Although the same environmental regulations apply to all regions in China, legal enforcement can be different due to local economic development priorities. There is still a lack of knowledge about how regional disparities affect the operating performance results of the implementation of corporate environmental management practices, thus providing little information for foreign companies when they invest and develop their production base in China. To fill this research gap, this paper collects data from the Fortune 500 Chinese firms to investigate the (...) moderating role of regional disparities in affecting the performance results of corporate environmental management efforts based on the institutional theory. The disclosed corporate environmental responsibility practices serve as proxy to represent corporate environmental management practices. Content analysis approach was applied to collect and analyze CER practices published in the corporate reports of Chinese manufacturers. The results show that CER has a positive impact on operating income, while regional disparities influence the relationship between CER and corporate operating income. Specifically, CER and operating income are positively related in Eastern China; on the contrary, they are negatively related in Western China. This paper adds to the body of knowledge about environmental discrepancies in the same emerging economy, and provides insights for systematic consideration in terms of the issues of government environmental regulations and corporate environmental strategies. (shrink)

To explore the motivations underpinning corporate social responsibility (CSR) decisions in China, a country characterized by extensive government intervention, this paper investigates whether building a good relationship with the government is a political incentive that is driving firms to conduct CSR by examining the effects of political connections on the latter. Our results indicate that politically connected firms exhibit better CSR. However, the effect is considerably more significant for firms with existing political relationships. Additionally, findings show that the effect is (...) more prominent in firms for which political connections are more valuable, namely, non‐state‐owned enterprises, small firms, and firms operating in less market‐oriented cities, indicating that CSR can serve as a differentiation strategy to compete against other bidders. Dividing CSR activities into economic, environmental and social aspects, we find that the social‐based activities are more likely to be driven by political motivations. By categorizing CSR and political connections, this paper not only expands the scope of political CSR and renders the generated results that have been mixed together more distinguishable, but also provides a more precise understanding of the fundamental drivers of CSR in China from the perspective of resource exchange. (shrink)

This study examines whether the chief executive officer’s poverty experience has an impact on firms’ corporate social responsibility. We find that firms’ CSR performance increases with CEOs’ poverty experience; specifically, firms with CEOs who experienced early-life poverty are associated with more socially responsible activities and fewer socially irresponsible activities, such as on-the-job consumption, and are more associated with key stakeholder-related rather than community-related CSR. We further find that the positive relationship between the CEO’s poverty experience and CSR strengthens for well-educated (...) or powerful CEOs. Our evidence is consistent with our conjecture that CEOs who experienced early-life poverty have stronger compassion and prosocial psychology. Consequently, these CEOs are more willing to make long-term investments in socially beneficial activities, leading to better CSR performance, which further confirms the altruistic motivation of CSR. (shrink)

The core goal of this study is to empirically investigate whether there is a “world price” of corporate sustainability. This is assessed in the context of standard asset pricing models—in particular, by asking whether a risk premium attaches to a sustainability factor after controlling for the Fama–French factors. Both time-series and cross-sectional tests are formulated and applied. The results show that (1) global Fama–French factors have strong power to explain global equity returns and (2) sustainability investments have no significant impact (...) on global equity returns. The absence of a significant relationship between sustainability and returns implies that large institutional investors are free to implement sustainability mandates without fear of breaching their fiduciary duties from realising negative returns due to incorporating a sustainability investment process. (shrink)

The corporate financial performance (CFP)–corporate social performance (CSP) relationship has been investigated many times over the past few decades, yet the notion of CSP has generally been understood to be a single, monolithic aspect of corporate strategy. This article examines the common CFP–CSP understanding in three distinct ways: (1) by extending the evaluation of CSP as a complex, multistakeholder notion; (2) by analyzing CSP's relationship with the firm's financial performance at a given point in time as a lead (independent) variable (...) in the relationship and as a lag (dependent) variable in the relationship; and (3) for both positive and negative stakeholder relationships. The results indicate that the employee emerges as the stakeholder group most strongly linked to CFP, followed by the consumer stakeholder. The natural environment and the community stakeholder group are minimally associated with CFP. General support is found for a CFP–CSP relationship at a given point in time, with some support found for CSP as a lead (independent) variable. When used as a measure of financial performance, return on assets is more often correlated with CSP than is return on equity. These results and their implications are discussed. (shrink)

