Corporate Social Responsibility and Performance Relationships in Advanced and Emerging Countries

Abstract

The responsibility of business in society in general and whether corporate social responsibility (CSR) pays off, in particular, have generated a lively, ongoing debate. We suggest one solution to the debate by building on the theory of shared value creation. We argue that although CSR supports performance, the effect of the components of CSR (environmental, governance, and social) on performance varies in advanced and emerging countries because each of the CSR components addresses different infrastructure challenges in the context. Specifically, we argue that in advanced economies, environmental CSR has the highest impact on performance, followed by governance CSR, and then social CSR. In contrast, in emerging markets, social CSR has the highest impact on performance, followed by governance CSR, and lastly, environmental CSR. We illustrate the argument by comparing the CSR-performance relations in large advanced (USA, Germany) and emerging economies (China, India).