Skip to main content

CSR Structures: Evidence, Drivers, and Firm Value Implications

Abstract

This paper investigates the corporate social responsibility (CSR) structures of U.S. listed firms. We find evidence of a general tendency towards CSR specialization with almost three-quarters (73.91%) of these firms focusing on a single CSR dimension. The degree of specialization varies across industries and the single CSR dimension focused on also varies for industries with similar degrees of specialization. We find that firms with higher exposures to CSR concerns, international activities, larger size, and higher financial slack tend to diversify across multiple CSR dimensions. More importantly, we find evidence that diversified CSR structures positively affect a firm’s value relative to a control group before and during the 2008 financial crisis. Our findings have important implications for corporate and portfolio managers, investors, and policy makers.

This is a preview of subscription content, access via your institution.

Fig. 1

Notes

  1. Also, a 2014 report in the Financial Times shows that the Fortune Global 500 companies devote more than $15.2 billion a year on CSR activities (The Financial Times Limited, 2020).

  2. A similar methodology is used by Colla et al. (2013) and John et al. (2021) who studied firm debt structures in the U.S. and internationally.

  3. According to Lin-Hi and Müller (2013), corporate social “irresponsibility” (CSI) can be defined as “corporate actions that result in (potential) disadvantages and/or harm to other actors.”

  4. In the same vein, policy makers design regulations for specific industries or sectors.

  5. The materiality of CSR activities also depends on the industry where a firm is operating (Ioannou & Serafeim, 2019; Khan et al., 2016).

  6. We compute the adjusted Entropy so that it yields the same directional interpretation as the HHI index so that high (low) values indicate specialization (diversification).

  7. As another alternative measure of CSR specialization, we follow Colla et al. (2013) and John et al. (2021) and compute a dummy variable Sup90 which equals one if a firm obtains at least 90% of its CSR from one CSR dimension and zero otherwise. A value of one indicates that the firm is highly concentrated in its CSR structure. All the obtained results are qualitatively similar to those with HHI and Entropy measures.

  8. We compute the percentage of the firms which rely on each CSR dimension for their CSR engagement and find that 54.52% and 42.37% use, respectively, the diversity and employee relations dimensions. Also, an important share of the firms, which is 27.87%, 23.04%, 20.55%, and 16.11%, use, respectively, the environment, governance, community, and product dimensions to structure their CSR actions. Finally, few (almost 2%) of the firms in the sample rely on the human rights dimension for their CSR. The inclusion of this dimension tends to understate the measures of specialization. Overall, firms are different in their usage of the seven CSR dimensions and thereby present various CSR structures.

  9. For the identification of clusters, we use the Stata command cluster kmeans with clusters defined over all seven CSR dimensions simultaneously and run kmeans for up to 15 clusters. We then apply a stopping rule based on the Calinski/Harabasz index.

  10. These results are robust to different specifications of the conditioning threshold. In appendix 4, we provide the findings when the conditioning threshold is 40% and 50%.

  11. The detailed definition of the 17 industries is available at: http://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.html.

  12. We also run probit regressions using the clusters that we have already defined. Our dichotomic-dependent variables are computed based on firm membership in the six specialized clusters of CSR dimensions (Product, Diversity, Governance, Employees, Community, and Environment). We also define the baseline comparison group using the set of our three diversified CSR clusters already computed. The findings are provided in Appendix 3. Except for the community CSR dimension, Size negatively, and significantly drives CSR specialization which is consistent with our Hypothesis H5 [Larger (smaller) firms are expected to have more diversified (specialized) CSR structures]. International operations are found to negatively and significantly drive CSR specialization in Diversity and Employee relations in support of our Hypothesis H3 [Firms with international (domestic) activities are expected to have more diversified (specialized) CSR actions].

  13. Our testing strategy is similar to that of Bushanan, Cao and Chen (2018) who examine how Corporate Social Responsibility, jointly with influential institutional ownership, affects firm value around the 2008 financial crisis.

  14. Additional tests show that the CSR ratings of firms in the extractive industries changed following the BP Deepwater disaster shock. As expected, the ratios in the parentheses of Eq. (1) decreased for these firms' Environment and Product dimensions, and increased mechanically for these firms' Governance and Human rights dimensions.

  15. Results for an Euclidian distance clustering analysis based on CSR dimensions ratios (CSR specialization measure) are reported in Appendix 1 (2).

  16. This lagged modeling specification should further alleviate somewhat the concerns associated with endogeneity biases. A similar argument is used in the corporate governance literature (e.g., Adams et al., 2009; Jiraporn et al., 2009; Kryzanowski & Mohebshahedin, 2016).

  17. (β1 + β2) = 0.2727 − 0.1921 = 0.0806.

  18. We also use our subsample of diversified CSR structures and integrate two interactions of CSR dimensions indicators (Employee-Product and Product-Environment) to capture their effects on Tobin’s Q. The findings are reported in Appendix 5 (Firm value and CSR structures: CSR dimensions combinations). They are supportive of the finding of Cavaco and Crifo (2014) that environment and business behaviors towards customers and suppliers are substitutable.

