Sustaining the Financial Value of Global CSR: Reconciling Corporate and Stakeholder Interests in a Less Regulated Environment

In this article we examine the association between corporate social responsibility (CSR) and firm value. This line of research is important since firms continue to invest in CSR even though past studies reveal a limited linkage between financial value and CSR. However, the business case for CSR or “doing good while making a profit,” appears to be advancing within the business ethics literature as a preferred conception of CSR. We conjecture that the greater unification and refinement of both profit maximization and stakeholder interests through corporate acts, not statements alone, will sustain the financial value of CSR in a less regulated global business environment. We study the triangle of what companies say, what companies do, and firm financial performance. We analyze Fortune 250 firms and find a positive association between what companies do based on KLD Research and Analytics, Inc. (KLD) ratings, and what companies state about ethics in their CSR statements. We then employ regression analysis and find that companies’ socially responsible acts are positively associated with overall firm value and financial performance. Yet we do not find a statistically significant association between what companies say regarding ethics in their CSR statements and their financial outcomes. These results suggest that firm value and financial performance is associated with what companies do and not what they say. Our results seem to be driven by multinational corporations (MNCs) and not by non‐MNCs. This is possibly because MNCs generally operate in a less regulated global business environment that often necessitates strong ethical corporate leadership to further stakeholder interests. Overall, these results help reconcile corporate and stakeholder objectives since evidence of a link between financial performance and doing good sustains global CSR.     

Connecting the Dots: Do Financial Analysts Help Corporate Boards Improve Corporate Social Responsibility?

This paper presents an examination of the joint impact of board structural elements at firm level and financial analysts as market-level corporate governance (CG) on corporate social responsibility (CSR) performance. Our study contributes to the CG–CSR literature by adopting the bundling approach, a perspective that has recently attracted researchers’ attention as an answer to any heterogeneity and fragmentation in existing findings. It is based on an extensive sample consisting of 7,739 firm-year observations of US firms for the 2006–2015 period. The findings suggest that financial analysts complement the corporate board with more independence, gender diversity and a specialized CSR committee to realize a certain level of CSR performance of a firm. The findings also indicate that analysts substitute for those internal governance factors that are associated with weaker boards – larger sizes and dual-role CEOs. We also draw implications for research and practice from our findings.     

Corporate governance and social norms during financial crisis: evidence from France and Saudi Arabia

The resistance to financial crisis and compliance with social norms and effectiveness of corporate governance mechanisms is considered recently as a good matter of concern. Focusing on differences between French and Saudi firms, we examine the effect of (1) board of directors, (2) audit committee, (3) compliance with Corporate Social Responsibility activities, (4) compliance with Shariah principles on financial volatility during subprime crisis of 2007. We find that larger boards, larger audit committees, independent members on boards and audit committees are related negatively to financial volatility. The result supports corporate governance theory which suggests that corporate governance variables outlined provide effective of monitoring of the management thereby enhancing firm’s resistance to financial crisis. In addition, we find that compliance with CSR alone does not explain the financial volatility. Its concert with corporate governance variables is necessary. This result supports stakeholder theory which argues that companies compliant with CSR activities in their business strategy and have larger boards and audit committees, and independent directors on boards and audit committees resist more financial downturns and any economic shock. Furthermore, we find that compliance with Shariah norms plays a significant role in protecting shareholder interests, improving functioning of corporate governance mechanisms and affect positively the resistance of Saudi firms to financial crisis.     

International corporate social responsibility and post-entry performance of developing market INVs: The moderating role of corporate governance mechanisms

Building on the stakeholder, agency, and resource dependence theories; this paper investigates the role of international corporate social responsibility (CSR) for the post-entry performance of developing market international new ventures (INVs) in the presence of corporate governance mechanisms to overcome their agency and environmental problems. We test and validate the conceptual model using survey data collected from 110 INVs operating in the developing market of Pakistan. Our results show that international CSR promotes the post-entry performance of developing market INVs. Further, we found that this association is moderated by corporate governance mechanisms of ownership, board independence, and returnee board members. Specifically, the relationship between international CSR and post-entry performance is weaker when ownership is concentrated but stronger when outsider and returnee board members are present in developing market INVs. The findings of this study have important theoretical and practical implications for INVs' social strategies and international performance contingent upon corporate governance.     

