Corporate Social Responsibility Investment Research Articles

Corporate social responsibility: Is it a matter of slack financial resources or strategy or both?

Drawing on slack resources and institutional theories, this study tests the links between liquidity, corporate social responsibility (CSR) strategy, and CSR performance. The results indicate differential effects of liquidity measures on CSR investment. CSR committee and executive CSR compensation individually are significant drivers of higher CSR performance. Moderation analysis to test the interaction effect of liquidity measurements with the CSR committee on CSR performance yields mixed outcomes. Similarly, a second moderation analysis conducted to test the interaction of liquidity measurements with executive CSR compensation on CSR performance produces mixed results. Hence, the results are metric sensitive in terms of liquidity measurements.

Strategic sourcing model for green supply chain management: an insight into automobile manufacturing units in India

PurposeSupplier selection (SS) is one of the prime competencies in a sourcing decision. Taking into account the key role played by suppliers in facilitating the implementation of green supply chain management (GSCM), it is somewhat surprising that very little research attention has been imparted to the development of a strategic sourcing model for GSCM. This research aims to develop a strategic sourcing framework in which supplier organizations are prioritized and ranked based on their GSCM performance. Accordingly, the benchmark organization is identified and its strategy is explored for GSCM performance improvement.Design/methodology/approachThe research develops an innovative GSCM performance evaluation framework using six parameters, namely, investment in corporate social responsibility, investment in research and development, utilization of renewable energy, total energy consumption, total carbon-di-oxide emissions and total waste generation. An integrated multicriteria decision-making (MCDM) approach is proposed in which the entropy method calculates criteria weights. The Complex Proportional Assessment (COPRAS) and the Grey relational analysis (GRA) methods are used to rank supplier organizations based on their performance scores. A real-world case of green supplier selection (GSS) is considered in which five leading India-based automobile manufacturing organizations (Supplier 1, Supplier 2, Supplier 3, Supplier 4 and Supplier 5) are selected. Surveys with industry experts at the strategic, tactical, and operational levels are carried out to collect relevant data.FindingsThe results reveal that total carbon dioxide emission is the most influential parameter, as it gains the highest weight. On the contrary, investment in research and development, and total waste generation have no significant impact on GSCM performance. Results show that Supplier 5 secures the top rank. Hence, it is the benchmark organization.Research limitations/implicationsThe proposed methodology offers an easy and comprehensive approach to sourcing decisions in the field of GSCM. The entropy weight-based COPRAS and GRA methods offer an error-free channel of decision-making and can be proficiently used to outrank various industrial sectors based on their GSCM performances. This research is specific to the automobile manufacturing supply chain. Therefore, research outcomes may vary across supply chains with distinct characteristics.Practical implicationsThe basic propositions of this research are based on a real-world case. Hence, the research findings are practically feasible. The less significant parameters identified in this study would enable managers to impart more attention to vulnerable areas for improvement. This research may help policymakers identify the influential parameters for effective GSCM implementation. As this research considers all aspects of sustainability, the strategies of the benchmark supplier have a direct impact on organizations' overall sustainability. The study would enable practitioners to make various strategies for GSCM performance improvement and to develop a cleaner production system.Originality/valueThe originality of this research lies in the consideration of both economic, social, environmental and operational aspects of sustainability for assessing the GSCM performance of supplier organizations. Quantitative criteria are considered so that vagueness can be removed from the decision. The use of an integrated grey-based approach for developing a strategic sourcing model is another unique feature of this study.

