The commercialization of microfinance brings formal financial institutions into the microfinance landscape, yet little is known about the forces that lead to this phenomenon. This paper is the first dedicated to this topic using a hand-collected dataset of 112 institutions from 34 countries covering the period from 2008 to 2012. Based on institutional theory and resource-based argument, we empirically assess the effects of institutional environment factors, including regulative, normative, and cognitive elements, as well as resource-based factors, including practice model and (...) multinational diversity, on the intensity of engagements. To do so, we define the roles as capital-related, product-related, and service delivery, and calculate engagement intensity using a scoring method which reflects an organization’s extent of presence in the microfinance value chain. The analysis takes the engaging location and engaging model into account. We find that the two logics together can explain such involvement. Legal compliance is identified as most relevant for domestic players, while resource-based factors are more relevant for overseas players. In addition to regression analysis, many cases are identified to support the arguments. (shrink)

One of the older questions in the debate about Corporate Social Responsibility (CSR) is whether it is worthwhile for organizations to pay attention to societal demands. This debate was emotionally, normatively, and ideologically loaded. Up to the present, this question has been an important trigger for empirical research in CSR. However, the answer to the question has apparently not been found yet, at least that is what many researchers state. This apparent ambivalence in CSR consequences invites a literature study that (...) can clarify the debate and allow for the drawing of conclusions. The results of the literature study performed here reveal that there is indeed clear empirical evidence for a positive correlation between corporate social and financial performance. Voices that state the opposite refer to outdated material. Since the beginnings of the CSR debate, societies have changed. We can therefore clearly state that, for the present Western society, "Good Ethics is Good Business.". (shrink)

In recent years, development practice has seen that microfinance institutions are starting to consider their environmental bottom line in addition to their financial and social objectives. Yet, little is known about the characteristics of institutions involved in environmental management. This paper empirically identifies the characteristics of these MFIs for the first time using a sample of 160 microfinance institutions worldwide. Basing our analysis on various econometric tests, we find that larger MFIs and MFIs registered as banks tend to perform better (...) in environmental policy and environmental risk assessment. Furthermore, more mature MFIs tend to have better environmental performances, in particular in providing green microcredit and environmental non-financial services. On the other hand, financial performance is not significantly related to environmental performance, suggesting that ‘green’ MFIs are not more or less profitable than other microfinance institutions. (shrink)

Previous studies have proposed a virtuous circle between corporate social performance (CSP) and corporate financial performance (CFP). However, a key challenge researchers face when empirically examining this virtuous circle is endogeneity. In this paper, we apply a well-developed method—dynamic panel data (DPD) estimation—to account for endogeneity and conduct two studies to reexamine the causal relationship between CSP and CFP. Study 1 relies on KLD ratings from 1997 to 2012 as the measure of CSP. According to the results of Study 1, (...) although CFP measured as ROE may have a causal impact on CSP, it is doubtful whether there is a causal influence of CSP on CFP. Study 2 relies on the sustainability scores provided by Sustainalytics from 2009 to 2018 as the measure of CSP. Study 2 reports that CSP does not causally influence CFP and that CFP does not have a causal impact on CSP. Together, Study 1 and Study 2, using different measures for CSP, suggest that a virtuous circle between CSP and CFP may not exist. Our study suggests that doing good may not necessarily lead to doing well and that doing well may not naturally result in doing good. Thus, our study implies that future studies should seriously consider the causal mechanisms through which CSP may influence or may be influenced by CFP. Our paper also discusses the implications for CSP research and for management and organization research. The limitations of applying DPD estimation to empirically examine the causal relationship between CSP and CFP are also discussed. (shrink)

This article examines whether the charitable giving amount and likelihood of firm response to catastrophic events relate to firms' ownership type using a unique dataset of listed firms in China, where state ownership is still prevalent. Based on the data of Chinese firms' response to the 2008 Sichuan earthquake, we find that the extent of corporate contributions for state-owned firms following this disaster is less than that for private firms. State-owned firms are also less likely to respond in this disaster (...) compared to private firms. The results also reveal that firm size, profitability, geography, cash resource available, and leverage affect firms' philanthropic disaster response behavior in China. (shrink)

This article examines whether the charitable giving amount and likelihood of firm response to catastrophic events relate to firms’ ownership type using a unique dataset of listed firms in China, where state ownership is still prevalent. Based on the data of Chinese firms’ response to the 2008 Sichuan earthquake, we find that the extent of corporate contributions for state-owned firms following this disaster is less than that for private firms. State-owned firms are also less likely to respond in␣this disaster compared (...) to private firms. The results also␣reveal that firm size, profitability, geography, cash resource available, and leverage affect firms’ philanthropic disaster response behavior in China. (shrink)

