1 UNIVERSITY OF AMSTERDAM
Amsterdam Business School
CSR-CFP Relationship in S&P500 Companies
Martina van Wieren (10598588) 29 June 2016
Words count: 9,953
Supervisor: Pushpika Vishwanathan
BSc Economics & Business, specialization Business Administration Faculty of Economics and Business, University of Amsterdam
2
Statement of Originality
This document is written by Martina D. van Wieren who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
3
Abstract
The majority of previous literature has focused on studying the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) based on general companies and single CSR measurement. This paper will bring the focus on the consumer markets, specifically on the consumer industry, to analyze the difference between one unit of CSR measurement and the multidimensionality aspect of the CSR measurement by analyzing the S&P500 companies. The study hypothesizes that the consumer market positively moderates the relationship between CSR and CFP. Further, it hypothesizes that within the consumer market the consumer discretionary industry will have a positive CSR-CFP relationship and that the interaction between one of the CSR dimensions – product quality – and advertisement intensity will result in a positive effect on this relationship. A multi hierarchical regression analysis was performed to analyze these hypothesized statement. The findings verify that the consumer market does indeed have a positive CSR-CFP relationship. Yet, the consumer discretionary industry and the interaction of the product quality CSR measure with advertisement does not result positive relationships. Surprisingly, the CSR dimension employee relations’ interaction with advertisement intensity does generate a positive relationship between CSR and CFP. These results may be able to deepen the understanding of the theoretical aspects of the relationship and also offer practical managerial implications about the consumer industry and multidimensionality of CSR to understand to which dimensions they can best allocate their resources.
4
Table of Contents
1. Introduction 5
2. Theoretical Framework 6
2.1 Corporate Social Responsibility 6
2.2 B2C vs. B2C Sectors 7
2.3 CSR-CFP of the Consumer Discretionary Industry 10 2.4 Multidimensionality of Corporate Social Responsibility 12
2.5 Customer Satisfaction 13
2.6 Reputation 14
3. Methodology 17
3.1 Sample 17
3.2 Variables 17
3.2.1 Corporate Social Responsibility 17
3.2.2 Corporate Financial Performance 18
3.2.3 Moderators 19 3.2.4 Control Variables 19 3.3 Statistical Analysis 20 4. Results 21 5. Discussion 27 6. Conclusion 29 7. Bibliography 31 8. Appendix 36
5
1. Introduction
Trying to find a direct relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) has been gaining attention over the years. Although these overall findings are quite inconclusive and misleading (Margolis & Walsh, 2003). The majority of the findings, as in Margolis and Walsh’s meta-analysis of 95 studies, have a positive relationship yet some are found to be negative or neutral, this could be due to the negative effect being too great that it overpowers the slim positive effects. Furthermore the studies that she analyzed often used a general group of companies that vary in industries and sectors and are calculated based one total measurement of CSR.
This results in the idea that there might be a much more complicated relationship between the CSR and CFP variables than once thought. There are most likely various influential factors that have an effect on the outcome of this relationship which creates such ambiguous results when looking at the direct relationship between the variables. Furthermore, solely looking at the direct relationship results in unreliable conclusions because of these influential factors that alter the results (Alafi & Hasoneh, 2012). Therefore, instead of looking at a general group of companies and making assumptions it is also important to look at
specific industries to allow for more detailed and specific information per industry. As each industry has unique characteristics and opportunities that can change the priorities. But research seems to lack for the consumer discretionary industry. Therefore the main research questions that will be answered in this study is: What is the CSR-CFP relationship in the consumer discretionary companies of the S&P500 companies? This question will be
answered by answering the following sub questions. What is the difference in the relationship between B2C and B2B markets? What is the relationship of the S&P500 companies in the consumer discretionary industry based on one total CSR measurement? And what is the CSR-CFP relationship in the consumer discretionary industry when that one total CSR
measurement is split up into dimensions of CSR?
This thesis will aid the existing literature as the concluding information can have major effects on the strategic decisions a consumer discretionary company makes in the future if they want to do good and make their company even more financial sustainable. The efforts used here can help open a new direction for CSR research into specifics instead of
6 The thesis will be constructed as follows. Firstly, the thesis will explain how there could be important differences between B2C and B2B markets that managers should take into account when making strategical decisions. Secondly, it brings the specific industry of
consumer discretionary into the spotlight. Trying to create a deeper and better understanding of what makes the CFP measurement tick. Delving deeper into this industry the study will also analyze the impact of product quality and advertisement intensity on the financial performance of consumer discretionary companies. Trying to create an understanding as to why this specific industry generates positive effects on the relationship between CSR and CFP. The next section will explain the results obtained from the regression analyses that will be performed. These will then be discussed and analyzed in the section following this. The thesis will be concluded with an overview of the results and limitations of this study including future research possibilities.
2. Theoretical Framework
2.1 Corporate Social Responsibility
Even though there has been a vast amount of research done over the last decades on the CSR-CFP relationship and the body of literature continues to grow daily it has not made the picture any clearer than before. The construct of this relationship still remain quite ambiguous (Wood, 2010). The majority of the meta-analysis and literature review on the CSR-CFP relationship show that there have been ambiguous and inconclusive results (Rowley and Berman, 2000 & Margolish and Walsh, 2003). Rowley and Berman (2000) respond to the current state of results as, “researchers have combined various mishmashes of uncorrelated variables, which render correlation and ordinary least square regression results indiscernible. In their meta-analysis, Margolis and Walsh (2003), are in agreement with Rowley and
Berman, arguing that all the research that has been conducted has led to a range of results that have no clear answer. The results have obscured the overall picture of what this relationship actually contains, it has made the path to getting an answer even more congested.
Despite this huge body of literature that has been compiled, getting a clear direction on what this relationship actually entails starts even before the empirical analysis is realized. Corporate social responsibility, to this day, still does not have a clear definition (Scherer & Palazzo, 2007). This makes it hard to compare results of studies in which various CSR dimensions are used to test the degree of CSR activities a company takes part in and to what degree this has financial performance effects. This problem often originates from the long
7 range of activities that are considered as acts of CSR (KLD database). For example, within the KLD database, when selecting which variables to test there are 158 variables to select from to test the CSR measures of a company. Although there are so many different possibilities, CSR does mean something to everyone but vary due to different
opinions/thoughts about what it actually means for one’s self. (van Marrewijk, 2003). Yet Carroll (1999) believes that even though the CSR definitions greatly vary in the existing literature, there is a common threat that keeps it similar.
