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Book part
Publication date: 14 May 2018

Edeltraud Guenther, Timo Busch, Jan Endrikat, Thomas Guenther and Marc Orlitzky

The purpose of this literature review is to reorient empirical research on the causal links between corporate ecological sustainability (CES) and corporate financial performance…

Abstract

The purpose of this literature review is to reorient empirical research on the causal links between corporate ecological sustainability (CES) and corporate financial performance (CFP). Toward this end, we summarize the findings of four meta-analyses (conducted between 2012 and 2016), which indicate that there is, on average, a small positive association between CES and CFP. In addition, these empirical associations seem to be contingent on the firm’s strategic approach with regard to ecological sustainability (e.g., proactive vs reactive approach) and on the operationalization of both constructs. We conclude that future research may benefit from an even more explicit, analytic shift to the circumstances under which it pays for firms to go green. The main research limitations we point out are model misspecifications, endogeneity, and problems in the measurement of both CES and CFP.

Article
Publication date: 11 January 2023

Shuang Wang, Hui Yu and Miaomiao Wei

In the context of global economic downturn and intense competition, firms are increasingly resorting to supply chains to acquire capital support and achieve sustainability. This…

Abstract

Purpose

In the context of global economic downturn and intense competition, firms are increasingly resorting to supply chains to acquire capital support and achieve sustainability. This study aims to investigate the effect of supply chain finance (SCF) on corporate sustainability performance (CSP) and identifies SCF-related recipes for CSP.

Design/methodology/approach

Based on a sample of 1,038 firms that disclose CSP – namely, corporate financial performance (CFP) and environmental, social and governance performance (ESGP) – the authors use a quasi-replication method consisting of empirical analysis with fuzzy-set qualitative comparative analysis (fsQCA) to investigate SCF’s effects on CSP.

Findings

The authors find that SCF has a “doing well by doing good” effect on CSP. CFP can promote the positive effect of SCF and ESGP while ESGP’s positive effect on SCF and CFP is nonsignificant. In addition, heterogeneity tests show that SCF’s promoting effect on CSP is affected by high-low CFP and ESGP. The fsQCA results verify the empirical findings and reveal five SCF-related recipes for achieving high CSP.

Research limitations/implications

This study has the following two limitations. First, we do not consider how SCF affects CSP in different industries. There is a need to investigate whether industry heterogeneity changes SCF’s effects on CSP, especially in prominent industries, such as the energy industry, with its high susceptibility to ESGP, and the manufacturing industry, with its extensive application of SCF. It will be important to investigate these industries to better understand SCF’s role in sustainability. Second, we study the secondary supply chain – namely, core firm–suppliers and core firm–customers. The authors do not consider financial institutions (e.g. banks and guarantee institutions). SCF modes that include the participation of financial institutions, such as factoring financing and reverse factoring financing, cater more to the capital needs of diversified firms. In the future, studying specific industries that have made significant contributions to the application of SCF along with others that are more sensitive to environmental governance could better highlight the effect of SCF on sustainability and help supply chain managers understand the application value of SCF. Future research could also extend SCF participants into multiple roles to explore separate effects. Tracking financing demanders, fund providers and credit guarantors could capture SCF characteristics more comprehensively. Methodologically, it will be challenging to accurately measure SCF networks in terms of quantification. In future work, this could be performed with the help of artificial intelligence.

Practical implications

First, our findings indicate that SCF has a “doing well by doing good” effect on core firms. SCF can not only overcome the capital shortage of SMEs but also provide significant benefits to core firms. Second, our findings provide SCF-related recipes to help firms fulfil ESGP obligations without sacrificing CFP under the pressure to “do good.” The authors provide valuable insights and diverse recommendations to help supply chain managers, marketing executives and researchers adjust supply chain management strategies. Third, this work can guide executives in various fields to adopt SCF to achieve sustainability as a risk-mitigation strategy by means of marketing.

Originality/value

This study identifies better, more straightforward SCF-related recipes for CSP (consisting of CFP and ESGP) using a quasi-replication analysis that improves upon conventional methods such as regression analysis, which have limited power. The authors provide valuable insights and diverse recommendations to help managers pursue sustainable development. The findings point to practical guidelines and feasible solutions that can support well-founded operational strategic and management decision-making, which can enhance a firm’s competitiveness under uncertainty and a sluggish economy.