Impact of CSR, innovation, and green investment on sales growth: new evidence from manufacturing industries of China and Saudi Arabia

Environmental concerns have got supreme interest from the researchers and policy makers for which experts have revealed their organizational impacts too. At the same time, corporate social responsibility is observed as a key determinant of financial performance both in developed and developing economies. Recognize the same, this study aims to examine the impact of corporate social responsibilities, economic innovation, green credit, and green investment on the sales growth of manufacturing industries of China and Saudi Arabia. This study has selected top twelve trading manufacturing companies registered in the Shanghai stock exchange and Saudi stock exchange during the period of 2016 to 2020. For data estimation, panel regression estimations like fixed and random effect models have been used. The results indicate that corporate social responsibility, economic innovation, green credit, and green investment are significantly and positively associated with sales growth of manufacturing industries in China and Saudi Arabia. However, their coefficient’s magnitude varies due to distinct features of both countries. These findings offer valuable policy recommendations for all stakeholders.

Corporate Social Responsibility, Firm Value, and Financial Constraints: A Signal of Corporate Liquidity

The concept of corporate social responsibility (CSR) has gained much attention and has been currently practiced by many companies. This study examined the role of CSR disclosure as a signal on the corporate liquidity in creating value for the firms. We examined the effects of moderation using subgroup analysis on a sample of 77 manufacturing sector firm that listed on IDX with three years data observations. By using the Chow test, the results show that CSR disclosure is related with firm value in non-financial constraints (NFC) firms compared to financial constraints (FC) firms. However, the two groups of companies have opposite effects. Companies with non-financial constraints have a positive direction while the other group has no specific pattern for the FC sample. The empirical evidence showed that firms with financial constraints report less information about their CSR activities than firms with non-financial constraints. Our findings suggest that company with non-financial constraints can confidently and strategically increase CSR investment to enhance firm value. However, the company with financial constraints needs to carefully examine the effects of CSR on firm value when making CSR-related decisions.

The self-centered philanthropist: family involvement and corporate social responsibility in private enterprises

Although corporate social responsibility (CSR) has attracted increasing attention in recent years, systematic studies on the CSR of Chinese enterprises are absent from academic publications. This study examines the effects of family involvement in the CSR of private enterprises. Using private enterprise data in China, the article reveals that, on the one hand, family involvement will improve CSR investment toward community stakeholders; on the other hand, family involvement has a negative effect on the CSR of contractual stakeholders. With the influence of “chaxu geju,” the author argues that Chinese families tend to shift between different logics of behavior when faced with people with whom they have different types of relationships and incorporate this behavioral mode into company practices when they engage themselves in management and business affairs.

The Impact of Executives\u2019 Gender, Financial Incentives, and Shareholder Pressure on Corporate Social and Ecological Investments

Archival research suggests that female executives have an impact on corporate decision-making and generally finds positive associations between female board representation and Corporate Social Responsibility (CSR) performance. However, archival research does not reveal why female executives decide differently in the context of CSR. As this is our starting point, we conduct an experiment and examine executives’ decision-making in terms of CSR investment. While female executives seem to be more oriented towards social and ecological practices, we find strong evidence that participants’ real-world incentive program mainly drives their CSR decision-making. We also examine if selected gender-specific character traits (risk propensity, sustainability attitude, and empathy) cause gender differences in executives’ CSR decision-making. In an exploratory analysis, we furthermore show that executives’ risk propensity affects their CSR decision-making conditional on the level of shareholder pressure they face. Our study contributes to the literature on executives’ decision-making and to the CSR literature by enhancing our understanding of determinants of executives’ CSR decision-making.

Manufacturer’s cooperation strategy of closed-loop supply chain considering corporate social responsibility

