Strategic Corporate Social Responsibility Activities and Corporate Governance in Imperfectly Competitive Markets

We investigate the incentives of firms' owners to commit voluntarily to corporate social responsibility (CSR) activities in an oligopolistic market. The socially responsible attributes attached to products are considered as credence goods, with consumers forming expectations about their existence and level. We show that hiring an ‘individually’ socially responsible CEO and delegating to him the CSR effort and market decisions acts as a commitment device for the firm's owners and credibly signals to consumers that the firm will undertake the ‘missioned’ CSR activities. We also find that CSR activities are welfare enhancing for consumers and firms and thus, they should be encouraged. Copyright © 2013 John Wiley & Sons, Ltd.     

Voluntary Assurance of Voluntary CSR Disclosure

We study a firm's decisions to engage in socially responsible activities, voluntarily report on them, and purchase external assurance of the report. In our signaling model, neither firm type nor the level of activity is observed. We show that if voluntary assurance is not too expensive, the firm that engages in more socially responsible activities purchases external assurance and thus “selects” a separating equilibrium. As a result, CSR reports can be used to infer the level of activity and this causes all firms to engage in more socially responsible activity. Further, when voluntary assurance is required to support a separating equilibrium, greater monitoring by social activists increases the chosen quality of voluntary assurance—voluntary assurance and monitoring by social activists are complements, not substitutes.     

A coordination mechanism through value-added profit distribution in a supply chain considering corporate social responsibility

The consumers pay more and more attention to corporate social responsibility (CSR), which has been a new competitiveness for the enterprises. This paper constructs a supply chain consisting of a dominated retailer, a socially responsible supplier and a non-socially responsible supplier (compared with the socially responsible supplier), consider the consumer preference and exploit the game analysis technique to analyze the optimal decisions under the decentralized and concentrated decision, and then design a coordination mechanism based on value-added profit distribution. The results show that compared with the decentralized decision, the retail price and order quantity of two products are lower, the CSR effort degree of socially responsible supplier is higher, and the performance of the whole supply chain is better under the concentrated decision. In addition, the mechanism designed can induce the socially responsible supplier to undertake CSR without damaging its profit, prompt the supply chain members to make the concentrated decisions, and promote the competitiveness of the retailer-dominated supply chain.     

Towards a configuration of socially responsible human resource management policies and practices: findings from an academic consensus

Abstract

The integration of socially responsible behaviour has become a strategic priority for companies in recent years. Academic contributions that merge the fields of corporate social responsibility (CSR) and human resource management (HRM) have been expanding, demonstrating a broad sweep of benefits reflected in greater levels of commitment, motivation, and performance by employees. However, little has been clarified about what academics and business management understand to be a configuration of socially responsible human resource management (SR-HRM) practices. This paper aims to define and provide an initial academic approximation of a set of socially responsible human resource practices. In order to accomplish this objective, a content analysis was conducted based on a review of the literature, CSR reports, and international CSR standards such as the Global Reporting Initiative and ISO 26000. The theoretical findings were supported by a panel of experts who inspected them over three rounds of reviews. The sample for the study was created by consulting the academic literature, strengthened by the input from the panel of experts. The results show an academic consensus of 80%, and support the existence of a valid configuration of 8 socially responsible human resource policies divided into 32 practices.     

An Examination of Corporate Social Responsibility Implementation and Stakeholder Engagement: A Case Study in the Australian Mining Industry

This case study explores the experience of a company in a controversial industry sector and its efforts to act in a socially responsible manner when establishing a presence in a regional market. We examine the management of stakeholder relationships and communication, and identify the challenges associated with implementing corporate social responsibility (CSR) initiatives. Our findings highlight the importance of ongoing and broad stakeholder identification, prioritization and management. This case study demonstrates the key role of commitment from senior management and front‐line employees and the importance of a CSR champion. Commitment must be demonstrated at a local level to facilitate community engagement, feedback and monitoring. Finally, the findings highlight the externality of stakeholder networks and their non‐centric relationship with the company. Thus, a company is not the centre of the stakeholder network; the network has a life of its own, regardless of a company's involvement or non‐involvement. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.     