The core idea of CSR is the triple bottom line; which consists of social, environmental and economical. The economical aspect is often the most easily understood; the primary goal of a company is to be profitable (Cruz & Wakolbinger, 2008). The social aspect is concerned with both internal and external communications. Both the relationship with employees and the community of people with which they work and engage with. At the environmental level, it is often referred to operating in a more energy saving manner and trying to reduce one’s global footprint to being almost invisible (Pullman, 2009). This results in a core theme of CSR that even though definitions differ this aspect is seen with a recurring fashion. People understand that CSR is about firms realizing they have responsibilities that go beyond focusing on just financial performance. An activity that furthers the social good and goes beyond the primary instinct of gaining money and what is expected by the law (McWilliams & Siegel, 2001). Furthermore, this core theme agrees with the theory of the triple bottom line as explained earlier. It generates three important level of activity for a company to be
successful in the current business environment; social, economic & environmental.
2.2 B2C vs. B2B
A homogenous relationship is the most popular pursued effect for CSR-CFP relations. The meta-analysis, of Margolis & Walsh (2003) concluded that using ‘industry’ as the control variable is the number one most popular variable in the 95 CSR-CFP research articles they analyzed.
A homogeneous relationship across companies has been tried to be determined by Orlitzky. He tries to prove either positive, neutral, or negative relationship in the CSR-CFP relationship. He concludes a general positive association, in his research he states that “the results show that there is a positive association between CSP and CFP across industries and across study context" (p. 423, 2003). He further concludes that this shows that the
8 Orliztky makes as he now implies that unlimited investment in CSR activities yields a
positive outcome in corporate financial performance. If this ‘universal positive relationship’ were to exist than unlimited investment in CSR would yield positive effects, yet this is unrealistic. This signifies, for example, that the investment in the sustainability of carbon neutrality in the chemical industry and creating good employment relationships in the financial sector yield similar results on the company’s CFP because they fall under the general CSR term. Unrealistic, considering stakeholders in these industries have very different priorities that will affect the performance of the companies in these sectors.
The contingency based perspective has since been researched to show that there is no theoretical reason to have only one universal positive relationship between CSR and CFP. Rowley and Berman (2000) support this contingency perspective by showing that payoffs have been unclear as researchers have struggled over the years to demonstrate a universal rate of return. Universal rates are also an inadequate form of measurement because they do not take into account the various preferences of the range of stakeholders that exists within a firm. This is a very important aspect to consider because the evaluations of these stakeholders has significant impact on a firm’s performance such as the firm’s consumer support and loyalty base, among other things (Peloza & Papania, 2008). The relevance of CSR
dimensions and activities, as researched by Kempf & Osthoff (2007) result in showing there are differences between priorities that companies and industries have to the internal
environment and external environment. Furthermore, it is not just the types of CSR activities but also the ‘payoff’ to financial performance. As Kempf & Osthoff (2007) conclude, there are various CFP effect, such as direct cost savings, increased reputations or long term
performance goals, that due to CSR activities could be improved. Additionally, it continues to be just as hard to analyze the outcomes of CSR because it can also be measured in numerous ways and can be found in various databases with different measurement criteria’s.
Additionally, within accounting and marketing based values there are also numerous possibilities to use as variables for the dependent variable.
Looking at the various industries of the S&P 500 companies, it is probable that one industry results in greater financial performance with the use of CSR activities than other industries. Dividing the market into industrial and consumer markets indicates that there is a positive relationship between CSR-CFP in the consumer market and a negative relationship in the industrial markets (Baron, Harjoto & Jo, 2011). Reasons for this could be due to the rewards that are present for companies when selling to the consumer that are absent when selling to the industrial markets. Secondly, within the consumer market CSR has been created
9 as a managerial requisite, as data shows that there is an increase in the use of CSP in
consumer markets compared to the industrial market. Therefore, besides tangible attributes, CSR could also bring intangible attributes to a company’s name such as reputation
(McWilliams & Siegel, 2001).
The aspect of proximity to customers has quite a varied effect depending on who the end customer is. Many focus on the difference in customers, either an individual end customer or a business (industrial) end customer. Often this is defined by B2C or B2B businesses. Baron, Harjoto, Jo (2011) concluded from their research that CSR is positively correlated with CFP with consumer markets (B2C) and negatively correlated in the industrial markets (B2B). This research supports the concept of different result areas of CSR-CFP within B2C and B2B companies done by Crucio and Wolf (1996). They determined that CSR activities are only profitable when companies are selling to the ultimate customer. CSR activities manage to generate more value when products are sold to the end consumer because these ultimate consumers show more social concern in their consumption. They believe that each small single act will help the overall good. Consequently, due this psychological impact it is important for companies to be able to play into this need and gain personal and communal connections out of it with the society. These results are furthermore supported by research done by Lev, Petrovits & Radhakrishnan (2010) who study the impact of corporate
philanthropy on sales growth. Their evidence showed that growth in sales, due to
philanthropic acts, was a result of the highly sensitive customer perception those companies had to communicate with – where the individual customer was also predominantly the end-customer.
Within the S&P500 the companies are split into ten general big sectors: Energy, materials, industrials, consumer discretionary, consumer staples, health care, financials, information technology, telecommunication services and utilities. These ten industries can also be split into B2C and B2B sectors as they market to different end-customers. They will be split into the consumer focused industries and the non-consumer focused industries. These will create the two big groups of B2C which includes consumer discretionary, consumer staples, health care, financials and utilities. The B2B consists of the energy, materials and industrials. The following proposition that can thus be put forward is that the B2C will have a positive CSR-CFP relationship while B2B will have a negative Therefore this study will hypothesize that for the B2C sector there will be a positive relationship between CSR and CFP and for the B2B there will be a negative CSR-CFP relationship for the B2B sector.
10 H1: There will be a positive CFP relationship for the B2C sector and a negative
CSR-CFP relationship for the B2B sector.
2.3 CSR-CFP within the Consumer Discretionary Industry
The remaining part of the research will focus on the consumer discretionary industry in order to test the effects of CSR on CFP on a specific industry of the B2C market. This will allow for a deeper understanding aided with more detailed information that is useful for companies/managers in the consumer discretionary industry because it relates directly towards their success. The ‘umbrella’ analyses that have been conducted in many articles focus on the general group of firms, but as explained earlier this can have varied effects on different companies and therefore may not be the most optimal information to use for companies who are focused on one specific area of expertise (Margolis and Walsh, 2003). For the purpose of this paper, consumer discretionary sector will be defined as, “industries that tend to be very sensitive to economic cycles due to their non-essential characteristics.” It includes but is not limited to products such as automotive vehicles, household durable goods, leisure equipment, and service and experiences like hotels, restaurants, media production and consumer retailing and services where the consumer is the end-customers (Fidelity
Investments).
Within this industry CSR can also be seen as a competitive advantage. Engagement in CSR can provide as a differentiation strategy to gain this competitive advantage. This could be a helpful strategic move in competitive industry like the consumer discretionary industry because so many businesses in this industry offer similar products and the low barriers to entry allow for useful strategies to succeed over the newcomers in the industry. Gupta (2002) concluded that the use of CSR can create a positive impact on the differentiating strategy for the corporate image (As cited in: Rhou, Singal & Koh, 2016). For example, the automotive industry would be part of the consumer discretionary industry as it is a non-essential service a customer is buying. Within this sector there are many similar products and a car company could choose to advertise a hybrid or electric car as a way to demonstrate why their product is better compared to those of the more polluting cars of other brands.
