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)

Rowley and Berman (2000) are tackling the right questions in their article. Three critical questions, in essence, are asked: What is corporate social performance (CSP)? What does it mean (i.e., CSP measures)? And, where does the future lie with CSP? In answering these questions, they are creating a CSP research agenda for the 21st Century. While agreeing, to a large extent, with their new set of questions, this paper questions their rationale for what is currently wrong with CSP and focuses (...) on extending future research directions. Specifically, this paper suggests that existing research in related disciplines can help accelerate our understanding of CSP. Marketing (i.e., customer-organization relations) and human relations (i.e., employee-organization relations) literatures, for example, already critically examine the conditions under which various organizational practices, policies, and procedures flourish. These boundary spanning functions provide newinsights that can lead to a broader, richer, and more systematic understanding of the complex CSP construct. (shrink)

Over the past four decades, stakeholder research has united a chorus of voices from different disciplines using different terminology for different audiences all related to a seemingly similar topic: those that affect and are affected by business. By juxtaposing a comprehensive review of the early years of stakeholder research against more recent stakeholder research, we identify areas of common convergence as well as emergent scholarship. We develop an organizing framework consisting of three stakeholder-related themes: who or what is a stakeholder; (...) mechanisms underlying stakeholder relationships; and outcomes-oriented stakeholder research. Future research opportunities include: simultaneously examining multiple stakeholders at multiple levels; multiplier effects along the value chain and across geographies; and net impacts. We conclude by identifying how stakeholder research can “move the needle” on important business issues such as: income inequality and CEO pay; human rights and building community inclusion; disease alleviation; and food security in firms’ continuous quest to create value. (shrink)

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)

This study contributes to understanding stakeholder engagement strategies by examining competitive responses alongside sociopolitical implications after a major exogenous shock—the 1998 Master Settlement Agreement (MSA) between the “Big Four” U.S. tobacco firms and 46 state attorneys general. We compare the different stakeholder engagement strategies of the two remaining U.S. tobacco manufacturers, Philip Morris (PM) and R. J. Reynolds (RJR), between 1998 and 2017. Implications for stakeholder theory from a relatively rare natural experiment highlight the importance of simultaneously managing multiple stakeholders, (...) inclusive of domestic and international sociopolitical and value chain stakeholders over time, for sustained value creation. Although PM and RJR initially pursued heterogeneous strategies by re-configuring relationships with relevant stakeholders, each firm’s growth prospects for the first decade post-MSA were exacerbated by various stakeholders through withholding and selective engagement strategies. Implications for how multiple, simultaneous stakeholder relationships can serve as important resources for achieving or limiting sustained growth are discussed. (shrink)

Facing an increasing number and variety of issues with social salience, firms must determine how to engage with issues that likely have a significant impact on them. Integrating issues management and salience theories, the authors find that firms engage with socially contested issues—where there is a high degree of societal disagreement—in a different manner from issues that have social consensus, or high agreement. Examining social issue resolutions filed by shareholders from 1997 to 2009, the study finds that socially contested issues, (...) as well as those issues with social consensus, are both likely to result in engagement by the firm. For social issues with consensus, a firm is more likely to opt for a low level of shareholder engagement whereas resolutions regarding contested issues lead to engaging shareholders at a higher level. These findings shed new light on the IM and issue salience literature streams that have suggested firms will react differently to these types of issues, even while they remain largely untested. Finally, firms become less engaged with perennial issues over time. rather than more, providing new guidance to researchers, shareholder activists, and firms alike. To the authors’ knowledge, such fined-grained insight into expected levels of firm engagement with social issue salience has not been put forth previously. (shrink)

Abstract‘Monkey see, monkey do’ is an old saying referring to imitating another's actions without necessarily understanding the underlying motivations or being concerned about consequences, such as propagating harmful behaviors. This study examines the likelihood of firms imitating and proliferating others’ unethical, irresponsible practices thereby exacerbating harmful effects among even more firms; in doing so, irresponsible contagions can rapidly spread more broadly, negatively affecting even more consumers. Building upon rivalry- and information-based imitation theories, we examine if harmful behaviors of others, in (...) combination with misbehavior of referent firms, influences the likelihood of a firm to engage in irresponsible consumer-related practices. After examining 25,824 firm-year observations over 12 years, our findings suggest that imitation of harmful product-related behavior occurs; with size an important factor related to proliferation of harmful behaviors. Testing the model against a holdout sample finds 94% accuracy. Implications for scholars, managers, and policy makers are explored. (shrink)

Issues-driven shareholder activism suggests that specific issue characteristics brought by shareholders, a group to which firms are obligated to respond, interact in a way that affects the materiality of the issue in the eyes of the modern corporation. Relevant issue characteristics include: issue type, social significance, and issue life cycle stage.

Instrumental CSR perspectives suggest that selective investments in prosocial, voluntary behaviors are largely profit-driven, whereas institutional theory emphasizes legitimacy-seeking as a significant mechanism for explicit CSR disclosure. We test both profit-seeking and legitimacy-seeking mechanisms, derived from empirical findings of Western-oriented firms, in a unique setting to understand voluntary CSR disclosure in an Eastern context: South Korea. By examining voluntary disclosure of the 500 largest South Korean firms’ social contributions from 2006 to 2012, a time period purposefully encompassing the global financial (...) crisis, we highlight the limitations of corporate social responsibility theorizing when East meets West. Our findings suggest profitability is not significantly related to voluntary disclosure as predicted by Western, instrumental CSR literature. Overall, we found support for legitimacy-seeking mechanisms as the likelihood of disclosure increased for publicly listed firms and those employing a larger number of workers for all years between 2006 and 2012. Further, firms affiliated with chaebols are more likely to disclose prosocial behaviors prior to, and after, the GFC compared to firms that are not affiliated with chaebols regardless of profitability further suggesting that legitimacy-seeking mechanisms may underlie CSR reporting in Korean firms. (shrink)

Based on Davenport’s (1998) social audit, we examined six firms’ corporate social responsibility activities within the beer industry in an effort to identify and compare these firms’ industry social standing. The results have implications in our understanding and assessment of corporate citizenship practices both within and across business industry groups.