Should pharmaceutical companies engage in corporate social responsibility?

Abstract

Purpose

The purpose of this paper is to investigate whether corporate social responsibility (CSR) really adds value to corporate financial performance (CFP) in the pharmaceutical industry. Most pharmaceutical companies currently practice CSR by taking a “triple bottom line” approach of environmental, social, and economic strategies to manage their businesses and produce an overall positive impact.

Design/methodology/approach

A survey was developed based on professional experience, Carroll’s construct, the study’s hypotheses, and industry studies. The survey, composed of 45 questions using a seven-point Likert scale, was conducted among pharmaceutical professionals to evaluate whether CSR affects performance. Responses totaling 140, including 20 companies, were coded, taking into account the respondent’s corporate position and firm size.

Findings

Survey respondents strongly agreed that CSR adds value to CFP and should be viewed as a long-term investment. CSR programs should be implemented regardless of company size. CSR is effective because it invests in stakeholder management, such as with customers, government, investors, and activists, creating positive relationships which improve reputation and profitability.

Research limitations/implications

This perception study shows the need for further quantitative analysis of CSR and CFP metrics specific to the pharmaceutical industry.

Practical implications

CSR programs should be implemented regardless of company size, and sheer size does not dictate whether CSR programs can be successful. This paper also sheds light on potential managerial implications that originate from these findings that may help pharmaceutical companies manage their scarce resources more effectively.

Social implications

In today’s competitive economic environment, where increasingly stakeholders including investors scrutinize pharmaceutical firms’ environmental and social performance, CSR is a crucial strategy. The findings can help corporate managers make strategic CSR decisions to optimize benefits for their organization.

Originality/value

While numerous studies have addressed the link between CSR and corporate performance across industries, definitive studies have not examined the pharmaceutical industry.

Citation

Min, M., Desmoulins-Lebeault, F. and Esposito, M. (2017), "Should pharmaceutical companies engage in corporate social responsibility?", Journal of Management Development, Vol. 36 No. 1, pp. 58-70. https://doi.org/10.1108/JMD-09-2014-0103