Corporate social responsibility (CSR) has become a popular and important strategy for corporate operation and sustainable development. Meanwhile, many social or environmental incidents that occur in one enterprise could bring huge risk or disruption for the entire supply chain. This study discusses the manufacturer’s cooperation strategy of closed-loop supply chain (CLSC) composed of a dominant manufacturer with CSR behavior consciousness, a retailer with CSR investment, and a third-party recycler. In the CSR-CLSC, the manufacturer exhibits CSR behavior consciousness through considering stakeholders welfare, the retailer makes CSR investment through profit donation and the third-party recycler exhibits CSR activity through product recycling. And under the Stackelberg Game setting, we formulate four different decision-making models to investigate the interaction between manufacturer’s CSR behavior consciousness and retailer’s CSR investment, as well as their impact on the manufacturer’s cooperative strategy selection and CLSC operation. The results show that both the CSR behavior consciousness of manufacturer and CSR investment of retailer are conducive to reducing the wholesale price of new products, enhancing the recycling rate of waste products and improving the performance of CSR-CLSC members, and both of them have the function of mutual incentives. The vertical cooperation strategy of manufacturer is conducive to increasing the overall performance of CSR-CLSC, and compared with the cooperation with the third-party recycler, the manufacturer has stronger motivation to cooperate with the retailer, and it is also more beneficial to improving the CSR investment level, the waste product recycling rate, and the performance of CSR-CLSC members.

Corporate social responsibility overinvestment in mergers and acquisitions

Corporate social responsibility (CSR) has been advocated by scholars and practitioners whereas overinvestment in CSR can destroy value. This paper investigates how CSR overinvestment influences firm value in the context of mergers and acquisitions (M&As). Specifically, we examine the shareholder wealth and financial performance of firms who bid on targets with CSR overinvestment. The results suggest that firms purchasing CSR-overinvesting targets experience significant declining market reactions to the M&A announcements and deteriorating financial performance following the M&A transactions. We further show significant improvement in CSR ratings and CEO pay among acquirers purchasing CSR-overinvesting targets. Moreover, the adverse effects of CSR-overinvesting targets on M&A outcomes are more pronounced for the acquiring firms with weak corporate governance or with retiring CEOs. Our findings suggest that a firm makes a value-destroying M&A with a CSR-overinvesting target probably for the benefit of improved CSR and CEO gains. This study provides evidence for the agency view of CSR investment in the context of M&As.

Corporate Social Responsibility and Foreign Direct Investments of Telecommunication Companies in Nigeria

This study empirically examined if there exist model guiding corporate social responsibility activities of foreign telecommunication companies in Nigeria. The study employed interpretive research design while data were manually and electronically sourced through interviews, observations and articles. Empirical results revealed that there is a significant but inverse relationship between study variables which depend on the philosophy of the investors and actions of the community since there is weak policy of the state . Therefore, corporate social responsibility activities should be organized and controlled to address environmental and economic needs that will benefit the community which is what the inverse association represents.

Corporate social responsibility and inside debt: The long game

We examine the effect of CEO inside debt on corporate social responsibility (CSR). We document a positive relation between CEO inside debt and CSR. This positive relation is attenuated not only when firms face high risk, but also when firms have high short-term institutional ownership. Our evidence supports the view that CEOs with large inside debt holdings are more concerned about firm sustainability and, are therefore more likely to prefer CSR for long-term firm benefits, i.e., the long game. We also find that CSR and CEO inside debt jointly exert a significantly positive impact on long-run stock performance, particularly in the presence of a low level of short-term institutional holdings. Overall, our findings highlight the importance of aligning institutional investor preferences with CEO incentives in order to maximize shareholder benefits from CSR investment.

Fostering sustainable relationships in Pakistani cellular service industry through CSR and brand love

PurposeThis study investigates the mediating role of brand love in two important relationships: first, corporate social responsibility (CSR)–word-of-mouth (WoM) intentions and second, corporate ability (CA)–WoM relationships.Design/methodology/approachData were collected with a sample of 359 respondents, and partial least squares-based structural equation modeling was utilized for data analysis.FindingsThe research reveals interesting findings as brand love fully mediates the CSR–WoM relationship, whilst it partially mediates the CA–WoM relationship.Practical implicationsThe results demonstrate that cellular service firms should strive to create brand love. This is because CSR investments can be diligently translated into WoM intentions through brand love.Originality/valueThe proposal and validation of brand love as a mediator in CSR–WoM and CA–WoM relationships in the cellular service context of a South Asian market is the key contribution of this research.