This article examines whether the likelihood and amount of firm charitable giving in response to catastrophic events are related to firm advertising intensity, and whether industry competition level moderates this relationship. Using data on Chinese firms’ philanthropic response to the 2008 Sichuan earthquake, we find that firm advertising intensity is positively associated with both the probability and the amount of corporate giving. The results also indicate that this positive advertising intensity-philanthropic giving relationship is stronger in competitive industries, and firms in (...) competitive industries are more likely to donate. This study thus provides evidence suggesting that even in the wake of catastrophic events, corporate philanthropic giving is strategic. (shrink)

Social entrepreneurship orientation is a behavioral construct of social entrepreneurship ; therefore, we examined the influence of SEO of the organization on social and financial performance. A random sample of 810 employees was drawn from social enterprises of Pakistan during the COVID-19 pandemic. Although increasing research focuses on SE, the discipline continues to disintegrate, and this has led to appeals for a careful investigation of the associations of firms’ SE. In the recent decade, “social entrepreneurship” has earned its importance as (...) a segment of entrepreneurship. Instead of mixed activity, firms are more likely to engage in either for-profit or non-profit activities. The causes for and consequences of this conduct has been mainly studied using objective measures of SEO, social performance, and financial performance, with little attention paid to the subjective experiences of social enterprises. We rely on the theory of stakeholder and mixed structuring to postulate that social performance intermediates the SEO-financial performance relation. By assessing a sample of 810 employees from active enterprises, we discover that social performance mediates positively and partially between SEO and financial performance, and both direct and indirect paths are in the same direction and significant. Our findings exhibit that social performance variance explained 74% of the mediating role, and the remaining 26% of the effect is because of SEO. We consider the functions by which an SEO influences enterprise performance and delivers more prominent understanding into multiple spectrums of performance. We discuss the prospective suggestions of our research and foster an encouraging pathway for more enquiry on the SEO paradigm. The study adds contribution to the literature, which has not been testified before on hybrid firms. SEO is a newly defined construct and requires more prospective research. This research gives the researchers/scholars new directions to address related disciplines and further explore this domain. (shrink)

Corruption has been a major obstacle to economic growth around the world. In this paper, we examine how firms interact with corrupt government officials either to minimize the impact of corruption on their operations or to maximize their benefit of paying a bribe. Our estimates show that firms know exactly what they need and use their limited resources to bribe only relevant government authorities. In other words, firms are rational bribers who know exactly what they need and optimize their bribes (...) to fulfill that need. This type of intentional bribery could be reduced by enhanced institutional environments and improved openness of the economy. (shrink)

Corruption has been a major obstacle to economic growth around the world. In this paper, we examine how firms interact with corrupt government officials either to minimize the impact of corruption on their operations or to maximize their benefit of paying a bribe. Our estimates show that firms know exactly what they need and use their limited resources to bribe only relevant government authorities. In other words, firms are rational bribers who know exactly what they need and optimize their bribes (...) to fulfill that need. This type of intentional bribery could be reduced by enhanced institutional environments and improved openness of the economy. (shrink)

This article analyses the link between innovation with high social benefits and corporate social performance (CSP) and the role that family firms play in this. This theme is particularly relevant given the large number of firms that are family-owned. Also the implicit potential of innovation to reconcile corporate sustainability aspects with profitability justifies an extended analysis of this link. Governments often support socially beneficial innovation with various policy instruments, with the intention of increasing international competitiveness and simultaneously supporting sustainable development. (...) In parallel, firms pursue corporate social responsibility (CSR) and environmental management activities partly in the hope that this will foster such innovation in their organisation (alongside their main aim of improving CSP). Hence, the main research question of this article is about the association of CSP with innovation with high social benefits and the determinants of the potential moderation of this association. Based on panel data, the article analyses the link between CSP and innovation, and the effect of being a family firm using panel estimation techniques. The results point to a moderating role of family firms on the link between innovation with high social benefits and CSP. The article concludes by assessing the policy implications of this insight. (shrink)

