The relationship between corporate social responsibility and
financial performance revised:
Assessing the impact of different CSR-motives on corporate financial
performance
Tobias Kreuger 10072098
Bachelor Thesis Business Administration First supervisor: E. Dirksen MSc.
Abstract
Over the last decades, the importance and significance of corporate social responsibility (CSR) has grown continuously in both the business and academic environment. For managers and investors, it is important to know what the impact is of CSR on corporate financial
performance (CFP). However, still much disagreement about the nature of this relationship between CSR and CFP exists despite the large extent of research that has been conducted about this topic. Therefore, this study examined the relationship between CSR and CFP by looking at firms’ different communicated motives for applying CSR and how this affects their financial performance. These motives are performance, stakeholder and value-driven. In order to provide an answer, 45 companies listed on the Fortune500 were categorized in one of the three motives-categories and their financial performance was compared. The results show that, on average, the financial performance for performance-driven, stakeholder-driven and value-driven firms do not differ.
Table of Contents
A b s t r a c t … … … . . 2
1 . I n t r o d u c t i o n … … … . . . 5
2 . L i t e r a t u r e r e v i e w … … … 8
2.1 The concept/definition of CSR………8
2.2 The advantages and disadvantages of corporate social responsibility………..………9
2.3 CSR and corporate financial performance………..11
2.3.1 Corporate Financial Performance………..11
2.3.2 The relationship between CSR and CFP………12
2.4 Motives for applying CSR………16 3 . M e t h o d … … … . … … … . … … . 1 8 3.1 Research methodology………...…………....18 3.2 Sample………..………..21 4 . R e s u l t s … . . … … … . . . … … 2 2 4.1 Descriptive statistics……….22 4.2 Correlations………..……….23 4.3 Independent-samples t-test………..24 5. Discussion……….26
5.1 The relationship between corporate social responsibility and corporate financial performance……….26
5.2 Performance-driven versus stakeholder-driven motives for applying CSR……..……….27
5.3 Performance-driven versus value-driven motives for applying CSR ………27
5.5 Suggestions for future research……… …………29
6. Conclusion……….30
Bibliography………..………...31
1. Introduction
Over the last decades, the importance and significance of corporate social
responsibility (CSR) has grown continuously (Carroll & Shabana, 2010). In both the business and academic environment the concept of CSR has got a lot of attention. Almost all big and well-known companies have social reports on their website in which they state that they are conducting corporate social responsible activities. For example, Red Bull has a page on its website where they show that their products are hundred percent recyclable and they care about the environment (Red Bull, 2015). This also goes for BP (British Petroleum). On their website, a whole page is dedicated to sustainability and their social responsible activities (BP, 2015). This illustrates the importance of the CSR-concept for companies. Even though the companies mentioned before are reporting their social responsible activities or trying to create alertness about concrete matters, they are not obliged to do so. This is an example of how CSR is defined, namely: “actions that appear to further some good, beyond the interests of the firm and that which is required by law”, (McWilliams & Siegel, 2001). According to McWilliams and Siegel, some examples of CSR-activities include supporting local
businesses, non-animal testing procedures and using products that have social attributes or characteristics.
However, there is still much debate whether these CSR-activities will improve the financial performance of the companies. A lot of research has been conducted trying to explain the relationship between CSR and corporate financial performance (CFP) (Margolish & Walsh, 2003; Cavaco & Crifo, 2014). Nonetheless, the results are mixed: some authors have found positive relationships and others have found negative relationships (Barnett, Robert & Salomon, 2012). For instance, Margolish and Walsh have examined 127 published studies between 1970 and 2002 about the relationship between companies’ socially
responsible conduct and their financial performance. In almost half of these studies results suggest that there is a positive relationship between CSR and CFP. Only in seven studies results shows that there is a negative relationship. The remaining studies suggest a non-significant relationship. These mixed results leaves managers in the blind regarding the desirability of investing in CSR. Hence, still many scholars note that more research is needed for a deeper understanding of this relationship.
One way to get a clearer picture about the relationship between CSR and CFP is to look at the different CSR-motives of companies. In the existing literature about the
relationship between CSR and CFP, little attention is given to the different motives of corporate social responsibility (Babiak & Trendafilova, 2011). However, looking more closely into different dimensions of CSR, the relationship between corporate social
responsibility and corporate financial performance can be examined in a more comprehensive manner. For instance, Maignan and Ralston (2002) found three main principles that represent the motivational inputs that drives the commitment to CSR. These are value-driven,
stakeholder-driven and performance-driven motives, which will be further explained later. The above-mentioned motives were categorized by looking at the web pages and annual reports of different companies. Maignan and Ralston gave an important insight in what the underlying motives are of companies in different countries to engage in CSR-activities. Nonetheless, they did not look further into the relationship between the different motives of CSR and the financial performance of the companies. This might be of interest to, for example, shareholders. If they are only looking for companies, which perform financially well, and the research suggest that firms with performance-driven motives perform better than the firms with the other two motives, this could be valuable for them. The main purpose of this study is to further investigate this relationship between the different CSR-motives (value-driven, stakeholder-driven and performance driven) of companies and their financial performance.
This leads to the following research question: ‘How does communicated CSR-motives of
firms influence their financial performance?’
The reason why the motives developed by Maignan and Ralston is used for this study is because their framework is based on the results of a reliable number of firms and also because the chosen firms were from four different countries, namely the United States, France, Holland and the United Kingdom. This gives a more complete picture about why companies engage in CSR-activities. Besides this, the article of Maignan and Ralston is cited in more than over 870 other articles and many scholars use their framework.
To answer the proposed research question, companies with different CSR-motives will be compared to each other with respect to their financial performance. This will be done by looking at web pages of companies and their annual reports. Before this, existing literature about the relationship between CSR and CFP will be studied and a deeper insight into the different motives of CSR is given.
The remainder of this study is as follows. The concept/definition of CSR and benefits/disadvantages are discussed in chapter 2. In this chapter the relationship between CSR and CFP and the different motives of CSR are also mentioned. The methodology is the central topic in chapter 3. Furthermore, the results are discussed in chapter 4. Chapter 5 will contain the discussion, limitations and suggestions for future research. Finally, the conclusion will be covered in chapter 6.
