-Martínez et al., 2020;Crișan-Mitra et al., 2020;Garcia et al., 2021;Napier et al., 2023); corporate social responsibilities (e.g., Han et al., 2020;Kurt, 2022;Zhou et al., 2021); corporate citizenship (e.g., Akbari & McClelland, 2020;Kruggel et al., 2020); business ethics (e.g., DeTienne et al., 2021;Ermasova, 2021); corporate governance (e.g., Koutoupis et al., 2021;Naciti et al., 2022;Zaman et al., 2022); environmental management or sustainable development (e.g., López-Concepción et al., 2022;Lu et al., 2021;Ruggerio, 2021); among other topics. ...
Article
Full-text available
Available here: https://revistasinvestigacion.lasalle.mx/index.php/recein/article/view/3592 This paper presents the results of a study on Corporate Social Responsibility (CSR) in micro, small and medium-sized enterprises (MSMEs). Using a bibliometric methodology of descriptive-comparative scope to analyze a total of 380 research papers, published during the period from 1972 to 2021 in several scientific journals. The results show that the scientific publications increased significantly as of 2009; the Journal of Business Ethics stands out for the most significant number of publications; in addition, the journals’ countries with the highest scientific production were the United Kingdom and the United States of America. Regarding the authorship criterion, Laura J. Spence resulted with the greater number of contributions on the subject. Finally, the predominance of the quantitative methodology and a non-experimental research design in the publications is noteworthy; furthermore, the most recurrent approach studied was the CSR practices in MSMEs. This bibliometric study contributes to CSR state of the art.
... Ackers and Eccles (2015) point out that society around the world is demanding government and businesses share the collective responsibility to ensure economic development does not compromise the ability of future generations to meet their own needs. In line with this notion, the extractive industries' CSR contributes to sustainable economic growth (Misura et al., 2018). However, if the business environment in which the extractive industries operate is ignored, the business contribution to SCD may not be successful. ...
Chapter
This chapter analyses the place of corporate social responsibility (CSR) in Kenya’s mining sector. The extractive industry engages in corporate social responsibility (CSR) not only to obtain the social license needed to mine but, ostensibly, also to develop the communities within which they carry out their operations. The Kenyan Mining Policy 2016, new Kenyan Mining Act 2016 and Petroleum Act 2019 suggest various ways through which players in the mining industry (especially mining corporations) can develop local communities. The Local Content Bill 2018 also spells out how communities can benefit from mining projects through arrangements bearing on the promotion of value addition through local expertise. The Petroleum Act 2019 itself already provides a comprehensive framework that guides the development of regulations to implement local content and has a suggestion on how mining communities can be assisted. These legal instruments thus focus on how communities can be assisted through CSR activities. While this may be the aim of these regulations, others have argued that these legal instruments only suggest how CSR may be carried out without offering specifics. This thus will only create regulatory confusion to the detriment of communities (as major multinational mining companies tend to overwhelm weak governments in developing nations by ignoring these regulations).KeywordsCSRMiningKenyaCommunities
... This finding of no significant relationship between CSR and ROE is consistent with studies such as Machdar (2019), Miller (2016) and Mišura et al. (2017) that found no significant rapport between CSR investment and economic performance. ...
Article
Full-text available
The significance of corporate social responsibility cannot be underestimated. Corporate ignorers of CSR initiatives are likely to be punished by customers leading to an impact on corporate financial performance. The present work evaluated the nexus between CSR and financial performance of 42 Johannesburg Stock Exchange (JSE) listed mining companies. The study followed a quantitative research approach with a correlational non-experimental research design. Data were collected from 2013 to 2021. Financial performance was taken as the dependent variable proxied by return on equity, return on assets and earnings per share. The independent variable of this research consisted of CSR index based on the Boston College Carroll School of Management Center for Corporate Citizenship reports. The findings show that return on assets was positively and significantly linked to return on assets. Two financial performance measures (earnings per share and return on equity) displayed no significant relationship with CSR. It was concluded that if companies adopt the right CSR initiatives can increase financial performance. From a practical standpoint, this study contributes towards developing of CSR policies and as well function as a trigger for listed companies that they can improve financial performance from CSR.