References

  • Adams, J. C., Mansi, S. A., & Nishikawa, T. (2009). Internal governance mechanisms and operational performance: Evidence from index mutual funds. The Review of Financial Studies, 23(3), 1261–1286.

    Article  Google Scholar 

  • Admin (2020). Stakeholder capitalism will get a report card. It’s not good. Whole Monitor. Retrieved September 22, 2020, from https://wholemonitor.com/stakeholder-capitalism-will-get-a-report-card-its-not-good/

  • Amiraslani, H., Lins, K., Servaes, H., & Tamayo, A. (2017). A matter of trust? The bond market benefits of corporate social capital during the financial crisis. SSRN Journal. https://doi.org/10.2139/ssrn.2978794

    Article  Google Scholar 

  • Attig, N., Boubakri, N., El Ghoul, S., & Guedhami, O. (2016). Firm internationalization and corporate social responsibility. Journal of Business Ethics, 34, 171–197.

    Article  Google Scholar 

  • Bansal, P., & Roth, K. (2000). Why companies go green: A model of ecological responsiveness. Academy of Management Journal, 43(4), 717–736.

    Google Scholar 

  • Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.

    Article  Google Scholar 

  • Barney, J., & Hansen, M. (1994). Trustworthiness: Can It be a source of competitive advantage? Strategic Management Journal, 15(S2), 175–203.

    Article  Google Scholar 

  • Belu, C., & Manescu, C. (2013). Strategic corporate social responsibility and economic performance. Applied Economics, 45, 2751–2764.

    Article  Google Scholar 

  • Bena, J., & Li, K. (2014). Corporate innovations and mergers and acquisitions. Journal of Finance, 69(5), 1923–1960.

    Article  Google Scholar 

  • Benabou, R., & Tirole, J. (2010). Individual and corporate social responsibility. Economica, 77, 1–19.

    Article  Google Scholar 

  • Bereskin, F., Byun, S. K., & Officer, M. S. (2018). The effect of cultural similarity on mergers and acquisitions: Evidence from corporate social responsibility. Journal of Financial and Quantitative Analysis, 53(5), 1995–2039.

    Article  Google Scholar 

  • Bird, L. A., Wüstenhagen, R., & Aabakken, J. (2002). A review of international green power markets: Recent experience, trends, and market drivers. Renewable and Sustainable Energy Reviews, 6(6), 513–536.

    Article  Google Scholar 

  • Bloom, N., Schankerman, M., & Van Reenen, J. (2013). Identifying technology spillovers and product market rivalry. Econometrica, 81, 1347–1393.

    Article  Google Scholar 

  • Brammer, S. J., & Millington, A. (2008). Does it pay to be different? An analysis of the relationship between corporate social and financial performance. Strategic Management Journal, 29, 1325–1343.

    Article  Google Scholar 

  • Brammer, S., & Pavelin, S. (2006). Corporate reputation and social performance: The importance of fit. Journal of Management Studies, 43, 435–455.

    Article  Google Scholar 

  • Brammer, S. J., Pavelin, S., & Porter, L. A. (2006). Corporate social performance and geographical diversification. Journal of Business Research, 59, 1025–1034.

    Article  Google Scholar 

  • Bridoux, F., & Stoelhorstm, J. W. (2014). Microfoundations for stakeholder theory: Managing stakeholders with heterogeneous motives. Strategic Management Journal, 35(1), 107–125.

    Article  Google Scholar 

  • Brower, J., & Mahajan, V. (2013). Driven to be good: A stakeholder theory perspective on the drivers of corporate social performance. Journal of Business Ethics, 117(2), 313–331.

    Article  Google Scholar 

  • Bushanan, B., Cao, C. X., & Chen, C. (2018). Corporate social responsibility, firm value, and influential institutional ownership. Journal of Corporate Finance, 52, 73–95.

    Article  Google Scholar 

  • Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32, 946–967.

    Article  Google Scholar 

  • Cano-Rodríguez, M., Márquez-Illescas, G., & Núñez-Níckel, M. (2017). Experts or rivals: Mimicry and voluntary disclosure. Journal of Business Research, 73, 46–54.

    Article  Google Scholar 

  • Capelle-Blancard, G., & Petit, A. (2017). The weighting of CSR dimensions: One size does not fit all. Business & Society, 56(6), 919–943.

    Article  Google Scholar 

  • Cavaco, S., & Crifo, P. (2014). CSR and financial performance: Complementarity between environmental, social and business behaviours. Applied Economics, 46, 3323–3338.

    Article  Google Scholar 

  • Chatterji, A. K., & Toffel, M. W. (2010). How firms respond to being rated. Strategic Management Journal, 31(9), 917–945.

    Google Scholar 

  • Clarkson, M. E. (1995). A stakeholder framework for analyzing and evaluating corporate social performance. Academy of Management Review, 20(1), 92–117.

    Article  Google Scholar 

  • Clarkson, P. M., Li, Y., Richardson, G. D., & Vasvari, F. P. (2011). Does it really pay to be green? Determinants and consequences of proactive environmental strategies. Journal of Accounting and Public Policy, 30(2), 122–144.