2. Literature review
In this section the existing literature related to the main topic of this study is discussed. First, the concept/definition of CSR is addressed. Second, the benefits and disadvantages of employing CSR are discussed. Third, the relationship between CSR and CFP is examined. Finally, the underlying motives of CSR of why companies engage in CSR are investigated
2.1 The concept/definition of Corporate Social Responsibility
The idea of CSR was developed for the business community already in the 1920s (Arvidsson, 2010). During the years, the concept of CSR has shifted into different perspectives. In 1970, Friedman presented an article in which he claims that the social responsibility of companies is to increase their profits, also known as the shareholder approach (Arvidsson, 2010). This view indicates that the main objective of stakeholder management teams is to maximize shareholder value. Freeman (1984), proposed a different view on the concept of CSR. As reported by Freeman regarding to CSR, a stakeholder approach should lead management teams to defining which part of the society they should respond to. So the main difference between the two views is that according to the latter, a company is not conceived as a mutual relationship between shareholders and management teams but as a multilateral set of
relationships amongst various stakeholders. Because of the many corporate scandals that took place in the last decades (e.g. Waste Management Company, Enron, Lehman Brothers) mistrust has arisen against the management teams of big corporations. As a result, many have criticized the view on the shareholder-perspective and the stakeholder-view of Freeman is more accepted. This does not mean that the more accepted stakeholder-view of Freeman does not come with challenges. Findings from marketplace polls and academic research show that key stakeholders (i.e. employees, investors and consumers) are increasingly likely to take actions to reward companies with a good CSR-reputation and to punish companies with bad CSR-reputations (Du, Bhattacharya & Sen, 2010). However, more recent, another broader view on CSR is taken into regard, namely the societal approach (Van Marrewijk, 2003). In this view, companies are not only responsible to their key-stakeholders but to society as a whole, in which they are integrated. The more recent societal approach of CSR requires organizations to rethink their strategy and thoroughly analyse the complex societal context of which they are a part.
According to Dahlsrud (2008), CSR is “a social construction and, as such, it is not possible to develop an unbiased definition”. In his article, Dahlsrud studies the similarities and differences between available interpretations of CSR. Based on the definitions he
developed five categories, which represents the different dimensions of CSR; the stakeholder dimension, social dimension, economic dimension, voluntariness dimension and the
environmental dimension. The stakeholder dimension is concerned with key-stakeholders in the firm. The social dimension contains the relationship between business and society. The economic dimension accounts the financial aspects including describing CSR in terms of the operations of the firm. The voluntariness dimension is related to actions that are not
prescribed by law. Finally the environmental dimension contains aspects of the natural environment. In order to understand the concept of CSR all the above-mentioned dimensions should be taken into account. The categories of Dahlsrud are in accordance with the three dimensions that Van Marrewijk (2003) displayed in his article, namely the economic, environmental and social aspect of CSR. Those three dimensions are also stated in the
description of CSR according to The International Organization for Standardization: “CSR is a balanced approach for organizations to address economic, social and environmental issues in a way that aims to benefit people, communities and society’’ (ISO, 2015). This shows a pattern in what the most important components are of corporate social responsibility, namely the economic, environmental and social aspects.
As already mentioned in the introduction, McWilliams and Siegel (2001) defined CSR as: “actions that appear to further some good, beyond the interests of the firm and that which is required by law”. This definition, in the opinion of the author of this study,
comprehends the three most important components of CSR and also the remaining two dimensions found by Dahlsrud. The first part of their definition compels the economic, environmental and social dimension as well as the stakeholder dimension. To “further some good” is quite broad and thus it is assumable that this contains the abovementioned
dimensions. The phrase “beyond the interests of the firm and that, which is required by law” summarizes the voluntariness dimension. This definition will be used throughout this paper.
2.2 The advantages and disadvantages of engaging in CSR
As stated by Burke and Logsdon (1996), one reason why firms engage in CSR is that despite the short-term costs that it entails, it will pay off for companies in the long run. It is argued that firms would benefit from greater social legitimacy and that governments would regulate
to a lesser extent. This will create a better society as a whole and this will improve long-term profitability of firms. Furthermore, Burke and Logsdon found that CSR-policies could be beneficial for corporations when these policies are strategic, in other words, when they yield substantial business-related advantages such as supporting core activities. They developed five dimensions that capture the full range of strategic behaviour for firms to benefit from CSR. These are centrality (closeness of fit to the firm’s mission and objectives), specificity (ability to capture private benefits by the firm), proactivity (degree to which the program is planned in anticipation of emerging social trends), voluntarism (the scope for discretionary decision-making and the lack of externally imposed compliance requirements) and finally
visibility (observable, recognizable credit by internal and/or external stakeholders for the
firm). When these strategic behaviours are in line with the CSR-policies of the company, it is likely to benefit from engaging in CSR. Examples of outcomes of strategic CSR behaviour are customer loyalty, productivity gains and new product/geographic market opportunities. Babiak and Trendafilova (2011) notice another important dimension for engaging in CSR, namely legitimacy. Legitimacy ‘affects not only how people act toward organizations, but also as how they understand them’. For this reason, people perceive legitimate organizations as more meaningful, predictable and trustworthy. This will improve the firm’s ability to compete for resources, assemble stakeholder approval and goodwill of the firm during times of crisis (Babiak and Trendafilova, 2011). Other reasons why firms employ CSR are moral obligation, reputation, sustainability and license-to-operate (Porter & Kramer, 2006). For instance, the license-to-operate approach offers businesses to identify certain social issues that are of interest to their stakeholders. It also advances constructive dialogue with governments, local citizenry and also activists. Reputation is also used by many firms to justify their CSR-activities. The underlying assumption here is that engaging in CSR will strengthen the brand, company’s image and improve the value of its stock.
However, there are also cases against employing CSR. Friedman discussed the fact that management is only responsible for maximizing profits of owners and shareholders (in Carrol & Shabana, 2010). According to Friedman, social issues are not the concern of business people and that these problems should be resolved by the free market system. Furthermore, employing CSR dilutes the primary purpose of the company. When firms adopt CSR they can be put into fields that are unrelated with their initial goals and this can be costly. Another argument against engaging in CSR is that managers are trained to deal with finances and operations, not for making socially oriented decisions (Davis, 1973). Managers
lack the social skills to make these decisions. Davis also states that the costs of social
involvement can outweigh the benefits. For example, metal foundries had to close their doors because the costs of new pollution systems were too high to make profits. Besides this, added costs of CSR are generally incorporated into the price of the product. When businesses are competing internationally, where other firms are not indulged in CSR, this can cause a competitive disadvantage. Additionally, it can be argued that businesses already have enough social power. According to Davis, combining social activities with the established economic activities of corporations will give them an excessive concentration of power. Finally, businessmen lack accountability to the people. It may be unwise to give managers
responsibilities in areas where they are not accountable. This can create a negative image for the company, because the society perceives managers not capable of being responsible for social responsible activities.
2.3 CSR and CFP
Before examining existing literature about the relationship between Corporate Social
Responsibility and Corporate Financial Performance (CFP), it is important to know what CFP actually is. This will be explained in the next section.
