(855) 4-ESSAYS

Type a new keyword(s) and press Enter to search

Corporate Social Responsibility and Financial Performance

             In recent decades, companies are paying more and more attention to develop and adopt Corporate Social Responsibility (CSR) initiatives. -i.e. the voluntary integration of social and environmental concerns in their companies' operations and in their interaction with stakeholders (European Commission, 2001). The purpose for the companies to invest heavily in launching CSR initiatives can be various based on different operational conditions. To achieve a better financial performance is one of the major purpose from the companies. However, The extant research so far has failed to give a definitive answer (Margolis, Elfenbein and Walsh, 2007) on how CSR can influence companies' value creation in a positive way. The debate remains among companies' managerial executives, shareholder, financial institutions and other third party stakeholders. Early interpretations holds a pessimistic view on the relationship between CSR and corporate financial performance (CFP). In more recent years, scholars refute this argument by deciphering the limits of previous research, and provide views on how CSR correlates with CFP optimistically (Ioannis Ioannou, George Serafeim, 2014). .
             To further explain the issue, it is firstly necessary to be aware of the previously prevalent theory on agency logic, which lead to the argument of negative relationship between CSR and CFP. Other reasons such as sample selection bias can be supplementary to the generation of this point of view. Secondly, to illustrate the contrary argument, the evolvement of the theories over recent decades will be introduced. Finally, empirical study on the aspects of CSR's positive impact to CFP will be developed to help companies better achieve their financial goal by adopting effective CSR initiatives.
             Agency Logic.
             From early 1990s to post 2000, companies started to realize investing in CSR initiatives could be a way to achieve better operational performance and financial result.

Essays Related to Corporate Social Responsibility and Financial Performance

Got a writing question? Ask our professional writer!
Submit My Question