A Data Envelopment Analysis-Based Methodology Adopting Assurance Region Approach for Measuring Corporate Social Performance
- 15 Downloads
Many research papers calculate corporate social performance (CSP) with the net score method, i.e., by subtracting the number of concerns from the number of strengths. Although widely adopted, this method implies, perhaps mistakenly, that each indicator is of equal importance and that however serious the social misconduct a firm may have engaged in, it can be completely offset by some positive social action. The method also implies that a given firm that has done both a lot of harm and a lot of good will have CSP similar to that of another firm that has done little harm and little good. In this study, however, we question the appropriateness of the net score method in terms of its ability to truly reflect CSP and truly identify the real effects of CSP on various characteristics. We therefore propose a data envelopment analysis-based methodology that adopts the assurance region approach for evaluating CSP, through which various CSP indicators are converted into a single composite measure of CSP. Our findings show that our proposed methodology consistently performs better than the net score method in evaluating CSP.
KeywordsCorporate social responsibility Corporate social performance Performance measurement Data envelopment analysis (DEA) Assurance region KLD
This work was supported by the Ministry of Science and Technology of Taiwan under Grants MOST-106-2410-H-305-011. This support is gratefully acknowledged.
- Davis, K. (1973). The case for and against business assumption of social responsibilities. Academy of Management Journal,16(2), 312–322.Google Scholar
- Graves, S. B., & Waddock, S. A. (1994). Institutional owners and corporate social performance. Academy of Management Journal,37(4), 1034–1046.Google Scholar
- McGuire, J. B., Sundgren, A., & Schneeweis, T. (1988). Corporate social responsibility and firm financial performance. Academy of Management Journal,31(4), 854–872.Google Scholar
- SustainAbilty. (2010). Rate the raters (phase two): Taking inventory of the ratings universe. October 2010.Google Scholar
- SustainAbilty. (2013). Rate the raters (phase five): The 2013 rating survey: Polling the experts. A GlobeScan/Sustainability Survey.Google Scholar
- Turban, D. B., & Greening, D. W. (1997). Corporate social performance and organizational attractiveness to prospective employees. The Academy of Management Journal,40(3), 658–672.Google Scholar
- Wolfe, R., & Aupperle, K. (1991). Introduction to corporate social performance: Methods for evaluating an elusive construct. In J. E. Post (Ed.), Research in corporate social performance and policy (Vol. 12, pp. 265–268). Greenwich, CT: JAI Press.Google Scholar