Corporate social responsibility and economic performance in the top British companies: are they linked?

Abstract

This paper investigates the relationship between corporate social responsibility (CSR) and the economic performance of corporations. It first examines the theories that suggest a relationship between the two. To test these theories, measures of CSR performance and disclosure developed by the New Consumer Group were analysed against the (past, concurrent and subsequent to CSR performance period) economic performance of 56 large UK companies. Economic performance included: financial (return on capital employed, return on equity and gross profit to sales ratios); and capital market performance (systematic risk and excess market valuation). The results supported the conclusion that (past, concurrent and subsequent) economic performance is related to both CSR performance and disclosure. However, the relationships were weak and lacked an overall consistency. For example, past economic performance was found to partly explain variations in firms’ involvement in philanthropic activities. CSR disclosure was affected (positively) by both a firm’s CSR performance and its concurrent financial performance. Involvement in environmental protection activities was found to be negatively correlated with subsequent financial performance. Whereas a firm’s policies regarding women’s positions seem to be more rewarding in terms of positive capital market responses (performance) in the subsequent period. Donations to the Conservative Party were found not to be related to companies’ (past, concurrent or subsequent) financial and/or capital performance.

Do different industries report Corporate Social Responsibility differently? An investigation through the lens of stakeholder theory

“…Cottrill (1990) argues that any investigation of CSR that fails to incorporate industry level realities will be fatally deficient. While Cowen, Ferreri, and Parket (1987) and Balabanis, Philips, and Lyall (1998) report that disclosure does not differ by industry type; Waddock and Graves (1997) found great difference in CSR disclosure across industries. Simpson and Kohers (2002) concentrated on the banking industry and argue that differences between industries with regard to CSR is so great that research needs to stick to just one industry.…”

Understanding Complexity: the Curvilinear Relationship Between Environmental Performance and Firm Performance

“…The following studies, among others, have found evidence for a positive relationship: Hart and Ahuja (1996), Waddock and Graves (1997), Russo and Fouts (1997), Balabanis et al (1998), Margolis and Walsh (2003), Orlitzky et al (2003), Margolis et al (2007), Montabon et al (2007), Callan and Thomas (2009), Peloza (2009), Rugman and Verbeke (2000, Porter and Linde (1995a, b), Marshall and Brown (2003), and Preston (2001). More recent studies that found positive relationship between EP and FP include Tarus (2015) for Kenya, Lin et al (2009) for Taiwan, Mishra and Suar (2010) for India, Hossain et al (2015) for Bangladesh, Lisi (2015) for Italy, and Maletič et al (2015) for multiple European countries (Germany, Poland, Serbia, Slovenia, and Spain).…”

Model of Sustainable Business for Business-Evidence forTaiwan

“…It is inconclusive for findings on the relationship between CSP and CFP, existing positive relationship [6], [7]; negative relationship [8], [9]; and no relationship [10]. This study will be careful to examine their relationship with OLS model and 3SLS model.…”