The Mirror Effect: Corporate Social Responsibility,Corporate Social Irresponsibility and Firm Performance in Coordinated Market Economies and Liberal Market Economies

We investigate the classic management debate of agency versus institutional pressures through the application of the varieties of capitalism literature. In particular, we examine corporate social responsibility (CSR), corporate social irresponsibility (CSiR) and their relationships with firm performance in two types of capitalist systems: coordinated market economies (CMEs) and liberal market economies (LMEs). We note that while the CSR literature has tended to develop a balanced view on the influence of agency and institutional pressures, the CSiR literature has tended to emphasize the influence of agency. The latter appears to be a result of the fundamental attribution bias, where irresponsible corporate behaviours are attributed to individual managers or organizations, rather than the institutional environment. Our results, which include five years of data across 16 countries, show significantly greater CSR and significantly lower CSiR in CMEs compared with LMEs. Further, we find a positive relationship between CSR and firm performance in CMEs but not LMEs, and a negative relationship between CSiR and firm performance in LMEs but not CMEs. Overall, our results demonstrate the influence of the institutional environment, suggesting that corporate behaviours mirror the external environment.     

CSR as Value Attunement within Governance Processes: Stakeholder Dialogue,Corporate Principles and Regulation

I argue that a governance perspective on corporate social responsibility (CSR) makes it possible to explain why the concept will always be under‐defined, is normative and thus political by nature, and is and should be difficult to measure. The perspective also makes it possible to understand the interaction between corporate values and stakeholders values. In processes of dialogue within governance systems and governance structures, changing insights into the principles of CSR can lead to regulation or its adjustment. Power is important in these dialogues. Principles are at least partly shaped within governance systems and governance structures, and they influence the outcomes of corporate policies. Changes within the regulatory framework could also lead to changes in the principles of CSR. Value attunement processes could lead to regulation, which again influences the governance structures and thus the power of stakeholders within the dialogue. The theoretical model provided helps to analyze why CSR is different in companies, cultures and academic traditions.     

媒体关注下的CSR信息披露与企业财务绩效关系研究及启示——基于我国A股上市公司CSR报告的实证研究

企业社会责任(CSR)及信息披露已成为当前社会各界共同关注的热点问题。本文利用独立机构发布的我国A股上市公司CSR报告的评级数据,验证了当前时代背景下我国企业社会责任信息披露与企业财务绩效的关系,以及作为信息传递媒介和"公众日程设置者"的媒体的关注对于二者关系的影响作用。研究发现,高水平披露社会责任信息的企业的绩效明显高于低水平企业,但是这种作用关系是在媒体关注度这一变量的完全中介作用之下实现的。这一新发现不仅丰富和拓展了企业社会责任及信息披露的理论研究框架,对于基于战略性CSR思维制定相关战略的企业管理者也深具启发意义。     

Financial Returns of Corporate Social Responsibility,and the Moral Freedom and Responsibility of Business Leaders

A number of theorists have proposed mechanisms suggesting that corporate social responsibility produces better financial results. Others subscribe to the theory that, realistically, less ethical means are necessary. This article contains an analysis of these perspectives drawing on observations from evolutionary game theory and nature. Based on these analyses, it is concluded that the financial returns of corporate social responsibility and irresponsibility (CSR and CSI) are equal on average. The explanation is that CSR and CSI aredriven to a state of equilibrium, because if one or the other were to offer higher profits, it would attract more players who would compete for the best opportunities until there was no difference in average profit. Existing empirical research generally shows a positive correlation between CSR as measured and corporate financial performance. It is argued that what is actually causing that finding is probably not CSR but management skill. More skillful managers, whether actually responsible or irresponsible, are able to obtain both higher profits and greater credit in imperfect measures of CSR. Next it is shown that this theory of equal returns implies greater moral freedom and therefore responsibility for business leaders. It is concluded that this insight can intensify the interest of decent business leaders in vigorously championing CSR.     