2.3.1. Corporate Financial Performance
Orlitzky, Schmidt and Rynes (2003) have conducted a meta-analysis of 52 quantitative studies about the CSR-CFP relationship. In their research they have found that in existing studies, three broad subdivisions are used for CFP. These are market-based, accounting-based and perceptual measures. Market-based measures contain investor returns, accounting-based measures are about accounting returns and perceptual measures are based on surveys. The market-based measure “reflects the notion that shareholders are a primary stakeholder group whose satisfaction determines the company’s fate” according to Cochran and Wood (in Orlitzky et al., 2003). Additional, Mackey, Mackey and Barney (2005) define market value as “the price of a firm’s equity multiplied by the number of its shares outstanding”. The accounting-based measures, such as return on assets (ROA), return on equity (ROE) and earnings per share (EPS), captures a firm’s internal performance in some way because accounting returns are allocated by managers to different projects of their choosing. Finally perceptual measures of corporate financial performance are developed by subjective
estimates of survey-respondents about, for example, the firm’s ‘soundness of financial position’. McGuire, Sundgren and Schneeweis (1988) also used accounting-based and
stock-market-based indicators for measuring financial performance in their study about the CSR-CFP relationship. They found that three accounting-based measures are correlated with CSR, specifically ROA, total assets and operating income growth. Finally, Preston and O’Bannon (1997) used the following traditional financial performance indicators (selected from
COMPUSTAT) to investigate the relationship between CSR and CFP: ROA, ROE and return on investment (ROI). For their choice of financial performance measures they have followed the method of Mcguire and his colleagues as mentioned before. This illustrates that
accounting-based measures are often used for measuring financial performance and is a good indicator of CFP. Therefore, in this study, accounting-based measures will be used for the CFP-variable.
2.3.2 The relationship between CSR and CFP
The relationship between corporate social responsibility and corporate financial performance is examined by many scholars and has got a lot of attention over the past decades, especially in the domains of management sciences and economics of organizations (Cavaco & Crifo, 2014). Various traditional arguments have been made for examining the CSR-CFP
relationship (McGuire, Sundgren & Schneeweis, 1988). One view is that firms have a trade-off when they engage in CSR. In this view it is proposed that firms incur costs from social responsible activities. This will give a disadvantage when other competing firms are less responsible. Another contrasting view is that corporate social responsibility will stimulate employee morale and productivity, while the explicit costs are low. Additionally there is the view that costs of CSR are significant, but these costs are outweighed by the reduction in other firm costs. For example, perceptions of high social responsibility may increase firms’ ability to obtain funds at consistent rates compared to firms that have a low social
responsibility.
As indicated above, there are several reasons why it is relevant to study the relationship between corporate social responsibility and corporate financial performance. However, scholars still have not reached consensusabout the nature of this relationship. According to Margolish and Walsh (2003) and Barnett and his fellow researchers (2012), a lot of studies about the CSR-CFP relationship have suggested different results. The studies they examined suggest positive, negative and neutral relationships between corporate social responsibility and financial performance.
A positive relationship between corporate social responsibility and financial
performance implies that when companies engage in CSR-activities this will improve their financial achievements (Margolis, Elfenbein & Walsh, 2007). Furthermore, this relationship also implies that when firms act social irresponsible this will alter their financial
performance. The main theory that suggests a positive relationship between CSR and CFP is the stakeholder theory that was developed by Freeman in the 1980s. According to this theory, firms are not only responsible for maximizing the wealth of shareholders but also for other stakeholders and the society as a whole (Freeman, 1984). Freeman’s defines the stakeholder as “any group or individual who can affect or is affected by the achievement of an
organization’s objectives”. In the present business environment, more and more stakeholders are pressuring companies to behave social responsible. This pressure in translated in the form of implicit contracts (McGuire et al., 1988). Examples of implicit contracts include better quality of products, better waste management and supporting sustainable projects. Having implicit contracts, which is unavoidable for companies nowadays, also implies having
implicit costs. These implicit costs can turn into higher explicit costs when firms do not act in a social responsible way. The reason for this is that when firms act socially irresponsible, stakeholders will try to turn the implicit contract into an explicit contract. When this is the case, stricter rules could be imposed by the government and will increase the costs of the company. This line of reasoning indicates that social responsible firms have less explicit costs than socially irresponsible firms and thus have a better financial performance.
According to Margolis, Elfenbein and Walsh, a possible reason for a positive relationship is that employees efforts increase when they are treated well. This causes improved productivity and therefore, improved financial performance. Decreased costs also enhances financial performance. Examples of decreased costs due to acting social responsible include avoidance of potential penalties and regulation, less difficulties with contracting stakeholders and lower material costs from reduces levels of pollution and waste (Margolis et al., 2007). Tsoutsoura (2004) also argues that firms that employ CSR have less risk to be involved in negative events and are less likely to pay heavy fines for pollution. This is consistent with the view of Margolis, Elfenbein and Walsh. These examples highlight the value-creating impact of the efforts to do good. Another view is that the appeal of engaging in CSR, rather than reduced costs or increased productivity, is responsible for improved financial performance. According to this view, the perception among key-stakeholders that companies support a good cause generates demand for and commitment to the company’s jobs, products and stock. In this case the appearance of CSR is the value-creating mechanism. Because of these reasons and
the fact that most studies about the CSR-CFP relationship show a positive relationship we propose that this will also be found in this study. Therefore the first hypothesis is:
H1: The overall relationship between CSR and CFP will be positive.
When there is a negative relationship between corporate social responsibility and financial performance, this indicates that when more social responsible activities are conducted by companies, this worsens their financial performance. The main theory that supports the view that CSR and CFP are negatively related is the neo-classical theory (Friedman, 1962). According to this theory, the main purpose of firms is to increase its profits, in other words, increase the wealth of company owners/shareholders. This view was briefly mentioned earlier, known as the shareholder approach. Related to this theory is the principle-agency theory. In this theory the principles are the shareholders and the agents are managers who are responsible for running the organization. These managers are selected by the shareholders and are responsible to act on behalf of the shareholder’s interests. This theory thus suggests that the main goal of managers is to maximize profits and supports the neo-classical view of Friedman. Besides this, Friedman states that the costs of CSR-activities reduce the bottom line result, or in other words, the net increase in shareholders’ equity. According to Waddock and Graves (1997) the extra costs of engaging in CSR causes a competitive disadvantage. The reason for this is that firms, which do not engage in social responsible activities, do not have to bear these extra costs and have less difficulty to compete in a market with strong competition. Their view is also in line with the argument of Davis (1973), which is
mentioned earlier, and Vance (1975), who found that corporations displaying strong social credentials experience declines in stock prices compared to the market average. Another explanation for a negative relationship between CSR and CFP is the so-called “managerial opportunism” hypothesis (Preston & O’Bannon, 1997). This hypothesis states that “the pursuit of private managerial goals, in the context of compensation schemes closely linked to short term profit and stock price behaviour, might lead to a negative relationship between financial and social performance”. The reason behind this is as follows: when financial performance is high, managers may attempt to “cash in” by reducing social expenditures, which gives them the opportunity to increase their own short-term private gains. In contrast, when financial performance is weak, managers will justify their disappointing results due to
the fact that the company engages in social responsible activities. Finally, firms may forgo certain opportunities when they indulge social responsible programs (McGuire et al., 1988). They state that when firms act socially, they reduce their own strategic choices and thus have fewer options to increase profits. However, according to several meta-analyses, only few studies have found negative relationships between corporate social responsibility and corporate financial performance.