Adding onto this competitive advantage it can further be recognized that using CSR as a strategic move can be beneficial in rewards terms. Consumer and employees will reward these companies for their good experience and act to society (Baron 2001). Reward can act as
11 an important factor, whether in terms of internal employees or external customers. Example of internal reward is the increase in motivation of employees working for an actively socially aware company. For the external aspect, consumer reward them by buying their product instead of the same product from another firm but without CSR aspects. Thus CSR is often used as part of a strategy for product differentiation, creating a unique attribute/characteristic that make the consumer more willing to buy the product in comparison with other similar products.
Furthermore, it has been found that the use of CSR will increase with the use of credence and experience goods (Siegel & Vitaliano, 2007). Experience and credence goods are most often products that are sold directly to the consumer, a B2C market and not a B2B market therefore creating the importance of the end-consumer. Siegel and Vitaliano (2007) also show that with these types of products a positive relationship between CSR and CFP is created. They revealed that companies that were selling durable goods and credence services had the highest probability of investing in CSR activities. This could link to the idea that for firms that are selling durable products, reputation is a very important aspect because trust needs to be established between the firm and the end-consumer. Service industry, as mentioned above, one cannot measure the quality beforehand. Therefore, a company’s image and reputation can serve as guidelines to making a customer’s opinion about the company. CSR can become a very important aspect in those situation because they often foster trust in a firm (Nicolau, 2008).
In review, a lot of evidence here shows why consumer discretionary companies would have a positive relationship between CSR and CFP. Firstly, it can be used as a strategic move, within the consumer market it can be used as a way to differentiate your product by aiding the sustainability awareness over the years and building the corporate image. Secondly, this differentiation can lead to building reputation and corporate image that generate the reward psychology with the end-consumers towards the actions and feelings of needing to give reward to those companies who are going beyond the economical perspective of the business case. Thirdly, CSR can generate positive effects due to the type of products that are sold within the industry. Experience goods are often considered non-essential, as it is not necessary to consume them in terms of the basic needs to live. They are goods that somebody would buy because they desire to not because they need to and therefore CSR can again build this image of trust that generates more willingness within the customer to buy that CSR-engaged product. With this evidence one can conclude that consumers in this area
12 would be willing to spend more on CSR products because of desires and the need to give rewards and the trust it creates.
This study will therefore test the assumption that the industry consumer discretionary will have strong positive effect when testing their CSR activities to CFP results. This due to the theory given above that shows the important effect CSR can have on the type of end-user and the type of product and the firm image it creates.
H2: There will be a positive relationship between CSR-CFP for the S&P500 companies in the consumer discretionary industry.
2.4 Multidimensionality of Corporate Social Responsibility
As argued before, previous empirical research has often used a unidimensional value for CSR which aggregates all of a company acts concerning social responsibility. This
unidimensional value includes but is not limited to, extensive human resource management within an internal organization of a company, reduction of pollution, charity donations, supporting local businesses vs. corporations, safety, etc. (Barnett, 2007). Yet, even though this is the most used measurement various scholars have suggested the need to change this measurement into smaller sub groups of similar activities.
One of the first scholar to suggest the use of multidimensionality in terms of CSR was Carroll (1979) concerning ethical and philanthropic activities. Based on her findings CSR was defined under four main elements: economic responsibility concerning investors and consumers; legal responsibility to the law and the requirements of the government; ethical responsibility concerning the community and society; and discretionary responsibility concerning the community (Hillman & Keim, 2001). With these elements as guidelines data was collected by various scholars yet many found it hard to define these terms to their specifics to ensure that the right data was collected (Clarkson 1995).
This framework was then further developed into a framework which is used today, that considers the importance of the various stakeholder that are part of the business case (Clarkson, 2005). There are CSR dimensions that are specific towards reaching primary stakeholders versus other which are focused on secondary stakeholder. Primary stakeholders group includes those who carry some risk with their affiliation with the company. This group usually contains investors, employees, customer, suppliers, etc. (Clarkson, 2005). Whereas
13 secondary stakeholder, fall under the community sub-groups, where for example a company participates in a philanthropic act such as donating money to a charity (Zhang et al., 2010).
2.5 Customer Satisfaction
Customer satisfaction has always been considered an important part of a corporate strategy (Fornell et al., 2006). Customer satisfaction will be defined as, “overall evaluation based on the customer’s total purchase and consumption experience with a good or service over time,” for this study (Anderson, Fornell, Maz, 2005; Fornell 1992; Luo and
Bhattacharya, 2006). Many researchers have been able to prove the positive relationship between customer satisfaction and market value (Anderson, Fornell, Mazcanheryl, 2004; Fornell, 2006). Loyal customers are willing to a pay a premium price for their products in comparison to disappointed or non-loyal customers (Homburg, Koschae, & Hoyerm, 2005; McWilliams and Siegel, 2001). Products that are produced in a socially responsible manner are often priced higher because the production costs are higher than those products produced in a non-socially responsible manner. Therefore, in order to be successful in a CSR-active business it is important to have a loyal consumer base who are willing to pay a bit more for the products. Furthermore, it has been argued that good customer relations lead to higher levels of cash flow for the firm (Gruca & Rego, 2005; Mittal et. al, 2005) and is therefore considered a key driver for long term profit (Gruca & Rego, 2005). The ability of a firm to act on CSR activities is a prerequisite for a company’s performance. As a result of social acts customers look at a corporation as one that is concerned with more than just their own financial successes, as mentioned by the triple bottom line theory, and think of other stakeholder as well (Gupta, 2002: as cited in Saeidi, et al., 2015).
It is logical that many consumers that use products that are reliable and honest expect companies to deliver greater value and are therefore willing to pay a higher price for these products. The Walker Information Inc. is a research company that analyzes customer
satisfaction, their results showed that 47% of consumers would be more willing and likely to buy from a ‘good’ company that was acting socially responsible (Sato, 1998 as cited in: Zhang, Zhu, Yue & Zhu, 2010). “A company’s CSR and their corporate abilities both influence customer’s perceptions of the company’s product (i.e. product quality)” (Luo and Bhattacharya, 2006, p. 4). Product quality is a key driver of customer satisfaction so it is important to have the best quality possible, which nowadays often includes CSR aspects. On
14 the other hand, it is important to note that if customers perceive the CSR acts to be
detrimental to the development of corporate abilities – such as product quality – it might actually have a negative effect (Luo and Bhattacharya 2006).
