Dimensions Of Corporate Social Performance Research Articles

Weighing in on the average weights: Measuring corporate social performance (CSP) score using DEA

This study develops a new DEA approach to incorporate such market-level information (i.e., average weights over firms) to create a composite corporate social performance (CSP) measure. The new model addresses the challenge that stakeholder expectations—expressed as the CSP weights of different CSP dimensions—are usually unknown at the firm level, but some reliable estimates of the average weights (across firms) are available at the industry or market level. Distinct from the traditional DEA, the new approach can incorporate constraints on the average values of weight distributions and is built on a computational framework new to the literature. The new model is compared with the traditional CSP approach, using longitudinal investment data by socially responsible funds (SRF). The regression results show evidence that the traditional CSP score, which is widely used in the management literature, may not be a reliable CSP score: firms with higher CSP scores tend to have lower SRF investment (in both the number of SRF and total shares). In contrast, the DEA-based CSP scores show the correct and positive correlation with SRF investment. Overall, this paper contributes to the literature by presenting a more reliable CSP approach and a new, generalizable DEA model. This is also the first empirical work documenting the potential validity issue of the traditional CSP scores.

Value relevance of multifaceted corporate social performance: how do country-specific factors matter?

This study examines the relationship between multidimensional corporate social performance (CSP) and shareholder value, considering the moderating impacts of country-specific factors: economic development, the political system, and culture. Based on a sample of public companies in Asian-Pacific emerging countries over the 2010–2020 period, the findings reveal that the aggregate CSP measure obscures the valuation effect, whereas individual CSP dimensions highlight positive valuation effects. The CSP valuation effect varies across dimensions aimed at different stakeholder groups. Notably, narrowly focused CSP dimensions (community, product responsibility, and workforce) demonstrate more pronounced valuation effects than broadly focused dimensions (human rights). Given CSP’s multifaceted nature, directing attention toward the aggregate measure or incorrect dimensions may yield unwarranted conclusions. To enhance shareholder value through CSP, importance-performance analysis suggests prioritized resource allocation to human rights, community, product responsibility, and workforce dimensions. Intriguingly, the positive valuation effect of CSP is amplified in countries with higher income-per-capita and lower corruption, indicative of economic development and a robust political system, respectively. However, humane orientation—a cultural proxy—exerts no moderating impact on the CSP-shareholder value relationship. Comprehending the moderating roles of country-specific factors bears significant implications for bolstering CSP across diverse global regions.

Family Ownership, Financial Performance, and Social Performance: A Stakeholder Salience View

Employing an integrated framework from stakeholder salience and socioemotional wealth perspective, this study addresses family firms' heterogeneity on corporate social performance (CSP) issues by utilizing balanced panel data from 2007-2018. We found that family firms prioritize CSP dimensions (i.e., shareholder, employee, society, and environmental protection) as salient or not based on the socioemotional wealth concern (measured by the family ownership). Additionally, firm financial performance increases the positive relationship between family ownership and the overall CSP. Specifically, the moderating effect helps the shareholder, employee, and the society dimension of CSP. This study provides insights on realizing how and under what kind of conditions that family ownership matters on distinct aspects of CSP in family firms

Institutional ownership stability and corporate social performance

We examine the influence of institutional ownership stability on corporate social performance (CSP). We find that stable institutional ownership is associated with higher CSP, after controlling for the percentage of institutional ownership. The result is robust to alternative measures of CSP and various techniques to address endogeneity concerns. Additional analysis shows that this positive relation is driven by prudent institutional investors and by CSP dimensions directly pertinent to a specific, primary stakeholder group. Overall, we show that stable institutional investors are an effective mechanism to promote firms’ investment in long-term-oriented activities including CSR.

Institutional Ownership and Corporate Social Performance in Emerging Economies Multinationals: Evidence from India

This study fills the gap in the literature by considering the heterogeneous impact of institutional ownership on various dimensions of corporate social performance (CSP). Using the behavioural risk agency perspective, we argue that the risk behaviour of various institutional owners is not the same towards the CSP. We have taken a balanced panel sample of 61 Indian multinational firms for the span of 2013–2018 to test the proposed hypotheses. Results show a negative association of pressure-sensitive institutional investors’ ownership with social and governance dimensions of CSP. Mutual funds ownership is positively associated with the social and governance dimensions of CSP. Foreign institutional investors ownership has no significant impact on CSP. We found that the environmental dimension of CSP is ignored by institutional owners. The moderating effect of firm internationalisation on the relationship between institutional ownership and CSP is also examined.

