Legitimacy Of Corporate Social Responsibility Research Articles

Is There Any Impact of CSR on Financial Performance? Evidence from Indian Firms

The sceptical attitude towards linking corporate social responsibility (CSR) and corporate financial performance (CFP) forms the basis of this study. The available literature concentrates only on the positive side of CSR activities and benefits derived from them. The Companies Act, 2013, has made it mandatory for Indian companies of a certain turnover and profit to use 2% of their profits from the past three years on CSR activities. Given this background, this study examines the impact of CSR on the financial performance of the business itself. The economic legitimacy of CSR is also probed, that is, does CSR have a positive economic impact? For this examination, the Pearson Fixed effects panel regression analysis was performed on Nifty 50 companies during the period 2010–2018. Data regarding financial performance variables was obtained from Prowess IQ database. The CSR data was collected from the companies’ annual reports and content analysis was done using NVIVO software. The results of the study provide insights into the corporate response to the mandatory requirement of CSR activities and their impact on the company’s financial performance. The results of the study conclude that there is no significant influence of CSR on the financial performance of Indian companies.

Intrinsic drivers of the reputation for CSR: a cognitive analysis of consumer expectations

PurposeThe appraisal of corporate reputation based on third-party corporate social responsibility (CSR) indices appears to have been institutionalized. The endorsement of such an approach by sustainability custodians and influencers undermines the uptake of the morality and legitimacy of CSR. This study takes a social realist perspective, which suggests that social phenomena such as CSR and corporate reputation are shaped by social structures and power relations. This study aims to contribute to a deeper understanding of the complex relationship between CSR and corporate reputation and understand ways in which the constructs are influenced by cognitive factors.Design/methodology/approachThis study surveyed 411 respondents across five shopping malls and analyzed the data using path analysis of the structural equation modeling (SEM) technique. The mall-intercept survey sought to critically assess expectations of CSR vis-à-vis evaluation of corporate reputation. Based on a case study of three Johannesburg Stock Exchange listed companies, CSR expectations were measured along the philanthropic, economic, ethical and legal dimensions, while evaluation of corporate reputation was based on product quality, financial performance and social responsibility. SEM path analysis was used to extrapolate the predictive outcomes of CSR on corporate reputation.FindingsReputation for product quality and social responsibility is underpinned by the fulfillment of ethical CSR expectations, while philanthropic gestures enhance the evaluation of financial performance. Legal CSR significantly influences the reputation for social responsibility and product quality. Fulfillment of economic CSR expectations influences the reputation for product quality. However, no relationship was established between economic performance and social responsibility. Involvement in economic, philanthropic and particularly, legal CSR, are not indicative of the reputation for financial performance. Conversely, companies’ involvement in economic CSR does not suggest a higher propensity for social responsibility.Research limitations/implicationsThe predictive outcomes of CSR expectations on corporate reputation can reveal situated understanding of actual perceptions of corporate behavior.Practical implicationsEthical business conduct is synonymously associated with social responsibility while espoused corporate philanthropy signals strong financial performance. The awareness of consumers’ cognitive evaluation of corporate reputation can offer a pathway to corporate communication professionals, policy makers and agencies to rethink and reposition CSR efforts.Social implicationsInsensitivity to taken-for-granted cultural prescriptions and reliance on market-based reputational rankings undermine mutually beneficial stakeholder relationships and the social license to operate.Originality/valueThis study brings to the fore, cognitively dominated indicators of consumers’ perceptions of the reputation for CSR, to foster nuanced and halo-removed approaches to social responsibility. The authors show for the first time how companies’ skewed focus on corporate philanthropic giving paradoxically signals a capitalistic notion of social responsibility and unethical business conduct. This study offers a halo-removed orientation to the appraisal of CSR and corporate reputation.

CSR decoupling within business groups and the risk of perceived greenwashing

AbstractResearch SummaryGiven the growing legitimacy of corporate social responsibility (CSR), many firms engage in symbolic communication to showcase CSR without undertaking commensurate substantive actions. This “CSR decoupling” can create a risk of perceived greenwashing, which, in turn, may negatively affect a firm's performance. In this study, we explore an unexamined antecedent of decoupling: interfirm affiliation. Specifically, we use the structure of Business Groups (BGs) to investigate CSR decoupling across rather than within firms. We find that apex firms within a group are more likely to engage in CSR decoupling compared with non‐apex firms and, importantly, are partially shielded from greenwashing perceptions by the market. Our research contributes to the literatures on decoupling, perceived greenwashing, and the role of BGs and their CSR practices.Managerial SummaryCompanies that engage in symbolic communication about corporate social responsibility (CSR) without substantive actions risk being perceived as “greenwashers,” a perception that harms firm performance. Our study demonstrates how, in certain contexts where firms are affiliated with others, this may not occur. For instance, apex firms within Business Groups (BGs)—where firms are interconnected through equity and social relationships—can report on the CSR actions of non‐apex affiliates without providing commensurate substantive actions of their own. Importantly, the control and coordination abilities of these apex firms protect them from greenwashing perceptions. This study, therefore, demonstrates the role of BGs in shaping CSR practices and provides insights for managers to understand the potential risks and benefits of affiliations within BGs.