This paper explores the nature of the relationship between corporate social responsibility (CSR) and competitiveness. We start with the commonly held view that firm competitiveness is defined by the market. That is, the question of what are the critical competitiveness factors is answered by looking at how companies and financial analysts describe and evaluate a firm. To analyze this, we review the current state of the art on the relationship between CSR and competitiveness. Second, CSR criteria used by financial analysts (...) is identified and compared with company valuation methods. Third, the results of a multi-stakeholder dialogue on CSR and competitiveness of the European financial sector are presented. As a conclusion, we argue that CSR and competitiveness relate through a learning and innovation cycle, where corporate values, policies and practices are permanently defined and re-defined. Thus, we propose that learning takes place as CSR is embedded in business processes, and that once it has been integrated, in turn, it generates innovative practices, and finally, competitiveness. At the end of the paper, we propose that CSR in practice consists of managing inherent paradoxes generated by the tension between CSR and business policies. (shrink)

One of the older questions in the debate about Corporate Social Responsibility (CSR) is whether it is worthwhile for organizations to pay attention to societal demands. This debate was emotionally, normatively, and ideologically loaded. Up to the present, this question has been an important trigger for empirical research in CSR. However, the answer to the question has apparently not been found yet, at least that is what many researchers state. This apparent ambivalence in CSR consequences invites a literature study that (...) can clarify the debate and allow for the drawing of conclusions. The results of the literature study performed here reveal that there is indeed clear empirical evidence for a positive correlation between corporate social and financial performance. Voices that state the opposite refer to out-dated material. Since the beginnings of the CSR debate, societies have changed. We can therefore clearly state that, for the present Western society, “Good Ethics is Good Business.”. (shrink)

Although agreement on the positive sign of the relationship between corporate social and financial performance is observed in the literature, the mechanisms that constitute this relationship are not yet well-known. We address this issue by extending management’s stakeholder theory by adding insights from psychology’s prospect decision theory and sociology’s resource dependence theory. Empirically, we analyze an extensive panel dataset, including information on disaggregated measures of social performance for the S&P 500 in the 1997–2002 period. In so doing, we enrich the (...) extant literature by focusing on stakeholder heterogeneity, perceptional framing, and disaggregated measures of corporate social performance. (shrink)

We study the relationship between corporate social performance and financial performance by comparing the portfolio returns of firms with changes in corporate social responsibility (CSR) intensity. Using an extensive US sample from the MSCI ESG database, we find that improvement in the overall CSR is generally value enhancing. The relationship varies with CSR dimensions. More importantly, the relationship shifts differently for various CSR dimensions during the crisis period when trust in the society is low and financial resource is limited. Improvement (...) in environment, human rights, and product characteristics shows higher financial returns during the financial crisis period, whereas the value enhancement of improvement in employee relations is more pronounced during the non-crisis period. (shrink)

Proactive corporate social responsibility (CSR) involves business practices adopted voluntarily by firms that go beyond regulatory requirements in order to actively support sustainable economic, social and environmental development, and thereby contribute broadly and positively to society. This empirical study examines the role of the economic, social and environmental dimensions of proactive CSR on the association between three specific capabilities—shared vision, stakeholder management and strategic proactivity—and financial performance in small and medium enterprises (SMEs). Using quantitative data collected from a sample of (...) 171 Australian SMEs in the machinery and equipment manufacturing sector and employing structural equation modelling, we find that the adoption of practices in each CSR dimension by SMEs is influenced slightly differently by each capability, and affects financial performance differentially. The study also demonstrates the importance of the interaction between the three dimensions of proactive CSR in positively moderating the deployment of each individual CSR dimension to generate financial performance. Paying primary attention to the economic dimension of proactive CSR and selectively focusing on social and environmental elements of proactive CSR that drive and support the economic dimension are of key importance to sustainable long-term financial success for SMEs. (shrink)

Proactive corporate social responsibility (CSR) involves business strategies and practices adopted voluntarily by firms that go beyond regulatory requirements in order to manage their social responsibilities, and thereby contribute broadly and positively to society. Proactive CSR has been less researched in small and medium enterprises (SMEs) compared to large firms; and, whether SMEs are ideally placed to gain competitive advantage through such activity therefore remains a point of debate. This study examines empirically the association between three specified capabilities (shared vision, (...) stakeholder management and strategic proactivity), proactive CSR and financial performance in SMEs. Using quantitative data collected from a sample of 171 SMEs in the machinery and equipment sector of the Australian manufacturing industry, we find that all specified capabilities are positively associated with adoption of proactive CSR by SMEs, and that proactive CSR is, in turn, associated with an improvement in firm financial performance. Evidence of a fully mediating role for proactive CSR on the association between capabilities and financial performance presented in this study aligns with RBV theory that suggests adoption of value-creating strategies that make the most effective use of a firm’s capabilities is essential to financial success. The study contributes to the CSR literature by demonstrating a case for SMEs being able to maximise financial returns whilst proactively making progress towards CSR. (shrink)