This article studies how financial investors respond to firms' corporate social responsibility (CSR) performance in terms of their investing behaviors, and how such behaviors change contingent on an event that provokes their attention and concerns to CSR. Using the melamine contamination incident in China as a natural experiment, it is found that neither the individual investors' nor the institutional investors' behaviors are influenced by firms' CSR performance before the incident. Nevertheless, in the post-event period, institutional investors' behaviors are significantly influenced (...) by firms' CSR performance that exceeds a certain threshold. Furthermore, such an effect diminishes for a better CSR performance. In comparison, the authors do not find any effects of CSR performance on individual investors, either before the event or after the event. Finally, firms' performance and investors' behaviors jointly affect firms' stock returns after the event but not before the event. This article reconciles the mixed findings in the literature on the effect of firms' CSR performance on their financial performance by showing that such an effect exists in a contingent manner. Furthermore, the authors show that a too low or a too high CSR performance could lead to undesirable responses from investors. Therefore, managers should pay attention to optimizing firms' CSR activities. (shrink)

We propose adding a temporal dimension to stakeholder management theory, and assess the implications thereof for firm-level competitive advantage. We argue that a firm’s competitive advantage fundamentally depends on its capacity for stakeholder management related, transformational adaptation over time. Our new temporal stakeholder management approach builds upon insights from both the resource-based view (RBV) in strategic management and institutional theory. Stakeholder agendas and their relative salience to the firm evolve over time, a phenomenon well understood in the literature, and requiring (...) what we call level 1 adaptation. However, the dominant direction of stakeholder pressures can also change, namely, from supporting resource heterogeneity at the firm level to fostering industry homogeneity, and vice versa. When dominant stakeholder pressures shift from supporting heterogeneity towards stimulating homogeneity in industry, the firm must engage in level 2 or transformational adaptation. Stakeholders typically provide valuable resources to the firm in an early stage . Without these resources, which foster heterogeneity (in line with RBV thinking), the firm would not exist. At a later stage , stakeholders also contribute to inter-firm homogeneity via isomorphism pressures (in line with institutional theory thinking). Adding a temporal dimension to stakeholder management theory has far reaching implications for this theory’s practical relevance to senior level management in business. (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 the same environmental regulations apply to all regions in China, legal enforcement can be different due to local economic development priorities. There is still a lack of knowledge about how regional disparities affect the operating performance results of the implementation of corporate environmental management practices, thus providing little information for foreign companies when they invest and develop their production base in China. To fill this research gap, this paper collects data from the Fortune 500 Chinese firms to investigate the (...) moderating role of regional disparities in affecting the performance results of corporate environmental management efforts based on the institutional theory. The disclosed corporate environmental responsibility practices serve as proxy to represent corporate environmental management practices. Content analysis approach was applied to collect and analyze CER practices published in the corporate reports of Chinese manufacturers. The results show that CER has a positive impact on operating income, while regional disparities influence the relationship between CER and corporate operating income. Specifically, CER and operating income are positively related in Eastern China; on the contrary, they are negatively related in Western China. This paper adds to the body of knowledge about environmental discrepancies in the same emerging economy, and provides insights for systematic consideration in terms of the issues of government environmental regulations and corporate environmental strategies. (shrink)

In the literature, CSR’s roles on firm performance are found to be positive, negative, or neutral. This inconclusive pattern suggests there may be a more complicated mechanism at work than the traditional focus on simple linear associations. We propose and test an inverted-U-shaped relationship between CSR and shareholder value, the fundamental measure of firm performance. Further, we incorporate a critical firm attribute, marketing capability, to moderate the nonlinear link between CSR and shareholder value, thereby exploring a previous understudied area involving (...) the interplay between CSR and market-side competency. The results show that an initial increase in CSR engagement positively drives firm shareholder value, but the effect turns negative when a firm pursues excessive CSR engagement. Notably, however, this negative association does not apply to firms that have a high marketing capability. Our research generates meaningful implications for a stakeholder view of CSR, strategic management, firm valuation, resource-based theories, and business practices. (shrink)

Prior research suggests that participating in corporate social responsibility (CSR) activities can lead to higher future productivity. However, the empirical evidence is still scarce. The purpose of this study is to examine the relationship between CSR and future firm productivity in the U.S. chemical industry. Specifically, this study examines the relationship between CSR in year t and firm productivity in year (t + 1), (t + 2), and (t + 3). We use Data Envelopment Analysis, a non-parametric method, to measure (...) firm productivity. Results from the regression analysis support a significantly positive relationship between CSR and future firm productivity, suggesting that CSR can lead to higher productivity in the chemical industry. The findings add to the validity of the proposition in prior research. (shrink)