Details

Journal of Business & Industrial Marketing, vol. 38 no. 11
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 1 December 2022

Xian Zheng, Jiawei Deng, Xiangnan Song, Meng Ye and Lan Luo

Corporate social responsibility (CSR) and innovation are the two main approaches firms utilize to promote sustainable development. However, as yet, scholars have reached no…

Abstract

Purpose

Corporate social responsibility (CSR) and innovation are the two main approaches firms utilize to promote sustainable development. However, as yet, scholars have reached no consensus regarding their precise impact on construction firm performance (CFP), hindering efforts to implement effective sustainable development strategies that improve CFP. In view that a simple linear relationship may not be sufficient to capture their precise pattern, this study aims to unveil the nonlinear impact of CSR and innovation on CFP, especially when construction firms take up a distinct competitive position.

Design/methodology/approach

This study first proposed four hypotheses to establish a new theoretical model by incorporating CSR, innovation, CFP and construction firms' competitive position (CFCP). Then the model was tested by using 292 annual observations collected from 75 construction firms in China. A multiple regression model analysis was carried out to analyze the survey data and validate the hypotheses.

Findings

The results reveal that both CSR and innovation have a U-shaped impact on the price-to-book ratio of a construction firm, a specific CFP measure. CFCP negatively moderates the U-shaped relationship between CSR and CFP, but positively moderates the U-shaped relationship between innovation and CFP.

Originality/value

This study goes beyond a simple linear view, instead of unveiling the nonlinear U-shaped effects of CSR and innovation on CFP that deepen the understanding of their complex relationships in the construction industry and makes construction firms aware that CSR and innovation can only improve performance if they reach a certain level. The moderating role of CFCP provides important implications for construction firms seeking to adopt appropriate competitive strategies related to social responsibility and innovation that both promote CFP and achieve sustainable development.

Details

Engineering, Construction and Architectural Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0969-9988

Keywords

Article
Publication date: 11 July 2019

Woon Leong Lin, Jo Ann Ho, Siew Imm Ng and Chin Lee

The purpose of this study is to investigate the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP), as the findings on the…

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Abstract

Purpose

The purpose of this study is to investigate the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP), as the findings on the relationship have been inconsistent and have led to calls to further examine this relationship. However, instead of investigating the connection between CSR and CFP, academics have stated that a contingency viewpoint must be used for uncovering the context and conditions which catalyse the relationship between both constructs.

Design/methodology/approach

This study acquired the CSR data from 100 companies listed in Fortune’s most admired US companies between 2007 and 2016. These data were used to investigate the CSR–CFP link with the help of the dynamic panel data system, which is the generalised method of moments (GMM) estimator.

Findings

The results indicate that CSR and CFP have a neutral relationship which characterises the effect between CFP and CSR. However, this study found that financial slack positively affected the CSR–CFP relationship, implying that companies will only benefit from CSR activities if they have excess financial resources.

Originality/value

This study offers a very distinctive perspective regarding the CSR–CFP link according to the financial slack perspective.

Details

Social Responsibility Journal, vol. 16 no. 7
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 8 April 2019

Sean Yim, Young Han Bae, Hyunwoo Lim and JaeHwan Kwon

The authors use signaling theory in proposing a conceptual framework that simultaneously incorporates both the mediating effects of corporate reputation (CR) and the moderating…

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Abstract

Purpose

The authors use signaling theory in proposing a conceptual framework that simultaneously incorporates both the mediating effects of corporate reputation (CR) and the moderating effects of marketing capability (MC) into the corporate social responsibility (CSR)–corporate financial performance (CFP) link and theorize a single moderated mediation model. The empirical results of the research confirm the theorized moderated mediation model among the four variables, where a firm’s CR plays a mediating role in the relationship between CSR and CFP, and a firm’s MC moderates the effect of CSR on CR exclusively in the first link. Both theoretical and practical implications of the moderated mediation model are discussed.

Design/methodology/approach

This study uses structural equation model estimations with the relevant secondary datasets collected from publicly available databases.