The vast majority of extant empirical research examining the relationship between corporate social performance and financial performance selects samples of only those firms which are observed engaging in CSP. In this study, the authors assert that firms’ efforts to pursue CSP and subsequently their appearance in social-choice investment advisory firms’ ranking databases are non-random. Studying the CSP–FP link using selected samples of only those firms whose social performance is ranked by SIA firms introduces a sample-selection bias which limits generalization of (...) results to a population of all firms, and at worst provides alternate explanations for observed relationships. The authors test these assertions on a large sample of public corporations in the United States over 6 years and find a sample-selection bias. Upon correction of this bias, this study confirms the positive impact of CSP on FP. (shrink)

>With assets of over US$1.0 trillion and growing, public pension funds in the United States have become a major force in the private sector through their holding of equity positions in large publicly traded corporations. More recently, these funds have been expanding their investment strategy by considering a corporations long-term risks on issues such as environmental protection, sustainability, and good corporate citizenship, and how these factors impact a companys long-term performance. Conventional wisdom argues that the fiduciary responsibility of the pension (...) funds trustees must be solely focused on their beneficiaries and, therefore, their investment criteria must be based strictly on narrowly defined financial measures. It is also asserted that well-established financial measurements of corporate performance already include long-term risk assessment through discounted present value of future flow of earnings. Consequently, all other criteria are contrary to the best interest of the pension funds beneficiaries. In this paper, we assert that, contrary to conventional wisdom, pension funds, and for that matter other mutual funds, must be concerned with the long-term survival and growth of corporations. These measures are generally referred to socially responsible investing (SRI) and when applied to corporations, it is termed socially responsible corporate conduct (SRCC). We demonstrate that current measurement of future risk assessment invariably understates, and quite often completely overlooks, these long-term risks because of the inherent bias towards short-run on the part of financial intermediaries whose compensation depends greatly on short-term results. Furthermore, there is ample evidence to suggest that these intermediaries have been engaging in self-serving practices and thus failing in their duties to serve their clients, i.e. pension funds, best interests. Because of their large holdings in the total market as well as individual companies, these funds cannot easily divest from poorly performing companies without destabilizing the companies stock and overall markets. Hence, they must opt for a strategy of emphasizing investment criteria that encourage companies to take into account long-term aspects of their operations in terms of their impact on environment, sustainability, and community welfare, to name a few. We argue that an exclusionary, and even a primary, focus on short-term financial criteria is no longer a viable option. It also calls for the pension funds to encourage greater transparency and accountability of the entire corporate sector through improved corporate governance. Thus socially responsible investing practices are not merely discretionary and desirable activities; they are a necessary imperative, which both the corporations and public pension funds, and other large institutional holders, will ignore at serious peril to themselves. Finally, the paper considers some of the recent developments where corporations have been responding to these challenges and how their actions might be strengthened through greater disclosure and transparency of corporate activities. It also makes recommendations for the pension funds to support further research in creating new measurement standards that further refine the concept of socially responsible investing as a necessary ingredient of long-term corporate survival and growth in the context of a changing economic, environmental and socio-political dynamic. (shrink)