社会责任的信号作用——基于中国市场的研究

承担社会责任能否提升未来公司绩效一直是国内外学者关注的焦点,大部分研究认为履行社会责任有助于提升公司未来绩效,将社会责任视为一种价值投资。在控制了当期绩效因素对企业承担社会责任的影响后,本文发现：（1）承担社会责任不能提升公司未来财务绩效,仅能对企业未来股票回报产生正向影响;（2）当期经济绩效较好的企业,社会责任会对未来财务绩效产生正向影响,而当期经济绩效较差的企业,社会责任会对未来财务绩效产生负向影响。文章结果表明：当期绩效较差公司承担社会责任存在更大成本,当期绩效较好公司可以通过履行社会责任向市场传达信号使其与当期绩效较差公司区分,但此信号行为本身不对公司绩效存在影响。早期研究发现社会责任与未来公司财务绩效的正向关系很可能是因未考虑当期公司绩效同时正向影响当期公司社会责任履行程度和未来财务绩效而产生的伪相关关系。本文实证结果一定程度上对现有社会责任促进公司绩效的理论分析框架构成了挑战。     

Corporate social responsibility recognition and support for the arts: Evidence from European financial institutions

This research investigates whether financial institutions that have gained a good reputation in relation to their CSR activities also engage in significant corporate support for the arts (CSA). Using a sample composed of the 42 largest listed European financial institutions, data from 2004 to 2013 (i.e., 420 firm-year observations) and manually collected CSA disclosure information, our findings indicate that entities rewarded for their CSR initiatives are also those that engage in significant CSA. We also find that CSA disclosure reported in the social reports of financial institutions is a predictor for the attainment of a CSR award, whereas that reported in annual reports is not. Our findings suggest that annual and social reports have a different informative relevance, at least in relation to CSR initiatives in the form of CSA, for the stakeholders of financial institutions. Thus, our results provide useful insights for companies’ communication strategies showing, for example, that social reports are the best channel to communicate about CSA.     

Governance Choices for Corporate Social Responsibility: to Contribute,Collaborate or Internalize?

Within a competitive business environment where resources are limited, it is increasingly important for senior management to make every investment count. Measuring ‘return on investment’ occurs at every level of operations—so why not also in the arena of Corporate Social activity? Until now, much research has focused on finding the link between corporate social responsibility (CSR) and increased business performance. Researchers have not examined the cost implications associated with the different forms of governance utilized by companies to implement their CSR activities, e.g., outsourcing through charitable contributions, developing an in-house program, or creating a more collaborative model, which benefits both the company and the partner nonprofit organization. Careful examination and evaluation of these costs will help senior management choose the governance structure that will maximize the benefits they reap from CSR activities.Drawing upon insights from organizational economics, this article develops a framework to compare the alternative modes of CSR governance and identifies the key drivers that affect governance choice, including associated costs. Most importantly, it provides a decision-making tool that can guide senior management in this vital choice as a way to contribute to the competitive advantage of the firm.     

When Boards Matter: The Case of Corporate Social Irresponsibility

While academic research has made remarkable progress in understanding corporate social responsibility (CSR), we have scant understanding of corporate social irresponsibility (CSiR). This paper adopts a stakeholder‐agency perspective towards CSiR to ask two related questions: (1) What board‐level structures can monitor management to reduce CSiR? and (2) What are the conditions that render board monitoring more effective? Employing a unique objective measure of CSiR and a sophisticated system generalized method of moments with dynamic panel model on a sample of publicly listed firms in the USA between 2002 and 2015, this paper demonstrates how firms with a specific board‐level governance bundle (i.e. a large, more independent board, with a board CSR committee, a higher proportion of women within boards with frequent director activity) are better equipped to reduce irresponsible behaviours, both in terms of number of irresponsible incidents as well as in terms of their economic costs to the firm. Moreover, the effectiveness of this governance bundle sustains under conditions of high institutional ownership and high board remuneration. This paper has implications for CSR and corporate governance literatures, as well as for managers and policymakers.     