Corporate Social and Financial Performance in Chemical Industry in the United States

The purpose of this study is to investigate the relationship between corporation financial performance (CFP) and corporate social performance (CSP). This study uses return on assets (ROA) to measure corporate financial performance. We use two different measurement strategies independently to measure corporate social performance: (a) KLD index as perceptual CSP measure strategy; (b) Percentage change in waste produced by the corporation (TRI index) as behavior CSP measure strategy. Using the sample of 123 U.S chemical firms from 2009-2018, this paper finds that KLD index has a significantly positive association with CFP, while TRI index is not significantly associated with CFP. Meanwhile, this paper also finds that seven individual dimensions of CSP are significantly related to CFP except for the environment dimension. The result expands the importance of CSP measurement methods from cross-industry research to single industry research and contributes to the CSP individual dimensions literature.

CSP and governance in emerging and developing country firms: Of mirrors and substitutes

AbstractA recent debate in the international CSR literature has focused on the question whether CSR serves as a mirror or a substitute of country-level governance. Advocates of the mirror view highlight the role of country level institutions to drive corporate social performance (CSP) levels, whereas proponents of the substitute view find companies to become more active in light of governance gaps. We contribute to this debate by moving the focus to a sample of 264 emerging economy and developing country companies and by comparing the relationship between country-level governance and CSP based on three different CSP dimensions, namely, emissions, human rights, and community performance. Whilst we find corporate emissions performance and human rights performance to align more closely with the mirror view, there is some indication that corporate community performance—possibly traced back to the longstanding tradition of corporate philanthropy in non-Western contexts—instead acts as a substitute to fill institutional voids. We discuss implications of our findings for research and policymakers.

Exploring Dimensions of Corporate Social Performance as a Strategy for Attracting Quality Job Seekers

The main objective of this paper is to explore job seekers’ perception of an organisation’s corporate social performance (CSP) credentials as a plausible consideration in the employment decision-making process as suggested by existing literature. Similarly, the paper provides a contextual extension of previous studies that were conducted in different cultural work environments. The paper developed a conceptual model based on a literature survey in order to achieve its objectives. A survey of 515 final year undergraduate and postgraduate students in a public university in Gauteng, South Africa, was conducted to empirically determine the relationship between various dimensions of CSP in relation to a job seeker’s attractiveness to an organisation. The economic responsibility dimension of CSP was found to have the greatest influence on organisational attractiveness to job seekers. Previous studies used organisational level as the unit of analysis in arriving at conclusions, without corresponding evidence at the individual level of analysis. Our analysis in this study was conducted at an individual level, thus filling an existing gap in the literature. This paper further extends the work of some previous scholars on job pursuit intention. The study is, however, limited by our assumption that all participants would enter the labour market immediately after graduation, withoutÂ

Corporate Social Performance of Family Firms: A Place-Based Perspective in the Context of Layoffs

This paper investigates the layoff behavior, a typical people dimension of corporate social performance (CSP), of family firms from a place-based perspective. We theorize that a place-based culture within family firms ensures that all organizational members share a deep sense of connection with the place of operations which makes them inherently care about their impact on society. Using data on layoffs of 2000 largest US firms between 1994 and 2007, we find that family firms do indeed exhibit a lower tendency to lay off employees in comparison to non-family firms; this relationship is particularly strong in ‘places’ with low population where the negative social externalities related to layoffs tend to be higher. Further post hoc analyses indicate that family firms have a strong place-based culture which can provide resource-based competitive advantages.

Labour reputation and financial performance: is there a causal relationship?

PurposeThe purpose of this paper is to analyse if there is a circular relationship of causality between the labour dimension of corporate social performance (CSP) and corporate financial performance (CFP).Design/methodology/approachThe sample is formed by the best companies to work for in Spain according to the labour reputation (LR) ranking developed by MERCO from 2006 to 2013. This study overcomes the limitations of previous studies using the panel data methodology (System generalised method of moments) and the Granger causality test.FindingsThe results suggest that the labour dimension of CSP cause CFP, but there is not causality in the opposite direction.Originality/valueStudies about the relationship between dimensions of CSP and CFP demonstrated that there are divergences in the results depending on the dimension analysed. Despite managers and employees are interested in the impact of labour dimension of CSP on CFP, there are few studies about it and they have important limitations.