With assets of over US$1.0 trillion and growing, public pension funds in the United States have become a major force in the private sector through their holding of equity positions in large publicly traded corporations. More recently, these funds have been expanding their investment strategy by considering a corporation's long-term risks on issues such as environmental protection, sustainability, and good corporate citizenship, and how these factors impact a company's long-term performance. Conventional wisdom argues that the fiduciary responsibility of the pension (...) funds' trustees must be solely focused on their beneficiaries and, therefore, their investment criteria must be based strictly on narrowly defined financial measures. It is also asserted that well-established financial measurements of corporate performance already include long-term risk assessment through discounted present value of future flow of earnings. Consequently, all other criteria are contrary to the best interest of the pension funds' beneficiaries. In this paper, we assert that, contrary to conventional wisdom, pension funds, and for that matter other mutual funds, must be concerned with the long-term survival and growth of corporations. These measures are generally referred to "socially responsible investing" and when applied to corporations, it is termed "socially responsible corporate conduct." We demonstrate that current measurement of future risk assessment invariably understates, and quite often completely overlooks, these long-term risks because of the inherent bias towards short-run on the part of financial intermediaries whose compensation depends greatly on short-term results. Furthermore, there is ample evidence to suggest that these intermediaries have been engaging in self-serving practices and thus failing in their duties to serve their clients', i.e. pension funds', best interests. Because of their large holdings in the total market as well as individual companies, these funds cannot easily divest from poorly performing companies without destabilizing the companies' stock and overall markets. Hence, they must opt for a strategy of emphasizing investment criteria that encourage companies to take into account long-term aspects of their operations in terms of their impact on environment, sustainability, and community welfare, to name a few. We argue that an exclusionary, and even a primary, focus on short-term financial criteria is no longer a viable option. It also calls for the pension funds to encourage greater transparency and accountability of the entire corporate sector through improved corporate governance. Thus socially responsible investing practices are not merely discretionary and desirable activities; they are a necessary imperative, which both the corporations and public pension funds, and other large institutional holders, will ignore at serious peril to themselves. Finally, the paper considers some of the recent developments where corporations have been responding to these challenges and how their actions might be strengthened through greater disclosure and transparency of corporate activities. It also makes recommendations for the pension funds to support further research in creating new measurement standards that further refine the concept of socially responsible investing as a necessary ingredient of long-term corporate survival and growth in the context of a changing economic, environmental and socio-political dynamic. (shrink)

Although legitimacy theory provides strong arguments that environmental, social and governance disclosure and performance can help mitigate firm-specific risks, this relationship has been repeatedly challenged by conceptual arguments, such as ‘transparency fallacy’ or ‘impression management’, and mixed empirical evidence. Therefore, we investigate this relationship in the revelatory case of initial public offerings, which represent the first sale of common stock to the wider public. IPOs are characterised by strong information asymmetry between firm insiders and society, while at the same time (...) suffering from uncertainty in firm legitimacy, culminating in amplified financial risks for both issuers and investors in aftermarket trading. Using data from the United States, we demonstrate that voluntary ESG disclosure reduces idiosyncratic volatility and downside tail risk and higher ESG ratings have lower associated firm-specific volatility and downside tail risk during the first year of trading in the aftermarket. We provide theoretical arguments for the relationships observed, suggesting that companies striving for ESG performance and communicating their efforts signal their compliance with sustainability-related norms, thus acquiring and upholding a societal license to operate. ESG performance and disclosure help companies build their reputation capital with investors after going public. We also report that ESG disclosure is a more consistent proxy for ex-ante uncertainty as an indicator of aftermarket risk, thereby replacing some of the more conventional measures, such as firm age, offered in the existing literature. (shrink)

This paper examines the relationship between corporate social responsibility and financial performance for Islamic banks in the Gulf Cooperation Council region over the period 2000–2014 by generating CSR-related data through disclosure analysis of the annual reports of the sampled banks. The findings of this study indicate that there is a significant positive relationship between CSR disclosure and the financial performance of Islamic banks in the GCC countries. The results also show a positive relationship between CSR disclosure and the future financial (...) performance of GCC Islamic banks, potentially indicating that current CSR activities carried out by Islamic banks in the GCC could have a long-term impact on their financial performance. Furthermore, despite demonstrating a significant positive relationship between the composite measure of the CSR disclosure index and financial performance, the findings show no statistically significant relationship between the individual dimensions of the CSR disclosure index and the current financial performance measure except for ‘mission and vision’ and ‘products and services’. Similarly, the empirical results detect a positive significant association only between ‘mission and vision’ dimension and future financial performance of the examined banks. (shrink)

The authors review three theoretical approaches to strategic corporate social responsibility (CSR), which can be defined as voluntary CSR actions that enhance a firm’s competitiveness and reputation. The end result of such activities should be an improvement in financial and economic performance. Based on an overview of recent empirical evidence, the authors conclude that economic theories of strategic CSR have the greatest potential for advancing this field of inquiry, although theories of strategic leadership should also be incorporated into this perspective. (...) In the remainder of the article, they provide focused summaries of the articles presented in this special issue and outline an agenda for future research on strategic CSR and environmental sustainability. (shrink)