    Article  Google Scholar 

  • Clifford, T. (2020). Salesforce’s Marc Benioff claims a ‘victory for stakeholder capitalism’. CNBC. Retrieved August 25, 2020, from https://www.cnbc.com/2020/08/25/salesforces-marc-benioff-claims-a-victory-for-stakeholder-capitalism.html

  • Colla, P., Ippolito, F., & Li, K. (2013). Debt specialization. Journal of Finance, 68, 2117–2141.

    Article  Google Scholar 

  • Cormier, D., & Magnan, M. (1999). Corporate environmental disclosure strategies: Determinants, costs and benefits. Journal of Accounting, Auditing and Finance, 14(4), 429–451.

    Article  Google Scholar 

  • Dabic, M., Colovic, A., Lamotte, O., Painter-Morland, M., & Brozovic, S. (2016). Industry-specific CSR: Analysis of 20 years of research. European Business Review, 28, 250–273.

    Article  Google Scholar 

  • Dam, L., & Scholtens, B. (2012). Does ownership type matter for corporate social responsibility? Corporate Governance: An International Review, 20(3), 233–252.

    Article  Google Scholar 

  • Deloitte, 2019. The rise of the socially responsible business. Retrieved March 1, 2021, from https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/deloitte-global-societal-impact-pulse-survey-report-jan-2019.pdf

  • Derwall, J., Verwijmeren, P. (2007). Corporate Social Responsibility and the Implied Cost of Equity Capital. RSM Erasmus University, Working paper.

  • Donaldson, T., & Preston, L. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20, 65–91.

    Article  Google Scholar 

  • Dyck, A., Lins, K. V., Roth, L., & Wagner, H. F. (2019). Do institutional investors drive corporate social responsibility? International evidence. Journal of Financial Economics, 131(3), 693–714.

    Article  Google Scholar 

  • Edmans, A. (2011). Does the stock market fully value intangibles? Employee satisfaction and equity prices. Journal of Financial Economics, 101, 621–640.

    Article  Google Scholar 

  • Edmans, A. (2012). The link between job satisfaction and firm value, with implications for corporate social responsibility. Academy of Management Perspectives, 26(4), 1–19.

    Article  Google Scholar 

  • El Ghoul, S., Guedhami, O., Kwok, C., & Mishra, D. (2011). Does corporate social responsibility affect the cost of capital? Journal of Banking and Finance, 35, 2388–2406.

    Article  Google Scholar 

  • Flammer, C. (2013). Corporate social responsibility and shareholder reaction: The environmental awareness of investors. Academy of Management Journal, 56(3), 758–781.

    Article  Google Scholar 

  • Flammer, C. (2015). Does product market competition foster corporate social responsibility? Evidence from trade liberalization. Strategic Management Journal, 36(10), 1469–1485.

    Article  Google Scholar 

  • Flammer, C., & Kacperczyk, A. (2016). The impact of stakeholder orientation on innovation: Evidence from a natural experiment. Management Science, 62(7), 1982–2001.

    Article  Google Scholar 

  • Flammer, C., & Kacperczyk, A. (2019). Corporate social responsibility as a defense against knowledge spillovers: Evidence from the inevitable disclosure doctrine. Strategic Management Journal, 40(8), 1243–1267.

    Google Scholar 

  • Flammer, C., & Luo, J. (2017). Corporate social responsibility as an employee governance tool: Evidence from a quasi-experiment. Strategic Management Journal, 38(2), 163–183.

    Article  Google Scholar 

  • Freeman, R. (1984). Strategic management: A stakeholder approach. Massachusetts Pitman Publishing.

    Google Scholar 

  • Freeman, R. E., & Phillips, R. (2002). Stakeholder theory: A libertarian defense. Business Ethics Quarterly, 12(3), 331–350.

    Article  Google Scholar 

  • Friedman, M. (1970). The social responsibility of business is to increase its profits. New York Times Magazine, 13 September. pp. 122–126.

  • Fu, L., Boehe, D., Orlitzky, M., & Swanson, D. L. (2019). Managing stakeholder pressures: Toward a typology of corporate social performance profiles. Long Range Planning, 52(6), 101847.

    Article  Google Scholar 

  • Gamache, D., Neville, F., Bundy, J., & Short, C. (2020). Serving differently: CEO regulatory focus and firm stakeholder strategy. Strategic Management Journal, 41(7), 1305–1335.

    Article  Google Scholar 

  • Garud, R., Kumaraswamy, A., & Karnoe, P. (2010). Path dependence or path creation. Journal of Management Studies, 47, 760–774.

    Article  Google Scholar 

  • Goodman, P.S. (2020). Stakeholder capitalism gets a report card. It’s not good. New York Times, 22 Sept. 2020. Accessed via Factiva.

  • Hackston, D., & Milne, M. J. (1996). Some determinants of social and environmental disclosures in New Zealand companies. Accounting, Auditing & Accountability Journal, 9, 77–108.

    Article  Google Scholar 

  • Harjoto, M. A., & Jo, H. (2015). Legal vs. normative CSR: Differential impact on analyst dispersion, stock return volatility, cost of capital, and firm value. Journal of Business Ethics, 128(1), 1–20.

    Article  Google Scholar 

  • Harrison, J., Bosse, D., & Phillips, R. (2007). Stakeholder theory and competitive advantage. Academy of Management Proceedings, 2007(1), 1–6.

