Most theorizing on the relationship between corporate social/environmental performance (CSP) and corporate financial performance (CFP) assumes that the current evidence is too fractured or too variable to draw any generalizable conclusions. With this integrative, quantitative study, we intend to show that the mainstream claim that we have little generalizable knowledge about CSP and CFP is built on shaky grounds. Providing a methodologically more rigorous review than previous efforts, we conduct a meta-analysis of 52 studies (which represent the population of prior quantitative inquiry) yielding a total sample size of 33,878 observations. The meta-analytic findings suggest that corporate virtue in the form of social responsibility and, to a lesser extent, environmental responsibility is likely to pay off, although the operationalizations of CSP and CFP also moderate the positive association. For example, CSP appears to be more highly correlated with accounting-based measures of CFP than with market-based ...

/pdf/corporate-social-and-financial-performance-a-meta-analysis-21bp3gts9c.pdf

Corporate Social and Financial Performance: A Meta-Analysis

We outline a supply and demand model of corporate social responsibility (CSR). Based on this framework, we hypothesize that a firm's level of CSR will depend on its size, level of diversification, research and development, advertising, government sales, consumer income, labor market conditions, and stage in the industry life cycle. From these hypotheses, we conclude that there is an “ideal” level of CSR, which managers can determine via cost-benefit analysis, and that there is a neutral relationship between CSR and financial performance.

https://www.jstor.org/stable/pdf/259398.pdf

Corporate Social Responsibility: a Theory of the Firm Perspective

Companies are increasingly asked to provide innovative solutions to deep-seated problems of human misery, even as economic theory instructs managers to focus on maximizing their shareholders' wealt

Misery Loves Companies: Rethinking Social Initiatives by Business:

Drawing on the resource-based view of the firm, we posited that environmental performance and economic performance are positively linked and that industry growth moderates the relationship, with the returns to environmental performance higher in high-growth industries. We tested these hypotheses with an analysis of 243 Finns over two years, using independently developed environmental ratings. Results indicate that “it pays to be green” and that this relationship strengthens with industry growth. We conclude by highlighting the study's academic and managerial implications, making special reference to the social issues in management literature.

/pdf/a-resource-based-perspective-on-corporate-environmental-o8uurv17d3.pdf

A Resource-Based Perspective On Corporate Environmental Performance And Profitability

In the face of marketplace polls that attest to the increasing influence of corporate social responsibility (CSR) on consumers' purchase behavior, this article examines when, how, and for whom specific CSR initiatives work. The findings implicate both company-specific factors, such as the CSR issues a company chooses to focus on and the quality of its products, and individual-specific factors, such as consumers' personal support for the CSR issues and their general beliefs about CSR, as key moderators of consumers' responses to CSR. the results also highlight the mediating role of consumers' perceptions of congruence between their own characters and that of the company in their reactions to its CSR initiatives. More specifically, the authors find that CSR initiatives can, under certain conditions, decrease consumers' intentions to buy a company's products.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2333479_code333677.pdf?abstractid=2333479&type=2

Does Doing Good Always Lead to Doing Better? Consumer Reactions to Corporate Social Responsibility

Firms compete for reputational status in institutional fields. Managers attempt to influence other stakeholders' assessments by signaling firms' salient advantages. Stakeholders gauge firms' relati...

What's in a Name? Reputation Building and Corporate Strategy

Introduction. Strategy and Economics. Part One. Economic Foundations of Strategy. Chapter 1. Basic Microeconomic Principles. Chapter 2. Economies of Scale and Scope. Chapter 3. Agency and Coordination. Chapter 4. The Power of Principles - An Historical Perspective. Part Two. Firm Boundaries. Chapter 5. The Vertical Boundaries of the Firm. Chapter 6. Organizing Vertical Boundaries: Vertical Integration and Its Alternatives. Chapter 7. Diversification. Part Three. Market and Competitive Analysis. Chapter 8. Competitors and Competition. Chapter 9. Strategic Commitment. Chapter 10. The Dynamics of Pricing Rivalry. Chapter 11. Entry and Exit. Chapter 12. Industry Analysis. Part Four. Strategic Position and Dynamics. Chapter 13. Strategic Positioning for Competitive Advantage. Chapter 14. Sustaining Competitive Advantage. Chapter 15. The Origins of Competitive Advantage: Innovation, Evolution, and Environment. Part Five. Internal Organization. Chapter 16. Performance Measurement and Incentives in Firms. Chapter 17. Strategy and Structure. Chapter 18. Environment, Power, and Culture.