ABSTRACT:This study examines whether the empirical evidence on the relationship between corporate social performance (CSP) and corporate financial performance (CFP) differs depending on the publication outlet in which that evidence appears. This moderator meta-analysis, based on a total sample size of 33,878 observations, suggests that published CSP-CFP findings have been shaped by differences in institutional logics in different subdisciplines of organization studies. In economics, finance, and accounting journals, the average correlations were only about half the magnitude of the findings published (...) in Social Issues in Management, Business Ethics, or Business and Society journals (mean corrected correlation coefficientof.22 vs..49, respectively). Specifically, economists did not find null or negative CSP-CFP correlations, and average findings published in general management outlets (=.41) were closer to Social Issues in Management, Business Ethics, and Business and Society results than to findings reported in economics, finance, and accounting journals. (shrink)

Increasingly, companies implement social and environmental standards as instruments towards corporate social responsibility in supply chains. This is based on the assumption that such standards increase legitimacy among stakeholders. Yet, a wide variety of standards with different requirement levels exist and companies might tend to introduce the ones with low exigencies, using them as a legitimacy front. This strategy jeopardizes the reputation of social and environmental standards among stakeholders and their long-term trust in these instruments of CSR, meaning that all (...) expenses for their implementation are of no avail for the companies. Therefore, this paper highlights which criteria are important for the selection, implementation and improvement in order to achieve a company's aim, but also to strengthen the legitimacy of social and environmental standards. This research is based on conceptual thought and some existing empirical research, comparing four different social and environmental standards, revealing weaknesses and strengths. It exposes the basic conditions for the success of such standards among stakeholders and identifies the need for more empirical data. (shrink)

The contribution of this work is a classification of corporate social action underlying the Social Ratings Data compiled by Kinder Lydenburg Domini Analytics, Inc. We compare extant typologies of corporate social action to the results of our exploratory factor analysis. Our findings indicate four distinct latent constructs that bear resemblance to concepts discussed in prior literature. Akey finding of our research is that positive and negative social action are both empirically and conceptually distinct constructs and should not be combined in (...) future research. Additionally, we recommend that some prior research results be reconsidered to determine whether these newly derived measures might clarify some previous findings. (shrink)

Business Ethics: A European Review, EarlyView.

Prior research suggests that ownership structure is associated to corporate social responsibility (CSR) in developed countries. This article examines whether and how ownership structure affects CSR in emerging markets using Chinese firms' social responsibility ranking. Our empirical evidences show that for non-state-owned firms, corporate ownership dispersion is positively associated to CSR. However, for state-owned firms, whose controlling shareholder is the state, this relation is reversed. We attribute the reversed relationship to political interferences and further test this hypothesis by demonstrating that (...) regional economic development is negatively related to CSR for state-owned firms due to decreased political interference in more developed areas. This study is the first to directly examine the relationship between the dispersion of corporate ownership and CSR in emerging markets, and our results depict that it is important to consider ownership type in assessing CSR in emerging market where state ownership is still prevalent such as China. The results also reveal that firm size, profitability, employee power, leverage, and growth opportunity affect CSR in China. (shrink)

Growing detrimental effects on the bio-physical environment have been responsible for a large number of small firms to adopt a more strategic stance toward exploiting green-related opportunities. This article aims to shed light on how internal company factors help to formulate a green business strategy among small manufacturing firms, and how this, in turn, influences their competitive advantage and performance. Based on data received from 153 small Cypriot manufacturers, we propose and test a conceptual model anchored on the Resource-based View (...) of the firm. The findings underscore the critical role of both organizational resources and capabilities in pursuing a green business strategy. The adoption of this strategy was more evident in the case of firms operating in more harmful, as opposed to less harmful, industries. The implementation of a green business strategy was found to generate a positional competitive advantage, with this association becoming stronger under conditions of high regulatory intensity, high market dynamism, high public concern, and high competitive intensity. It was also revealed that this competitive advantage is conducive to gaining heightened market and financial performance. Our study makes a fivefold contribution: it injects a theoretical perspective into a relatively atheoretic field, underlines the role of organizational resources/capabilities as drivers of eco-friendly initiatives, highlights the often neglected strategic aspects of small firms’ ecological business activities, stresses the contingent role of external forces in moderating the positive impact of small firm green business strategy on competitive advantage, and focuses on the performance implications of the small firm’s engagement in environmental operations. (shrink)