    Article  Google Scholar 

  • Hart, S. L. (1995). A natural resource-based view of the firm. Academy of Management Review, 20, 986–1014.

    Article  Google Scholar 

  • Heal, G. (2005). Corporate social responsibility: An economic and financial framework. Geneva Papers on Risk and Insurance-Issues and Practice, 30(3), 387–409.

    Article  Google Scholar 

  • Hillman, A. J., & Keim, G. D. (2001). Shareholder value, stakeholder management and social issues: What’s the bottom line? Strategic Management Journal, 22, 125–139.

    Article  Google Scholar 

  • Hockerts, K., & Wüstenhagen, R. (2010). Green Goliaths versus emerging Davids—Theorizing about the role of incumbents and new entrants in sustainable entrepreneurship. Journal of Business Venturing, 25, 481–492.

    Article  Google Scholar 

  • Holland, B. (2022). Private money flowing freely to energy transition companies, technologies. S&P Global Market Intelligence, 18 April 2022.

  • Hong, H., Kubik, J.D. and Scheinkman, J.A. (2012). Financial constraints on corporate goodness. NBER Working Paper, 18476.

  • Ioannou, I., & Serafeim, G. (2012). What drives corporate social performance? The role of nation-level institutions. Journal of International Business Studies, 43, 834–864.

    Article  Google Scholar 

  • Ioannou, I., & Serafeim, G. (2019). Corporate sustainability: A strategy? SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3312191

    Article  Google Scholar 

  • Jackson, G., & Apostolakou, A. (2010). Corporate social responsibility in Western Europe: An institutional mirror or substitute? Journal of Business Ethics, 94, 371–394.

    Article  Google Scholar 

  • Jaffe, A.B. (1986). Technological opportunity and spillovers of R&D: Evidence from firms’ patents, profits and market value. NBER Working Paper, No. 1815.

  • Jiraporn, P., Singh, M., & Lee, C. I. (2009). Ineffective corporate governance: Director busyness and board committee memberships. Journal of Banking and Finance, 33(5), 819–828.

    Article  Google Scholar 

  • Jo, H., & Harjoto, M. A. (2011). Corporate governance and firm value: The impact of corporate social responsibility. Journal of Business Ethics, 103(3), 351–383.

    Article  Google Scholar 

  • Jo, H., & Harjoto, M. A. (2012). The causal effect of corporate governance on corporate social responsibility. Journal of Business Ethics, 106(3), 53–72.

    Article  Google Scholar 

  • John, K., Kaviani, M. S., Kryzanowski, L., & Maleki, H. (2021). Do country-level creditor protections affect firm-level debt structure concentration? Review of Finance, 25(6), 1677–1725.

    Article  Google Scholar 

  • Johnson, J., Sutton, S. G., & Theis, J. (2019). Prioritizing sustainability issues: Insights from corporate managers about key decision-makers, reporting models, and stakeholder communications. Accounting and the Public Interest, 20, 28.

    Article  Google Scholar 

  • Jones, T. M. (1995). Instrumental stakeholder theory: A synthesis of ethics and economics. Academy of Management Review, 20(2), 404–437.

    Article  Google Scholar 

  • Kang, C., Germann, F., & Grewal, R. (2016). Washing away your sins? Corporate social responsibility, corporate social irresponsibility and firm performance. Journal of Marketing, 80(2), 59–79.

    Article  Google Scholar 

  • Khan, M., Serafeim, G., & Yoon, A. (2016). Corporate sustainability: First evidence on materiality. Accounting Review, 91(6), 1697–1724.

    Article  Google Scholar 

  • Knox, S., Maklan, S., & French, P. (2006). Corporate social responsibility: Exploring stakeholder relationships and program reporting across leading FTSE companies. Journal of Business Ethics, 61, 7–28.

    Article  Google Scholar 

  • Kotchen, M., & Moon, J. J. (2012). Corporate social responsibility for irresponsibility. The B.e. Journal of Economic Analysis & Policy, 12(1), 1–21.

    Article  Google Scholar 

  • Kryzanowski, L., & Mohebshahedin, M. (2016). Board governance, monetary interest, and closed-end fund performance. Journal of Corporate Finance, 38, 196–217.

    Article  Google Scholar 

  • Laeven, L., & Levine, R. (2008). Complex ownership structures and corporate valuations. Review of Financial Studies, 21, 579–604.

    Article  Google Scholar 

  • Lin-Hi, N., & Müller, K. (2013). The CSR bottom line: Preventing corporate social irresponsibility. Journal of Business Research, 66(10), 1928–1936.

    Article  Google Scholar 

  • Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. The Journal of Finance, 72(4), 1785–1823.

    Article  Google Scholar 

  • Lys, T., Naughton, J. P., & Wang, C. (2015). Signaling through corporate accountability reporting. Journal of Accounting and Economics, 60, 56–72.

    Article  Google Scholar 

  • Marano, V., & Kostova, T. (2016). Unpacking the institutional complexity in adoption of CSR practices in multinational enterprises. Journal of Management Studies, 53(1), 28–54.

