:quality(90))
“There remains a protracted debate about the legitimacy and value of corporate responses to CSR concerns. There are different views of the role of the firm in society and disagreement as to whether wealth maximization should be the sole goal of a corporation”, Tsoutsoura writes in her 2004 paper. Using a dataset that includes most of the S&P 500 firms and covers the years 1996-2000, Tsoutsoura explores and tests the sign of the relationship between corporate social responsibility and financial performance. “The sign may imply negative, neutral or positive linkages.” Tsoutsoura concludes, “Results indicate that the sign of the relationship is positive, which supports those studies that found positive linkages in the past (Waddock and Graves, 1997[2]; McGuire, et al., 1988,1990[3]; Aupperle, et al., 1985[4]). Different explanations for this result depend on the direction of the causality between CSR and profitability.”
References
Margolis, Joshua D., and James P. Walsh. “Misery Loves Companies: Rethinking Social Initiatives by Business.” Administrative Science Quarterly 48, no. 2 (2003): 268–305.
Waddock, Sandra A., and Samuel B. Graves. “The Corporate Social Performance-financial Performance Link.” Strategic Management Journal 18, no. 4 (April 1997): 303–319.
McGuire, Jean B., Alison Sundgren, and Thomas Schneeweis. “Corporate Social Responsibility and Firm Financial Performance.” The Academy of Management Journal 31, no. 4 (December 1, 1988): 854–872.
Aupperle, Kenneth E., Archie B. Carroll, and John D. Hatfield. “An Empirical Examination of the Relationship Between Corporate Social Responsibility and Profitability.” The Academy of Management Journal 28, no. 2 (June 1, 1985): 446–463.
This article may be reproduced according to our terms of use with attribution (and link, if online) to www.tias.edu. To be cited as: “CSR and financial performance positively linked”, Margarita Tsoutsoura, www.tias.edu, July 11, 2012.