Measuring the business and societal benefits of corporate responsibility

Abstract

PurposeThe economic crisis has more than ever revealed the necessity for companies to extend their focus from the maximization of shareholder returns to the management of their complex stakeholder relationships including societal stakeholders. Although companies and scholars alike have been searching for adequate performance measurement systems that allow them to evaluate their relations with society, practical approaches to measure the benefits of CSR are still missing. This paper aims at filling this research gap. It proposes a measurement and a governance model to evaluate and manage the business as well as the societal benefits of CSR.Design/methodology/approachThe research follows a two‐step approach. First, a measurement model is developed based on a sound theoretical analysis. It is then applied in an in‐depth case study to test its applicability to business practice.FindingsThe research finds that current measurement approaches fail to provide a practicable measurement framework, especially relating to an evaluation of individual CSR activities. Thus, a framework is developed that applies methods of investment appraisal as well as qualitative evaluation approaches to individual CSR activities. The case study offers an easy‐to‐use evaluation tool that can be directly applied by business practice.Originality/valueCurrent research mostly focuses on quantitatively or qualitatively evaluating CSR. However, a comprehensive measurement of CSR needs to combine both. This is the focus of this paper. In addition, most measurement models focus on the business case for CSR. In this research, this perspective is complemented by proposing an evaluation from both perspectives – business and society.