Sustainable development (SD) – that is, “Development that meets the needs of current generations without compromising the ability of future generations to meet their needs and aspirations” – can be pursued in many different ways. Stakeholder relations management (SRM) is one such way, through which corporations are confronted with economic, social, and environmental stakeholder claims. This paper lays the groundwork for an empirical analysis of the question of how far SD can be achieved through SRM. It describes the so-called SD–SRM (...) perspective as a distinctive research approach and shows how it relates to the wider body of stakeholder theory. Next, the concept of SD is operationalized for the microeconomic level with reference to important documents. Based on the ensuing SD framework, it is shown how SD and SRM relate to each other, and how the two concepts relate to other popular concepts such as Corporate Sustainability and Corporate Social Responsibility. The paper concludes that the significance of societal guiding models such as SD and of management approaches like CSR is strongly dependent on their footing in society. (shrink)

Since the 1970s, many Anglo-American studies have investigated the theme of corporate social responsibility (CSR) and its costs and benefits. Most studies have tried to test, largely in samples of multiple industries, the relationship between corporate social performance (CSP) and corporate financial performance (CFP). These analyses, however, have produced conflicting results and any attempt to give a generalized and coherent conclusion has proved inadequate. This article examines the ways CSP can be proxied and investigates the possible relationship between CSP (measured (...) by ethical rating) and CFP (measured by market and accounting ratios) in the banking sector using correlation methodology. It emerges that there is no statistically significant link between CSP and CFP. (shrink)

Tokenistic short-term economic success is not good indicia of long-term success. Sustainable business success requires sustained existence in a corporation's political, economic, social, technological, legal and environmental contexts. Far beyond the traditional economic focus, consumers, governments and public interest groups alike increasingly expect the business sector to take on more social and environmental responsibilities. Corporate social responsibility (CSR) is the model in which economic, social and environmental responsibilities are fulfilled simultaneously. However, there is insufficient empirical evidence that demonstrates genuine widespread (...) adoption of CSR in practice, and its underlying reasons. Though research in CSR has been rapidly growing, its commercial reality and implications need to be further improved if it is to inspire corporations to voluntarily adopt CSR. In the literature, Carroll's four-dimensional (economic, legal, ethical and discretionary) CSR framework offers a theoretical basis for developing an empirically based model to explain why and how profit-motivated managers take up CSR voluntarily. Our study has developed a structural equation model to identify the key factors and their interactions that influence economically motivated managers to take on voluntary CSR, and validate Carroll's four-dimensional construct. The results support Carroll's four-dimensional CSR framework, with the exception of the link pertaining to the relationship between economic and discretionary/voluntary responsibility. This characterises the economic reality that financial market-driven economic responsibility does not automatically translate into social responsibility. Nevertheless, the empirical results demonstrate that corporations can be led to engage in more voluntary CSR activities to achieve social good when appropriate legal and ethical controls are in place. (shrink)

Despite rich theoretical development, empirical research on stakeholder management is scant, save its relationship with financial performance. Recent research shows significant intrafirm variability in stakeholder management across time. This study seeks to explain why firms would experience significant changes in stakeholder management. Adapting Wood’s framework to discuss three principles of stakeholder management, the authors identify antecedents of change at the institutional, organizational, and executive levels. Pressures for legitimacy at the institutional level suggest that firm age and size, along with industry (...) shifts in stakeholder management, will increase the likelihood of changes in stakeholder management for the focal firm. The authors posit that organizational risk and performance will also affect the likelihood of change, as will managerial discretion, ownership, and succession. The authors test their predictions using a longitudinal sample of stakeholder management data and discuss the implications of the findings for research and practice. (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)

This study complements previous empirical research on the business case for corporate social responsibility (CSR) by employing hitherto unused data on corporate social performance (CSP) and proposing statistical analyses to account for bi-directional causality between social and financial performance. By allowing for differences in the importance of single components of CSP between industries, the data in this study overcome certain limitations of the databases used in earlier studies. The econometrics employed offer a rigorous way of addressing the problem of endogeneity (...) due to simultaneous causality. Although the study’s results provide no evidence that there is a generic or universal business case for CSR, they indicate that there is a strong link between single stakeholder-related issues of CSR and financial performance. However, the analysis does not establish causality within these relationships. (shrink)