    Article  Google Scholar 

  • Margolis, J.D., Elfenbein, H.A., Walsh, J.P. (2007). Does it pay to be good? A meta-analysis and redirection of research on the relationship between corporate social and financial performance. Working paper, Harvard Business School.

  • Matten, D. (2006). Why do companies engage in corporate social responsibility? Background, reasons and basic concepts. In J. Henningfeld, M. Pohl, & N. Tolhurst (Eds.), The ICCA handbook on corporate social responsibility (pp. 3–46). Wiley.

    Google Scholar 

  • Mattingly, J., & Berman, S. (2006). Measurement of corporate social action: Discovering taxonomy in the Kinder Lydenburg Domini ratings data. Business & Society, 45, 20–46.

    Article  Google Scholar 

  • Mazutis, D. (2013). The CEO effect: A longitudinal, multilevel analysis of the relationship between executive orientation and corporate social strategy. Business & Society, 52, 631–648.

    Article  Google Scholar 

  • McMahon, T. F. (1999). From social irresponsibility to social responsiveness: The Chrysler/Kenosha plant closing. Journal of Business Ethics, 20, 101–111.

    Article  Google Scholar 

  • McWilliams, A., & Siegel, D. (2001). Corporate social responsibility: A theory of the firm perspective. The Academy of Management Review, 26(1), 117–127.

    Article  Google Scholar 

  • Metcalfe, C. (1998). The stakeholder corporation. Business Ethics: A European Review, 7(1), 30–36.

    Article  Google Scholar 

  • Meyer, J. W., & Rowan, B. (1977). Institutional organizations: Formal structures as myth and ceremony. American Journal of Sociology, 83, 340–363.

    Article  Google Scholar 

  • Mishina, Y., Pollock, T. G., & Porac, J. F. (2004). Are more resources always better for growth? Resource stickiness in market and product expansion. Strategic Management Journal, 25, 1179–1197.

    Article  Google Scholar 

  • Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, 22, 853–886.

    Article  Google Scholar 

  • Morris, J. J., & Alam, P. (2012). Value relevance and the dot-com bubble of the 1990s. Quarterly Review of Economics and Finance, 52(2), 243–255.

    Article  Google Scholar 

  • Muller, A., & Kräussl, R. (2011). Doing good deeds in times of need: A strategic perspective on corporate disaster donations. Strategic Management Journal, 32(9), 911–929.

    Article  Google Scholar 

  • Nardi, L., Zenger, T., Lazzarini, S. G., & Cabral, S. (2020). Doing well by doing good, uniquely: The market value of unique CSR strategies. Academy of Management Proceedings, 2020(1), 11800.

    Article  Google Scholar 

  • Oikonomou, I., Brooks, C., & Pavelin, S. (2014). The financial effects of uniform and mixed corporate social performance. Journal of Management Studies, 51, 898–925.

    Article  Google Scholar 

  • Orlitzky, M., & Benjamin, J. D. (2001). Corporate social performance and firm risk: A meta-analytic review. Business and Society, 40, 369–396.

    Article  Google Scholar 

  • Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization Studies, 24, 403–441.

    Article  Google Scholar 

  • Ortiz-de-Mandojana, N., & Bansal, P. (2016). The long-term benefits of organizational resilience through sustainable business practices. Strategic Management Journal, 37(8), 1615–1631.

    Article  Google Scholar 

  • Padgett, R. C., & Galan, J. I. (2010). The effect of R&D intensity on corporate social responsibility. Journal of Business Ethics, 93, 407–418.

    Article  Google Scholar 

  • Parnell, J. A., Scott, G. J., & Angelopoulos, G. (2013). Benchmarking tendencies in managerial mindsets: Prioritizing stockholders and stakeholders in Peru, South Africa, and the United States. Journal of Business Ethics, 118(3), 589–605.

    Article  Google Scholar 

  • Phillips, R. A. (2003). Stakeholder legitimacy. Business Ethics Quarterly, 13, 25–41.

    Article  Google Scholar 

  • Porter, M. E., & Kramer, M. R. (2006). Strategy & society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78–92.

    Google Scholar 

  • Porter, M. E., & Kramer, M. R. (2011). The big idea: Creating shared value. Harvard Business Review, 89(1/2), 62–77.

    Google Scholar 

  • Preston, L. E., & O’Bannon, D. P. (1997). The corporate social–financial performance relationship: A typology and analysis. Business and Society, 36, 419–429.

    Article  Google Scholar 

  • Reverte, C. (2009). Determinants of corporate social responsibility disclosure ratings by Spanish listed firms. Journal of Business Ethics, 88, 351–366.

    Article  Google Scholar 

  • Reynolds, S. J., Schultz, F. C., & Hekman, D. R. (2006). Stakeholder theory and managerial decision-making: Constraints and implications of balancing stakeholder interests. Journal of Business Ethics, 64, 285–301.

    Article  Google Scholar 

  • Rives, K. (2022a). Climate resolutions top 'unprecedented' number of shareholder proposals in 2022a. S&P Global Market Intelligence, 04 April 2022a.

  • Rives, K. (2022b). SEC unveils landmark climate-risk disclosure rule for publicly traded companies. S&P Global Market Intelligence, 21 March 2022b.