Chapter
Responsible leadership focusing on sustainable community development (SCD) is a relatively new area of scholarly inquiry that goes beyond traditional leadership approaches and focuses on people, institutions, and societies. The antecedents and responsible leadership strategies of corporate social responsibility (CSR), particularly for extractive industries and their SCD programs, have received little attention in the CSR literature. This book chapter discusses how and why responsible leadership needs to be considered for CSR effectiveness to uphold SCD for developing nations. Based on a comprehensive literature review and the author’s extensive research, this chapter identifies a range of interconnected drivers and theories for responsible leadership, the importance of CSR implementation for developing nations, and SCD, highlighting the United Nations’ 2030 Sustainable Development Goals (SDGs). It then focuses on the matrix and influence of responsible leadership, CSR, and SCD in emerging countries. Finally, this chapter refers to responsible leaders as the key facilitators and promoters of CSR for SCDs to clarify their actions and expectations. This chapter describes the scholarly literature on explicit and implicit CSR forms of extractive industries and the entire concept of responsible leadership based on stakeholder theory from the point of view of developing nations. In this way, it clarifies the role of the responsible leader in implementing and institutionalizing CSR. This chapter facilitates dialog and a constructive debate among educators, students, stakeholders such as universities, governments, corporations, news media, policymakers, and future researchers about SCD through CSR for responsible extractive industries. Developing nations’ perspectives on responsibility, CSR, and SCD have been overlooked and lack evidence. This proposed chapter outlines these relationships for future research and theory development.
Article
Full-text available
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).
Article
Full-text available
This paper examines the relationship between corporate social responsibility (CSR) ratings and firm value, by using a sample of U.S. companies listed on the New York Stock Exchange and NASDAQ Stock Market, over 2008-2011. The Corporate Social Responsibility Index (CSRI) developed by Boston College Center for Corporate Citizenship and Reputation Institute was used as a proxy for corporate social responsibility. A certain company is perceived in three dimensions: citizenship (the community and the environment), governance (ethics and transparency), and workplace practices, that quantified through numerical variables are reflected into the CSRI ranking score. The Tobin’s Q ratio adjusted according to activity sector was employed in order to quantify firm value. After the estimation of panel data regression models, unbalanced, both without cross-sectional effects and with fixed effects, our results show that corporate social responsibility positively influences firm value. The empirical evidence is consistent with the instrumental stakeholder theory view, since the companies involved in corporate social responsibility undertakings use in a more effective way their resources in order to better satisfy stakeholders’ needs. CSR activities can add value to the firm if they are wisely managed and implemented, as well as sufficiently disclosed and reported.
Article
Full-text available
Companies in Lithuania follow international trends of social responsibility and start to declare their social responsibility to create positive consumer attitude. However, it is not determined if socially responsible activities are noticed by consumers and if they are noticed, are these activities perceived positively. Therefore, the purpose of the article was to identify the Lithuanian population approach to social responsibility declaring companies from telecommunications and financial services sectors. The content analysis of public information from 3 telecommunication companies and 6 finance companies was performed and 6 companies selected for further analysis. The survey of 95 respondents was carried out, which revealed that particularly in telecommunications and financial services sector consumers prefer service quality and consumers satisfaction more than social responsibility, although in general consumers approve socially or environmentally oriented actions by the companies.
Article
Full-text available
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.
Article
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.
Article
The "business as usual" model is no longer possible. Globalization, technological and demographical changes have lead to the change in the internal organization structures, processes and behaviour. Environmental, social and governance issues are becoming extremely powerful means of gaining competitive advantage on the global market. The purpose of the paper is to underline the importance of socially responsible business practices for the corporation. In order to emphasize the importance of socially responsible behaviour with regards to financial performance, the research was enriched with of the comparative analysis of the financial performances of 45 corporations listed on Dow Jones Sustainability World Index 2009/2010 that represent the top 10% of the leading sustainability companies out of the biggest 2500 companies in the Dow Jones Global Total Stock Market Index compared with non CSR corporations - not listed on DJSWI. Authors are presenting results of the econometric model which further confirmed that CSR firms in the average enjoy better financial performance that non-CSR firms.
Article
The policies and practices of corporations are shaped by their top management groups. The attitudes and values of these executives influence significantly whether or not those policies and practices are responsive to the expectations of the broader society. This article demonstrates not only a relationship between management values and corporate social responsiveness, but also that companies with strong social responsiveness generally enjoy better financial performance than their less responsive industry counterparts.