The effect of environmental, social, and governance (ESG) activities on corporate financial performance (CFP) could be linear or nonlinear. However, inconsistent results remain a research gap and thus need to be re-examined. By drawing on stakeholder theory and the neoclassical economics perspective while using the panel data of 155 Chinese listed firms from 2010 to 2020, system generalized method of moments (GMM) estimation results revealed an inverted U-shaped relationship between ESG and CFP. Moreover, by drawing on the institutional-based view, it (...) was determined that government subsidies moderate the inverted U-shaped relationship between ESG and CFP. Specifically, we found that the inverted U-shaped effect of ESG on CFP is weakened when government subsidies are high. This study contributes to the literature by confirming the presence of a curvilinear relationship between ESG and CFP. This study also generates meaningful implications suggesting that the governmental role in ESG is salient in mitigating associated financial costs for firms, thereby ultimately affecting CFP. (shrink)

Although agreement on the positive sign of the relationship between corporate social and financial performance is observed in the literature, the mechanisms that constitute this relationship are not yet well-known. We address this issue by extending management’s stakeholder theory by adding insights from psychology’s prospect decision theory and sociology’s resource dependence theory. Empirically, we analyze an extensive panel dataset, including information on disaggregated measures of social performance for the S&P 500 in the 1997–2002 period. In so doing, we enrich the (...) extant literature by focusing on stakeholder heterogeneity, perceptional framing, and disaggregated measures of corporate social performance. (shrink)

One area of business performance of particular interest to both scholars and practitioners is corporate social responsibility. The notion that organizations should be attentive to the needs of constituents other than shareholders has been investigated and vigorously debated for over two decades. This has provoked an especially rich and diverse literature investigating the relationship between business and society. As a result, researchers have urged the study of the profiles and backgrounds of corporate upper echelons in order to better understand this (...) relationship.There is ample evidence that corporations have in recent years increased the proportion of outside directors on their boards. This has been partly in reaction to increased interest in the corporate social responsiveness of business organizations and suggestions that the board of directors could play a unique role in this area. The expectation on the part of practitioners, researchers, and governmental regulators is that outside directors will advocate greater corporate responsiveness to society''s needs by playing a more active role in overseeing managerial decisions. (shrink)

Corporate environmental performance has become a key focus of business leaders, policy makers, and scholars alike. Today, scholarship on environmental practice increasingly highlights how various aspects of corporate governance can influence environmental performance. However, the prior literature is inconclusive as to whether ownership by insiders (officers and directors) will have positive or negative environmental effects and whether insider voting control or equity control is more salient to environmental outcomes. This article leverages a unique empirical data set of dual-class firms, where (...) insiders have voting rights disproportionate to their equity rights, to shed light on this question. We find that, on average, dual-class firms underperform their single-class peers on environmental measures and that the discrepancy comes from dual-class firms where insiders have more voting control, relative to their equity stake. While small increases in voting control are associated with improved environmental performance, too much (relative to insiders’ equity stake) worsens firms’ environmental performance. Insider equity control alone has no impact on environmental outcomes. Our findings have important implications for agency theory and environmental scholarship by identifying contingencies on the impact of voting and equity-based incentives. This research casts doubt on the idea that providing insiders with significant voting control will aid environmental performance. (shrink)

As more and more multi-national companies expand their operations globally, their responsibilities extend beyond not only the economic motive of profitability but also other social and environmental factors. The objective of this article is to examine the impact of national culture and geographic environment on firms’ corporate social performance (CSP). Empirical tests are based on a global CSP database of companies from 49 countries. Results show that the Hofstede’s cultural dimensions are significantly associated with CSP. In addition, European companies are (...) found to out-perform other regions and countries in CSP. (shrink)

Drawing on the Agency-Stewardship approach, which suggests that manager profile may range from the agent model to the steward model, this article aims to examine how important CEOs are to corporate social responsibility (CSR). Specifically, this exploratory study proposes the existence of a relationship between manager profile and CSR practices and that this relation is mediated by the perceived role of ethics and social responsibility. After applying a mediated regression analysis using survey information collected from 149 CEOs in Spain, results (...) show that those closer to the steward model are more inclined to attach great importance to ethics and social responsibility, and to implement CSR practices in their companies. Results also provide support for the suggested mediating effect. Thus, this article extends research in understanding top managers as drivers for CSR and suggests new ways to deal with this issue empirically. (shrink)