Corporate social responsibility in the board room – when do directors pay attention?

When do board directors pay attention to corporate social responsibility (CSR) issues? Board directors have traditionally focused on maximizing shareholder profit and viewed corporate governance narrowly as a way to meet this goal. They have paid little or no attention to CSR issues because they see CSR as a contrast to profit maximization. We argue in this article that companies can no longer ignore CSR. We propose that three conditions must be met in order for boards to pay attention toCSR. First, the board must have a mindset that considers CSR as contributing value to the firm. Second, the board must have relevant competences that enable members to understand CSR issues. Third, compensation of top-level management should reflect CSR performance. The first two conditions are directly linked to human resource development because, in order to embrace the specific challenges that CSR possesses, board members must develop an understanding of the CSR field and related challenges and opportunities for the company.     

Consequences of Collaborative Governance in CSR: An Empirical Illustration of Strategic Responses to Institutional Pluralism and Some Theoretical Implications

Collaborative governance (CG) is becoming the common currency of decision‐making, able to surmount existing institutional constraints to effectively address challenges related to sustainability and social and environmental corporate behavior. CG approaches may however result in institutional complexity. As an illustration of CG in the domain of corporate social responsibility (CSR), the ISO 26000 standard is a legitimate point of reference for organizations worldwide. The standard represents a pluralistic institutional logic that resonates several tensions arising from the domain it tries to standardize, the nature of its development process, its interpretation of CSR and the type of standard it represents. This article aims to identify and examine strategic responses to ISO 26000 by various standards‐related organizations (including national standardization institutes, certification organizations, and service providers) and to contribute to the understanding of strategic responses of organizations to pluralistic institutional logics that result from CG.     

Corporate Social Responsibility in Developing Countries as an Emerging Field of Study

Given the rising interest in corporate social responsibility (CSR) globally, its local expressions are as varied as they are increasingly visible in both developed and developing countries. This paper presents a multilevel review of the literature on CSR in developing countries and highlights the key differentiators and nuanced CSR‐related considerations that qualify it as a distinctive field of study. This review entails a content analysis of 452 articles spanning two‐and‐a‐half decades (1990–2015). Based on this comprehensive review, the authors identify the key differentiating attributes of the literature on CSR in developing countries in relation to depictions of how CSR is conceived or ‘CSR Thinking’ and depictions of how CSR is practiced and implemented or ‘CSR Doing’. The authors synthesize from there five key themes that capture the main aspects of variation in this literature, namely: (1) complex institutional antecedents within the national business system (NBS); (2) complex macro‐level antecedents outside the NBS; (3) the salience of multiple actors involved in formal and informal governance; (4) hybridized and other nuanced forms of CSR expressions; and (5) varied scope of developmental and detrimental CSR consequences. The paper concludes by accentuating how the nuanced forms of CSR in the developing world are invariably contextualized and locally shaped by multi‐level factors and actors embedded within wider formal and informal governance systems.     

企业社会责任一致性对财务绩效的影响研究

基于工具性利益相关者理论,以A股上市公司为研究对象,考察了企业社会责任时间和结构这两类一致性对财务绩效的影响,并检验了信任因素在该过程的中介作用,以及企业社会责任水平和不同利益相关者关注的调节效应。研究表明:企业持续地承担社会责任(时间一致性)有助于提升财务绩效,而公平地承担社会责任(结构一致性)则对财务绩效有负面影响;信任因素是一致性和财务绩效之间的中介机制,“时间/结构一致性—信任—财务绩效”是社会责任发挥作用的逻辑路径之一;企业社会责任整体水平的提升将强化结构一致性的负面作用,而外部利益相关者中分析师的关注会强化时间一致性的积极影响;对于结构一致性而言,包括公众和分析师在内的外部利益相关者的关注会强化其负面影响,而内部独立董事的关注则有助于缓和这一负面影响。     

