CSR Action Portfolio Management and Firm Performance: A Competitive Dynamics View of CSR

Abstract

The financial value associated with socially responsible actions has been much contested in the existing literature. These findings are generally contextually limited such that studies tend to view volume of CSR actions as the primary characteristic associated with CSR activity. Drawing from the competitive dynamics literature, we contribute to the literature by introducing alternative measures of CSR actions (diversity and dynamism) as important CSR characteristics that influence firm performance. Our findings from a 10- year, multi-industry sampling framework suggest that CSR volume has no significant independent effect on performance; however, a firm’s use of a diverse portfolio of CSR actions has a significant effect on both short- and long-term firm performance. Further, we find that a firm’s use of a dynamic sequence of CSR has indirect effects on short- and long-term firm performance. By leveraging a competitive dynamics lens, our conceptualization of CSR actions as a holistic portfolio extends the strategic CSR literature and provides insight regarding the value of CSR efforts.