  • Russo, M. V., & Fouts, P. A. (1997). A resource-based perspective on corporate environmental performance and profitability. Academy of Management Journal, 40, 534–559.

    Google Scholar 

  • Saridakis, C., Angelidou, S., & Woodside, A. G. (2020). What type of CSR engagement suits my firm best? Evidence from an abductively-derived typology. Journal of Business Research, 108, 174–187.

    Article  Google Scholar 

  • Seo, H., Luo, J., & Kaul, A. (2021). Giving a little to many or a lot to a few? The returns to variety in corporate philanthropy. Strategic Management Journal, 4, 1–31.

    Google Scholar 

  • Servaes, H., & Tamayo, A. (2013). The impact of corporate social responsibility on firm value: The role of customer awareness. Management Science, 59(5), 1045–1061.

    Article  Google Scholar 

  • Soytas, M. A., & Atik, A. (2018). Does being international make companies more sustainable? Evidence based on corporate sustainability indices. Central Bank Review, 18, 34–36.

    Article  Google Scholar 

  • Surroca, J., Tribo, J. A., & Zahra, S. A. (2013). Stakeholder pressure on MNEs and the transfer of socially irresponsible practices to subsidiaries. Academy of Management Journal, 56, 549–572.

    Article  Google Scholar 

  • Tang, Z., Hull, C. E., & Rothenberg, A. (2012). How corporate social responsibility engagement strategy moderates the CSR-financial performance relationship. Journal of Management Studies, 49, 1274–1303.

    Article  Google Scholar 

  • Tashman, P., & Raelin, J. (2013). Who and what really matters to the firm: Moving stakeholder salience beyond managerial perceptions. Business Ethics Quarterly, 23(04), 591–616.

    Article  Google Scholar 

  • The Financial Times Limited (2020). Retrieved March 1, 2021, from https://www.ft.com/content/95239a6e-4fe0-11e4-a0a4-00144feab7de

  • Waddock, S. A., & Graves, S. B. (1997). The corporate social performance financial performance link. Strategic Management Journal, 18(4), 303–319.

    Article  Google Scholar 

  • Wang, H., & Choi, J. (2010). A new look at the corporate social—financial performance relationship: The moderating roles of temporal and interdomain consistency in corporate social performance. Journal of Management, 39(2), 416–441.

    Article  Google Scholar 

  • Wang, T., & Bansal, P. (2012). Social responsibility in new ventures: Profiting from a long-term orientation. Strategic Management Journal, 33(10), 1135–1153.

    Article  Google Scholar 

  • Williamson, H. (2008). Not everyone happy in Germany's solar valley. Financial Times, 11 March 2008.

  • Wood, D. J., & Jones, R. E. (1995). Stakeholder mismatching: A theoretical problem in empirical research on corporate social performance. The International Journal of Organizational Analysis, 3(3), 229–267.

    Article  Google Scholar 

  • Zhang, Y., Wang, H., & Zhou, X. (2020). Dare to be different? Conformity versus differentiation in corporate social activities of Chinese firms and market responses. Academy of Management Journal, 63(3), 717–742.

    Article  Google Scholar 

Download references

Acknowledgements

The authors would like to thank two anonymous referees and the participants to the Administrative Sciences Association of Canada (ASAC) 2022 conference in particular Amos Sodjahin (discussant), and Hyeonjoon Park for their valuable comments and suggestions. Kryzanowski thanks the Senior Concordia University Research Chair in Finance and the Social Sciences and Humanities Research Council of Canada (SSHRC, Grant #435-2018-048) for providing financial support for this project. We thank Jamal Ouenniche for his help with Matlab programming. An earlier version of this article won the best paper award for the finance division at the Administrative Sciences Association of Canada (ASAC) 2022 conference.

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Abdelmajid Hmaittane.

Ethics declarations

Conflict of interest

Authors Kais Bouslah, Abdelmajid Hmaittane, Lawrence Kryzanowski, and Bouchra M’Zali declare that they have no conflict of interest.

Ethical Approval

This article does not contain any studies with human participants or animals performed by any of the author(s).

Research Involving Human Participants or Animals

Not applicable.

Informed Consent

Not applicable.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendices

Appendix 1

Cluster analysis on CSR dimensions ratios.

Cluster Governance Community Diversity Environment Product Human Rights Employee HHI
Cluster 1 0.999 0.000 0.000 0.000 0.000 0.000 0.001 0.999
Cluster 2 0.001 0.001 0.002 0.002 0.002 0.000 0.992 0.985
Cluster 3 0.002 0.006 0.980 0.002 0.005 0.000 0.005 0.965
Cluster 4 0.010 0.007 0.015 0.934 0.007 0.005 0.022 0.897
Cluster 5 0.040 0.006 0.073 0.069 0.806 0.001 0.006 0.766
Cluster 6 0.020 0.664 0.156 0.079 0.049 0.004 0.029 0.573
Cluster 7 0.419 0.015 0.408 0.088 0.024 0.010 0.036 0.360
Cluster 8 0.060 0.082 0.060 0.190 0.107 0.029 0.472 0.347
Cluster 9 0.027 0.096 0.450 0.138 0.044 0.005 0.241 0.290
All 0.138 0.075 0.356 0.133 0.064 0.006 0.228 0.689

Appendix 2

Cluster analysis on CSR dimensions ratios and CSR specialization (HHI).