Doing well and being responsible: The impact of corporate social responsibility legitimacy on responsible entrepreneurship

AbstractThis article examines the influence of corporate social responsibility (CSR) legitimacy on responsible entrepreneurship. It also analyses the contingent factors that influence the relationship between CSR legitimacy and responsible entrepreneurship. While studies on CSR legitimacy are burgeoning, studies analyzing contingent factors and boundary conditions surrounding CSR legitimacy theory are sparse. We extend legitimacy theory by estimating a contingent model that examines the effect of local embeddedness and CSR commitment on the relationship between CSR legitimacy and responsible entrepreneurship. Utilizing time‐lagged data collected from 282 entrepreneurs in Vietnam, we demonstrate that CSR legitimacy positively influences responsible entrepreneurship. Further, we find that local embeddedness exacerbates the potency of CSR legitimacy as a driver of responsible entrepreneurship. Additionally, our results show that this moderation is conditioned by CSR commitment. Specifically, the moderating effect of local embeddedness on the linkage between CSR legitimacy and responsible entrepreneurship is stronger when CSR commitment is high. These findings improve the conceptual scope and generalisability of CSR legitimacy as a driver of responsible entrepreneurship in non‐Western contexts.

Corporate social responsibility disclosures and profitability of Islamic banks: an empirical study

PurposeThis study aims to investigate the relationship between corporate social responsibility (CSR) disclosure and financial performance (FP) of Islamic banking sector from a developing country perspective. It also explores the present status of CSR activities performing by the listed Islamic banks (IBs) of Bangladesh.Design/methodology/approachThe secondary data from seven IBs’ annual reports for the years 2009–2018 are taken to obtain substantial measures of CSR activities. A corporate social responsibility disclosure index is constructed based on disclosure status on nine dimensions and 75 items as per the Accounting and Auditing Organization for Islamic Financial Institutions standards. To find the association between CSR disclosures and profitability, panel regression analysis has been performed.FindingsThe result indicates that CSR disclosures have a significant and negative relation with FP (return on assets) of IBs. It also suggests the expansion of CSR practices and the communicative CSR reporting of IBs, as an ethical identity, toward the stakeholders and society.Research limitations/implicationsFirst, the samples used in this study are limited to IBs as ethical identities in Bangladesh. Second, the length of a time frame as the practice of CSR activities and its reporting is still ineffective following the enforcement of the central bank directive in 2008. Another limitation is that the study used a subjective measure, content analysis, of CSR activities that was self-reported disclosures, which may creep some biasness.Practical implicationsThe practical involvement of this research includes the assistance for policy development regarding better understanding of expansion of CSR practices and trustworthiness of CSR reporting by the Islamic banking segments in developing country context. Future researchers can get a glimpse of what reputational impact CSR initiatives really have on consumers and investors, considering CSR activities as an indicator of greater transparency and honesty in operations and financial reporting.Originality/valueThis study makes an important contribution to the academic literature on CSR communication from developing country context where CSR activities are supported under Islamic banking system. In addition, its examination of the legitimacy of CSR disclosures elaborates the social obligations of corporate entities to their stakeholders and society.

Evaluating Board Candidates: A Threat-Contingency Model of Shareholder Dissent Against Female Director Candidates

Given the growing corporate social responsibility (CSR) pressures to increase board gender diversity and the scrutiny afforded to firms that fail to appoint female directors, one may expect shareholders to vote with greater support for women (than for men) nominated to boards. However, diversity management research suggests that pressures to improve female representation in organizations and in leadership roles may also backfire. We propose a threat-contingency model of shareholder dissent against female director candidates to explain when shareholders will be more or less likely to dissent against female (relative to male) directors. Specifically, we advance CSR legitimacy threats and agency threats as conditions contextualizing shareholder dissent against female director candidates. Using a sample of 50,202 director elections at 1,104 public firms from 2003 to 2015, we find that female directors receive less dissent from shareholders; further, low female board representation intensifies this leniency as CSR legitimacy threats become more salient. However, when firm-related agency threats occur (e.g., firm underperformance and media controversies), shareholders’ leniency toward female director candidates dissipates, and when directors themselves present agency threats (e.g., director attendance problems and nonindependence), shareholders evaluate female directors more harshly than male directors. Underlining the relevance of our theory, our supplementary analyses show that shareholder dissent increases the probability of director turnover. These findings contribute to theory and research on women on boards, firm responses to institutional pressures, and shareholder dissent.