In the existing literature, not only positive and negative relationships between CSR and CFP have been found. There are also cases where no significant (whether positive of negative) relationship between the two variables was found (Waddock & Graves, 1997). An explanation for this result is that there are many interceding variables between social and financial performance (Ullman, 1985). Therefore, no reason exists to expect a relationship, except when this is caused by chance. The supply and demand model of McWilliams and Siegel (2001) also gives a possible explanation why there is no relationship between CSR and financial performance. Their model indicates that even though firms that employ CSR will have higher costs than firms which do not, they eventually will have the same rate of profit. The explanation for their argument is illustrated by an example from the article of
McWilliams and Siegel:
Assume there are two firms that produce identical goods, except one company adds a social characteristic to its product. Invoking the theory of the firm, we assume that each firm makes optimal choices, which means that each produces at a
profit-maximizing level of output. It can be shown that, in equilibrium, both will be equally profitable. The firm that produces a CSR attribute will have higher costs but also higher revenues, whereas the firm that produces no CSR attributes will have lower costs but also lower revenues. Any other result-for instance, one firm earning a higher rate of return-would cause the other firm to switch product strategies.
This example illustrates that it does not matter when companies employ CSR or not, profitability will equal in the equilibrium.
To conclude, in the existing literature about the relationship between CSR and CFP, three types of relationships have been found. Firstly, results of different studies suggest that there is a positive relationship. This indicates that when firms are engaging in CSR, they will have a better financial performance than similar firms that do not employ CSR. The opposite
is true for a negative relationship between corporate social responsibility and financial
performance. This kind of relationship is also found in several studies. Finally, some scholars have found that there is no significant relationship between CSR and financial performance and thus is does not matter for the financial performance of firms whether they engage in CSR. This shows that there still is disagreement over the nature of this relationship. In the next section the different motives of why companies act socially responsible are considered.
2.4 Different motives for employing CSR
In 1995, Swanson addressed a theoretical problem by reorienting the corporate social performance (CSP) model. Before she did her research, different academics had developed frameworks for conceptual developments in the CSP area. For instance, Wood (1991) created a CSP model that provided a coherent structure for examining the relevance of research topics in CSR. However, this model highlighted a theoretical problem: its economic and duty-aligned views were not integrated (Swanson, 1995). The revised CSP-framework of Swanson integrated these views and showed that there are three main principles of why firms employ CSR. One motive has a utilitarian perspective, which means that firms are engaging in CSR to achieve their performance objectives in terms of profitability. Furthermore, Swanson argued that firms are also compelled to conduct social responsibility activities in order to conform to norms set by stakeholders. These norms define appropriate behaviour. This motive is labelled as the negative duty approach. Finally, the positive duty view states that firms are self-motivated to have a positive impact regardless of social pressures of stakeholders or other parties. When this last principle is the motive for companies to conduct CSR activities, this is part of the corporate identity (Hooghiemstra, 2000). This means that companies express values considered by their organizational members as distinctive, central and enduring.
According to Maignan and Ralston (2002), existing research about the motives of CSR is mainly done by looking at firms in the United States. Therefore they conducted a similar research to look whether the same or different motives for employing CSR are present in European countries. They have done this by looking at statements of companies on their webpages regarding CSR. Maignan and Ralston also found three main principles that represent the motivational inputs that drives the commitment to CSR in Europe. The principles are value-driven, stakeholder-driven and performance-driven motives. These motives correspond respectively to the positive duty, negative duty and utilitarian approach,
which Swanson found in her study, and are also used in other studies (Ellen, Webb & Mohr, 2006; Latteman, Fetscherin, Li & Schneider, 2009). Furthermore, Jones, Felps and Bigley (2007) also conducted research about ethical theory in which they looked further into
different types of principles of how companies do business with their stakeholders. Jones and his colleagues also found principles that correspond with the principles of Maigan and
Ralston (2002). According to them, utilitarianism ‘admonishes moral agents to promote overall human-welfare by acting in ways that result in the greatest total beneficial consequences minus harmful consequences’. In this theory, firms apply a cost-benefit measure universally, in other words, it involves not only the organization but also
stakeholders. The focus here is thus on maximizing profits, but with taking into account the stakeholders of the company. This principle is related to the performance-driven motive of Maignan and Ralston.
Furthermore, Handelman and Arnold (1999), state that in the negative duty approach, which is related to the stakeholder-driven motive of Maignan and Ralston, societal norms from the institutional environment are more important than performative concerns, such as efficiency and competition. Norms defined by stakeholders are the general guideline of how companies should do business in this view. Therefore, the emphasis lies more on meeting standards rather than being as efficient as possible. Companies’ stakeholder-driven motives causes for less moral weights on personal satisfaction and the benefit of the firm (Jones, Felps & Bigley, 2007). For this reason it can be said that the stakeholder-driven motive will have a less positive impact on financial performance than the performance-driven motive, which results in the second hypothesis:
H2: Performance-driven motives for applying CSR will have a bigger positive impact on the firm’s financial performance than stakeholder-driven motives for applying CSR.
The main difference between the stakeholder-driven motive and value-driven motive is that according to the latter, companies do not engage in CSR activities because they need to meet standards set by the society, but because they want to. This principle holds that there is a genuine ‘care’ for the stakeholders and society (Jones, Felps & Bigley, 2007). Companies that have value driven motives for applying CSR can be labelled as ‘altruist’ firms. In their case, ethical standards come first and economic considerations are only taken into account in the direst circumstances. However this induces an unfortunate trade-off. For instance, when
financial crises are prevailing, altruist firms are more likely to take actions that are more beneficial for the society than for the firm itself. Moral principles are more important than other decision-making criteria, even when the companies’ survival is at stake. Therefore, the third hypothesis is:
H3: Performance-driven motives for applying CSR will have a bigger positive impact on the firm’s financial performance than value-driven motives for applying CSR.
3. Method
In the previous section a literature review was given related to the research problem and to propose several hypotheses. In the following section, the overall research design will be discussed as well as the method that will be used in order to answer the research question and to test the propositions.