Luo and Bhattacharya (2006) continue by arguing three reasons to why product quality can have such an impact on customer satisfaction. Their first argument is related to the multidimensionality of consumers and their believe that the firm is not focused on only, "economic conditions but [also focused] on family, community, and country," (Handelman and Arnold, 1999; s cited in Luo and Bhattacharya, 2006, p. 3). Secondly, a strong CSR base boosts the evaluations of consumers towards the company. Arguing that CSR is a key
proponent that can induce corporate identity which can induce customers to identify with the company. Third and lastly, customers are likely to be more satisfied with products that are made by a socially responsible company. These arguments demonstrate that CSR can help promote customer satisfaction. In conclusion, firms with higher levels of corporate abilities (I.e. product quality) generate positive market value through CSR. This leads to better corporate image and more attractive identities; both for the firm and for the consumer. Increasing customer satisfaction has a direct impact on increasing reputation. Furthermore, when looking at primary stakeholders, Berman et al. (1999) suggests that a positive
evaluation of product quality by consumers influences their view and therefore also the investors reactions to a company’s market value. This is mostly likely due to reputation or customer satisfaction growth that generates this positive image.
2.6 Reputation
The changes in the corporate environment, such as the expectations of CSR, sharper competition, greater expectation from stakeholder, and more corporate transparency, has led companies to become more aware of the importance of corporate reputation in the recent years. The importance of what others think of them has an apparent effect on their
performance whether financial or non-financial. Customer satisfaction is one of the most important factors which business to consumer companies focus on when trying to increase their reputation image to the outside world because reputation is one of the leading variables that effects customer satisfaction (Luo and Bhattacharya, 2006).
Existing literature reveals that reputation is positively related to firm performance. Various studies show that this positive reputation has both financial and non-financial benefits and that companies with a good reputation are considered less risky. (Flatt and
15 Kowalczyk, 2011; Helm, 2007). Lower risk often leads to easier investment and growth and creates more opportunities furthering the possibility of greater financial performance
(Shamsie 2003). Furthering this positive financial performance, reputation has led to higher sales numbers and a higher ROA, in both the short and long term (Kotha et. Al, 2001; Robert & Dowling, 2002).
The consumer discretionary companies are in an industry that is very sensitive to certain conditions. These include but are not limited to things such as economic conditions, trends, and customer perception (Fidelity Investments). Within this industry there are often expenses that are not required to be made by the customer but wanted to be made compared to
consumer staple products, which consist of essential products such as food and shelter. Reputation, as shown in the research above, has a strong correlation with customer
satisfaction. Therefore, the success of products/experiences that are non-essential could be very sensitive to the reputation of a company. For example, if a consumer has a bad experience with customer service he/she might decide to stop buying the product because they did not have a good experience and it is not a necessary product to have. So they would rather go to a different company to buy it or not buy it at all. The consumer would discuss this bad customer experience with group of friends and this could lead to a decrease in reputation of the corporation and therefore also their financial performance.
Depending on the kind of CSR activity a firm produces or participates in, it can
sometimes be hard for consumers to actually see or understand the efforts a company engages in to create a better influence on society. Thus, advertising is often a successful channel through which companies can teach their consumers the types of CSR activities they focus on, “to make potential customer fully aware of CSR characteristics; otherwise, they will purchase a similar product without such attributes.” (McWilliams & Siegel, 2001, p. 121). Ergo, advertising can play an important part to teach consumers about these characteristics of the company that might not be as evident at first glance to further build on their reputation which has a direct relationship with customer satisfaction. CSR advertisement intensity is more frequent in consumer oriented industries (Fishman, 2006) as it can play a vital role as a differentiating strategy and a firm's financial performance (McWilliams & Siegel 2001).
The majority of literature and research on advertising focuses on two main sorts of goods; search and experience goods. A search good is a product, “whose attributes and quality can be determined before purchase,” and an experience good is a product that, “must be
consumed before their true value can be known,” (McWilliams & Siegel, 2001, p. 120). Both these type of goods could fall under the consumer discretionary industry products. For
16 example, a search good is a product like sports car, where you can test and analyze the car before the actual purchase takes. On the other hand, an example of an experience good, would be a bottle of wine. One has to try it first before being able to determine its real value as this is hard to do by just looking at it before buying. You have to experience the product.
The positive corporate images and attractive identities can be built through good advertising which leads to both the ability to build reputation and customer satisfaction. Therefore, an indication of effort by a company to increase their corporate image is done by looking at the advertising intensity of each company. It increases the noticeability of a company and puts it on the map. Investors are often more willing to invest in companies and hold stocks of companies that are well-known or familiar. It is often assumed, that companies that are well-known and generate high percentage of advertising will increase in their
financial performance (Kitmueller and Shimshack, 2012).
Due to CSR having gained such importance to many corporations it has become a vital aspect they need to understand how to deal with and how CSR can play a role in helping a company improve their reputation. Customers are expecting more from company in terms of CSR thus CSR can therefore help improve customer satisfaction and the overall reputation of the company.
Consequently, advertising that provides information about the CSR efforts of the company is assumed to uphold and build this benchmark of reputation and quality of for a company’s products (McWilliams & Siegel, 2001). Advertising plays a vital role in assessing the most advantageous and optimal level of CSR input for each company. Through
advertising a company can spread their messages and information of product quality and their CSR activity as a way to reach their customers. Being a proactive advertiser can allow for first-on awareness and self-improvement, making clear to the consumer that it is not a reaction to suppress negative press but be proactive in teaching consumers about their social actions (Kitmueller and Shimshack, 2012).
Taking into account all of this theory, this thesis will argue that the CSR-CFP has a positive relationship due to the effect the interaction of CSR dimension product quality and advertising intensity (as a measurement of reputation and therefore also customer
satisfaction). Some of the arguments for this given statement are as follow. As discussed previously, the definition of CSR had the general overarching theme of the need to act beyond the gains of financial performance. Yet it is important for society to perceive the acts of CSR that a company partakes in as valuable which can be done through customer
17 Hypothesis 3: There will be a positive relationship with interaction of CSRproduct quality x
advertisement intensity and CFP.
3. Methodology 3.1 Sample
The data used are companies on the S&P500 list. American companies were used because these companies hold 75% of their market price and are for the majority global companies (S&P500 Index). Due to their global presence they will probably be able to generate the largest effect on positive CSR because of their resources and capabilities. Therefore, it is important to understand which specific dimensions are the most important for them to realize. The data ranges from 2005-2010. The reason for this timeline is because during this time period, the relevant variables that were used remained mostly unchanged in the KLD
database to measure CSR. After 2010, various variables were added to the data set, making it hard to compare data from the years after that. Thus, it is a more reliable measure to take a range from constant variables (KLD Manual). The data collected started with 3082 total observations from which the CSR-CFP relationship could be measured. But due to some company tickers doubling companies or adding non-S&P500 companies this had to be reduced. The current data uses 3034 observations to test the hypotheses.
