Investigating the relationship between corporate social responsibility and market, cost and environmental performance for sustainable business

L Suganthi

doi:10.4102/sajbm.v51i1.1630

Abstract

Purpose: Corporate social responsibility (CSR) when integrated with the business model resulted in the holistic development of the organisation and the community. Many firms have found that CSR initiatives have a positive influence on performance. However, results indicating the contrary have also been noted during the review of literature. Research dealing with the relationship between the adoption of CSR initiatives and market, cost and environmental performance was scant. This research was directed towards finding the relationship between the adoption of CSR initiatives by the organisation and the different types of performance related to market, cost and environment. Design/methodology/approach: This study made use of 527 cleaned responses collected from employees belonging to various organisations. Measurement and structural models were developed using analysis of moment structure (AMOS) to analyse the data. The models were also tested using income as a moderator. Findings/results: Composite reliability, discriminant validity and average variance extracted revealed that the models were acceptable and the model fit indices for both measurement and structural models were within acceptable limits. The accepted hypotheses, namely, adoption of CSR initiatives, have a significant positive effect on the market, cost and environmental performance. Practical implications: Organisations can use CSR as a strategic tool to enhance their market, cost and environmental performance for meeting the global competitiveness. Originality/value: The results reveal that when organisations adopt CSR initiatives, the result is a chain reaction with developments being witnessed in several areas. This highlights the need for organisations to adopt CSR initiatives within their business model. A longitudinal study is required to find the extent of the influence of CSR initiatives on market, cost and environmental performance.

Highlights

Organisations compete with each other to survive in the marketplace
The review highlighted the fact that the relationship between Corporate social responsibility (CSR) and financial performance was positive in a majority of instances (Aragón-Correa, Hurtado-Torres, Sharma, & García-Morales, 2008; Bird, Hall, Momentè, & Reggiani, 2007; Flammer, 2015; Goll & Rasheed, 2004; Nicolau, 2008; Orlitzky et al, 2003), while in a few cases, a negative relationship was seen because of additional costs involved in implementing CSR initiatives (Brammer, Brooks, & Pavelin, 2006), and in some instances the results indicated no effect (Chand, 2006; Chih, Chih, & Chen, 2010; Fauzi & Idris, 2009; McWilliams, Siegel, & Wright, 2006; Mulyadi & Anwar, 2012)
The review of the literature indicated that there was an enormous amount of research conducted on the relationship between CSR and performance, there were very few studies that dealt with the different types of CSR

Summary

Introduction

Organisations compete with each other to survive in the marketplace. Blue ocean strategy, balanced scorecard and strategic options development analysis (SODA) are some of the strategies organisations adopt to counter the challenges that competition poses (Institute for Manufacturing, 2016). Organisations adopt green practices and sustainability for long-term growth (Teixeira & Canciglieri Junior, 2019; Yang, Zhang, Jiang, & Sun, 2015). Corporate social responsibility (CSR) is yet another activity that helps organisations to build business for sustainability (Kolk, 2016). Employees who are the internal stakeholders upon witnessing their organisations’ involvement in CSR activities develop a stronger bondage with the organisation. CSR acts as a strategic tool among organisations, with the aim of increasing profits in the long run because of the trust instilled among the http://www.sajbm.org

Methods

Results

Discussion

Conclusion