Previous empirical research has found mixed results for the impact of corporate social responsibility (CSR) investments on corporate financial performance (CFP). This paper contributes to the literature by exploring in a two stage investor decision-making model the relationship between a firm’s innovation effort, CSR, and financial performance. We simultaneously examine the impact of CSR on both accounting-based (financial health) and market-based (Tobin’s Q) financial performance measures. From a sample of top corporate citizens, we find that: (1) a firm’s social responsibility (...) commitment (CSR) contributes to its financial performance; (2) after controlling for investment in innovation activities, CSR continues to have a positive impact on a firm’s financial performance; (3) the customer dimension of CSR has a positive effect on both CFP measures, whereas the employee dimension indicates a significant impact only on financial heath; and (4) the community relation dimension of CSR only affects the market-based CFP measure of firms with high innovation intensity. (shrink)

Corporate Social Responsibility (CSR) programs are increasingly popular corporate marketing strategies. This paper argues that CSR programs can fall along a continuum between two endpoints: Institutionalized programs and Promotional programs. This classification is based on an exploratory study examining the variance of four responses from the consumer stakeholder group toward these two categories of CSR. Institutionalized CSR programs are argued to be most effective at increasing customer loyalty, enhancing attitude toward the company, and decreasing consumer skepticism. Promotional CSR programs are (...) argued to be more effective at generating purchase intent. Ethical and managerial implications of these preliminary findings are discussed. (shrink)

The business case for social responsibility is one of the most widely studied topics in the business and society literature that focuses on large firms. This attention is understandable because large firms have an obligation to shareholders who, as commonly assumed, seek to maximize returns on their investments, in turn, pressing corporate managers to show that firms’ expenditures in social engagement would pay off. Small firms, on the other hand, rarely face such pressures, yet the BCSR logic is increasingly applied (...) to small firms as well. Our primary objective in this paper is to examine whether and how much do small firm owners’ perceptions of BCSR affect the firm’s social engagement. In finding a fine-grained answer to those questions, we consider BCSR as a two-dimensional construct consisting of tangible and intangible benefits, and also integrate the BCSR perspective with the slack resource perspective to offer a motivation-capacity lens to examine firm’s social engagement. Drawing on a multi-industry sample of 478 small firms in the US, we find that while small firm owners’ perceptions about potential tangible benefits of social engagement are not related to the firm’s social engagement, perceptions about potential intangible are positively related. Firm's financial performance is also positively related to its social engagement, but there is no interaction between potential benefits and financial performance. This study contributes to an improved understanding about small firms’ social engagement, which still remains an understudied area. Our results are in line with studies which argue that firms’ social engagement is a response to institutional factors. (shrink)

The current study examines the micro-linguistic details of Twitter responses to the whistleblower-initiated publication of the Panama Papers. The leaked documents contained the micro-details of tax avoidance, tax evasion, and wealth accumulation schemes used by business elites, politicians, and government bureaucrats. The public release of the documents on April 4, 2016 resulted in a groundswell of Twitter and other social media activity throughout the world, including 161,036 Spanish-language tweets in the subsequent 5-month period. The findings illustrate that the responses were (...) polyvocal, consisting a collection of overlapping speech genres with varied thematic topics and linguistic styles, as well as differing degrees of calls for action and varying amounts of illocutionary force. The analysis also illustrates that, while the illocutionary force of tweets is somewhat associated with the adoption of a prosaic and vernacular ethical stance as well as with demands for action, these types of voicing behaviors were not present in the majority of the tweets. These results suggest that, while social media platforms are a popular site for collective forms of voicing activities, it is less certain that these collective stakeholder voices necessarily result in forceful accountability demands that spill out of the communication medium and thus serve as an impulse for positive social change. (shrink)

This study examines the 3.5 m+ English-language original tweets that occurred during the 2011 Occupy Wall Street protests. Starting from previous research, we analyze how character terms such as “the banker,” “politician,” “the teaparty,” “GOP,” and “the corporation,” as well as concept terms such as “ethics,” “fairness,” “morals,” “justice,” and “democracy” were used by individual participants to respond to the Occupy Wall Street events. These character and concept terms not only allowed individuals to take an ethical stance but also accumulated (...) into a citizen’s narrative about social accountability. The analysis illustrates how the centrality of the different concepts and characters in the conversation changed over time as well as how the concepts ethics, morals, fairness, justice, and democracy participated within the conversation, helping to amplify the ethical attributes of different characters. These findings contribute to our understanding of how demands for social accountability are articulated and change over time. (shrink)