3.2 Independent, Dependent and Control Variables 3.2.1 Corporate Social Responsibility
Data taken from the KLD Database will be used as the measurement of the amount of corporate attention is given to various stakeholder issues such as employee relations,
product quality and community. KLD statistical tool is a data set with yearly snapshots of information, which consist of tables of data of three main areas of the theme corporate social responsibility. These include analyzing company’s actions within the spectrum of environment, social, and governance area. The statistical company was started in 1991, during which the company covered data from Domini 400 Social SM Index and S&P 500 companies after which the company continued to expand by adding more American companies and eventually spread to include the thousand biggest companies within the Unites States (Wharton Database). There are seven main dimensions that they cover:
18 Community, corporate governance, diversity, employee relations, environment, human rights, and products. These categories are the umbrella categories of various smaller variables which are umbrella terms for the various smaller variables that fall under these categories to come up with a score. Moreover, these seven dimensions are sub categories for the main umbrella term of CSR rating of a company. The CSR measurements of each dimensions are split into the total strengths of CSR activities and total concerns of CSR activities. Strengths are the positive CSR acts and concerns are problematic issues against the norms of CSR that a company partakes in.
The data collected is obtained from annual surveys, annual reports, quarterly reports, as well as external data sources such as extracting data from articles from communications channels such as news outlets or business proxies. The measurement scheme of the KLD database has become one of the most adopted schemes in current empirical studies.
Furthermore, in 1996, Sharfman conducted a construct validity against other measurements that had been used for CSR and he concluded that up to date it is the best available
measurement for CSR up to this date; which can be seen from the great majority of times it has been cited in various other empirical studies (Hillman & Keim, 2001).
For the purpose of this research, the CSR strengths measurements are used. The reason for this decision was because the idea is to analyze the positive acts of CSR a company partakes in. Not look at the concerns of a CSR acts that a company partakes in. For the first hypothesis the measurement of the independent variable is the total CSR – strengths, meaning the sum (which has been calculated manually) of all seven dimensions of CSR to come to one value of CSR activity per company. For the interaction term the CSR dimension – total product strengths – will be the value used in the analysis. This value is taken straight from the database.
3.2.2 Corporate Financial Performance
The financial performance will be measured through the accounting based measure ROA, return on assets. The use of ROA as a measurement for financial performance has been used by many previous research papers. (Berman et al., 1999; Tang, Hull & Rothenberg, 2012; Kang et. Al. 2010). Return on Assets measures how efficiently a company uses its assets during a given fiscal year.
Return on assets is calculated as a ratio of net income to the total amount of assets. These two datasets, net income and total amount of assets, will be retrieved from the
19 COMPUSTAT Database from which the ROA will be calculated manually (computing a variable in SPSS). This database consists of measures on financial, statistical and market information of thousands of global companies and was established in 1962.
3.2.3 Moderators
The following variables will be used as moderators for the regressions because they are believed to either increase or decrease the strength of the relationship between corporate social responsibility and corporate financial performance.
Within the S&P500 index the companies are also sorted into GIC Sectors, these are ten in total; materials, energy, utilities, consumer staples, consumer discretionary,
telecommunications, information technology, industrials, health care, and financials. The industry of telecommunication has been left out of the data due to lack of data and a small number of companies in this industry. The other nine industries are divided into two categories, B2C and B2B. B2C category consists of the industries consumer discretionary, consumer staples, health care, financials, and utilities. B2B category consist of the industries energy, materials, industrials, and information technology. The reasons for this divisions is to analyze the effects of consumer versus industrial markets in the CSR-CFP relationship.
For hypothesis two and three, the industry will be controlled for by filtering those companies out with the GIC Sector code of the analyzed industry. In thesis this will be the consumer discretionary industry with a GIC code of 25. As explained in the theory chapter above, moderating for industries can allow for more specific and in-depth information for specific companies and see if due to different priorities it can have varying effects.
Advertisement intensity will be used as the moderator in the consumer discretionary industry testing in hypothesis three. The necessary variables, advertising expenditure and total sales, were retrieved from COMPUTSTAT. Advertising intensity was calculated using the following formula: 𝐴𝑑𝑣𝑒𝑟𝑡𝑖𝑠𝑖𝑛𝑔 𝐸𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒
𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠 . This will then be multiplied by the CSR
dimensions measure – Product to create the interaction term.
3.2.4 Control Variables
Firm size, is considered to be consistent as all the companies come from the S&P500 index. Reasons to control for this variable is because the size of a firm can affect the budget amount that in allocated towards spending in CSR. These consist of mid- to large companies.
20 These companies are all considered some of the largest companies in the United States. So there will not be any outliers as they would not be in the S&P500 list if they were for example, still a small family business. They are the biggest companies in terms of market capitalization, they make up a total of 75% of the US market (S&P500 Index). But to make sure that firm size is controlled for even within this group, the log of the number of
employees will be used as this indicates the resources each company has for CSR investment. Another commonly found confounding variable is risk. This will be calculated
through long term debt to total assets ratio. Risk is an important factor, because the amount of leverage a company has will affect if investors will spend money on these companies, which lead to possible growth. This has been found to affect the financial performance of a
company and is therefore controlled.
In recent years R&D investment has also been empirically proven to be a contingent factor for the CSR-CFP relationship (Hull and Rothenberg, 2008; McWilliams and Siegel, 2000). R&D investment is often in a similar situation as CSR investment, in that there are often limited resources that allow for the investment to take place. Therefore, what is spend on R&D would undermine the need to spend those resources on CSR. In other words, this could make it hard to measure the effects of CSR in a highly innovative company. R&D investment is used as a measure of intensity; therefore, it will be weighted by the firms’ total assets.
The last confounding variables that will be controlled for is the firm year. It was decided to use this data period due to the changes in the KLD variable measurement consistency. Yet in the same period of 2005-2010 an economic recession took place. It is important to acknowledge this by controlling the years to make sure that the economic recession effects do not influence the outcome of the actually variables being tested. For this reason a dummy variable was created for each year in the tested period and controlled for.
3.3 Statistical Analysis
To be able to test the hypothesized statement in the previous segments a multi-hierarchical regression analysis will be performed to test the predictor variable by first ensuring the confounding variables are controlled for. Firstly, the effect the moderator of consumer (B2C) versus industrial (B2B) will be moderated to better understand their CSR-CFP relation and further when focused on just the consumer discretionary industry, the regression will test specifically CSR – Product x Advertising Intensity interaction on the
21 companies within the consumer discretionary and again also control for any confounding variables. In order to test the specific industries/groups, each regression will filter out just the companies in that industry with the use of the GIC Sector Code variable that is included in the database.
