Strategic CSR for airlines: does materiality matter?

Abstract

Purpose

Considering the increasing significance of corporate social responsibility (CSR) in the corporate world and the mixed findings of the financial implication of CSR investment in the financial economics literature, the purpose of this study is to examine the relationship between (im)material CSR investment and firm performance and the moderating role of airline type and economic conditions based on the stakeholder theory and institutional pressure argument.

Design/methodology/approach

This study uses a two-way random-effects model by firm and year along with using clustering coefficient estimation by firm to control for the possibility of inflated standard errors because of autocorrelation across years within a given firm.

Findings

This study finds that both material and immaterial CSR initiatives do not directly influence firm performance, but airline type and economic conditions do moderate the relationship. In specific, the study found that airlines’ investments in material CSR initiatives show an indifferent effect on firm performance between low-cost and full-service carriers and also between non-recessionary and recessionary periods. On the other hand, investments in immaterial CSR initiatives present different impacts on firm performance between low-cost and full-service carriers and between non-recessionary and recessionary periods. In details, the effect is more negative for low-cost carriers and recessionary periods than full-service carriers and non-recessionary periods.

Originality/value

This is the first empirical investigation of materiality for the airline industry in relation to firm performance using the industry-specific Materiality Map developed by the Sustainability Accounting Standards Board. Further, this study incorporates two additional moderators (airline type and economic conditions) to enhance the understanding of the proposed relationships between (im)material CSR and firm performance.

Citation

Lee, S., Kim, B. and Ham, S. (2018), "Strategic CSR for airlines: does materiality matter?", International Journal of Contemporary Hospitality Management, Vol. 30 No. 12, pp. 3592-3608. https://doi.org/10.1108/IJCHM-10-2017-0697