This research note analyzes the relationship between indicators of corporate social and financial performance within a comprehensive theoretical framework. The results, based on data for 67 large U.S. corporations for 1982-1992, reveal no significant negative social-financial performance relationships and strong positive correlations in both contemporaneous and lead-lag formulations.

It is generally assumed that common stock investors are exclusively interested in earning the highest level of future cash-flow for a given amount of risk. This view suggests that investors select a well-diversified portfolio of securities to achieve this goal. Accordingly, it is often assumed that investors are unwilling to pay a premium for corporate behavior which can be described as socially-responsible.Recently, this view has been under increasing attack. According to the Social Investment Forum, at least 538 institutional investors now (...) allocate funds using social screens or criteria. In addition, Alice Tepper Marlin, president of the New York-based Council on Economic Priorities has recently estimated that about $600 billion of invested funds are socially-screened (1992). (shrink)

This paper contrasts the normative foundations of the stakeholder and shareholder theories of the firm. It demonstrates how the shareholder theory of the firm appears to have at least as much normative support as stakeholder theory and suggests that a way forward may be for a variant of pure shareholder theory to emerge.

This article extends earlier research concerning the relationship between corporate social performance and corporate financial performance, with particular emphasis on methodological inconsistencies. Research in this area is extended in three critical areas. First, it focuses on a particular industry, the chemical industry. Second, it uses multiple sources of data-two that are perceptual based (KLD Index and Fortune reputation survey), and two that are performance based (TRI database and corporate philanthropy) in order to triangulate toward assessing corporate social performance. Third, it (...) uses the five most commonly applied accounting measures in the corporate social performance and corporate financial performance (CSP/CFP) literature to assess corporate financial performance. The results indicate that the a priori use of measures may actually predetermine the CSP/CFP relationship outcome. Surprisingly, Fortune and KLD indices very closely track one another, whereas TRI and corporate philanthropy differentiate between high and low social performers and do not correlate to the firm's financial performance. (shrink)

Most work to date seeking to link CSR level and performance has treated CSR as a strictly firm level variable. It is the argument of this author that any investigation of CSR that fails to incorporate industry level realities, particularly of an economic nature, will be fatally deficient. Hypotheses are proposed, building off the work of James Post, the gravamen of which is that CSR level depends significantly on industrial and economic status. The hypotheses are tested against a currently popular (...) database and receive moderate support. (shrink)

Abstract:The aim of this paper is to create a framework which can serve as a guide to the understanding of organizational ethicality. This is done by linking ethical and organizational theory. Organizational ethicality is about “being” as well as “doing”: relevant ethical theory is therefore both substantive (agent-centred, concerned with the “good”) as well as procedural (act-centred, concerned with the “right” in the sense of the moral or just thing to do). The ethical theories of Alasdair MacIntyre and Jurgen Habermas, (...) as representatives of these two traditions, are mapped onto a framework which characterises organizations as assemblages of practices supported by a climate embedded within an organizational culture. Organizational practice is articulated and given meaning within a discourse of “sensemaking” in which narrative creates space-time links between people and events. Within that same communicative climate practices are evaluated and decisions taken. This theoretical framework is specified in such a way as to highlight the parallels with the ethical theories of MacIntyre, who uses notions of practice, tradition and the narrative unity of moral experience to create an ethical theory of the “good,” and Habermas, who spells out the process of moral argumentation by which consensus on the “just” or “right” is reached. Some possibilities for further research are suggested at the end of the paper. (shrink)