Consumers’ prosocial engagement in CSR: why should they care and what does it mean to them?

PurposePublic relations practitioners worldwide are attempting to enhance the overall organization–stakeholder relationships by applying strategic communication techniques and skills to corporate social responsibility (CSR) management and communications. In this light, drawing on the prosocial motivation literature, this paper aims to investigate consumers’ implicit and explicit motivations for prosocial behavior, and how these two motivations interact to affect consumers’ willingness to contribute to CSR activities. Second, through the lens of sensemaking theory, this study evaluates the influence of successful prosocial behavior engagement on consumers’ perceptions of both self and companies’ prosocial identities, CSR authenticity and company evaluations.Design/methodology/approachThis study adopts a dictator game experiment with 2 × 2 factorial design to gauge consumers’ prosocial behavioral response toward companies’ CSR communication with implicit and explicit motivations and to examine its effect on company evaluation.FindingsIn all, the results of this study suggest that implicit motivation, i.e. self-affirmation intervention, in CSR communication will cause consumers to donate more money to CSR programs; whereas explicit motivation does not exert an effect on consumers’ prosocial behavior. In addition, such donation will trigger consumers’ prosocial sensemaking process and lead to strong identification with the company, positive attitudes and behavioral intentions toward the company.Originality/valueThis study aims to build a consumer- and social cause-oriented CSR communication model, which maximizes the impact of CSR investments on consumer relationship building, business bottom line and social causes.

The effect of perceptions of corporate identity and corporate social responsibility practices on investment intention

Orientation: Given the growing importance of sound corporate social responsibility (CSR) and considerable corporate investment in such activities, it is essential to understand the perceived impact thereof on stakeholder behaviour.Research purpose: As young individuals are particularly passionate about social responsibility, the effect of their perception of corporate identity (corporate values and corporate expertise) and CSR practices (relational, moral and discretionary actions) on their investment intention was investigated within an emerging market context.Motivation for the study: Previous researchers mainly focused on the effects of CSR on consumers’ intention to purchase products. Limited research has been conducted to understand the effect of CSR on decisions made by other key stakeholders, including investors.Research approach/design and method: Based on the theory of planned behaviour, a consumer behaviour-based dual-process model was adapted and tested in the investment context. An electronic questionnaire was distributed to potential young investors in the country to determine the effect of their perceptions of the CSR practices of a well-known South African financial company (Nedbank) on their intention to invest. The 1 649 responses were assessed through partial least squares structural equation modelling.Main findings: The adapted model was deemed reliable and valid in the investment context. Discretionary and relational CSR practices had more predictive relevance towards the corporate values dimension than the corporate expertise dimension of corporate identity. Moral CSR practices predicted the perception of both dimensions, which, in turn, influenced investment intention.Practical/managerial implications: Focus should be placed on communicating moral CSR practices, as it had a stronger prediction value (than discretionary and relational CSR practices) towards potential investors’ perceptions of the corporate expertise and values dimension of corporate identity which, in turn, strongly predicted investment intention.Contribution/value-add: This study makes a methodological contribution, as a dual-process model accounting for corporate identity and a range of CSR practices, based on consumer behavioural constructs, was applied in the context of investment decision-making within an emerging market.

Caring for survivors: Do CSR policies matter for post‐restructuring employee performance?