Existing research on the financial implications of corporate social responsibility (CSR) for firms has predominantly focused on positive aspects of CSR, overlooking that firms also undertake actions and initiatives that qualify as negative CSR. Moreover, studies in this area have not investigated how both positive and negative CSR affect the financial risk of firms. As such, in this research, the authors provide a framework linking both positive and negative CSR to idiosyncratic risk of firms. While investigating these relationships, the authors (...) also analyze the moderating role of financial leverage of firms. Overall, analysis of secondary information for firms from multiple industries over the years 2000–2009 shows that CSR has a significant effect on the idiosyncratic risk of firms, with positive CSR reducing risk and negative CSR increasing it. Results also show that the reduction in risk from positive CSR is not guaranteed, with firms having high levels of financial leverage witnessing lower idiosyncratic risk reduction. (shrink)

This study examines whether corporate social responsibility (CSR) towards primary stakeholders influences the financial and the non-financial performance (NFP) of Indian firms. Perceptual data on CSR and NFP were collected from 150 senior-level Indian managers including CEOs through questionnaire survey.Hard data on financial performance (FP) of the companies were obtained from secondary sources. A questionnaire for assessing CSR was developed with respect to six stakeholder groups - employees, customers, investors, community, natural environment, and suppliers. A composite measure of CSR was (...) obtained by aggregating the six dimensions. Findings indicate that stock-listed firms show responsible business practices and better FP than the non-stock-listed firms. Controlling confounding effects of stock-listing, ownership, and firm size, a favorable perception of managers towards CSR is found to be associated with increase in FP and NFP of firms.Such findings hold good when CSR is assessed for the six stakeholder groups in aggregate and for each stakeholder group in segregate. Findings suggest that responsible business practices towards primary stakeholders can be profitable and beneficial to Indian firms. (shrink)

The concept of the ‘stakeholder’ has become central to business, yet there is no common consensus as to what the concept of a stakeholder means, with hundreds of different published definitions suggested. Whilst every concept is liable to be contested, for stakeholder research, this is problematic for both theoretical and empirical analysis. This article explores whether this lack of consensus is conceptual confusion, which would benefit from further debate to try to reach a higher degree of elucidation, or whether the (...) stakeholder concept is essentially contested, rendering the quest to seek a singular definition unfeasible. The theory of essentially contested concepts was proposed by Gallie (Proc Aristot Soc 56:167–198, 1956 ). The seven criteria Gallie prescribes for evaluating essentially contested concepts are applied to the stakeholder concept. The analysis suggests that this concept is an essentially contested concept and this explains the degree of definitional variation. (shrink)

This article reviews empirical research of corporate social performance using Kinder, Lydenberg, Domini social ratings data through 2011. The review synthesizes 100 empirical studies, noting consistencies and inconsistencies among studies examining similar constructs. Notable consistencies were that, although accounting measures of financial performance were a positive outcome of CSP, the same was not often true of stock returns. Also, demographics of top management teams increased CSP strengths, but did not reduce concerns, whereas organizational decentralization reduced CSP concerns. Notable inconsistencies were (...) that CEO demographics were not as often related to CSP as were TMT demographics, indicating that managerial discretion may be an important mitigating factor shaping managerial effects on CSP. Also, although CSP for some organizations seemed influenced by institutional pressures, other organizations appeared to be less influenced, perhaps suggesting that some organizations are more able than others to resist institutional pressures. Future research should attempt to probe observed consistencies and inconsistencies, and to test the boundaries of observed relationships, toward a disciplined program of middle-range theory development. (shrink)

What critical characteristics do firms have that determine the scale and scope of corporate social responsibility activities they undertake? This paper examines two disparate predictors of corporate social performance. First, using the lens of the resource-based view, we examine the role of alliance network centrality on corporate social performance. We find that centrality enhances corporate social performance. Second, we investigate how board composition affects corporate social performance. Specifically, drawing on stakeholder theory, we find that the percentage of female directors predicts (...) greater corporate social performance. In addition, we look at the influence of outside directors on this relationship. Our findings show that the presence of more outside directors positively moderates the relationship between female directors and corporate social performance. (shrink)

This study provides empirical evidence on how corporate sustainability performance (CSP), as proxied by membership of the Dow Jones sustainability index, is reflected in the market value of equity. Using a theoretical framework combining institutional perspectives, stake-holder theory, and resource-based perspectives, we develop a set of hypotheses that relate the market value of equity to CSP. For a sample of North American firms, our preliminary results show that CSP has significant explanatory power for stock prices over the traditional summary accounting (...) measures such as earnings and book value of equity. However, further analyses suggest that we should not focus on corporate sustainability itself. Our findings suggest that what investors really do is to penalize large profitable firms with low level of CSP. Firms with incentives to develop a high level of CSP not engaging on such strategy are, thus, penalized by the market. (shrink)