Economics of Strategy

This paper develops a theory of strategic group identity that explains how strategic groups emerge in an industry and how they can affect firm behaviors and outcomes. In so doing, it provides a theoretical basis for the existence of strategic groups. We argue that managers cognitively partition their industry environment to reduce uncertainty and to cope with bounded rationality. Social learning theory and social identification theory are used to describe how cognitive groups coalesce into meaningful substructures and how a group-level identity emerges. We describe the ways in which macro level factors condition the development of groups and their identities. We introduce the notion of a strong identity, which characterizes any group sufficiently recognized and attended to by members to affect individual action. Groups with ‘weak identities’ are no more than transient agglomerations of firms and do not exist in any meaningful sense. These ideas are developed into propositions that describe the conditions under which groups with strong identities are likely to emerge. A second set of propositions describes their transformation over time. Identity strength is linked to both positive and negative outcomes in a final set of propositions. We show how strategic groups with strong identities can affect firm performance, resolving a longstanding problem which has plagued strategic groups research and conclude by suggesting some approaches for measurement and future research. © 1997 by John Wiley & Sons, Ltd.

https://www.wiley.com/college/man/saloner380717/cases/peteraf.pdf

Getting to know you: a theory of strategic group identity

Although scholars have long recognized the increased mortality risk that new
ventures face in terms of a "liability of newness," most of the discussion
around this risk has been in terms of the contextual constraints that new ventures
face and the difficulties that managers have in overcoming them. This
emphasis is in part a reflection of the perils of newness but also stems from
the retrospective and aggregate perspective taken by researchers. Although
the macro-level perspective of new venture mortality has made a significant contribution to our knowledge of mortality risk patterns, there has been little interest in identifying how venture managers can address the risks that all new organizations face.

We argue that in order to make progress in explaining new venture survival, a theoretical model is required that uses a more micro-level perspective to explain new venture failure (and the flip side, new venture survival). In this paper we develop such a model. We establish a definition of mortality risk and argue that the liability of newness is largely dependent on the degree of novelty (ignorance) associated with a new venture. Novelty is viewed in three different dimensions, viz.: to the market, to the technology of production and to management. Novelty to the market concerns the degree to which the customers are uncertain about the new venture. Novelty in production concerns the extent to which the production technology used by the new venture is similar to the technologies in which the production team has experience and knowledge. Novelty to management concerns the entrepreneurial team’s lack of business skills, industry specific information and start-up experience. We argue that mortality risk increases
with the degree of novelty in each dimension and with the number of dimensions in which the new venture is novel.
We propose that the decline in mortality risk occurs as the venture’s novelty in each of the three dimensions is eroded by information search and dissemination processes. This allows the new firm to become an established business and explains what we term the "evolutionary" path of mortality—novelty and risk decline monotonically, after a period of adolescence, as ignorance decays over time due to ‘passive learning’. We also propose that there is a "strategic" mortality risk path that reflects the impact of positive and negative shocks (shocks are exogenous events that alter the overall degree of novelty at a point in time— positive shocks decrease overall novelty, while negative shocks increase overall novelty) and reversals (endogenous actions that increase the overall novelty of the new venture at a point in time) on the mortality risk of a new venture.
If the incidence and effects of these disruptions can be managed, then venture managers may be able to mitigate the mortality risk for their venture. We argue that risk reduction strategies can be employed, most of which impact on one or more of the dimensions of mortality risk in order to increase the firm’s chances of survival. A series of risk reduction strategies are proposed and their impact on the determinants of mortality risk is considered.

Mark Shanley

Papers

What's in a Name? Reputation Building and Corporate Strategy

Economics of Strategy

Getting to know you: a theory of strategic group identity

New Venture Survival: Ignorance, External Shocks, and Risk Reduction Strategies

New venture survival: Ignorance, external shocks, and risk reduction strategies