HOW IMPORTANT IS CSR COMMITMENT IN SHAPING CORPORATE REPUTATION?

Abstract

Objective: The study investigates the relationship between CSR and corporate reputation, given the trend of companies integrating CSR to meet stakeholders’ expectations and enhance reputation. Theoretical Framework: The study employs stakeholder theory to emphasize positive stakeholder relationships' impact on corporate reputation, the institutional approach advocating strategic societal engagement, signal theory highlighting CSR's role in signaling commitment to stakeholders, and legitimacy theory emphasizing active CSR participation to maintain societal legitimacy. Method: We use a panel data model on a sample of the world's most admired companies between 2015 and 2019. The proxy considered for corporate reputation includes eight firms’ attributes. Results and Discussion: Findings provide the positive relationship between CSR and corporate reputation firstly the stakeholders’ theory which suggests that companies engage in CSR in order to improve their image and meet stakeholders’ expectations suggesting that ethical CSR practices can create a belief that the organization upholds ethical standards and cares about the well-being of society, which, therefore, positively influences corporate reputation. Research Implications: The study has direct implications for academia and business, emphasizing CSR’s importance in enhancing corporate reputation, urging transparent implementation of CSR initiatives, and highlighting competitive advantages associated with responsible business practices. Originality/Value: The study provides novel insights into the relationship between CSR commitment and corporate reputation by employing a comprehensive corporate reputation proxy and a panel data model analysis of globally renowned companies across various industries. It offers new insights into CEO motivations for CSR adoption.