The statistical model that will be used is: Hypothesis 1-2:
𝑅𝑂𝐴𝑖 =∝ +β𝐶𝑆𝑅𝑇𝑜𝑡𝑎𝑙+ risk + size + R&D intensity + Firm Year + ε **Where i= B2C and B2B in hypothesis 1 and consumer discretionary industry in Hypothesis 2**
Hypothesis 3:
𝑅𝑂𝐴𝑖 =∝ +β𝐼𝑛𝑡𝑒𝑟𝑎𝑐𝑡𝑖𝑜𝑛𝐴𝑑𝑣𝑒𝑟𝑡𝑖𝑠𝑖𝑛𝑔 𝐼𝑛𝑡𝑒𝑠𝑛𝑡𝑖𝑦 𝑥 𝐶𝑆𝑅𝑝𝑟𝑜𝑑𝑢𝑐𝑡 𝑞𝑢𝑎𝑙𝑖𝑡𝑦 + risk + size
+ R&D intensity + Firm Year + ε
**Where i= consumer discretionary industry in Hypothesis 2**
4. Empirical Data
In this section of the thesis the empirical results will be presented and explained. First, the results of the B2C and B2B industry differences in CSR-CFP relationship will be presented. Following by a deeper analysis into the consumer discretionary industry and the interaction between CSR product dimension and advertisement intensity will be explained.
22 Firstly, the correlations for each market sector for consumer and industrial was
analyzed to understand the type of relationship that takes place between CSR and CFP in those specific markets. By filtering out the cases who are part of the B2C sector and the B2B sector in the SPSS software it was possible to isolate the companies in those market
conditions. The results of the descriptive are shown in Table 1 (B2C) and Table 2 (B2B), there is a significant correlation between ROA and total CSR with a correlation of 0.075 (p-value<0.01). Meaning that for the B2C there is a statistically positive relationship between CSR and CFP. For the B2B the correlation in -0.021 (p-value>0.05) meaning that no significant statistical conclusion can be made about the B2B.
Next a regression analysis for both sectors was performed. The results can be seen in Table 3, and more detailed results can be found in Appendix A. For the B2C sector, . In model 1 (containing just the control variables) the R2 = 0.089, thus the control variables
account for 8.9% of the variability in the outcome. Then when looking at model 2 (containing the control variables and the predictor variable) the R2 has a value of 0.100, thus the model as
a whole accounts for 10% of the variability in the outcome. The amount of variance that is explained by the predictor variable, CSR, is the R2 change value, 0.012, i.e. 1.2% with an
F-change of 8.609 (p-value<0.01). The βeta is 0.133(p=value<0.01) indicating that there is a statistically significant positive relationship between CSR and CFP for B2C sector
companies. The CSR coefficient has a Beta value of .003(p-value<0.01), indicating that there will be a 0.003 million dollars increase in ROA with every 1 rating increase of CSR
engagement.
Concerning the B2B market, the regression analysis indicates that the βeta has a value of 0.079(p-value>0.05) indicating there is no statistically significant positive relationship between CSR and CFP in the B2B sector. This is further shown in the variance of the
23 outcome between the control variables and the model that includes the predictor variable. In the first model (containing just the control variables) the R2 = 0.148, thus the control
variables account for 14.8% of the variability in the outcome. Then when looking at the second model (containing the control variables and the predictor variable) the R2 = 0.152,
thus the model as a whole account for 15.2% of the variability in the outcome. The amount of variance that is explained by the predictor variable, CSR, is the R2 change value, 0.004, i.e.
0.4%. Such little change in the variance takes place that it has an insignificant effect on the ROA. The F-change has a value of 3.092 (p-value>0.05). All these results indicate that there is no statistically significant regression model for the B2B market. This indicates that
hypothesis 1 is partially rejected, the B2C market does have a significant regression model with a positive relationship yet B2B market no significant statistical conclusion can be made from the data about the relationship between CSR and CFP.
Table 3: Regression Statistics
B2C B2B β 0.003* 0.002 R2 0.100 0.152 ∆R2 0.012 0.004 F-Change (Sig. value) (0.003) 8.609* (0.079) 3.092 *p-value<0.01, two-tailed test
Following the overarching B2C and B2B markets, now a specific industry within the B2C market, consumer discretionary industry, will be analyzed. This will concern both the second and third hypothesis. Looking deeper into the consumer discretionary industry to understand and see if the consumer discretionary industry does in fact generate a positive CSR-CFP relationship and analyzing the interaction term of a CSR product quality dimension and advertisement intensity on the CFP of consumer discretionary companies.
From the result it is shown that there is no significant statistically evidence that the consumer discretionary industry has a positive relationship concerning CSR and CFP, as can be seen in Table 4. For more detailed results use Appendix B as a reference. There is a positive correlation of 0.02 between CSR and CFP yet this is not statistically significant and thus no statistical conclusion can be made about the correlation between CSR-CFP for the consumer discretionary industry. Moreover, looking at the regression data, the βeta has a value of -0.025(p-value>0.05) indicating there is no statistically significant relationship between CSR and CFP. The R2 change is also 0.00, showing that the predictor variable CSR
24 does not add any additional variability to the results of the CFP. The second hypothesis is therefore rejected because there is no statistical data that indicates a positive relationship between CSR and CFP for the consumer discretionary industry.
The last part of the research is the analysis of an interaction between CSR dimension of product and advertisement intensity as a measure of reputation/consumer satisfaction. The descriptive statistics and correlations of all measurement items used in the regression analysis are listed in above, in Table 4. Looking at the 4th column, 1, are the correlations from
variables 2-16 with ROA. The control variables, risk, R&D investment intensity and year 2008 have a negative correlation with ROA, 0.35 (pvalue<0.01), 0.02(pvalue<0.05) and -0.23(p-value<0.01) respectively. As it shows by the data the reason for this negative
correlation in 2008 is most likely due to the economic recession that took place. Therefore it was important to control for the firm years to make sure a negative correlation like in 2008 does not confound the results. The control variable, size of firm (based on employees), has a positive correlation of 0.18(p-value<0.01), resulting in a positive effect on ROA. The interaction variable of CSR-Product*Advertisement intensity has a positive correlation of 0.05(p-value>0.05) with the return on assets. Indicating that this positive correlation has no statistically significant effect on the CFP measure Return on Assets.
Next, the actual regression has to be analyzed. In model 1 (containing just the control variables) the R2 = 0.210, thus the control variables account for 21% of the variability in the
outcome. Then when looking at model 2 (containing the control variables and the predictor variable) the R2 = 0.213, thus the model as a whole account for 21.3% of the variability in the
outcome. The amount of variance that is explained by the predictor variable, interaction of CSRproduct* Advertisement Intensityis the R2 change value, 0.003, i.e. 0.3%. The F-change
has a value of 0.680 (p-value>0.05). Therefore, all these results further support the statement above to indicate that there is no statistically significant regression model. Furthering this, the βeta of the interaction term has a value of 0.057(p-value>0.05) indicating that there is no significant positive relationship between the interaction term and the dependent variable. For a more detailed overview of the results consult the Appendix B at the end of the thesis
When taking a look at the correlations and testing some variables it came to my attention that the CSR dimension employee relations had a positive significant relationship with return on assets. To further confirm this data I also decided to run a regression on the interaction term of CSR employee relations dimension with advertisement intensity. When analyzing the employee relationship dimension of CSR with its interaction with
25 CSR-CFP. Looking first at the correlations in Table 4, there is a positive correlation of
0.11(p-value<0.05) between CSR-employee relationship and ROA. On the other hand, the variable advertisement intensity does not have such a significant correlation. But when interacting the variable with the CSR employee relationship dimension there is a significant positive correlation of 0.12(p-value<0.05).