AbstractOrganizational restructuring involving mass layoffs is an integral part of the corporate strategic landscape. While aimed at increasing a company’s efficiency and profitability, it often falls short of desired objectives, partly due to negative consequences for remaining employees, the so‐called “survivors”. As workforce reductions may jeopardize a company’s legitimacy, we develop a model that links the change in post‐restructuring employee productivity to the factors that help mitigate legitimacy issues. By using a comprehensive and innovative dataset of restructuring announcements reported by European companies over the post‐crisis period, we analyze the moderating effect of the restructuring extent on the role of corporate social responsibility (CSR) and economic justification as legitimacy tools in counterbalancing the negative effects of job reduction measures. Our findings reveal that in reactive layoffs, induced by financial difficulties, initially high levels of CSR help lessen negative effects of restructuring on employee productivity in low‐extent restructuring events; while in high‐extent restructuring events employee productivity is supported by continuing investments in CSR. We provide evidence that both the level and dynamics of CSR practices play a significant role, and their effect on employee performance is conditional on the restructuring context.

The impact of corporate social responsibility on financial distress: empirical evidence

PurposeThe present study aims to explore the role of corporate social responsibility (CSR) on the likelihood of financial distress for a sample of 139 Pakistan Stock Exchange (PSX) listed firms throughout 2008–2019.Design/methodology/approachPanel logistic regression (PLR) and the dynamic generalized method of moments (GMM) estimator are used to examine the impact of CSR on financial distress. The investment in CSR measures through a multidimensional financial approach which comprises the sum of the contribution made by the company in the form of charitable donation, employees’ welfare and research and development, whereas the Altman Z-score and ZM-Score are used as an indicator of financial distress. The higher the Z-score lower will be the probability of financial distress, whereas the higher ZM score shows a greater probability of financial distress risk.FindingsThe authors find a significant negative impact of CSR on financial distress in both PLR and GMM models. This finding is consistent with the stakeholder view of CSR, as an investment in CSR not only aligns the interest between shareholders and stakeholders but also mitigates the risk of financial distress as well.Research limitations/implicationsLike other studies, the present study is not free from limitations. First, financial firms skipped from the sample, although literature witnesses a lot of studies highlight the financial firms' commitment to achieving CSR goals. Second, financial distress occurs in different stages, the authors fail to establish linkage CSR engagements at different stages of CSR. In the future, researchers can make a valuable addition by covering these missing links in present studies.Practical implicationsThe findings of this study provide more insight to corporate managers and investors about the association between the quality of investment in CSR and the degree of financial distress, concerning Pakistani firms. Furthermore, this study contributes to the existing literature by adding new evidence from developing countries such as Pakistan which are helpful for regulatory bodies and policymakers in the formulation of long-term CSR strategies to manage financial distress.Originality/valueThe study extends the body of existing literature on CSR and the likelihood of financial distress in Pakistan. The results suggest that policymakers may pay special attention to the quality of CSR while predicting corporate financial distress.

Impact of Companies’ Characteristics on the Relationship between Corporate Social Responsibility Disclosure and Corporate financial Performance - An Empirical Analysis

Strategic managers are persistently accosting with the decision of switching the scared corporate resource for the community welfare to balance the shareholders’ and multiple stakeholders’ interests. Corporate houses are presumed to not only intensify the economic priorities of investors, but must also consider the community and environmental ramifications as well. Presently, corporations are in dilemma over whether investment in corporate social responsibility (CSR) initiatives will be a cost or gain from an economic point of view. For this purpose, the association between CSR disclosure and corporate financial performance has been empirically explored and also the company characteristic has been considered as a significant and interesting factor influencing the association between CSR and corporate financial performance. The prime objective of the present paper is to examine the impact of companies’ characteristics i.e., Age of company on the relationship between corporate social responsibility disclosure and corporate financial performance. Panel data regression statistical technique has been applied to investigate and analyze the relationship. The findings of the study reveal that companies CSR have significant influence on their financial performances. But, on the other hand the company characteristic, age of the company has no significant impact on the corporate financial performance. The findings are found consistent with earlier studies, which validate the company’s venture in undertaking the CSR initiatives. The present study addresses theoretical as well as empirical support and inspiration for the corporations towards CSR initiatives.