Findings

The empirical results confirm the theorized moderated mediation model in the conceptual framework that uses signaling theory. Specifically, the results identify the moderating role of MC in only the CSR- CR link (but not in the CR and CFP link), such that CR plays a moderated mediation role in the CSR–CFP link.

Research limitations/implications

The current research is not without limitations. These limitations mainly stem from data sets used in the empirical analyses. More details are discussed in the limitations and future research directions section.

Practical implications

The empirical findings suggest that a firm needs to develop a consolidated CSR-marketing program, simultaneously satisfying stakeholders’ needs for both the firm’s socially desirable business practices and value-creating marketing programs to increase its CR, which will, in turn, lead to better profitability for the firm.

Originality/value

To the best of the authors’ knowledge, the current research is the first to use signaling theory in building a conceptual framework that theorizes a moderated mediation model regarding the simultaneous effects of CR and MC on the relationship between CSR and CFP and to empirically test this conceptual framework of the single moderated mediation model. By doing so, the current research clarifies an unanswered question in the literature of whether the underlying mechanism in the CSR–CFP link is based on a mediated moderation or moderated mediation of CR and MC.

Article
Publication date: 4 January 2021

Kim-Lim Tan, Jie Min Ho, Rita Pidani and Archana Das Goveravaram

Although corporate social responsibility–corporate financial performance (CSR-CFP) research topics have been widely investigated, previous research has yet to examine the…

Abstract

Purpose

Although corporate social responsibility–corporate financial performance (CSR-CFP) research topics have been widely investigated, previous research has yet to examine the relationship between the specific dimension of CSR and CFP among Malaysian public-listed companies. Through literature review, it has been found that the CSR-CFP studies conducted in Malaysia have omitted the role of workplace diversity dimension in contribution to CFP. Failure to consider this variable may risk misrepresenting the relationship between CSR and CFP, thereby preclude consensus on the direction of the relationship between the variables. The purpose of this study is to investigate the relationship between individual CSR dimensions and CFP.

Design Methodology Approach

By using the CSR dimension disclosure-scoring method and cross-sectional data analysis, this research has conducted a content analysis on annual reports of the sample companies to evaluate the influence of CSR practices on companies’ profitability during 2015.

Findings

The results show that companies displaying CSR behavior are associated with higher CFP. That is to say, there is a positive relationship between CSR and CFP. However, the result has further revealed that the five CSR dimensions in isolation would differently associate with the two proxies of CFP.

Originality Value

To the best of the authors’ knowledge, this is the first study in Malaysia that considers workplace diversity issues as one of the dimensions of CSR. The findings will thus bring new insights into CSR application in Malaysia and its association with the CFP.

Details

Social Responsibility Journal, vol. 18 no. 1
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 3 October 2016

Anni Tuppura, Heli Arminen, Satu Pätäri and Ari Jantunen

The purpose of the paper is to examine empirically Granger causality relationships between corporate social performance (CSP) and corporate financial performance (CFP) in four…

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Abstract

Purpose

The purpose of the paper is to examine empirically Granger causality relationships between corporate social performance (CSP) and corporate financial performance (CFP) in four different industries.

Design/methodology/approach

The paper uses the Granger causality test to analyse the causality relationships between CSP and CFP in clothing, energy, food and forest industries in the USA. The panel data used combined CSP and CFP measures over the years 1991-2009. CSP strengths and concerns are handled as distinct constructs.

Findings

There is some evidence of bidirectional causality between CSP and CFP in the clothing, energy and forest industries; but in the food industry, CSP appears not to Granger-cause CFP. The results encourage accounting for the industry in empirical analyses, as well as the use of more than one measure for CFP in the analyses.

Originality/value

The direction of causality between CSP and CFP has been specifically addressed in only a few studies. Because the causality relationship may, in addition, be concealed when multi-industry data are used, this paper contributes to the literature by examining the Granger causality between CSP and CFP in four different industry contexts using two different measures of CFP.

Details

Social Responsibility Journal, vol. 12 no. 4
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 6 April 2021

Ismail Ben Douissa and Tawfik Azrak

Causality between corporate financial performance (CFP) and corporate social performance (CSP) has been extensively debated in previous research works; however, little research…

Abstract

Purpose

Causality between corporate financial performance (CFP) and corporate social performance (CSP) has been extensively debated in previous research works; however, little research has been done to investigate the long-run dynamics between these two constructs. The purpose of this paper is to enrich the CFP–CSP literature by estimating the long-run equilibrium relationship between financial performance and social performance in the banking sector in the Gulf Cooperation Council countries over the period 2009–2019.

