Sources of variation in linking corporate
social responsibility and financial
performance
Ali Quazi and Alice Richardson
Abstract
Purpose – This purpose of this paper is to identify the possible sources of variation of results in prior
studies linking corporate social responsibility (CSR) with corporate financial performance (CFP).
Design/methodology/approach – A meta-analysis was performed on 51 prior studies included in
Orlitzky et al. in order to ensure compatibility with previous results. The meta-analysis is based on
sub-groups of papers in five-year time intervals focusing on sample size and methodology employed as
the sources of variation concerning the nexus between CSR and CFP.
Findings – The major finding of the study is that sample size and methodology are significant sources of
variation in measuring the link between CSR and CFP.
Research limitations/implications – The findings are likely to help develop a structural framework
towards broadening and deepening our understanding of the debate regarding the sources of variation
in the measurement of CSR and CFP link. This research is limited to papers published up to 1999 as
included in Orlitzky et al. Future research can update the findings by using data beyond 1999.
Originality/value – This paper can be considered an advance on the previous research as it
contributes to broadening our understanding of the possible source of causes of variation in results of
studies linking CSR with CFP.
Keywords Corporate social responsibility, Financial performance, Meta analysis, Profitability,
Sub-group analysis, Company performance
Paper type Research paper
1. Introduction
Research into corporate social responsibility (CSR) has generated considerable interest
amongst academic and practitioners over the past decades. The issue has gained renewed
momentum in the post global financial crisis era. For the purpose of this paper CSR is
defined as those responsibilities that corporations undertake to satisfy organisational goals
as well as societal needs in a balanced way that serves the interests of both businesses and
the community. Various facets of CSR have been researched in the past. These include, for
example, managerial attitudes towards CSR (Quazi, 2003), theoretical aspects of CSR and
ethics (Hunt and Vitell, 1984), cross-cultural facets of CSR (Quazi and O’Brien, 2000), CSR
and quality of life (Rugimbana et al., 2008), and CSR and competitive advantage (Porter and
Krammer, 2005). However, one particular issue concerning the relationship between CSR
and the financial performance of firms has generated enormous interest amongst
academics, policy makers and practitioners (Ullmann, 1985; Marom, 2006). The issue is
that businesses and practitioners would like to see a business case to justify their
commitment to CSR. Numerous empirical studies aimed at finding a possible answer to the
question have produced mixed results (Peloza and Papania, 2008), most of which are
neither straightforward nor conclusive (Griffin and Mahon, 1997; Marom, 2006). In the
theoretical vein, two contrasting models have been suggested. One is rooted in the positive
impact of corporate social performance (CSP) on corporate financial performance (CFP),
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SOCIAL RESPONSIBILITY JOURNAL
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VOL. 8 NO. 2 2012, pp. 242-256, Q Emerald Group Publishing Limited, ISSN 1747-1117 DOI 10.1108/17471111211234860
Ali Quazi is an Associate
Professor in the Faculty of
Business and Government,
University of Canberra,
Canberra, Australia. Alice
Richardson is an Assistant
Professor in the Faculty of
Information Sciences and
Engineering, University of
Canberra, Canberra,
Australia.