Cluster Governance Community Diversity Environment Product Hum Rights Employee HHI
2 0.000 0.000 0.999 0.000 0.000 0.000 0.001 0.998
3 0.003 0.001 0.002 0.991 0.001 0.000 0.002 0.984
5 0.999 0.000 0.000 0.000 0.000 0.000 0.001 0.999
6 0.018 0.834 0.024 0.011 0.045 0.062 0.006 0.859
7 0.001 0.007 0.000 0.008 0.976 0.000 0.008 0.962
8 0.000 0.000 0.000 0.002 0.001 0.000 0.996 0.993
1 0.115 0.127 0.561 0.036 0.058 0.003 0.098 0.391
4 0.051 0.078 0.232 0.048 0.090 0.005 0.496 0.361
9 0.077 0.110 0.185 0.356 0.079 0.015 0.177 0.255
All 0.138 0.075 0.356 0.133 0.064 0.006 0.228 0.689

Appendix 3

Firm characteristics and CSR specialization: logistic regressions on CSR dimensions specialized clusters.

Dimension of specialization PRO DIV GOV EMP COM ENV
(1) (2) (3) (4) (5) (6)
CSR concerns  − 0.016  − 0.054*** 0.059*  − 0.020  − 0.036 0.011
(0.513) (0.001) (0.054) (0.266) (0.103) (0.577)
International 0.075  − 0.354***  − 0.327*  − 0.456*** 0.045  − 0.095
(0.604) (0.000) (0.069) (0.000) (0.694) (0.457)
Size  − 0.226***  − 0.107***  − 0.578***  − 0.211***  − 0.007  − 0.216***
(0.000) (0.000) (0.000) (0.000) (0.834) (0.000)
Cash-flows  − 0.593*  − 0.246  − 0.111  − 0.134  − 0.294 0.086
(0.095) (0.422) (0.806) (0.624) (0.439) (0.842)
Leverage 0.346 0.572*** 0.051 0.473*** 0.546*** 0.530**
(0.174) (0.001) (0.848) (0.005) (0.009) (0.014)
Profitability 0.321  − 0.406  − 0.182 0.171 0.496  − 1.317***
(0.563) (0.236) (0.711) (0.583) (0.308) (0.008)
R&D intensity  − 1.692**  − 2.028***  − 1.824***  − 0.191  − 3.884***  − 4.532***
(0.043) (0.000) (0.002) (0.599) (0.000) (0.000)
Constant  − 0.060  − 0.706** 1.821*** 0.826***  − 1.941*** 0.653**
(0.868) (0.017) (0.000) (0.003) (0.000) (0.039)
Observations 4 798 6 656 5 094 5 536 5 113 5 096
Pseud R2 0.126 0.216 0.403 0.116 0.122 0.183
Industry FE Yes Yes Yes Yes Yes Yes
Year FE Yes Yes Yes Yes Yes Yes
  1. This table presents the regression results for the relation between firm characteristics and CSR specialization using CSR dimension specialized subsamples. All variables are defined in the legend of Table 1. In all regression models, control variables are one-year lagged. All regressions control for firm industry membership. All continuous variables are winsorized at the 1st and 99th percentile. P values are reported in the parentheses. Heteroskedasticity-consistent standard errors are clustered at the firm level. ***, **, * denote statistical significance at 1%, 5%, and 10% levels, respectively

Appendix 4

CSR structures and specialization: additional tests.

Condition GOV COM DIV ENV PRO HUM EMP
Panel A: Conditional CSR structures (40%)
 Governance > 40% 0.855 0.005 0.081 0.017 0.013 0.002 0.028
 Community > 40% 0.014 0.661 0.152 0.063 0.027 0.001 0.082
 Diversity > 40% 0.039 0.043 0.775 0.035 0.019 0.001 0.088
 Environment > 40 % 0.028 0.032 0.077 0.733 0.031 0.003 0.095
 Product > 40% 0.030 0.027 0.057 0.053 0.731 0.001 0.101
 Hum Rights > 40% 0.065 0.006 0.035 0.103 0.007 0.720 0.063
 Employee > 40% 0.019 0.026 0.109 0.064 0.039 0.002 0.741
Panel B: Conditional CSR structures (50%)
 Governance > 50% 0.998 0.000 0.001 0.000 0.000 0.000 0.001
 Community > 50% 0.001 0.931 0.038 0.014 0.006 0.000 0.010
 Diversity > 50% 0.010 0.019 0.924 0.008 0.007 0.001 0.032
 Environment > 50% 0.008 0.005 0.015 0.941 0.006 0.001 0.024
 Product > 50% 0.001 0.007 0.000 0.008 0.976 0.000 0.008
 Hum Rights > 50% 0.000 0.000 0.000 0.000 0.000 0.980 0.020
 Employee > 50% 0.004 0.007 0.022 0.028 0.015 0.001 0.923
  1. This table presents the results of conditional CSR structures. We impose the condition that a firm’s involvement in a particular CSR dimension must exceed 40% (50%) of total CSR actions in Panel A (B). For the set of observations that satisfy this condition, we then compute the mean ratios of each CSR dimension

Appendix 5

Firm value and CSR structures: CSR dimensions combinations.