3.1 Research methodology
In order to answer the research question and to test the propositions, a quantitative method is used. The reason for this is that quantitative research examines relationships between
variables, which are measured numerically (Saunders, Lewis and Thornhill, 2012, p. 162). In this study, the emphasis lies on how financial performance differs between firms with
different motives for applying CSR, which are outlined in the previous section. The financial performance of companies is measured numerically, so a quantitative method was considered best for this research. The research strategy used in this thesis was archival research. In this strategy, administrative records and documents are used as the primary source of data. One limitation of this kind of data is that they originally were collected for a different purpose. However, once obtained these data can be used for further analysis to provide additional or different knowledge when used appropriate (Bulmet et al., 2009 in Saunders et al., 2012, p.304). Furthermore, the use of archival data saves a lot of time, what is beneficial when the timeframe for conducting research is limited. Before the analyses were conducted to
test the propositions firms are coded into three categorizations, which are related to the CSR-motives. This will be discussed next.
Categorization of CSR-motives
The coding of the CSR-motives was done by using the coding scheme developed by Maignan and Ralston (2002). In their research, they looked into the different motives of why
companies engage in CSR-activities. Maignan and Ralston did this by looking at webpages of companies and then categorized the motives into three categories; performance-driven, stakeholder-driven and value-driven motives. The performance-driven motive is used when CSR is applied for performance objectives in terms of profitability, return on investment or sales volume. When CSR is employed according to a stakeholder-driven motive, companies engage in CSR because they are compelled to adopt social responsibility initiatives in order to meet standards set by stakeholders and to define appropriate behaviour. Finally, the value-driven motive for applying CSR suggests that businesses are self-motivated to adopt green practices and social responsibility programmes. Their coding scheme is used in multiple studies and was also used for this study. The different motives with examples are summarised in table 1.
Table 1.
Categorization of CSR motives as stated on webpages
Motives for applying CSR Examples Performance-driven CSR: CSR is introduced as a part of the
firm’s economic mission, as an instrument to improve its financial performance and competitive posture
‘For BG Group, sustainability is a prerequisite for long-term performance and value protection for our shareholders’. www.bg-group.com
Stakeholder-driven CSR: CSR is presented as a response to the pressures and scrutiny of one or more stakeholder groups
‘We recognise that we have responsibilities not only towards our customers, employees and shareholders but also to the countries and
communities in which we operate’. www.hsbc.com
Value-driven CSR: CSR is presented as being part of the
company’s culture, or as an expression of its core values
‘At Lowe’s, we’re driven by a single purpose – to help people love where they live’. www.lowes.com
Data collection
Two types of data needed to be collected for testing the propositions. First, the firms must be coded into one of the three CSR-motives, which can be found in table 1. The categorization of CSR-motives was conducted by looking at the webpages and annual reports of companies. When there was no clear motive stated on the webpage or in the annual report, the company was not included in the data set. The motives for applying CSR are classified as categorical data. Categorical data refers to data whose value cannot be measured in to numerical
measures but can be classified into categories related to their characteristics (Saunders, Lewis & Thornhill, 2009, p. 475). In the case of the categorization of CSR-motives, the data is nominal, which implies that categories are discrete and unambiguous. For this reason, this kind of data is purely descriptive but they can be counted to establish frequencies of categories and to check whether cases are evenly distributed among categories. This is important for this study, because the amount of firms in each motive category should almost be the same to get a good comparison.
In order to test whether there is an overall positive relationship between corporate social responsibility and corporate financial performance, KLD scores were used to rate CSR. Kinder, Lydenberg and Domini (KLD) tracks firms’ CSR performance based on several aspects. For instance, companies are rated on their environmental, social, and corporate governance performance. In this study, CSR-performance of companies is rated on 15 criteria, based on their corporate governance, social and environmental performance. The lowest score possible is -8, which indicates a poor CSR-performance. The highest possible score is 7, which indicates an excellent CSR-performance. Each company will be scored on the 15 points, which results in a net score. This could either be positive or negative. The criteria are divided in positive points (strengths) and negative points (concerns). A company can score a 0 or a 1 on each criterion. When organisations score a 1 on a positive point, they will receive a plus 1 score. If companies score a 1 on a negative point, they receive a minus 1 score. When a 0 is obtained, this will result in a score of zero. These numbers are added up to calculate the overall social performance-score of the company, which is referred to as the Net KLD score.
Furthermore, the return on assets (ROA) and return on equity (ROE) of the companies were measured for the financial performance-variable. ROA is measured as net income divided by total assets. Return on equity is measured as net income divided by stockholders’ equity. Net income is defined as the earnings of a company within a given year. This data can
be classified as numerical, continuous data. A characteristic of continuous data is that the values are infinite. The return on assets and return on equity values can take any number. The ROA and ROE values were retrieved from COMPUSTAT, a database with financial
information from companies, following the method of Waddock and Graves (1997) and McGuire, Sundgren and Schneeweis (1988). The COMPUSTAT database mainly contains information about companies situated in the United States. Therefore, only U.S. companies were considered and this will be discussed in the next section.
3.2 Sample
The sample-frame used for this study is the 2014 Fortune 500 rankings-list
(www.fortune.com/fortune500). This list was used because it consists the 500 biggest companies from the United States, which makes the gathering of the financial performance information more easily. Besides this, Maignan and Ralston (2002) also used this list for selecting companies in their study. They found that American companies have clear CSR-motives stated on their webpages, which is important for this study as well. Another reason why this sample frame was used is because of language constraints. Only webpages in English could be used for the understanding of the CSR-motive, because of the language capabilities of the author. The procedure for selecting companies from the Fortune 500 list was done by choosing them randomly, for generating a better generalizability. Every third case was selected from the list. Then their webpages were analysed for CSR-motives. If no clear motive could be found, the next company was selected from the list and the same sampling procedure was used. When a company with a clear webpage was found, then the COMPUSTAT database was used for finding the necessary financial information. This routine was done until the three CSR-motives were represented by an equal amount of organizations. Because this procedure was quite time-consuming, 45 companies were used in total, with 15 companies per CSR-motive.
4. Results
In the previous section the method of conducting this research was discussed. This section will give an overview of the results. First, some descriptives statistics will be discussed. Then the correlations between the variables used for this study are presented. Finally, the results of the tests, which were used for testing the propositions, are showed.
4.1 Descriptive statistics
The descriptives statistics tables of the different groups regarding their CSR-motive
(performance, stakeholder and value-driven) can be found in Appendix A. Table 2a presents the descriptives statistics of the performance-driven firms. The table shows that the mean return on assets in this group is around 7 percent per annum. Furthermore, the minimum ROA amongst this group is minus 3 percent and the maximum around 14 percent. For the return on equity, the mean is around 16 percent and the minimum found is minus 47 percent. The maximum ROE is 9 percent per year. Regarding the social performance, it is shown that performance-driven firms score a 1.53 on average. The minimum score is -3 for this group, and their maximum is 3.
The descriptives for the stakeholder firms is shown in table 2b. Return on assets for stakeholder-driven firms is around 6 percent on average. The minimum ROA for this group is minus 8 percent and the maximum is 15 percent. For the return on equity, the numbers are respectively 14 percent, minus 24 percent and 35 percent. The stakeholder-driven companies score a 1.67 on average regarding their social performance scores. The minimum KLD-score in this group is minus 1 and the highest score is 4.