In this study, we examine whether corporate environmental responsibility plays a role in enhancing operating performance in the financial services sector. Because achieving success with CER investing is often a long-term process, we maintain that by effectively investing in CER, executives can decrease their firms’ environmental costs, thereby enhancing operating performance. By employing a unique environmental dataset covering 29 countries, we find that the reducing of environmental costs takes at least 1 or 2 years before enhancing return on assets. We (...) also find that reducing environmental costs has a more immediate and substantial effect on the performance of financial services firms in well-developed financial markets than in less-developed financial markets. These results are economically and statistically significant and robust even after alleviating endogeneity and using an additional performance measure. We interpret our empirical results as supporting the social impact and reputation-building hypothesis. Our findings also suggest that policy makers dealing with corporate sustainability management should pursue an environment-centered industry policy not only at the manufacturing sector but also at the financial services sector, as firms in both sectors with lower environmental costs perform better. (shrink)

This paper addresses the possibilities to introduce the stakeholder model in the firm, especially the possibility to give property or decision rights to stakeholders. This paper argues that it is not practical to give full property rights to more than one group of stakeholders. Decision rights to employees and creditors are already in place in some countries, but the possibility to introduce them more generally to other stakeholder groups depends very much on the governance and ownership structure of the firm (...) and the legal environment. The future of the stakeholder model in a globalised economy is also analysed. (shrink)

This article studies the idea of Corporate Social Performance (CSP) from a critical perspective using empirical elements derived from analysis of year 2000 ARESE data. ARESE is the French first mover social rating agency providing quantified data about the Social Performance of French companies. The paper starts out by reviewing leading CSP models and discussing problems inherent to the measurement of this construct before going on to present and analyse ARESE data - whose suitability for existing models will be discussed.

This article investigates stakeholder expectations associated with corporate environmental disclosure. Several articles have studied the effect that stakeholder pressure has on environmental disclosing strategies. In this article, we extend previous research to an examination of the influence of external, internal, and intermediary stakeholder groups or constituencies in turn to clarify the demands of multiple stakeholders as to firms' disclosure of sufficient and adequate environmental information. The sample comprised Taiwanese firms listed on the Taiwan Stock Exchange. Our results show that the (...) level of environmental disclosure is significantly affected by stakeholder groups' demands. External stake-holder groups, such as the government, debtors, and consumers, exert a strong influence over management intentions regarding the extent of environmental disclosure. Internal stakeholder groups, such as shareholders and employees, impose additional pressures on firms to disclose environmental information. As for intermediate stakeholder groups, environmental protection organizations, and accounting firms, these can greatly influence managerial choices regarding their environmental disclosure strategies. (shrink)

Recent perspectives on community investments suggest that they are opportunities for firms to create value for shareholders and other stakeholders. However, many corporate managers are still influenced by a widely held belief that such investments erode profits and are therefore unjustifiable from an agency perspective. In this paper, we refine and test theory regarding countervailing forces that influence community-based firm performance. We hypothesize that high levels of available slack will be associated with higher community-based performance, but that this relationship will (...) be moderated by three important governance variables: board independence, investment fund ownership, and CEO ownership. We find support for our hypotheses in longitudinal study of a large sample of U.S. corporations. (shrink)

In this paper, we review the literature on moderators and mediators in the corporate sustainability –corporate financial performance relationship. We provide some clarity on what has been learned so far by taking a contingency perspective on this much-researched relationship. Overall, we find that this research has made some progress in the past. However, we also find this research stream to be characterized by three major shortcomings, namely low degree of novelty, missing investment in theory building, and a lack of research (...) design and measurement options. To address these shortcomings, we suggest avenues for future research. Beyond that we also argue for a stronger emphasis on the strategic perspective of CS. In particular, we propose future research to take a step back and aim for an integration of the CS–CFP relationship into the strategic management literature. (shrink)

Based on a survey and content analysis of 462 peer-reviewed academic articles over the period 1990–2014, this article reviews theories related to the external drivers of corporate social responsibility and the internal drivers of CSR that have been utilized to explain CSR. The article discusses the main tenets of the principal theoretical perspectives and their application in CSR research. Going beyond previous reviews that have largely failed to investigate theory applications in CSR scholarship, this article stresses the importance of theory-driven (...) explanations of CSR and the complementarity of different theories. The article demonstrates that the current mainstream theorizing of CSR is dominated by theories related to the external drivers of CSR and is less developed with regard to the internal dynamics. The article outlines several productive avenues for future research: the need for multi-theory studies and more research at multiple levels of analysis, particularly at the individual level of analysis. It suggests that CSR scholarship can benefit from combining theoretical insights from a range of established theoretical lenses such as institutional theory and RBV, and can gain new insights from theoretical lenses such as Austrian economics and micro-level psychological theories. (shrink)