Looking at the coefficient of the regression, the multiple things can be deducted from results. The standardized βeta is 0.168 (p-value<0.05), inferring that there is a significant positive relationship between the interaction of employee relations and advertisement intensity on the CFP (ROA). With an R2 value of the model including the predictor variable
is 0.233 resulting in a change of R2 of 0.023 (F-change=5.343, p-value<0.05), concluding that
the interaction term account for an additional 2.3% variance of the financial performance. The unstandardized Beta has a value of 0.358(p-value<0.05). From this it can be inferred that the dependent variable, ROA, will increase by 0.358 million dollars with every one rating increase of CSR engagement. Reasons as to why the employee dimension has a significant positive effect on the return on assets and product quality does not will be further discussed in the discussion chapter of this thesis.
27
5. Discussion
By focusing on specific sectors and industries of the S&P500 companies incorporating both, total CSR strength measurements and dimension product strength measurements of CSR this study offers a couple of implications. First, it suggests that active CSR engagements mitigates some sort of positive effect on B2C companies. This supports the research
conducted by both Baron, Harjoto, & Jo (2011) and Crucio and Wolf (1996) who have indicated the importance of the different priorities between B2B and B2C and have emphasized the importance of selling to the end-consumer as they show more concern for such CSR engagements. B2C companies focus much of their time on making sure that the consumer is satisfied to hopefully get a reward back by gaining loyal customers. Consumers are more inclined to give rewards, publicity (word-of-mouth, online feeds), support towards socially responsible business. In other words, B2C are selling to the end-consumer and
therefore need to ensure that they are properly handling factors such as CSR to obtain the best rewards from their consumers to become and stay successful.
Secondly, within the consumer discretionary industry there does seems to be a positive relationship yet this is not supported by statistically significant data. This is surprising because goods such as for example experience goods are considered non-essential and therefore fall under the consumer discretionary industries. It could be that the majority of these positive effects fall under other B2C industries such as consumer staples or health care.
A reason for this discrepancy in theory and data could be due to the measurement of CSR. For this test, one total measurement of CSR was used. On the other hand, CSR is such an extended umbrella term, that cannot be defined by one definition (Scherer and Palazzo, 2007) making it hard to stay consistent in the measurements and indicating that just one
measurement does not give one clear picture. Within the KLD database there are various dimensions that make up the CSR measurements of overall arching strengths and
weaknesses. As certain dimensions might be more sensitive in one industry in comparison to another. This is why the rest of the study focused on analyzing the effects of a specific dimensions that supported by theory should have an impact on the financial performance of a firm. Another reason for this could be due to the short time period that was used to analyze the impact of this variable.
The dimension which the rest of the study focused on was customer satisfaction (as measured through CSR – product quality) and reputation(as measured through advertisement
28 intensity) which actually did not affect the corporate financial performance of the companies in the consumer discretionary industry companies. This was unexpected due to the variety of theories that indicated the emphasis consumers put on the quality of products, as concluded by Luo and Bhattacharya (2006) and Gupta (2002). Reasons for the discrepancy in theory and empirical data could be that consumers state the importance they weigh on social acts, they could still end up buying the cheaper version of the products because of budgeting issues. They can talk and agree with many of the social needs but when they actually come to act upon these issues themselves they back down on the premium prices and go for the non-CSR engaging product due to cheaper pricing.
Surprisingly, the CSR dimension of employee relations did have a significant impact on the financial performance with its interaction with advertisement intensity. This raises an interesting question as to why the CSR dimension of strengths of employee relations has a significant positive effect on the financial performance. There are a couple of reasons that could be support these results. Firstly, Brammer et al. (2007) conducted a study based on a sample of 4,712 employees which examined the impact of CSR on organizational
commitment. They found that, in fact, CSR engagement of the firms where employees work do impact their commitment to the firm. Furthermore, Kim et al. (2010) found similar results based on employee-company identification. Their results showed that CSR engagement has direct relationship on this identification, which leads to higher organizational commitment. This allows for the reduction of recruitment and training cost and at the same time increases job satisfaction and retention (Turban and Greening, 1997)
Another reason could be because larger companies tend not to publish all of their CSR information (Reverte, 2009) because they prefer to disclose information like this online or offline. This may be due to the big amount of customers they have and it might not be in agreement with a specific customer group so it is better to disclose the information in order not lose part of a customer group. This could lead to companies maybe focusing more on the internal organization where it is hard to disclose information like this when employees are working on specific projects. Moreover publishing CSR activities and reports to the public depends greatly on the type of firm, origin and culture it originates from, as they belief that each company has their own priorities and differences (Maignan and Ralston, 2002). Therefore, it is reasonable, that such companies focus on the relationship firms have with employees as a way build reputation and image; through the internal organization instead of externally. As reputation and image are an important influence on customers satisfaction and willingness to buy products or services like those of an experience for example, it seems
29 reasonable that the interaction of advertisement intensity and the employee relationship can have a significant impact on the financial performance of a consumer discretionary company.
Lastly, stakeholder theory supports the suggestion that investment into CSR could enhance various relationship, such as the relationship of the firm with their employees. It could even be as engaging is to motivate potential employees to come and work for a
company with CSR initiatives (Greening and Turban, 2000). An employee’s commitment to a firm takes into account the firm’s commitment in their evaluation of the company (Rodgers, Choy, & Guiral, 2013). This perception, which generates the type of relation an employee wants with the firm, can greatly affect their motivation. If they believe they are working for a socially responsible firm they could feel the same reward necessity as consumers do, but instead of buying the products they will help to improve productivity and financial outcomes (Waddock and Graves, 1997).
6. Conclusion
This research investigated the relationship between corporate social responsibility and corporate financial performance using data from the S&P500 index within the consumer discretionary industry. It analyzed an industry that has not been researched extensively and adding on the aspect of multidimensionality of the CSR measurement which was also lacking in the existing theories and studies on the CSR-CFP relationship. Theory indicated that businesses that are focused on selling to consumers and not to other businesses need to put greater emphasis on being active in CSR engagement as it has become a factor that seems to impact the behavior and opinion of consumers. They need to anticipate the importance of CSR in order to accurately promote it to their customer base. The study revealed that the consumer market does indeed generate a positive relationship between CSR and CFP. Focusing further on the consumer industry there was no statistical conclusion that could be made about the positive relationship with the use of one CSR variable. As well as the
interaction of product quality and advertisement intensity no conclusion could be made. Yet, surprisingly, the CSR dimension of employee relations and its interaction with advertisement intensity did generate a positive relationship.