Finally the descriptive statistics of the value-driven firms are shown in table 2c. It shows that the mean return on assets for this group is 4 percent. The lowest ROA found is minus 12 percent and the highest is 13 percent. On average, value-driven firms have a return on equity of 10 percent, with the lowest score minus 56 percent and the highest 28 percent. On social performance this groups scores on average the highest, namely 1.80. The lowest score found is minus 1 and the highest 4.
4.2 Correlations
The correlations between the main variables of this study are presented in table 3. Not
surprisingly, there is a high positive correlation between return on assets and return on equity and is statistically significant (.80). This is because in both measures, the same net income is included. However, there is a very small negative correlation between social performance-scores of firms and their return on assets (-.016). This is quite surprising, because in most other studies, strong positive associations have been found between corporate social
responsibility and corporate financial performance. The same result goes for the correlation between social performance-scores and return on equity (-.023), another accounting-based measure for financial performance. These findings illustrate that social performance of companies does not affect their financial performance, according to the accounting-based measures return on assets and return on equity. This result contradicts the view that the overall relationship between corporate social responsibility and financial performance is positive. Therefore, hypothesis 1 is not supported.
Table 3.
Correlations between main variables
1 2 3
1. ROA 1.00
2. ROE 0.80* 1.00
3. NetKLD -.016 -.023 1.00
Note. N=45. * p < 0.01, ROA=Return on Assets, ROE= Return on Equity, NetKLD=CSR-performance
In order to answer hypothesis 2, which stated that performance-driven firms will have a better financial performance than stakeholder-driver firms, and hypothesis 3, that stated that
performance-driven firms will have a better financial performance than value-driven firms, two independent sample t-tests are conducted to examine whether their financial performance differs statistically significantly on average. This is done in the following section.
4.3 Independent-samples t-test
To answer H2 and H3, it is important to investigate whether their financial performance differs on average. The appropriate test for answering the hypotheses is the independent-samples t-test. This test compares the difference between means of two groups while using a measure of the spread of the results (Saunders, Lewis & Thornhill, 2009, p. 519). Before an independensamples test can be conducted, some assumptions have to be met. First, the t-test assumes that the data are normally distributed. However, this can be ignored, even when the sample size is less than 30 (Hays, 1994). This is the case for the samples of the three groups in question, they all have a sample size of 15. Furthermore, the t-test also assumes that the variances of the two groups are the same. Nonetheless, this assumption can also be
ignored provided that the two samples are of similar size (Hays, 1994). The groups in this study all have the same size, which is mentioned above. Therefore, it is appropriate to conduct an independent-samples t-test. In table 4a the results of the first test can be found, regarding the performance-driven firms and the stakeholder-driven firms.
Table 4a
Results of independent samples t-tests, comparing Performance and Stakeholder-driven firms
Outcome Group 95% CI for
Mean Difference Performance-driven Stakeholder-driven M SD N M SD N t df ROA 0.0678 0.047 15 0.0647 0.061 15 -0.0375, 0.0438 0.159 28 ROE 0.1612 0.257 15 0.1358 0.167 15 -0.1366, 0.1874 0.321 28 Note. N=30, * p < .05.
Results of this independent samples t-test shows that mean return on assets do not differ between performance-driven firms (M = .0678, SD = .047) and stakeholder-driven firms (M = .0647, SD = .061) at the .05 level of significance (t = 0.159, df = 28, p = .875, ns). This result indicates that, on average, firms who have performance-driven motives for applying CSR do not perform better financially, in terms of ROA, than firms that have stakeholder-driven motives for engaging in CSR activities.
between performance-driven firms (M = .1612, SD = .257) and stakeholder-driven firms (M = .1358, SD = .167) at the .05 significance level (t = 0.321, df = 28, p = .751, ns). This
illustrates that, on average, stakeholder-driven firms do not underperform financially compared to performance-driven firms. Because both return on assets and return on equity are used for the financial performance variable, and this does not differ significantly statistically between the two groups, H2 is not supported.
The independent-samples t-test was also used to compare the mean financial performance of the performance-driven and value-driven firms. Again, the sample size for both groups is equal to 15. Table 4b shows the results of the independent-samples t-test for the comparison of these 2 groups.
Table 4b
Results of independent samples t-tests, comparing Performance and Value-driven firms
Outcome Group 95% CI for
Mean Difference Performance-driven Value-driven M SD N M SD N t df ROA 0.0678 0.047 15 0.0409 0.055 15 -0.0113, 0.0651 1.442 28 ROE 0.1612 0.257 15 0.1034 0.120 15 -0.1143, 0.2297 0.688 28 Note. N=30, * p < .05.
The results of the second independent-samples t-test shows that there are no statistically significant differences between the mean return on assets of performance-driven firms (M = .0678, SD = .047) and value-driven firms (M = .0409, SD = .055) at the 95 percent
confidence interval for the mean difference (t = 1.442, df = 28, p = .160, ns) even though the difference seems to be bigger when compared to stakeholder-driven groups. This outcome shows that, on average, firms that have performance-driven motives for applying CSR do not perform better financially than firms that have value-driven motives for applying CSR, according to their ROA. Looking at the mean return on equity for both types of firms, these do not have a statistically significant difference at the 5 percent significance level (t = 0.668, df = 28, p = .497, ns) where the mean ROE of performance-driven firms is 16.1 percent and the mean ROE for value-driven firms is 10.3 percent. For the mean return on equity, the
difference between performance and value-driven firms is bigger than the difference between performance and stakeholder-driven firms. However this difference is not statistically
significant. This outcome indicates that, on average, firms who have performance-driven motives for applying CSR do not perform better financially regarding their ROE compared to firms that have value-driven motives for applying CSR. The results of the second
independent-samples t-test suggest that performance-driven firms do not have a better financial performance on average compared to value-driven firms, which is measured by return on assets and return on equity. Therefore, the third hypothesis is not supported.
5. Discussion
In this section, the findings of the research are discussed. First, the outcomes, regarding the propositions are considered. This will be done by looking at existing literature and comparing the results to findings of prior research. Then, the contributions and limitations are covered. Finally, suggestions for future research are given.
