Revisiting the Corporate Social and Financial Performance Link: A Contingency Approach

This study draws on and extends contingency theory, in relation to stakeholder theory to understand the corporate social performance (CSP) and financial performance (CFP) link, by evaluating under what circumstances CSP influences CFP. Contingencies include stakeholder configurations/salience and crisis conditions. Using differentiated measures of CSP, this study examined financial effects of various specific stakeholder facing activities pre‐ and post‐crisis in the food/beverage and pharmaceutical industries, and in firms selling search versus experience goods. The results indicate that pre‐crisis CSP is related to post‐crisis financial effects, but the relationships are dependent on the interactions among the contingencies studied, so investments in certain social areas improve CFP, whereas others may hurt it. This confirms that a finer grained approach should be taken to the examination of CSP and CFP. On a practical basis, it shows that deep stakeholder knowledge and attention to complementary factors to CSP, such as advertising, must be understood, so CSP activities are of benefit to the firm.