Corporate social responsibility and economic performance in the top British companies: are they linked?

Corporate social responsibility and economic performance in the top British companies: are they... This paper investigates the relationship between corporate social responsibility (CSR) and the economic performance of corporations. It first examines the theories that suggest a relationship between the two. To test these theories, measures of CSR performance and disclosure developed by the New Consumer Group were analysed against the (past, concurrent and subsequent to CSR performance period) economic performance of 56 large UK companies. Economic performance included: financial (return on capital employed, return on equity and gross profit to sales ratios); and capital market performance (systematic risk and excess market valuation). The results supported the conclusion that (past, concurrent and subsequent) economic performance is related to both CSR performance and disclosure. However, the relationships were weak and lacked an overall consistency. For example, past economic performance was found to partly explain variations in firms’ involvement in philanthropic activities. CSR disclosure was affected (positively) by both a firm’s CSR performance and its concurrent financial performance. Involvement in environmental protection activities was found to be negatively correlated with subsequent financial performance. Whereas a firm’s policies regarding women’s positions seem to be more rewarding in terms of positive capital market responses (performance) in the subsequent period. Donations to the Conservative Party were found not to be related to companies’ (past, concurrent or subsequent) financial and/or capital performance. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png European Business Review Emerald Publishing

Corporate social responsibility and economic performance in the top British companies: are they linked?

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Publisher
Emerald Publishing
Copyright
Copyright © 1998 MCB UP Ltd. All rights reserved.
ISSN
0955-534X
DOI
10.1108/09555349810195529
Publisher site
See Article on Publisher Site

Abstract

This paper investigates the relationship between corporate social responsibility (CSR) and the economic performance of corporations. It first examines the theories that suggest a relationship between the two. To test these theories, measures of CSR performance and disclosure developed by the New Consumer Group were analysed against the (past, concurrent and subsequent to CSR performance period) economic performance of 56 large UK companies. Economic performance included: financial (return on capital employed, return on equity and gross profit to sales ratios); and capital market performance (systematic risk and excess market valuation). The results supported the conclusion that (past, concurrent and subsequent) economic performance is related to both CSR performance and disclosure. However, the relationships were weak and lacked an overall consistency. For example, past economic performance was found to partly explain variations in firms’ involvement in philanthropic activities. CSR disclosure was affected (positively) by both a firm’s CSR performance and its concurrent financial performance. Involvement in environmental protection activities was found to be negatively correlated with subsequent financial performance. Whereas a firm’s policies regarding women’s positions seem to be more rewarding in terms of positive capital market responses (performance) in the subsequent period. Donations to the Conservative Party were found not to be related to companies’ (past, concurrent or subsequent) financial and/or capital performance.

Journal

European Business ReviewEmerald Publishing

Published: Feb 1, 1998

Keywords: Performance; Social responsibility

References

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