5.1 The relationship between CSR and CFP
In this study, it was proposed that the overall relationship between corporate social responsibility and corporate financial performance is positive. However, no positive relationship between CSR and CFP was found. This outcome contradicts most studies that investigated this relationship (Margolish & Walsh, 2003). The results suggest that there is a weak negative association between CSR and CFP that is statistical non-significant. Even though most studies found positive relationships between corporate social responsibility and corporate financial performance, other streams of research also found non-significant
relationships (Waddock & Graves, 1997). According to Ullman (1985), there are many intervening variables between the two constructs and because of this, no relationship should be expected, only by chance. Furthermore, another explanation for this finding is that firms will generate the same profitability in equilibrium, according to the supply-and-demand model of McWilliams and Siegel (2001). Consistent with this model, firms that produce a CSR-attribute will have higher costs, but also higher revenues. Firms that do not produce CSR-attributes have less cost to bear, but also have lower revenues. This line of reasoning explains why it is possible that no relationship exists between corporate social responsibility and financial performance. Finally, measurement errors could be the reason why there are
contrasting results (Orlitzky et al., 2003). The CSR construct can be computed by several measures, which can cause different results. For instance, Post states that CSR performance is measured by four broad measurement strategies: (1) CSP disclosures; (2) CSP reputation ratings; (3) social audits, CSP processes, and observable outcomes; and (4) managerial CSP principles and values (as cited in Orlitzky et al., 2003). However, these four different categories can produce contrasting results and therefore suggests different types of relationships between CSR and CFP.
5.2 The difference between performance-driven and stakeholder-driven motives for CSR
The second hypothesis stated that performance-driven motives for applying CSR will have a bigger positive impact on the firm’s financial performance than stakeholder-driven motives for applying CSR. Nonetheless, this hypothesis was rejected, which means that even though performance-driven firms tend to put greater emphasis on cost-reduction, efficiency and revenues (Swanson 1995), they do not perform better in terms of profitability compared to stakeholder-driven firms. A reason for this could be the fact that when companies do not take the norms set by stakeholder-groups into account, their implicit costs could turn into explicit costs, which may alter their financial performance. Examples of implicit contracts include better quality of products, better waste management and supporting sustainable projects. When a company does not act to pressures of stakeholders to comply with these implicit contracts, they can turn into explicit contracts (i.e. standards set by governments or other institutions). And this, in turn, creates explicit costs. Another possible reason for this result is that when companies behave in ways that are appropriate according to stakeholders, they have fewer difficulties contracting them (Margolish et al., 2007). If companies show that they are good corporate citizens, they have easier access to certain resources and this could
improve profitability.
5.3 The difference between performance-driven and value-driven motives for CSR
The third and final proposition stated that firms that have performance-driven motives for applying CSR will have a better financial performance than firms that have value-driven motives for applying CSR. This result was not found in this study. The outcome shows that the two types of motives for applying CSR do not differ when it comes to financial
performance. In their study, Sen and Bhattacharya (2001) found that CSR records of
companies have positive effects on consumer’s evaluation of the company itself and on their purchase intentions. Value-driven firms ought to have better CSR records than
performance-driven firms, which can explain why value-performance-driven firms do not underperform financially compared to performance-driven firms. Furthermore, Bhattacharya, Korschun and Sen (2008) found that individuals who were conscientious about the fact that a large charitable gift was given by companies, they had greater intentions to invest in company stock than persons who were not aware of this fact. Because value-driven firms are devoted to help society and this is embedded in their strategies, it could be more likely that they give charitable donations to a larger extent than performance-driven firms, which in turn causes that individuals have bigger intentions to invest in value-driven firms.
5.4 Contributions and limitations
This study contributes to the line of research that examined the relationship between corporate social responsibility and corporate financial performance. Even though a large number of researches about this topic have been conducted, scholars still disagree about the nature of this relationship. By looking at three different motives for applying CSR and how these motives affect financial performance, this study has contributed to the existing literature because this specific area has not yet been investigated thoroughly. The results of this
research strengthen the stream of research that suggests that there is no relationship between corporate social responsibility and corporate financial performance. Furthermore, the results also suggest that is does not matter for the financial performance whether managers
responsible for communicating CSR-motives show that the company is performance, stakeholder or value driven. On average, these motives score the same on financial
performance measured by accounting-based measures. Finally, this information also could help investors who look to invest in the best performing companies, regarding to profitability. The research suggests that it does not matter for them whether companies communicate performance, stakeholder or value-driven motives for applying CSR when it comes to financial performance. However, these suggestions should be interpreted with caution, because several limitations exist in this study.
First of all, the main analysis was based on only two types of communication where firms communicate their CSR-motives, webpages and annual reports. It is possible that other channels could communicate these motives as well and give other effects. Besides this, corporate websites undergo continuous modification as well as sustainability reports, therefore on-going monitoring will be required. Second, the conclusions were drawn from a small number of firms discussing CSR. Due to the slow process of finding the right
companies and small amount of time this was unavoidable. However, the sample size in some previous research was not much larger than is the case in this study. In addition to this, the sample was drawn from the list of the 500 biggest American corporations. This will form issues for the representativeness of the results. It could be the case that for smaller companies the motives are of more or less importance when it comes to their performance and in other countries as well. Finally, the analysis was based on one point in time. To get a better understanding of the CSR and CFP relationship, longitudinal research is needed.
5.5 Suggestions for future research
In order to examine whether the different communicated motives for applying CSR evolve over time and this affects financial performance, a longitudinal research is needed. Therefore, researchers will need to keep track of how the communicated CSR-motives change or stay the same on webpages and in annual reports. This will give a more complete picture about how communicated CSR-motives influence financial performance. Besides this, a larger sample should be used. It is also important to investigate whether the same results apply for smaller companies. It could be possible that research with SMEs as target will yield different results. Finally, in this study the relationship between corporate social responsibility and corporate financial performance was the main topic. However it is also important to examine how different communicated motives for applying CSR influence their corporate social performance. In order to this, scholars should rate the social performance scores of companies and look whether there are differences between them regarding the different motives for engaging in CSR-activities.
6. Conclusion
Despite decades of research into the relationship between corporate social responsibility and corporate financial performance, still many scholars disagree about the nature of this
relationship. In order to contribute to this discussion, the aim of this study was to investigate how different communicated motives for applying corporate social responsibility influence corporate financial performance. In order to examine this relationship the following research question was formulated to lead this study: ‘How does communicated CSR-motives of firms influence their financial performance?’. Three different motives for engaging in
CSR-activities were considered for this research: performance-driven motives, stakeholder-driven motives and value-driven motives, developed by Maignan and Ralston (2002). The first motive is applicable when firms are engaging in CSR to achieve its performance objectives in terms of profitability. The second motive is relevant when companies engage in CSR because they are compelled to adopt social responsibility initiatives in order to meet standards set by stakeholders and to define appropriate behaviour. The third motive suggests that businesses are self-motivated to adopt green practices and social responsibility programmes.
The outcome of this research suggests that it does not matter for firms’ financial performance, on average, whether they communicate performance-driven, stakeholder-driven or value-driven motives for engaging in CSR. This outcome can be relevant for managers who are responsible for communicating these motives and for investors, who select companies based on their CSR-motives. However, the results are merely suggestions and should be interpreted with caution. Furthermore, the outcome of this study contributes to the on-going debate about the relationship between CSR and CFP. Existing research related to this topic did not yet investigated how these communicated motives influence financial performance. Therefore, this study tried to fill a gap in knowledge about the nature of the relationship between CSR and CFP. Nonetheless, still much research is needed to further examine this relationship.