Corporate social responsibility spending as a building block for sustainable corporate ethical identity: Lessons from Indian business groups

We examine the cost implications of using corporate social responsibility (CSR) as a vehicle to build sustainable corporate ethical identity (CEI). CSR investment is recognized as one of the effective channels to promote a firm's CEI. However, excessive CSR could divert resources from other strategic projects, and shareholder may not favor such initiatives. We address this managerial dilemma with a unique Indian CSR regulatory environment. Our results show that firms with greater reputational concerns have a higher proclivity to meet the mandatory CSR investment level but are reluctant to exceed the mandatory CSR limit due to absence of incremental financial benefits.

Slack Resources and Corporate Social Responsibility Link: Evidence from Manufacturing Firms in Nigeria

Extant empirical literature indicates little or no study on the extent of corporate social responsibility (CSR), using evidence from Nigerian context, and mixed study findings regarding slack resources and CSR relationship. Accordingly, this paper explores the extent of CSR activities by manufacturing firms in Nigeria and the effects of absorbed and unabsorbed slack resources on CSR. Using data set collected through content analysis of the 2017 and 2018 annual reports of 12 manufacturing firms in Nigeria and analyzing same by conducting one sample Wilcoxon signed rank test and regression analysis, we find that whereas the extent of CSR activities by the studied firms is low and insignificant, absorbed and unabsorbed slack resources have significant positive effects on CSR activities. These findings serve as a robust empirical basis for policy makers to insist on improved level of CSR activities by manufacturing firms in Nigeria, and for managers and regulators to understand the importance of slack organizational resources in CSR investment decision making.

Talented inside directors and corporate social responsibility: A tale of two roles

We examine the effect of inside directors with outside directorship, denoted as talented inside directors (TIDs), on corporate social responsibility (CSR) using 17,668 U.S. firm-year observations from 1998 to 2016. We find a significantly negative association between TIDs and excessive CSR and the result remains unchanged after correcting for endogeneity concern. We further shed light on how TIDs reduce excessive CSR through playing monitoring and advisory roles. The result showing a high sensitivity of CEO turnover to excessive CSR in firms with TIDs renders support to the monitoring hypothesis of TIDs. We further demonstrate that the baseline result is more pronounced for TIDs who are more likely to replace CEOs, for positive CSR activities that are more likely to enhance CEOs' personal benefits, and in firms that agency problems are more severe, providing additional evidence to support the monitoring hypothesis. This study also supports the advisory role of TIDs by showing that the baseline result is more pronounced in firms with high demand for board advice. Finally, we show that investors perceive that TIDs improve the value of CSR. Taken together, this study provides promising evidence that TIDs improve the efficiency of CSR investment by monitoring and advising CEOs.

The effect of regulatory focus and performance measurement on corporate social responsibility investment decisions

PurposeThis paper aims to investigate the relationship between regulatory focus, performance measurement and corporate social responsibility (CSR) investment decisions.Design/methodology/approachUsing an experimental method with a 2 × 2 between-subjects factorial design involving 144 participants, the data were analyzed using t-test and contrast test. In the experiment, the authors assigned participants into prevention focus or promotion focus group and complementary performance measurement or substitute performance measurement condition.FindingsThe results show that CSR investment is more preferable for managers in prevention focus instead of those in promotion focus group. Additionally, CSR investment is more preferable for managers in complementary performance measurement condition compared to those in substitute performance measurement condition. This study also provides evidence that the greatest CSR investment is reached when managers are in both prevention focus group and complementary performance measurement conditions.Practical implicationsCompanies need to activate the prevention focus for managers to motivate CSR investment. Additionally, companies need to use complementary performance measurements, which consist of CSR measurement and financial measurements.Originality/valueCSR research is dominated by theories explaining the external models which trigger companies to perform CSR. Existing research related to the internal models is limited to psychological aspects that are not directly related to company performance. This study investigates the motivational attributes that have a direct and strong influence on managers behavior. This research shows that regulatory focus is better at predicting CSR investment and is more motivational for individuals to perform well at work.