Strategic Decision Making for the Triple Bottom Line

Corporate social responsibility (CSR) has become a mandate for strategic managers and is often an important element of a differentiation strategy, but there is little research on how managers can make socially responsible decisions within the context of competitive strategy. In this study we explain how data envelopment analysis (DEA) results can be used to determine the trade‐offs inherent in managing the triple bottom line of profits, people and the planet. Once the trade‐offs are well understood, managers can implement sustainable competitive strategies that incorporate socially responsible decisions. Using public data from the electric power generation industry, we demonstrate how DEA can be utilized to determine the trade‐offs between efficiency, costs and pollution reduction, allowing managers to make and champion socially responsible decisions. We discuss the general applicability of our method for making strategic decisions incorporating the triple bottom line. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

Has the CSR engagement of electrical companies had an effect on their performance? A closer look at the environment

Even though electrical companies attain a top ranking in the publication of CSR reports, they are often accused of 'green‐washing' due to their bad environmental reputation. The current economic crisis is testing their real CSR commitment more than ever, especially when this goes beyond its economic consequences. Based on a worldwide sample of electrical companies, we are going to study why companies are being socially responsible. We wish to know if it is due to the impact on the firms' performance or whether there are other motives (legitimation, improving their reputation) that lead companies to carry out these practices. We will also consider if it changes across the kind of CSR action considered. The results show that there is an economic justification beyond the socially responsible behaviour of the electrical companies. Additionally, most kinds of CSR action (community, diversity, corporate governance, product responsibility) are also carried out looking for economic rewards. However, the CSR actions oriented to the environment are mainly motivated by their need to improve their image and reverse their negative impact. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

Mind the Gap: A Journey to Sustainable Supply Chains

Many companies still view Corporate Social Responsibility (CSR) as solely philanthropy rather than addressing their material issues. A few companies that have began to see the strategic advantages of being socially responsible and addressing their social, environmental and economic challenges. Developing an effective strategy can reward companies with reputation enhancement, license to operate, avoiding litigation, recruitment and retention of employees and developing process, product and strategic innovations. One company who has realized the value of investing and integrating CSR into the business model is the apparel retailer Gap Inc. This article will examine the evolution of Gap Inc. and its work developing an effective labor standards assurance program and stakeholder engagement strategy transformed historically adversarial relationships with key stakeholders into collaborative multi-stakeholder partnerships. Particular attention is put towards Gap Inc.’s learnings in the process and how these new insights innovated the company’s CSR strategy over time. An erratum to this article can be found at     

Toward a Theory of Activist-Driven Responsible Innovation: How Activists Pressure Firms to Adopt More Responsible Practices

Accounts of stakeholder influence on corporate social responsibility (CSR), situated in the CSR domain, have recognized that activists mitigate information asymmetries between firms and consumers. However, depictions of activists as information disseminators do not explain how they perform their quintessential role – pressuring resistant firms to engage in responsible innovation that emphasizes the creation of socioenvironmental value. Drawing from social movement theory that identifies claims as the instrument of such pressure, we examine four activist organizations’ use of claims across six campaigns to drive firms to adopt more socially and environmentally responsible practices, a form of responsible innovation. Our core contribution is an empirically grounded theory of activist-driven responsible innovation (ARI) that proposes how activists use claims to drive firms to engage in responsible innovation, as well as how features of the two sides may shape this outcome. Our ARI theory primarily enriches accounts of stakeholder influence on corporate social responsibility in the CSR domain and, in doing so, secondarily enriches accounts of the influence of activists’ claims on firms in the social movement domain. These contributions also speak to the resolution of grand challenges, a core interest of the special issue.     