Adopting an instrumental approach for stakeholder management, we focus on two primary stakeholder groups to investigate the relationship between employee treatment and loan contracts with banks. We find strong evidence that fair employee treatment reduces loan price and limits the use of financial covenants. In addition, we document that relationship bank lenders price both the levels and changes in the quality of employee treatment, whereas first-time bank lenders only care about the levels of fair employee treatment. Taking a contingency perspective, (...) we find that industry competition and firm asset intangibility moderate the relationship between good human resource management and bank loan costs. The cost reduction effect of fair employee treatment is stronger for firms operating in a more competitive industry and having higher levels of intangible assets. (shrink)

China is a country that has undertaken a great transformation since the late 1970' s, and among these changes, has seen a massive growth in the advertising industry with the influx of foreign advertisers, and the development of regional and global media, such as satellite television and the Internet. This has resulted in the Chinese people of all ages having a greater opportunity of exposure to different types of advertising, including the advertising of potentially controversial products, which could clash with (...) traditional Chinese values. Using a stakeholder theory approach, this study analyzes the responses of 630 Chinese respondents to discover who is offended by controversial advertisements and determine ways potentially offensive advertising messages can be reduced, thereby assisting marketers in being more socially responsible in their advertising messages. (shrink)

As corporate managers interact with nonshareholder stakeholders, potential tradeoffs emerge and questions arise as to how these interactions impact shareholder value. We argue that this shareholder—stakeholder debate is an important issue within the overall corporate governance and corporate policy domain and examine one such stakeholder group - employees - by studying labor-friendly corporate practices. We find that announcements of labor-friendly policies are associated with positive abnormal stock returns. Labor-friendly firms also outperform otherwise similar firms, both in terms of long-run stock (...) market returns and operating results. In addition, we find that the probability and benefits of labor-friendliness increase with the demand for highly skilled labor. Our analysis of excess executive compensation suggests that top management derives no pecuniary benefits from labor-friendly practices. We interpret our results as consistent with a genuine concern for employees translating into higher productivity and profitability, which in turn facilitate value creation. It appears that the benefits of labor-friendly practices significantly outweigh the costs and that what is good for employees is good for shareholders. (shrink)

Theoretical evidence suggests that corporate social irresponsibility (CSI) should produce long-lasting negative influences on firm performance. Yet, little empirical evidence exists in the literature to support this time-embedded research frame. This research was conducted by collecting a large set of firm data and by employing a series of vector autoregressive models to map out the longitudinal dynamic relationships between CSI and firm value under high versus low levels of two external factors, environmental dynamism and competition intensity, and one internal factor, (...) firm capability. The results show that CSI’s negative influences endure in scenarios such as high dynamism, high competition intensity, and low capability, but it has only a short-term impact on low-dynamism markets and does not produce significant effects on firm value under low-competition or high-capability conditions. These findings yield useful implications for CSI, resource-based theory, and environment theories as well as for managerial effectiveness of coping with social negativities. (shrink)

This study investigates the pattern of institutional shareholding in the U.K. and its relationship with socially responsible behavior by companies within a sample of over 500 UK companies. We estimate a set of ownership models that distinguish between long- and short-term investors and their largest components and which incorporate both aggregated and disaggregated measures of corporate social performance (CSP). The results suggest that long-term institutional investment is positively related to CSP providing further support for earlier studies by Johnson and Greening (...) (1999, Academy of Management Journal 42, 564–576) and Graves and Waddock (1994, Academy of Management Journal 37, 1034–1046). Disaggregation of CSP into its constituent components suggests that the pattern of institutional investment is also related to the form which CSP takes. Investigation of the impact of investment screens on the selection of stocks suggests that long-term institutional investors select primarily through exclusion, rejecting those firms which have the worst CSP. (shrink)

This paper's purpose is to assess how management's perceptions regarding certain aspects of environmental reporting relate to the firm's actual reporting strategy. Toward that end, we propose a model where a firm's environmental disclosure is conditional upon executive assessments of corporate concerns. The study relies on a survey that was sent to environmental management executives from European and North American multinational firms enquiring about the determinants of corporate environmental disclosure. Responses from these executives were then contrasted with their firms' actual (...) environmental reporting practices, which was measured using a comprehensive multi-criteria grid. Results show that there is a relationship between environmental managers' attitudes toward various stakeholder groups and how those managers respond to the stakeholders via the decision to disclose and the actual disclosures made. Our model provides a perspective as to how a firm responds to the numerous stakeholders to whom it must be accountable. This accountability in turn relates to how the company communicates its actions to society in order to achieve or maintain its social legitimacy. (shrink)