An emergent body of literature examined why some firms apply some environmental initiatives while other firms do not take responsibility for their natural environment? Thus, firm environmental orientation (responsiveness and performance) are linked in the literature to several variables. Unfortunately, the relationship between firm environmental orientation and either available resources or firm size showed mixed results and inconclusive evidence. Therefore, the aim of this paper is to show empirically how available resources and firm size can explain differences in firm environmental (...) responsiveness and environmental performance. Econometric results of environmental responsiveness using the logistic regression model demonstrated that firm size does appear to add something unique in explaining differences in environmental responsiveness while available resource can be safely dropped from the model. However, econometric analysis of environmental performance using the maximum-likelihood random effects model showed strong evidence that available resources and firm size are significant predictors of firm environmental performance. (shrink)

Organizations differ tremendously in the extent to which they engage in socially responsible behavior and the extent to which this behavior is evaluated by stakeholders. This research examines the complex role of organization size as a driver of perceptions of an organization’s socially responsible behavior and its social performance. Using a unique data set of 302 organizations in the higher education industry, we find that the strength of the organization size–organizational social performance relationship is contingent on whether the organization is (...) autonomous from community stakeholders and resource pressures. Our results show that the organization size–OSP relationship is stronger when stakeholders in the organization’s community are more involved in the organization itself and decision-making processes, and that this relationship is weaker when greater financial and human resources are available to the organization. (shrink)

In this study, I examine the hidden connection between corporate philanthropic giving and corporate environmental misconduct. Using survey data from Chinese family-owned firms, I provide strong and consistent evidence to show that corporate environmental misconduct is significantly positively associated with corporate philanthropic giving, suggesting that some Chinese family-owned firms act philanthropically to divert public attention from their environmentally unfriendly behavior. Moreover, the positive association between corporate environmental misconduct and corporate philanthropic giving is less pronounced for politically connected family-owned firms than (...) for their counterparts. The above results are robust to various sensitivity tests. My findings suggest that environmental misconduct dressing may be an additional motivation for corporate philanthropic giving and that different dimensions of corporate social responsibility may be inherently inconsistent in the given institutional setting. (shrink)

The concept of sustainable and responsible (SR) investments expresses that every investment should be based on the SR investor’s code of ethics. To a large extent the allocation of SR investments to more sustainable companies and ethical practices is based on the environmental, social, and corporate governance (ESG) scores provided by rating agencies. However, a thorough investigation of ESG scores is a neglected topic in the literature. This paper uses Thomson Reuters ASSET4 ESG ratings to analyze the influence of firm (...) size, a company’s available resources for providing ESG data, and the availability of a company’s ESG data on the company’s sustainability performance. We find a significant positive correlation between the stated variables, which can be explained by organizational legitimacy. The results raise the question of whether the way the ESG score measures corporate sustainability gives an advantage to larger firms with more resources while not providing SR investors with the information needed to make decisions based on their beliefs. Due to our results, SR investors and scholars should reopen the discussion about: what sustainability rating agencies measure with ESG scores, what exactly needs to be measured, and if the sustainable finance community can reach their self-imposed objectives with this measurement. (shrink)

Sustainability is a crucial issue for many sectors in Malaysia, including the manufacturing sector. Many businesses, especially the chemical manufacturing industry, aim to achieve a sustainable business through the implementation of green practices. Green practices provide guidelines for the employees to simultaneously sustain the organisation in a sustainable manner and carry out the required manufacturing activities. Focusing on that, this study aimed to examine the effects of green practices on corporate sustainability performance through Islamic work ethics, organisation size, and organisation (...) age as moderators. Using the stratified random sampling technique, 344 chemical manufacturing organisations in Malaysia were invited to participate in a survey. Data from 130 completed questionnaire sets were subjected to partial least square (PLS) analysis. The results demonstrated significant effects of green practices on corporate sustainability performance via Islamic work ethics and organisation size. However, organisation age was found to exhibit no moderation effect on the relationship between green practices and corporate sustainability performance. Conclusively, as part of the organisational strategies, the sustainability of chemical manufacturing organisations must involve successful implementation of green practices, Islamic work ethics, and organisation size. This study offered several theoretical and practical contributions on green practices, Islamic work ethics, organisation size, and organisation age, and corporate sustainability performance. Theoretically, this study extended literature on the resource-based view theory, natural-resource-based view theory, and stakeholder theory. Al-Quran and hadith were used to support this study to link the relationships of the variables under study, particularly in the context of chemical manufacturing organisations in Malaysia. Practically, this study was expected to assist chemical manufacturers in selecting the appropriate green practices to achieve corporate sustainability performance and good implementation of Islamic work ethics. Additionally, it is recommended for future research to explore other types of industries in the manufacturing sector given the focus of this study on the chemical manufacturing industry only. (shrink)