Design/methodology/approach

The paper adopts an approach that is primarily used in financial economics: first, the authors perform panel long-run Granger causality following Canning and Pedroni’s procedure to indicate the direction of the causal relationship. Second, the authors estimate an error correction model using Chudik and Pesaran’s (2015) dynamic common correlated effects mean group estimator to determine the sign of the relationship.

Findings

The present research findings prove the existence of a long-run equilibrium relationship between CFP and CSP, while indicating at the same time that panel Granger causality runs positively from CSP to CFP, which means that changes in CSP produce lasting changes in CFP.

Practical implications

The findings of the paper would guide strategists to build fit for purpose corporate social responsibility (CSR) strategies in their firms and establish a continuous investment in CSR activities in the long run rather than harshly investing in CSR activities in the short run.

Originality/value

To the best of the authors’ knowledge, this paper is the first one to address heterogeneity in long-run Granger causality tests to estimate the relationship between CSP and CFP.

Details

Social Responsibility Journal, vol. 18 no. 3
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 22 August 2020

S. Sudha

The purpose of this study is to attempt to empirically examine the impact of disaggregate, eco-efficiency-based measures of corporate environmental performance (CEP) on corporate…

Abstract

Purpose

The purpose of this study is to attempt to empirically examine the impact of disaggregate, eco-efficiency-based measures of corporate environmental performance (CEP) on corporate financial performance (CFP) of Indian companies. Further, recent theories contending a bidirectional causality between them is also explored.

Design/methodology/approach

Secondary data of 224 Indian S&P 500 companies from 2002 to 2011 are used to run panel data regression models for examining the impact of CEP measures on accounting-based CFP measures.

Findings

The empirical results are statistically significant and provide evidence for a positive association of eco-efficiency-based CEP metrics on CFP metrics, thereby supporting Porter's win–win hypothesis. Further, the results evidence a positive bi-directional causality between CEP and CFP for one period time lag signalling possibility of mutual reinforcement in CEP–CFP relationship.

Research limitations/implications

The study has used data for the period 2002–2011 and eco-efficiency metrics – energy, water and material efficiencies due to availability.

Practical implications

The results have implications to both corporate managers as well as policymakers across all industries for emphasizing on eco-efficiency-based (proactive) environmental sustainability initiatives to enhance both financial and environmental bottom lines.

Originality/value

The study contributes to scarce empirical literature analysing the impact of CEP on financial performance. To the best of authors's knowledge, event studies, portfolio studies and perceptual data-based empirical studies exist in India. This study is unique in that it examines long run effect of eco-efficiency-based CEP metrics which is pertinent in a rapidly growing emerging market – India, where, eco-efficiency is considered quintessential for sustainable development.

Details

Management of Environmental Quality: An International Journal, vol. 31 no. 6
Type: Research Article
ISSN: 1477-7835

Keywords

Book part
Publication date: 21 August 2019

Amy Yueh-Fang Ho, Hsin-Yu Liang and Tumenjargal Tumurbaatar

This is the first study to investigate the impact of corporate social responsibility (CSR) on corporate financial performance (CFP) in Mongolian banks. We hand-collect data to…

Abstract

This is the first study to investigate the impact of corporate social responsibility (CSR) on corporate financial performance (CFP) in Mongolian banks. We hand-collect data to construct CSR disclosure index from 65 annual reports of 12 banks in Mongolia from 2003 to 2012. The results indicate that banks with larger size or Chief Executive Officer duality exhibit higher CSR performance. Moreover, banks with higher CSR performance tend to have higher net interest margin and lower non-performing loan. Furthermore, the CSR–CFP relationship varies before and after the financial crisis. The findings provide meaningful insight to the foreign investors regarding the effect of CSR on the profitability and credit risk in Mongolian banking sector.

Details

Advances in Pacific Basin Business, Economics and Finance
Type: Book
ISBN: 978-1-78973-285-6

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