The Relation Between Corporate Social Responsibility and Financial Performance: Reviewing Empirical Studies and Discussing the Ethical Aspect

Abstract

This study is essentially about examining empirical studies on the relationship between corporate social responsibility and financial performance, and ethical grounding of CSR practices in business world. Actually, there are two basic approaches to the social responsibilities of corporations. On the one hand, the understanding that evaluates the business only in technical and economic terms, on the other hand, it is the vision that emphasizes the ‘Social’ dimension of the business. The latter, CSR approach is mainly based on managing the economic activities of the enterprise without harming the interests of the ‘whole society’. Interestingly, there are studies showing that social policies increase financial resources and increased FP’s provide more social benefits, as well as studies reaching the finding that corporations would generally not prefer social responsibility activities when financial losses are high. Although investing in social responsibility projects does not always bring profitability in the short term, it certainly provides both business profitability and social benefits in the long term. The important highlight from the studies is; corporations should act in a sustainable way of doing business by adapting to new conditions in a sensitive manner to human, society and environment with the understanding of CSR based on stakeholder theory. Lastly, the study will be concluded by evaluating the importance of moral values and social responsibility approach in terms of a sustainable socio-ecological business model.