In an era of rising concern about financial performance and social ills, companies’ economic achievements and negative externalities prompt a common question: Does it pay to be good? For thirty-five years, researchers have been investigating the empirical link between corporate social performance (CSP) and corporate financial performance (CFP). In the most comprehensive review of this research to date, we conduct a meta-analysis of 251 studies presented in 214 manuscripts. The overall effect is positive but small (mean r = .13, median r = .09, weighted r = .11), and results for the 106 studies from the past decade are even smaller. We also conduct sensitivity analyses to determine whether or not the relationship is stronger under certain conditions. Except for the effect of revealed misdeeds on financial performance, none of the many contingencies examined in the literature markedly affects the results. Therefore, we conclude by considering whether, aside from striving to do no harm, companies have grounds for doing good - and whether researchers have grounds for continuing to look for an empirical link between CSP and CFP.

Does it Pay to Be Good...And Does it Matter? A Meta-Analysis of the Relationship between Corporate Social and Financial Performance

One of the older questions in the debate about Corporate Social Responsibility (CSR) is whether it is worthwhile for organizations to pay attention to societal demands. This debate was emotionally, normatively, and ideologically loaded. Up to the present, this question has been an important trigger for empirical research in CSR. However, the answer to the question has apparently not been found yet, at least that is what many researchers state. This apparent ambivalence in CSR consequences invites a literature study that can clarify the debate and allow for the drawing of conclusions. The results of the literature study performed here reveal that there is indeed clear empirical evidence for a positive correlation between corporate social and financial performance. Voices that state the opposite refer to out-dated material. Since the beginnings of the CSR debate, societies have changed. We can therefore clearly state that, for the present Western society, “Good Ethics is Good Business.”

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The Worth of Values – A Literature Review on the Relation Between Corporate Social and Financial Performance

Ratings of corporations’ environmental activities and capabilities influence billions of dollars of “socially responsible” investments as well as some consumers, activists, and potential employees. In one of the first studies to assess these ratings, we examine how well the most widely used ratings— those of Kinder, Lydenberg, Domini Research & Analytics (KLD)—provide transparency about past and likely future environmental performance. We find KLD “concern” ratings to be fairly good summaries of past environmental performance. In addition, firms with more KLD concerns have slightly, but statistically significantly, more pollution and regulatory compliance violations in later years. KLD environmental strengths, in contrast, do not accurately predict pollution levels or compliance violations. Moreover, we find evidence that KLD’s ratings are not optimally using publicly available data. We discuss the implications of our findings for advocates and skeptics of corporate social

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How Well Do Social Ratings Actually Measure Corporate Social Responsibility

Over the last couple of decades Small and Medium Sized Enterprises [1] (SMEs) have become more important both numerically and economically, a trend that is set to be maintained. SMEs make up over 90 per cent of businesses worldwide and account for between 50 and 60 per cent of employment [2]. A report by the Global Entrepreneurship Monitor shows that Chile, Korea, New Zealand, Uganda and Venezuela are emerging as among the most entrepreneurial countries in the world, and that more than 80 per cent of entrepreneurs throughout the 41 countries studied expect to create new jobs within the next five years [3]. Given the significant scale of small business in nearly every economy, their aggregate achievements have a major effect worldwide. SMEs have multiple roles; they may be seen as innovators (or laggards) in the life-cycle of particular technologies, as a mechanism for privatisation of state-owned enterprises, as a response to global competition, or as a device for economic regeneration [4].

A Critique of Conventional CSR Theory: An SME Perspective

Purpose – The purpose of this article is to examine the influence of ownership structure on corporate social responsibility (CSR) disclosure in Malaysian company annual reports (CARs).Design/methodology/approach – The study uses a CSR disclosure checklist to measure the extent of CSR disclosure in annual reports and a multiple regression analysis to examine the association between ownership structure and the extent of CSR disclosure in annual reports.Findings – The paper finds that, even among the larger and actively traded stocks in Malaysia, there is considerable variability in the amount of social activities disclosed in corporate annual reports. Results from multiple regression analysis show that, consistent with expectations, companies in which the directors hold a higher proportion of equity shares (owner‐managed companies) disclosed significantly less CSR information, while companies in which the government is a substantial shareholder disclosed significantly more CSR information in their annual re...

Ownership structure and corporate social responsibility disclosure: some Malaysian evidence

This paper investigates the relationship between corporate social responsibility (CSR) and the economic performance of corporations. It first examines the theories that suggest a relationship between the two. To test these theories, measures of CSR performance and disclosure developed by the New Consumer Group were analysed against the (past, concurrent and subsequent to CSR performance period) economic performance of 56 large UK companies. Economic performance included: financial (return on capital employed, return on equity and gross profit to sales ratios); and capital market performance (systematic risk and excess market valuation). The results supported the conclusion that (past, concurrent and subsequent) economic performance is related to both CSR performance and disclosure. However, the relationships were weak and lacked an overall consistency. For example, past economic performance was found to partly explain variations in firms’ involvement in philanthropic activities. CSR disclosure was affected (positively) by both a firm’s CSR performance and its concurrent financial performance. Involvement in environmental protection activities was found to be negatively correlated with subsequent financial performance. Whereas a firm’s policies regarding women’s positions seem to be more rewarding in terms of positive capital market responses (performance) in the subsequent period. Donations to the Conservative Party were found not to be related to companies’ (past, concurrent or subsequent) financial and/or capital performance.

Corporate social responsibility and economic performance in the top British companies: are they linked?

Alsop's first business partner of two decades, John Lyall describes their formative years as students at the Architectural Association in London, the influence of various members of Archigram, and sharing a house in Southeast London's not-so-salubrious Ladywell district. He recounts a world of music gigs, designing events and parties, and the offices they worked for as young architects before forming their fledgling practice in the 1970s. 

Jonathan Lyall

Papers

Corporate social responsibility and economic performance in the top British companies: are they linked?

Notes on a 20‐Year Partnership: Challenging Architecture and Each Other