Corporate social performance and its relation with corporate financial performance: International evidence in the banking industry

The economic and financial crisis that began in 2008 has raised concerns over the impact of Corporate Social Performance (CSP) on Corporate Financial Performance (CFP). The controversies and scandals in regard to the role of banks in the crisis have revealed failures in some CSP dimensions and questioned the CSR policies of banks as a real strategic commitment to the main stakeholders. The financial sector has been one of the hardest hit by the crisis. We study whether banks adopted a strategic approach to CSP and the extent to which this approach attenuated the decrease in CFP during the crisis. To that end, we analyze the effect of four CSP dimensions on the CFP of 154 financial entities in 22 countries, most of them notably affected by the crisis, from 2005 to 2010. The results show that banks with better employee relationships and corporate governance had better CFP. Nevertheless, the crisis negatively moderated this effect in the latter, suggesting failures in corporate governance mechanisms. Contrary to what was expected, the product responsibility dimension did not positively influence CFP. We found evidence that, during the crisis, better relations with the community could be valued positively by investors, which, in turn, increases CFP. The results are relevant for managers and policymakers. We recommend that banks incorporate CSP concerns into their corporate governance mechanisms, review their commitment to customers and attach greater importance to relations with the community. Moreover, regulatory reforms are suggested to clarify the responsibilities of financial institutions in the design and marketing of banking products.

The Role of Corporate Social Performance (CSP) on the Talent Attraction: A Conceptual Framework

Talent Management is found to significantly impact the organizational competitive performance and thus, has received increased research and practitioners’ attention over the past two decades. The shortage of talent has pushed the corporates to a war for talent which focuses on attracting, engaging and retaining the right talent over competitors. The strategies of attracting the right talent therefore have become the vital first step in Talent Management. The existing literature suggests Corporate Social Performance (CSP) to facilitate attracting the right talent. However, the literature emphasizes the need for context specific research to identify factors influencing talent attraction. Meantime, if and how CSP assists talent attraction in Sri Lankan context has received very limited attention. Against this backdrop, this paper focuses on understanding the role of CSP on talent attraction in the Sri Lankan context. The paper aims to develop a conceptual framework which will bring meaningful insights to investigate the relationships between organizations’ CSP, and their ability to attract the right talent. Drawing from the literature the paper first identifies different factors influencing talent attraction, the dimensions of CSP and the level of impact CSP has had on talent attraction in other contexts. Second, the conceptual framework is presented. Third, the paper suggests an experimental design which can be used in empirical studies along with recommendations for future research.

Impact of corporate social performance on financial performance of manufacturing companies (IMC) listed on the Tehran Stock Exchange

PurposeThis study aims to investigate the impact of corporate social performance (CSP) on financial performance of manufacturing companies listed on the Tehran Stock Exchange and thus contributes to understanding the significance of socially responsible investments for companies.Design/methodology/approachThe CSP was measured by a questionnaire composed of 53 items related to customers’ social performance of the firm, workers and environmental and community dimensions. Besides, corporate financial performance was measured by two measures, return on equity (ROE) and return on assets (ROA). In this study, 74 observations were investigated from 2006 to 2012. The data were analyzed using the multiple regression method.FindingsThe results of the study revealed that customers’ social performance of the firm has a negative impact on ROA of the firm. Besides, social performance of the workers dimension of the firm has a positive impact on ROA. The results, also, showed that none of the CSP dimensions affected the ROE of the firms.Originality/valueThe present study is useful for managers to develop future social performance policies that may lead to better financial performance in the long-term. The paper, also, contributes to the corporate social responsibility literature, as it presents empirical evidence of the effects of CSP on the financial performance in the manufacturing sector of developing countries.

Why Chinese entrepreneurial firms selectively perform corporate social responsibility issues?

PurposeBased on the stakeholder theory, this study aims to investigate Chinese entrepreneurial firms’ selective satisfaction of Stakeholder demands on corporate social performance (CSP).Design/methodology/approachThis study uses the survey data from privately owned companies in China, which is collected by the All-China Federation of Industry and Commerce in three years of 2006, 2008 and 2010.FindingsThis paper suggests a contingency model of CSP: entrepreneurial firms selectively perform corporate social responsibility (CSR) issues rather than all CSP dimensions. Furthermore, this study illustrates that international operations, such as overseas exports, would strengthen the above positive relationships between foreign ownership and selected CSR issues.Originality/valueThis study contributes to the understanding of CSR activities in Chinese entrepreneurial firms, which are more selective when performing social issues. In addition to the theoretical contribution, this work suggests a contingency model to the stakeholder theory, indicating the moderating factors to the entrepreneurial firms’ motivation to perform specific social responsibilities.

What Have Firms Been Doing? Exploring What KLD Data Report About Firms’ Corporate Social Performance in the Period 2000-2010

With the blossoming of research on corporate social performance (CSP), the data produced by Kinder, Lydenberg, Domini (KLD) have become the standard to measure firms’ social and stakeholder actions. However, to date, only a few studies have focused on examining the data directly, and have done so largely in terms of validating the concepts and methods in the data set’s construction. The present study seeks to complement these efforts by contributing knowledge about what the KLD data report on firms’ actions toward primary and secondary stakeholders, and the dimensions of CSP that firms generally engage in, together or sequentially. With data on 3,073 firms over the period 2000-2010, results show that firms expend more resources on garnering strengths in primary stakeholder dimensions, although this trend is sharply deteriorating to the benefit of secondary stakeholders—notably the natural environment. Results also show that firms generally approach CSP with a mixed behavior, with strengths and concerns in the same dimensions, especially as it pertains to secondary stakeholders. These are the same dimensions in which firms show the longer, more intrinsic commitments, suggesting that secondary stakeholder strengths and concerns may be structural in nature. However, there is also evidence of relationships across dimensions, indicating that firms’ involvement in CSP can generate momentum. The rich implications of these findings are discussed.