Sustainable Development and the Financial System: Society's Perceptions About Socially Responsible Investing

The debate surrounding the financial needs of investors and the impact on society of investment is considered to be an important research topic due to the growth of socially responsible financial markets. The main objective of this research is to study society's perception about socially responsible investing (SRI) and to identify investor's preferences regarding environmental, social and governance criteria, their real‐life investment needs and the most relevant sustainable financial products. To examine society's perception of SRI, we conducted a field survey among Spanish investors. The results show that SRI is at an early stage and Spanish investors need more exact information regarding social, environmental, and governance criteria in order to invest in socially responsible companies and products. This paper offers some guidelines that could be used by Spanish institutions, managers and investors and by foreign managers when approaching the Spanish market, in order to promote the growth of socially responsible financial products. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.     

Real effects of social trust on firm performance during COVID-19

This study uses a difference-in-differences estimation method to address potential endogeneity between corporate social responsibility (CSR) and firm performance using a natural experiment of COVID-19, with a cross-country sample of 80,454 firm-quarter observations across 51 countries. We find that high-CSR firms show better performance, raise more debt, and invest more during COVID-19. The positive effect of CSR on firm performance is more pronounced in countries with better governance and among non- International Financial Reporting Standards adopters. Our findings suggest that when trust in firms and markets falls during an economic crisis, the trust established between a firm and its stakeholders via socially responsible behavior pays off.     

The HR role in corporate social responsibility and sustainability: A boundary‐shifting literature review

Although research on human and social sustainability has flourished in the past decade, the role that human resource management departments play (or should play) in facilitating more socially responsible and sustainable organizations remains unclear. In practice, this lack of clarity is due to the multiple features and dimensions of potential HR contributions to corporate social responsibility (CSR) and corporate sustainability (CS), as well as widespread failure to integrate HR and CSR functions. Theoretically, the absence of a framework that articulates the HR role in CSR and CS and the substantial separation between HRM and CSR/CS studies among academics act as a reinforcing mechanism. The present study contributes to the growing research on this topic, presenting a framework and a typology to classify the potential HR roles in CSR and CS and comprehensively reviewing the literature at the intersection of HR with CSR and CS. The results of the review provide a broader perspective on the role HR might play in CSR and CS as well as its impact beyond organizational boundaries.     

Moral management in competitive markets

The intrinsic motivation of a firm’s management for engaging in prosocial behavior is an important determinant of a firm’s social conduct. I provide the first model in which firms run by morally motivated managers engage in corporate social responsibility (CSR) in a competitive setting. Moral management crowds out a competitor’s strategic CSR, increasing profitability and leading shareholders to strategically delegate moral managers, although necessary for socially optimal CSR is that shareholders be morally motivated as well. Shareholders appoint managers that engage in a socially excessive amount of CSR, counter to existing literature, whenever product‐market competition is sufficiently intense.     

Chief executive officer ability,corporate social responsibility,and financial performance: The moderating role of the environment

This paper seeks to explore how chief executive officer (CEO) ability influences the economic impact of corporate social responsibility strategic decisions. Currently, the evidence on the impact of corporate social responsibility on the value of the company is mixed; in this paper, we aim to observe the moderate role played by this particularity of the CEO in the relationship between socially responsible commitment and financial performance. Our results identify that the most able CEOs make investments in social and environmental practices that lead to greater financial performance; in contrast, the less able CEOs can overinvest or underinvest in an opportunistic way for personal benefit at shareholders' expense. In addition, the role that CEO ability plays in social and environmental strategies is particularly pertinent in munificent environments that foment managerial discretion; in these contexts, high managerial ability leads to investment in socially responsible performance, which benefits shareholders by alleviating moral hazard.     