The Management of Information and Managers in Subsidiaries of Multinational Corporations

A key challenge facing multinational corporations (MNCs) is how to encourage the development of firm specific advantages throughout the network of subsidiaries while maintaining global coherence. As a result, a critical task for top managers in the MNC is to structure the relationship between headquarters and subsidiaries. Thus, headquarters' control of subsidiary behaviour and performance becomes a central integrating function in the MNC. We examine first the relationship between the nationality of the MNC headquarters and its information management, namely the key performance metrics utilized by the parent to evaluate subsidiary performance. Second, we investigate the relationship between the MNC nationality and its management of managers, specifically, the transfer of parent company nationals and corporate acculturation. These questions are investigated in a study of MNC subsidiaries located in Australia, Ireland and Singapore. Our data provide strong evidence that MNCs of all nationalities place the greatest emphasis on financial metrics compared to other performance metrics. Moreover, there are differences in the degree of emphasis on performance metrics across MNC nationality. We found that Japanese and German MNCs place significantly less emphasis on financial measures than US and UK MNCs. Our hypotheses relating to the management of managers were also supported by the data. In comparison with all other MNC nationalities, Japanese MNCs place greater emphasis on the transfer of Japanese managers to overseas subsidiaries and less emphasis on corporate acculturation. While some researchers have argued that management control has become more isomorphic as a result of globalization, our results show that companies from different nationalities diverge in their practices.     

The relationship between CSR and corporate governance moderated by performance and board of directors’ characteristics

Journal of Management and Governance - This paper studies the relationships among corporate governance (CG), ethical practices, and corporate social responsibility (CSR). In particular, the...     

Board of directors structure and firm financial performance: A qualitative comparative analysis

Previous research about the effects of board structure and process on the firm financial performance is based on conflicting theoretical perspectives, and empirical results, mostly based on regression analysis, are inconclusive. Building from Complexity Theory and configurational analysis, this study offers clarity to inconclusive previous empirical results about the link among several board features and firm financial performance. From a sample of 295 non-financial firms from Southern Europe for the period 2001–2010, and by using fuzzy set qualitative comparative analysis, findings of this study show that firm financial performance depends on a complex configuration of several board features (board size, board independence, leadership structure and board activity) and several corporate characteristics (firm size, firm leverage and firm age). This paper has implications for academics. Despite different theoretical arguments and inconclusive results of the wide empirical literature addressing the effect of board characteristics on the firm performance, building from Complexity Theory this paper adds to our knowledge because it empirically explores under which circumstances different board features should contribute positively or negatively to firm performance. The results of this study have also implications for policy makers and practitioners by providing some useful hints to the controversial relationship between corporate governance and financial performance. In this sense, general corporate governance recommendations must be rethought.     

Corporate Social Responsibility through Cross‐sector Partnerships: Implications for Civil Society,the State,and the Corporate Sector in India

Corporations are increasingly forced to widen their agendas to include social and environmental concerns, or corporate social responsibility (CSR). This development has been recorded in the current academic debate, and the views regarding its implications for business, the state, and civil society diverge. However, there is agreement within the CSR and corporate governance literatures that there is a lack of thorough empirical studies of these effects. Based on a case study of the multinational wind energy company Suzlon Energy's CSR projects in rural India, this article contends that CSR projects implemented through cross‐sector partnerships can help to build the capacities of civil society organizations (CSOs). Although the risk of corporate steering of the civil society agenda is reduced when CSR prioritizes community needs over business imperatives, CSOs tend to bear the highest costs in partnerships, through credibility losses and insecurity concerning project terms and funding, reinforcing the importance of critical cooperation and complementary core competencies in cross‐sector partnerships. The results have implications for the strategies of corporations, CSOs, and governments as well as for the planning of national and international development aid.