Impact of ESG factors on firm risk in Europe

A huge body of research has addressed the impact of corporate social performance (CSP) on corporate financial performance. However, prior literature provides only limited evidence of the impact of CSP on firm risk. The aim of this paper is to investigate the impact of CSP operationalized by environmental, social, and governance factors on market-based firm risk in Europe. Three risk measures are analyzed: systematic, idiosyncratic, and total risk. On the basis of a large European panel dataset of 8752 firm-year observations covering the period 2002–2014, we find that a higher CSP decreases total and idiosyncratic risk. Looking at the three dimensions of CSP, we show that social performance has a significantly negative effect on all three risk measures. Environmental performance generally decreases idiosyncratic risk, whereas total risk and systematic risk are only affected in environmentally sensitive industries. In contrast, we cannot detect a significant effect of corporate governance performance on firm risk. Our findings suggest that a higher CSP and a higher performance regarding the social dimension in particular have the potential to increase firm value through lower firm risk. Overall, our evidence fosters the assumption that there is a business case to be made for corporate social responsibility.

Patience Pays Off - Financial Long-Term Benefits of Sustainable Management Decisions

This paper quantifies the long-term financial effects of strong (weak) corporate social performance (CSP). We contribute to the literature by seeking such effects on a broad range, i.e. different CSP dimensions which are depicted by so-called ESGEc scores - an acronym for environment, social, governance, and economic - and for 18 sub-scores of these four dimensions. Our central strategy is to analyze the time structure of abnormal firm returns dependent on CSP rating data. We find positive mid- and long-term effects in all four dimensions of up to 6.82% abnormal return with respect to a change from the lowest to the highest possible ESGEc score. These effects are robust to controlling for common risk factors, accounting data, and industry fixed effects. We identify market inefficiencies for certain sub-scores and verify that the economic channel for the appreciation of strong CSP stocks are both additional cash flows and additional demand during our sample period. Thus, investments in firms with a high CSP are profitable in the long run.

The Effects of Corporate Social Performance on the Cost of Corporate Debt and Credit Ratings

AbstractThis study investigates the differential impact that various dimensions of corporate social performance have on the pricing of corporate debt as well as the assessment of the credit quality of specific bond issues. The empirical analysis, based on an extensive longitudinal data set, suggests that overall, good performance is rewarded and corporate social transgressions are penalized through lower and higher corporate bond yield spreads, respectively. Similar conclusions can be drawn when focusing on either the bond rating assigned to a specific debt issue or the probability of it being considered to be an asset of speculative grade.

The Financial Effects of Uniform and Mixed Corporate Social Performance

AbstractFirms typically present a mixed picture of corporate social performance (CSP), with positive and negative indicators exhibited by the same firm. Thus, stakeholders' judgments of corporate social responsibility (CSR) typically evaluate positives in the context of negatives, and vice versa. Building on social judgment theory, we present two alternative accounts of how stakeholders respond to such complexity, which provide differing implications for the financial effects of CSP: reciprocal dampening and rewarding uniformity. Echoing notable findings on strategic consistency, our US panel study finds that firms that exhibit uniformly positive or uniformly negative indicators in particular dimensions of CSP outperform firms that exhibit a mixed picture of positives and negatives, which supports the notion that stakeholders' judgments of CSR reward uniformity.

Modeling Job Pursuit Intention: Moderating Mechanisms of Socio-Environmental Consciousness

Many scholars have suggested the relationship between corporate social performance and its ability to attract a large number of high-quality job applicants, because previous literature indicates that employees with strong social awareness help create a high-performance organization. For that reason, an important issue for successful business recruitment is how to boost the pursuit intention of job seekers. This study discusses such issue by proposing a model based on signaling theory and cognitive dissonance theory. In the proposed model of this study, the positive relationships between four dimensions of corporate social performance and job pursuit intention are hypothetically moderated by socio-environmental consciousness. The proposed hypotheses of this research were empirically tested using the data from graduating students seeking a job. The empirical findings of this study complement previous literature by discussing how corporate social performance benefits business firms from a perspective of strengthened human resources and recruitment. Finally, managerial implications for business managers based on the findings herein are provided.