An Empirical Analysis of the Strategic Use of Corporate Social Responsibility

Recent theories of the strategic use of corporate social responsibility (CSR) emphasize the role of information asymmetry and how CSR is likely to be incorporated into a firm's product differentiation strategy. A key empirical implication of these theories is that firms selling experience or credence goods are more likely to be socially responsible than firms selling search goods. Using firm-level data, we report evidence that is consistent with this hypothesis.     

The impact of socially responsible human resource management on employees' organizational citizenship behaviour: the mediating role of organizational identification

Based on insights from social exchange and social identity theories, this paper examines the influence of three dimensions of socially responsible human resource management (SR-HRM), namely legal compliance HRM, employee-oriented HRM and general CSR facilitation HRM, on employees' organizational citizenship behaviour (OCB). Structural equation modelling of dyadic data collected from Chinese employees and their direct supervisors in three phases revealed that whilst organizational identification fully mediated the relationship between employee-oriented HRM and employee OCB, general CSR facilitation HRM had a direct effect on employee OCB. In contrast, legal compliance HRM neither influenced employee OCB directly, nor indirectly through organizational identification. The findings highlight the important but complex role played by SR-HRM in eliciting positive employee work outcomes, and contribute to our knowledge of the mechanisms underlying this relationship.     

Corporate social responsibility and financial performance: event study cases

This paper examines how the U.S. capital market perceives corporate social responsibilities (CSRs) by examining the constituent companies of the Dow Jones Sustainability Index (DJSI) and explores whether the implementation of CSR policies and verification by independent organizations contribute to variances in financial performance . This paper also examines different events (i.e., nominations, inclusions, and awards) in the analysis of how much importance investors place on CSR. The results show that investors do not exhibit significant recognition of U.S. companies included in the DJSI. However, when CSR becomes common practice within a given industry, certification by independent third parties regarding CSR policies conveys actual benefits to corporate performance. In addition, this paper compares degrees of CSR recognition between investors in the United States and investors in Taiwan. This study uses the Awards of Excellence in Corporate Social Responsibility given by Common Wealth Magazine to assess whether investors form different expectations of CSR based on company size. The results indicate that Taiwanese investors are increasingly aware of CSRs and the awards received by mid-sized companies show significant impacts. Changes in share prices for mid-sized companies are slower than for large companies. This paper argues that CSR policies not only enhance reputation but also lead to good financial performance. Companies are encouraged to take an active attitude toward CSR by understanding the relevant costs.     

Factors of internal corporate social responsibility and the effect on organizational commitment

Internal corporate social responsibility (CSR) has become an essential part of organizations' social responsibility. Yet, to date, CSR's internal dimension has been widely neglected in the literature. This paper empirically explores the concept of internal CSR and its relationship to employees' affective and normative organizational commitment. For conceptualizing internal CSR, seven factors are theoretically derived based on social exchange theory. The research model is initially tested through a pre-test consisting of 386 respondents from a German company active in the renewable energy sector. The main survey is carried out in an international pharmaceutical company, resulting in 2081 employee responses. The results reveal that the relevant factors constituting internal CSR are present and that the latter has a strong effect on employees' affective organizational commitment and a comparatively low effect on normative organizational commitment. Furthermore, a mediating role of affective on normative organizational commitment is detected.     

Conformance and Deviance: Company Responses to Institutional Pressures for Corporate Social Responsibility Reporting

This paper analyses how large Danish companies are responding to new governmental regulation which requires them to report on corporate social responsibility (CSR). The paper is based on an analysis of 142 company annual reports required by the new Danish regulation regarding CSR reporting, plus 10 interviews with first‐time reporting companies and six interviews with companies that failed to comply with the new law. It is concluded that coercive pressures from government have an impact on CSR reporting practices. Further, the analysis finds traces of mimetic isomorphism which inspires a homogenisation in CSR reporting practices. Finally, it is argued that non‐conformance with the new regulatory requirements is not solely about conscious resistance but may also be caused by, for example, lack of awareness, resource limitations, misinterpretations, and practical difficulties. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.