Bright harmony of environmental management initiatives for achieving corporate social responsibility authenticity and legitimacy: Glimpse of hotel and tourism industry

AbstractThe study aims to find out the effect of environmental management initiatives (EMI) on corporate social responsibility (CSR) authenticity and CSR legitimacy. The current study also examines the influence of CSR authenticity on CSR legitimacy and mediating effect of CSR authenticity in the connection between EMI and CSR legitimacy. Data were collected from 309 managers of hotels and tourism industries. Statistical techniques such as correlation and regression were used through AMOS 7.0 software for data analysis. Results reveal that EMI positively predicts CSR authenticity. Moreover, CSR authenticity significantly predicts the CSR legitimacy. The direct link between EMI and CSR legitimacy is also positive and significant. The findings also reveal that CSR authenticity mediates the relationship between both EMI and CSR legitimacy links. These findings suggested that managers in hotel and tourism industry should participate in CSR activities and well‐being of the societies using the organizational resources for attaining CSR legitimacy.

CSR reporting and assurance legitimacy: a client–assuror dyad investigation

Purpose Drawing on new insights from the experiences and perspectives of a prominent reporting client and its assurance team, the purpose of this paper is to explore the question: what are challenges to the legitimacy of corporate social responsibility (CSR) reporting and assurance? Design/methodology/approach Using a qualitative research approach, in-depth, semi-structured interviews are conducted with a Fortune 200 firm’s Vice President responsible for CSR oversight (including CSR reporting), and with the report’s assurance team from a Top 20 accounting firm. Questions are informed by existing literature, and analysis focuses on new insights that conform to, or contrast with, prior studies in areas that may challenge the legitimacy of CSR reporting. Findings The study documents that reporting and assurance may often serve the respective commercial and professional interests of the firm and the assuror, rather than providing accountability to the public interest. Specifically, the authors find that legitimacy-challenging instances of managerial capture of CSR reporting may co-exist in a firm with management-as-CSR-champion, in contrast with existing literature. Prior research has assumed these two constructs are not likely to co-exist within a single organization. The interviews suggest that managerial influence is fostered by the lack of reporting standards and the absence of agreement regarding the over-arching purpose of CSR reports and their assurance. Research limitations/implications Going forward, researchers should consider the multifaceted role management can play in CSR reporting and assurance, rather than treating managerial capture and management-as-champion as mutually exclusive. Future research could also examine how standards may balance desired comparability with flexibility in CSR reporting. Practical implications The study will interest report users who may assume that a seemingly supportive management would not play a restrictive role in the reporting and assurance processes. Reporters and assurors will benefit from reading the perspectives provided by professionals engaged in similar work, including the challenges they face, such as the consequences resulting from the lack of standards for CSR reporting and assurance. Originality/value The study is the first to provide a behind-the-scenes view of the report–assuror dyad by interviewing both the reporting firm and the assurance team engaged on the same CSR report.

El aporte de la Teoría de la Economía Civil a la argumentación de la RSE

Pese a la creciente legitimidad que está adquiriendo la Responsabilidad Social Empresarial (RSE), la argumentación teórica de esa legitimidad presenta fuertes debilidades. Estas debilidades se explican, en parte, porque esa argumentación no está basada en un marco de teoría económica alternativo a la Economía Neoclásica, en cuyos postulados e ideas se apoyan las principales críticas a la existencia de la RSE. Para esta escuela el concepto de RSE entra en contradicción con ideas como la que el fin de la empresa consiste exclusivamente en la maximización de las ganancias, la esfera económica es independiente de la social, el mercado es moralmente neutro y que las relaciones económicas se basan exclusivamente en el intercambio de equivalentes sin dejar espacio para la reciprocidad. El presente artículo tiene la intención de argumentar que la escuela denominada «Economía Civil» aporta un marco teórico desde el cual es posible responder a esas críticas y ofrecer una argumentación de la RSE basada en esa teoría. El documento fue construido mediante revisión bibliográfica y reflexión teórica del autor. Se identifican cinco dimensiones que caracterizan el concepto de RSE, luego se analizan los argumentos neoclásicos que invalidan esas dimensiones y finalmente, se exponen los argumentos de la Economía Civil que los legitiman.

Explaining the Growth of CSR within OECD Countries: The Role of Institutional Legitimacy in Resolving the Institutional Mirror vs. Substitute Debate

Two strands of literature have emerged to explain the rise of a new form of private governance, Corporate Social Responsibility (CSR). One camp argues that CSR expansion is likely during periods of economic liberalization because CSR tends to substitute for growing institutional voids and a lack of social regulation. The other camp argues that CSR is likely to diffuse within coordinated economies because it mirrors these institutional settings. While both camps find empirical support for their arguments, no one has yet managed to combine both perspectives. In our study, we develop three hypotheses based on two (rationalist and constructivist/sociological) strands of institutional theory. Based on a new dataset comprising the corporate membership in business-led CSR organizations in over thirty countries from 1981 to 2008, we show that economic liberalization has a strong effect on CSR expansion when the legitimacy of CSR is low. However, when the practice has achieved substantial cultural acceptance, economic liberalization no longer drives CSR expansion. In this setting, CSR expansion is most likely to occur within socially regulated economic contexts.