There are a couple of limitation in this study. Firstly, the sample only contains
companies from the S&P500 index. These include some of the most successful companies in the United States. In order to show that these results are consistent across companies in this industry, whether big, small, public, private, family-owned or a startup, a database should be
30 created that contains a number of companies in each of these categories to show consistency. Therefore it will always be very hard to generalize the entire consumer discretionary industry based on the data obtained in this study because the study used a specific type of company.
Secondly, the financial measurement that was used, return on assets, is an accountable measurement. This often indicates that one is looking at the short-term of a company. In order to be successful a company has to think about the future as well. Therefore it will be important to also analyze this data using financial measures that calculate the long-term performance of a company. This will show that CSR can also have an impact in the long term.
Some suggestions for future research would include analyzing more than just the consumer discretionary industry. Some of the other consumer industries include consumer staples and health care which could also further the consumer market in improving their strategic decisions. Another interesting aspect that could be measured is reputation through various reputation scores that would have to obtained from annual reports. To see how the interaction of reputation and the dimensions of CSR affect a company’s financial
performance instead of linking it to advertisement intensity.
This study yields to improve managerial practices because it gives a better indication of the types of CSR activities a company should partake in. Even though it is often thought the product quality – meaning a product being produced in a socially responsible manner – was thought to have quite an impact on the customer satisfaction and therefore also the financial performance yet this was not the conclusion that was made based on the data. Managers can use this information to change their focus on factors within the organization and their processes that are important towards their financial performance. This way they can best allocate their resources to stay engaged in CSR and at the same time continue to be successful because they will invest in activities that will pay out in the future.
31
7. References
Anderson, E.W., Fornell, C., Mazvancheryl, S.K. (2004). Customer Satisfaction and Shareholder Value, 68(4), 172-185.
Baron, D.P. (2001). Private Politics, Corporate Social Responsibility, and Integrate Strategy. Journal of Economics & Management Strategy 10(1), 7-45.
Barnet, M.L., (2007). Stakeholder Influence Capacity and the Variability of Financial Returns to Corporate Social Responsibility. The Academy of Management Review 32(3), 794-816.
Baron, D.P., Harjoto, M.A., & Hojo, J. (2011). The Economics and Politics of Corporate Social Performance. Business and Politics 13(2), 1-46.
Berman, S.L., Jones, T.M., Kotha, S., Wicks, A.C. (1999). Does Stakeholder Orientation Matter? The Relationship Between Stakeholder Management Models and Firm Financial Performance. The Academy of Management Journal 42(5), 488-506. Brammer, S., Millington, A., & Rayton, B. (2007). The Contribution of Corporate Social
Responsibility to Organizational Commitment. International Journal of Human Resource Management 18(10), 1701-1719.
Brammer, S., Pavelin S. (2004). Building a Good Reputation. European Management Journal, 22(2), 704-713.
Carroll, A.B. (1999). Corporate Social Responsibility. Evolution of a Definitional Construct. Business & Society 38(1), 268-295.
Clarkson, M.B.E. (1995). A Stakeholder Framework for Analyzing and Evaluating Social Performance. The Academy of Management Review 20(1), 92-117.
Cruz, J.M., Wakolbinger, T. (2008). Multiperiod effects of corporate social responsibility on supply chain networks, transaction costs, emissions, and risk. International Journal Production Economics 116, 61-74.
32 Curcio, R.J., Wolf. F.M. (1996). Corporate Environmental Strategy: Impact Upon Firm
Value. Journal of Financial and Strategic Decisions 9(2), 21-31.
Dowling, G.R., Roberts, P.W. (2002). Corporate Reputation and Sustained Superior Financial Performance Financial Performance. Strategic Management Journal 23, 1077-1093. Flatt, S.J., Kowalczyk, S.J. (2011). Corporate Reputation Persistence and Its Diminishing
Return. International Journal of Business and Social Science 2 (19), 1-10. Fidelity Investments, (24 June 2016). Consumer Discretionary. Retrieved from:
https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/sectors_in_market.jht ml?sector=25
Fornell, C. (1992). A National Customer Satisfaction Barometer: The Swedish Experience. Journal of Marketing, 56(1), 6-21.
Galbreath, J., Shum, P. (2012). Do Customer Satisfaction and Reputation Mediate the CSR-FP Link? Evidence from Australia. Australian Journal of Management 37(2), 211-229.
Greening, D.W., Turban, D.B. (2000). Corporate Social Performance as a Competitive Advantage in Attracting a Quality Workforce. Business & Society 39(3), 254-280. Gruca, T.S., Rego, L.L. (2005). Customer Satisfaction, Cash, Flow, and Shareholder Value.
Journal of Marketing 69(3), 115-130.
Helm, S., The Role of Corporate Reputation in Determining Investor Satisfaction and Loyalty. Corporate Reputation Review 10(1), 22-37.
Homburg, C., Koschate, N., Hoyer, W.D. (2005). Do Satisfied customers Really Pay More? A Study of the Relationship Between Customer Satisfaction and Willingness to Pay. Journal of Marketing 69(2), 84-96.
Hillman, A.J., Keim, G.D. (2001) Shareholder Value, Stakeholder Management, and Social Issues: What’s The Bottom Line? Strategic Management Journal 22, 125-139.
33 Kang, K.H., Lee, S., Huh, C. (2010). Impacts of Positive and Negative Corporate Social
Responsibility Activities on Company Performance in the Hospitality Industry. International Journal of Hospitality Management 29, 72-82.
Kempf, A., Osthoff, P. (2007). The Effect of Socially Responsible Investing on Porfolio Performance. European Financial Management 13(5), 908-932.\
Kim, H., Kim, N., Lee, H., & Lee, M.n (2010). Corporate Social Responsibility and Employee-Company Identification. Journal of Business Ethics 95, 557-569. Kitmueller, M., Shimshack, J. (2012). Economic Persepctives on Corporate Social
Responsibility. Journal of Economic Literature 50(1), 51-84.
Kotha, S., Rindova, V.P., Rothaermel, F.T. (2001). Assets and Action: Firm-Specific Factors in the Internationalization of U.S. Internet Firms. Journal of International Business Studies 32(4), 769-791.
Lev, B., Petrovits, C., Radhakrishnan, S. (2010). Corporate Environmental Strategy: Impact Upon Firm Value. Journal of Financial and Strategic Decisions 9(2), 21-31.
Luo, X., Bhattacharyca, C.B. (2006). Corporate Social Responsibility, Customer Satisfaction, and Market Value. Journal of Marketing 70(4).
Maignan, I., Ralston, D.A. (2002). Corporate Social Responsibility in Europe and the U.S.: Insights from Businesses’ Self-Presentation. Journal of International Business Studies, 33(3), 497-514.
Margolis, J.D., Walsh, J.P. (2003). Misery Loves Company: Rethinking Social Initiatives by Business. Administrative Science Quartely 48(2), 268-305.
Mittal, V., Anderson, E.W., Sayrak, A., Tadikamalla, P. (2005). Dual Emphasis and the Long-Term Financial Impact of Customer Satisfaction. Marketing Science 25(4), 544-555.