References
Arvidsson, S. (2010). Communication of corporate social responsibility: A study of the views of management teams in large companies. Journal of Business Ethics, 96(3), 339-354.
Babiak, K., & Trendafilova, S. (2011). CSR and environmental responsibility: motives and pressures to adopt green management practices. Corporate Social Responsibility and
Environmental Management, 18(1), 11-24.
Barnett, M. L., & Salomon, R. M. (2012). Does it pay to be really good? Addressing the shape of the relationship between social and financial performance. Strategic
Management Journal, 33(11), 1304-1320.
Bhattacharya, C. B., Korschun, D., & Sen, S. (2009). Strengthening stakeholder–company relationships through mutually beneficial corporate social responsibility initiatives.
Journal of Business Ethics, 85(2), 257-272.
BP, 2015, retrieved from http://www.bp.com
Burke, L., & Logsdon, J. M. (1996). How corporate social responsibility pays off. Long
range planning, 29(4), 495-502.
Carroll, A. B., & Shabana, K. M. (2010). The business case for corporate social
responsibility: a review of concepts, research and practice. International Journal of
Management Reviews, 12(1), 85-105.
Cavaco, S., & Crifo, P. (2014). CSR and financial performance: complementarity between environmental, social and business behaviours. Applied Economics, 46(27), 3323-3338.
Dahlsrud, A. (2008). How corporate social responsibility is defined: an analysis of 37 definitions. Corporate social responsibility and environmental management, 15(1), 1-13.
Davis, K. (1973). The case for and against business assumption of social responsibilities. Academy of Management journal, 16(2), 312-322.
Du, S., Bhattacharya, C. B., & Sen, S. (2010). Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication. International Journal
of Management Reviews, 12(1), 8-19.
Ellen, P. S., Webb, D. J., & Mohr, L. A. (2006). Building corporate associations: Consumer attributions for corporate socially responsible programs. Journal of the Academy of
Marketing Science, 34(2), 147-157.
Friedman, M. (1962). Capitalism and freedom. Chicago: University press.
Handelman, J. M., & Arnold, S. J. (1999). The role of marketing actions with a social dimension: Appeals to the institutional environment. The Journal of Marketing, 48.
Hays, W.L. (1994). Statistics. London: Holt-Saunders.
Hooghiemstra, R. (2000). Corporate communication and impression management–new perspectives why companies engage in corporate social reporting. Journal of
business ethics, 27(1-2), 55-68.
ISO, 2015, retrieved from
http://www.iso.org/iso/home/news_index/news_archive/news.htm?refid=ref843 Jones, T. M., Felps, W., & Bigley, G. A. (2007). Ethical theory and stakeholder-related
decisions: The role of stakeholder culture. Academy of Management Review, 32(1), 137-155.
Lattemann, C., Fetscherin, M., Alon, I., Li, S., & Schneider, A. M. (2009). CSR
communication intensity in Chinese and Indian multinational companies. Corporate
Governance: An International Review, 17(4), 426-442.
Mackey, A., Mackey, T. B., & Barney, J. B. (2007). Corporate social responsibility and firm performance: Investor preferences and corporate strategies. Academy of
management review, 32(3), 817-835.
Maignan, I., & Ralston, D. A. (2002). Corporate social responsibility in Europe and the US: Insights from businesses' self-presentations. Journal of International Business
Studies, 33(3), 497-514.
Margolis, J. D., Elfenbein, H. A., & Walsh, J. P. (2007). Does it pay to be good? A meta-analysis and redirection of research on the relationship between corporate social and financial performance. Ann Arbor, 1001, 48109-1234.
Margolis, J. D., & Walsh, J. P. (2003). Misery loves companies: Rethinking social initiatives by business. Administrative science quarterly, 48(2), 268-305.
McGuire, J. B., Sundgren, A., & Schneeweis, T. (1988). Corporate social responsibility and firm financial performance. Academy of management Journal, 31(4), 854-872. McWilliams, A., & Siegel, D. (2001). Corporate social responsibility: A theory of the firm
perspective. Academy of management review, 26(1), 117-127.
Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization studies, 24(3), 403-441.
Porter, M. E., & Kramer, M. R. (2006). Strategy and Society, The Link Between Competitive Advantage and Corporate Social Responsibility. Harvard Business
Review, 85(12), 78-93
Preston, L. E., & O’Bannon, D. P. (1997). The corporate social-financial performance relationship. Business and society, 36(4), 419-429.
Redbull, 2015, retrieved from http://www.redbull.com
Saunders, M., Lewis, P., & Thornhill, A. (2009). Research methods for business students. Essex: Prentice Hall
Sen, S., & Bhattacharya, C. B. (2001). Does doing good always lead to doing better? Consumer reactions to corporate social responsibility. Journal of marketing
Research, 38(2), 225-243.
Swanson, D. L. (1995). Addressing a theoretical problem by reorienting the corporate social performance model. Academy of Management Review, 20(1), 43-64.
Tsoutsoura, M. (2004). Corporate social responsibility and financial performance. UC
Berkeley: Center for Responsible Business.
Vance, S. C. (1975). Are socially responsible corporations good investment risks?
Management review, 64(8), 19-24.
Van Marrewijk, M. (2003). Concepts and definitions of CSR and corporate sustainability: Between agency and communion. Journal of business ethics, 44(2-3), 95-105. Waddock, S. A., & Graves, S. B. (1997). The corporate social performance-financial
performance link. Strategic management journal, 18(4), 303-319.
Wood, D. J. (1991). Corporate social performance revisited. Academy of management review,
APPENDIX A: Descriptives statistics
Table 2a.
Descriptives main variables Performance-driven firms
M SD MIN MAX
1. ROA 0.07 0.05 -0.03 0.14
2. ROE 0.16 0.26 -0.47 0.79
3. NetKLD 1.53 1.60 -3 3
Note. N=15. ROA=Return on Assets, ROE= Return on Equity, NetKLD=CSR-performance score
Table 2b.
Descriptives main variables Stakeholder-driven firms
M SD MIN MAX
1. ROA 0.06 0.06 -0.08 0.15
2. ROE 0.14 0.17 -0.24 0.35 3. NetKLD 1.67 1.63 -1 4
Note. N=15. ROA=Return on Assets, ROE= Return on Equity, NetKLD=CSR-performance score
Table 2c.
Descriptives main variables Value-driven firms
M SD MIN MAX
1. ROA 0.04 0.06 -0.12 0.13
2. ROE 0.10 0.20 -0.56 0.28 3. NetKLD 1.80 1.52 -1 4