  Diversified structures
Based on HHI Based on Entropy
EMP*PRO 0.1096 0.2565
(0.713) (0.370)
PRO*ENV  − 0.6655*  − 0.5704*
(0.065) (0.084)
PRO 0.6366** 0.3801
(0.029) (0.159)
ENV 0.0290 0.0271
(0.773) (0.801)
EMP 0.1222 0.0874
(0.257) (0.473)
Size  − 0.0822**  − 0.0947**
(0.031) (0.022)
Leverage  − 0.9973**  − 1.0280***
(0.011) (0.008)
Cash holdings 0.7889** 0.8339*
(0.032) (0.076)
R&D intensity 4.5289*** 4.7736***
(0.000) (0.000)
Capital expenditure/book asset 0.9800 0.6850
(0.256) (0.476)
Advertising intensity 2.1034 2.6572
(0.150) (0.118)
Sales growth rate 0.6852* 0.6572*
(0.053) (0.075)
Fixed assets/book assets 0.1616 0.2011
(0.596) (0.489)
Profitability 3.4034*** 3.3718***
(0.002) (0.002)
Constant 2.2983*** 2.4330***
(0.000) (0.000)
Observations 625 625
Adj. R-squared 0.419 0.428
Industry FE Yes Yes
  1. This table presents regression results for the relation between combinations of Tobin’s Q and CSR dimensions. EMP, PRO, and ENV are indicators of firm engagement in Employee relations, Product, and Environment CSR dimensions, respectively. FF17_2 is the dummy variable indicating that mining and minerals industry, and FF17_3 is the dummy variable indicating the oil and petroleum products industry. The definitions of the remaining industries are provided in the first two columns of Table 9. All the other variables are defined in the legend of Table 1. In all regression models, control variables are one-year lagged. All regressions control for firm industry membership. All continuous variables are winsorized at the 1st and 99th percentile. P values are reported in the parentheses. Heteroskedasticity-consistent standard errors are clustered at the firm level. ***, **, * denote statistical significance at 1%, 5%, and 10% levels, respectively

Appendix 6

Firm characteristics and CSR specialization: industry dummies.

  HHI Entropy
CSR concerns  − 0.011***  − 0.011***
(0.000) (0.000)
International  − 0.080***  − 0.069***
(0.000) (0.000)
Size  − 0.069***  − 0.057***
(0.000) (0.000)
Cash-flows  − 0.088*  − 0.079**
(0.092) (0.037)
Leverage 0.103*** 0.087***
(0.000) (0.000)
Profitability  − 0.054  − 0.034
(0.339) (0.404)
R&D intensity  − 0.410***  − 0.323***
(0.000) (0.000)
FF17_2 0.156*** 0.134***
(0.003) (0.001)
FF17_3 0.161*** 0.142***
(0.000) (0.000)
FF17_4 0.056 0.043
(0.295) (0.335)
FF17_5 0.065 0.049
(0.205) (0.258)
FF17_6 0.051 0.053
(0.254) (0.138)
FF17_7 0.107** 0.077**
(0.011) (0.027)
FF17_8 0.050 0.051
(0.259) (0.146)
FF17_9 0.141** 0.107**
(0.030) (0.046)
FF17_10 0.053 0.054
(0.328) (0.179)
FF17_11 0.050 0.049*
(0.138) (0.080)
FF17_12 0.155*** 0.131***
(0.001) (0.000)
FF17_13 0.110*** 0.099***
(0.004) (0.002)
FF17_15 0.094** 0.077**
(0.011) (0.012)
FF17_17 0.107*** 0.090***
(0.001) (0.001)
Constant 1.123*** 1.155***
(0.000) (0.000)
Observations 10,144 10,144
Adj. R-squared 0.227 0.266
Industry FE Yes Yes
Year FE Yes Yes
  1. This table presents regression results for model 3 and 4 of Table 6 on the relation between firm characteristics and CSR specialization. In this Table, we provide the estimates of industry dummies coefficients. All variables are as defined in the notes to Table 6. All right-hand side variables are lagged one-year. All specifications control for industry fixed effects and year fixed effects. Heteroskedasticity-consistent standard errors are clustered at the firm level. All the continuous variables are winsorized at the first and the 99th percentile. P values are reported in the parentheses. ***, **, * denote statistical significance at 1%, 5%, and 10% levels, respectively

Rights and permissions

Springer Nature or its licensor holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Bouslah, K., Hmaittane, A., Kryzanowski, L. et al. CSR Structures: Evidence, Drivers, and Firm Value Implications. J Bus Ethics (2022). https://doi.org/10.1007/s10551-022-05219-6

Download citation

  • Received:

  • Accepted:

  • Published:

  • DOI: https://doi.org/10.1007/s10551-022-05219-6

Keywords

  • Corporate social responsibility
  • CSR structures
  • CSR specialization
  • Stakeholder management

JEL Classification

  • M14
  • G34