The purpose of this article is to discuss and provide an alternative, less materialist–individualist approach to interpret the four assumptions of generally accepted accounting principles: economic entity, unit measure, periodic reporting, and going concern. The article draws from and builds on arguments first developed by Weber and Aristotle to demonstrate how a materialist–individualist moral point of view influences the conventional interpretation of the four basic assumptions for generally accepted accounting principles. We then propose an ideal-type conceptual framework upon which to (...) critique mainstream accounting theory and to develop alternative accounting theory that balances multiple forms of well-being (including financial, but also social, physical, spiritual, and ecological well-being) for multiple stakeholders (including owners, employees, customers, suppliers, competitors, neighbors, future generations, and so forth). (shrink)

Business and Society Review, Volume 127, Issue 2, Page 493-529, Summer 2022.

This study aims to overview the existing literature, knowledge framework, and intellectual structure mapping in the field of corporate environmental performance (CEP) and corporate financial performance (CFP) by employing a bibliometric analysis approach to selected 311 papers sourced from the Scopus database between 1994 and 2022. It presents the publication growth, influential sources, productive authors, and collaboration index of countries using Biblioshiny software. Stringent regulatory regime and stakeholders' pressure followed by a growing trend of publication motivated us to comprehend the (...) evolving facets of the relationship using co‐citation analysis followed by a systematic literature review using coupling analysis which identified five research themes as CEP–CFP relationships—facets, strategies and dimensions, and methodological choices during the initial phase of 1994–2014; and green innovation and corporate sustainability practices, environmental disclosure and environmental responsibility, and green development behavior and practices during 2015–2022. From the insights congregated from research themes, the study discusses prominent developments and provides future research directions to further enrich the field of CEP and CFP. Our findings provide various global regulatory frameworks, government, policymakers, and firm managers the need to explore the dynamic factors while formulating the strategic environmental policy and how it contributes to the financial performance of the firms. (shrink)

A variety of stakeholders including investors, corporate managers, customers, suppliers, employees, researchers, and government policy makers have long been interested in the relationship between the financial performance of a corporation and its commitment to business ethics. As a subject of research, the relations between business ethics and corporate valuation has yet to be thoroughly quantified and investigated. This article is an effort to amend this inadequacy by demonstrating a statistically significant association between ethical commitment and corporate valuation measures. Consistent with (...) anecdotal evidence, we have found a significant association between the ethical commitment of Korean companies and their valuation on the Korean stock market. However, the result reveals that the association between ethical commitment and financial performance is not significantly supported. (shrink)

Two fundamental business ethics issues that repeatedly surface in the academic literature relate to business's role in the development of public policy [Suarez, S. L.: 2000, Does Business Learn? (The University of Michigan Press, Ann Arbor, MI); Roberts, R. W. and D. D. Bobek: 2004, Accounting, Organizations and Society 29(5-6), 565-590] and its role in responsibly managing the natural environment [Newton, L.: 2005, Business Ethics and the Natural Environment (Blackwell Publishing, Oxford)]. When studied together, researchers often examine if, and how, (...) corporations influence environmental policy decisions. Drawing from literatures on corporate political activity, corporate social and environmental performance, and corporate environmental disclosure, we develop and empirically examine two research questions concerning the relations between corporate political expenditures, environmental performance, and environmental disclosure. The questions are: (1) Do corporations that are poorer environmental performers spend more on political activities than their better-performing counterparts? (2) Is there an association between corporations' spending on political activities and the extent of their financial report environmental disclosures? We investigated these questions through analyses of data we gathered on a sample consisting of 119 U.S. environmentally sensitive firms for the 2001-2002 election cycle. After controlling for firm size and specific industry effects, our tests reveal a significant, inverse relationship between firm environmental performance and political spending. This is consistent with the notion that U.S. firms with relatively poorer environmental performance records engage more intensely in corporate political activities as part of their overall strategic management of their relationship with the state. In addition, a significant and positive association between the amount of political spending and the extent of environmental disclosure suggests that environmental disclosure and political spending are both proactive, complementary tactics to strategically manage public policy pressure. If corporations' strategies are intentionally designed to unreasonably limit their environmental responsibilities or to misrepresent firm environmental performance, then we argue that these activities reflect a significant lapse in ethical conduct. (shrink)