How International Firms Conduct Societal Marketing in Emerging Markets

This study tests the relationship between activities of societal marketing and firms’ CSR legitimacy in terms of corporate social responsibility (CSR). It also examines the effects of the CSR legitimacy on firm performances in marketing. In addition, the study considers the relative importance of different activities of societal marketing. Based on data from a large sample of firms operating in both southern and northern China, this study compares the relative importance of three dimensions of societal marketing activities which influence a firm’s CSR legitimacy. Different from research findings from developed economies, our data show that the social dimension of societal marketing activities is the most effective when it comes to influencing a firm’s CSR image in an emerging economy. This image, in turn, has a positive effect on its marketing performances. This study suggests that, in an emerging economy such as China, firms that pay more attention to the social dimension of societal marketing are likely to be more effective in terms of building CSR legitimacy and achieving good performances.

Creeping legitimacy of corporate social responsibility

A consideration of the evolving international legal framework surrounding a company's ethical and social responsibilities to its employees. Article by Professor A.F.M. Maniruzzaman, University of Portsmouth published in Amicus Curiae – Journal of the Society for Advanced Legal Studies at the Institute of Advanced Legal Studies. The Journal is produced by SALS at the IALS (Institute of Advanced Legal Studies, School of Advanced Study, University of London).

The Relationship between Corporate Social Responsibility and Corporate Value Using the Game Theory

The relationship between corporate social responsibility and corporate value cause the attention of theory circleincreasingly. This paper analyzes the mechanism of the corporate social responsibility to corporate value,introducing the game model to justify the legitimacy of corporate social responsibility and demonstrate itsfunction to corporate value. At last, the corresponding countermeasures are put forward.

The legitimacy of corporate social responsibility

Based on deliberations on the legitimacy of CSR from the perspective of stakeholder and legitimacy theory on the one hand and the more critical view of Milton Friedman and Michael Jenson on the other hand, this paper analyses how major energy companies legitimise their CSR activities in their Annual Reports and their CSR reports. The research indicates that managers recognise the potential contribution of CSR to long-term financial performance of firms as well as the need to socially legitimise the firm’s operations. A surprisingly limited number of the companies in the sample take a very explicit strategic approach to CSR by stressing long-term shareholder value maximisation. The CSR policies therefore appear not to focus solely on a strategic stakeholder approach geared towards maximising shareholder value but to reflect considerations raised by legitimacy theory

The Cyclical Transformations of the Corporate Form: A Historical Perspective on Corporate Social Responsibility

This Article describes the transformations underwent by the corporate form from its Roman origins to the present. It shows that every time there was a shift in the role of the corporation, three theories of the corporation (the aggregate, artificial, and real entity theories) were brought forward in cyclical fashion. However, every time the real entity theory prevailed, and it is the dominant theory during periods of stability in the relationship between the corporation, the shareholders, and the state. The article describes this evolution in detail, and then attempts to derive normative consequences for the legitimacy of corporate social responsibility (CSR). The basic argument is that under the real view, which is historically the dominant view of the corporation, CSR is normatively acceptable even when it does not contribute to the long-run welfare of the shareholders.

Criteria for Evaluating the Legitimacy of Corporate Social Responsibility

The goal of this paper is to provide a general discussion about the legitimacy of corporate social responsibility. Given that social responsibility projects entail costs, it is not always obvious under what precise conditions managers will have a responsibility to engage in activities primarily designed to promote societal goals. In this paper we discuss four distinct criteria for evaluating the legitimacy of corporate projects for institutionalizing social responsibility: (1) local knowledge (2) level of responsibility (3) shared consensus, and (4) relationship to financial performance. We conclude our discussion by noting that in those cases where the firm possesses knowledge about a specific problem and its solution, is directly responsible for causing harm, where a shared consensus among all relevant stakeholders exists, and financial performance will be enhanced, social responsibility projects are ideal. Obviously, no program will meet all of the criteria. In fact, our model specifically suggests that there is often a trade-off between the first three criteria and the last. For example, in those situations where the corporation directly imposes harm on third parties, and where a high degree of consensus exists among all stakeholders, there is little need to link the social responsibility program to financial performance. By contrast, as the corporation seeks proactive solutions to problems which are only incidental to the corporation, and where little consensus exists, the predicted relationship to financial performance becomes more crucial. By formally examining the trade-offs among these four criteria we more fully understand the complex relationship between social responsibility and financial impacts.