Abstract
An increasing number of firms in OECD countries are obtaining certification as Socially Responsible. Literature is sensitive in testing whether there is a relation between firm performance and Social Responsibility certification. In order to overcome problems related to the multiplicity of Corporate Social Responsibility (CSR) definitions and certifications, our work implements a CSR index based on the intersection between two of the three main international indices (Domini 400 Social Index, Dow Jones Sustainability World Index and FTSE4Good Index). By using this database in a panel framework, our work shows that among Corporate Performance Measures (CPF), Market Value Added (MVA) is affected by a firm’s social responsible behaviour and certification. The results support the idea that CSR firms have better long-run performance. Thanks to the reputation effect, they achieve higher sales volumes and profits and a reduction in long-run costs: these effects compensate the costs due to the certification.
Highlights
Over the past two decades in OECD countries there has been an increase in Corporate Social Responsibility (CSR, hereafter) firms that according to [1,2,3,4,5] can be defined as a business organization’s configuration of principles of social responsibility, processes of social responsiveness, and policies, programs, and observable outcomes as they relate to the firm’s societal relationships’.CSR firms adopt ethical behavior
Growing importance of CSR firms can be seen by the rise of CSR reporting among S&P 500 companies: in the years 2011–2016 they increased from just 20% to 82%
Our results suggests that this variable is closely related to GDP per capita: as we have stressed by referring to economic literature, CSR firms are concentrated in the most developed countries
Summary
Over the past two decades in OECD countries there has been an increase in Corporate Social Responsibility (CSR, hereafter) firms that according to [1,2,3,4,5] can be defined as a business organization’s configuration of principles of social responsibility, processes of social responsiveness, and policies, programs, and observable outcomes as they relate to the firm’s societal relationships’. One of the main research topics related to CSR, is its impact on firms and economic system This has been analysed by several works ([13,14,15,16,17,18]) focusing primarily on the link between CSR and the financial performance. In the most recent research, Mixed measures such as Market Value Added (MVA, hereafter) or Tobin’q measure were used These studies are still limited and do not provide sufficient evidence. The main results seem to support the idea that CSR firms, which are more virtuous, have better long-run performance: even if they have initial costs due to the certification, they achieve higher sales volumes and profits, thanks to the reputation effect, a reduction in long-run costs and increased social responsible demand.
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