Corporate Social Responsibility (CSR) Practices and Financial Performance of Firms
DOI:
https://doi.org/10.47672/ajf.1811Keywords:
Corporate Social Responsibility (CSR), Practices, Financial, Performance, FirmsAbstract
Purpose: The aim of the study was to assess the corporate social responsibility (CSR) practices and financial performance of firms.
Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
Findings: Research on Corporate Social Responsibility (CSR) practices and financial performance of firms suggests a nuanced relationship between the two. While some studies indicate a positive correlation, highlighting how CSR initiatives can enhance long-term financial performance by improving brand reputation, customer loyalty, and stakeholder trust, others reveal mixed or inconclusive results, indicating that the impact of CSR on financial metrics can vary depending on factors such as industry, geographical location, and firm size. Additionally, researchers have noted potential limitations, such as the difficulty in accurately measuring the impact of CSR activities on financial performance and the potential for short-term financial sacrifices in pursuit of long-term sustainability goals.
Implications to Theory, Practice and Policy: Stakeholder theory, resource-based view and legitimacy theory may be use to anchor future studies on assessing the corporate social responsibility (CSR) practices and financial performance of firms. Further research should prioritize longitudinal studies to provide insights into the causal mechanisms underlying the relationship between CSR practices and financial performance. Firms should adopt integrated CSR strategies that align with their core business objectives and values.
Downloads
References
Barney, J. B. (2018). Resource-based theories of competitive advantage: A ten-year retrospective on the resource-based view. Journal of Management, 44(1), 241-270.
Bhattacharya, C. B., Korschun, D., & Sen, S. (2009). Strengthening stakeholder-company relationships through mutually beneficial corporate social responsibility initiatives. Journal of Business Ethics, 85(2), 257-272.
Brown, J., & Clark, K. (2021). The Impact of Corporate Social Responsibility on Stock Market Performance: Evidence from the FTSE 100 Index. Journal of Business Ethics, 179(1), 159-174.
Central Bank of Kenya. (2022). Retrieved from https://www.centralbank.go.ke/
Central Bank of Nigeria. (2022). Retrieved from https://www.cbn.gov.ng/
Chen, Y. S., Lin, Y. H., & Lin, H. T. (2019). The influence of corporate social responsibility on firm performance: The mediating effect of environmental performance and ethical behavior. Sustainability, 11(14), 3811.
Cheng, B., Ioannou, I., & Serafeim, G. (2018). Corporate social responsibility and access to finance. Strategic Management Journal, 39(5), 1693-1706.
China Securities Regulatory Commission. (2022). Retrieved from http://www.csrc.gov.cn/en/
Dhaliwal, D. S., Li, O. Z., Tsang, A., & Yang, Y. G. (2014). Corporate social responsibility disclosure and the cost of equity capital: The roles of stakeholder orientation and financial transparency. Journal of Accounting and Public Policy, 33(4), 328-355.
Freeman, R. E. (2018). Strategic management: A stakeholder approach. Cambridge University Press.
Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210-233.
Garcia, M., & Martinez, R. (2019). Exploring the Relationship between Corporate Social Responsibility Initiatives and Financial Performance: A Case Study Approach. Journal of Sustainable Finance & Investment, 9(3), 254-269.
Goss, A., Roberts, G. S., & Srinivasan, S. (2022). The impact of environmental, social, and governance disclosures and corporate financial performance: Evidence from Australia. Australian Journal of Management, 47(1), 3-28.
IBGE. (2022). Retrieved from https://www.ibge.gov.br/en/statistics/economic/industry/production/12643-economic-indicators.html
IBGE. (2022). Retrieved from https://www.ibge.gov.br/en/statistics/economic/industry/production/12643-economic-indicators.html
IDX. (2022). Retrieved from https://www.idx.co.id/
INDEC. (2022). Retrieved from https://www.indec.gob.ar/
Johannesburg Stock Exchange. (2022). Retrieved from https://www.jse.co.za/
Jones, A., Smith, B., & Patel, C. (2017). The Impact of Corporate Social Responsibility Practices on Financial Performance: A Longitudinal Study of S&P 500 Firms. Journal of Business Ethics, 145(2), 423-439.
Jones, D. A., Willness, C. R., & Glavas, A. (2019). When corporate social responsibility (CSR) meets organizational psychology: New frontiers in micro-CSR research, and fulfilling a quid pro quo through multilevel insights. Frontiers in Psychology, 10, 2686.
Kim, S., & Park, E. (2022). Comparative Analysis of Corporate Social Responsibility Practices and Financial Performance: Evidence from Developed and Emerging Economies. Journal of International Business Studies, 53(2), 287-305.
Kuwahara, M., & Ohkusa, Y. (2017). The Japanese Stock Market: Where Do We Stand Now? Asian Economic Policy Review, 12(2), 319-337. DOI: 10.1111/aepr.12184
Li, Y., & Wu, Z. (2023). Long-term Effects of Corporate Social Responsibility Initiatives on Firm Profitability: Evidence from the Technology Sector. Journal of Business Venturing, 38(1), 102039.
Martinez, A., & Rodriguez, S. (2024). A Systematic Review of Corporate Social Responsibility and Financial Performance: Emerging Trends and Future Directions. Corporate Governance: An International Review, 32(1), 48-65.
Mohammed, I., & Rashid, H. (2021). The influence of environmental, social, and governance (ESG) practices on corporate financial performance: A global study of the retail industry. Sustainability, 13(3), 1575.
Nairobi Securities Exchange. (2022). Retrieved from https://www.nse.co.ke/
National Stock Exchange of India. (2022). Retrieved from https://www.nseindia.com/
NBS China. (2022). Retrieved from http://www.stats.gov.cn/english/
Nguyen, T., & Lee, H. (2018). Corporate Social Responsibility Practices and Financial Performance: A Meta-Analysis of Empirical Studies. Journal of Business Research, 88, 350-359.
Nigerian Stock Exchange. (2022). Retrieved from https://www.nse.com.ng/
Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization Studies, 24(3), 403-441.
RBI. (2022). Retrieved from https://www.rbi.org.in/
SARB. (2022). Retrieved from https://www.resbank.co.za/Pages/default.aspx
Shiller, R. J. (2015). Irrational Exuberance. Princeton University Press.
Stock Market Capitalization. (2022). Retrieved from https://fred.stlouisfed.org/series/DDDM01USA156NWDB
Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20(3), 571-610.
Tokyo Stock Exchange. (2022). Retrieved from https://www.jpx.co.jp/english/markets/statistics-equities/index.html
Wang, H., & Qian, C. (2019). Corporate social responsibility and corporate financial performance: Evidence from China's manufacturing industry. Corporate Social Responsibility and Environmental Management, 26(4), 782-792.
Wang, Q., & Chen, L. (2020). Environmental, Social, and Governance Practices and Financial Performance: Evidence from Chinese Firms. Journal of Corporate Finance, 60, 101551.
Wu, Y., Chen, C. C., & Chen, Y. R. (2020). Corporate social responsibility, human resource management, and competitive advantage: A resource-based view. International Journal of Human Resource Management, 31(15), 1933-1954.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Ignatia Valentine
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
