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 ...

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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

Vertical groups are a common occurrence that is rarely studied as a group-level phenomenon. This paper brings attention to the vertical group, as a collective actor, and group formation processes. We define the vertical group and describe, in brief, why they exist. We explore the issue of how they form and the social processes under which different types of groups are likely to emerge. These include trial and error learning, social learning, and social identification. We introduce a framework that shows how variation in two more fundamental enabling conditions affects both the group development process and the characteristics of the emerging groups. Copyright © 2004 John Wiley & Sons, Ltd.

Vertical group formation: A social process perspective

A drug formulary is a list of approved drugs.1 The term is historically associated with hospitals; a hospital pharmacy stocks those drugs on the hospital formulary and some nonformulary items.2 Today, formularies are an essential component of managed care.3 Most health maintenance organizations (HMOs) provide greater coverage to patients who obtain drugs listed on their formularies.4 Some HMOs design their own formularies while others rely on third parties for formulary design. Regardless of how HMOs design their formularies, there is variation across HMOs in how they make adoption decisions for a given set of drugs. Some formularies are relatively “open” and include almost all FDA-approved drugs.5 Others are more restrictive, so that their HMOs pay for only one or two out of a class of competing drugs. This variation in formulary adoption decisions is, needless to say, important to pharmaceutical executives who are at a loss to explain why some HMOs adopt their drugs while others do not.

Lyles et al. (1997) examine some of the factors influencing formulary adoption decisions by HMOs and other managed care organizations (MCOs). The 51 organizations that respond to their survey all report that they use formularies to contain costs and assure appropriate drug use. All respondents state that they assess the clinical effectiveness and cost effectiveness of drugs, while about half also assess the impact of drugs on quality of life. While this study sheds light on the goals of formulary makers, it does not identify sources of variation in adoption decisions. For example, the study does not address the relative importance of cost versus quality goals. Nor does the study assess how organizational characteristics affect specific adoption decisions.

Lyles et al. show that when making formulary adoption decisions, MCOs examine a variety of criteria, including cost and quality. While all MCOs may weigh similar criteria, they may not reach the same conclusions. This can occur for at least three reasons. First, drug adoption decisions may vary because MCOs may pursue different objectives (or strategies for value creation) and may draw different conclusions about the available evidence on drug performance. Variation can also result from the organization-specific characteristics of MCOs. These could include incentives, controls, and practices that are incomplete or else inconsistent with the economic objectives for cost and quality that the MCO formally espouses. Organizational idiosyncrasies can thus bias adoption decisions away from those outcomes that would be most consistent with the MCO's objectives. Lastly, variation in adoption decisions may stem from different relationships between MCOs and the drug manufacturers.

In this study, we report the results of a survey of the directors of pharmacy at more than 40 HMOs. We identify economic and organizational factors that influence formulary adoption decisions for seven of the largest-selling drugs.6 Our intent is to clarify the decision processes that occur at this critical institutional linkage between pharmaceutical firms and HMOs. Knowledge of these processes becomes more important as the share of pharmaceutical sales that occurs through HMOs continues to grow.

Determinants of HMO formulary adoption decisions.

A major wave of acquisition activity developed in the US after 1976 (Golbe and White 1988). Evidence on the results of this activity for corporate acquirers is mixed (Porter 1987), while claims about its negative consequences for stakeholders have prompted numerous concerns (Siegfried and Sweeney 1982). The mechanisms by which acquisitions create value are unclear and little attention is devoted to what happens in firms after changes in ownership (Shanley and Correa 1992).1 This chapter studies the determinants and consequences of post-acquisition changes for 51 Fortune 500 acquisitions. Our results suggest that changes are best understood by an incremental management style that avoids disruptions, maintains flexibility, and maximises organisational learning.

Determinants and Consequences of Post-Acquisition Change

A note on the relational aspects of hospital market definitions.

The hospital services component of the Consumer Price Index (CPI) measures the cost of hospital services to private patients paying list prices. It is, however, widely used as an estimate of the overall rate of inflation in hospital prices in spite of the fact that there are strong reasons to believe that it is inappropriate to use the CPI for this purpose. This is because: 1) A growing number of patients are enrolled in health maintenance organizations (HMOs) and preferred provider organizations (PPOs), which negotiate discounts from list prices; and 2) the size of the discounts may have been increasing. The potential result is a gap between the rate of inflation of list prices and the rate of inflation of actual prices paid in transactions. This study explores whether such a gap exists and determines its possible magnitude. In addition, parallel indices for list and actual prices are computed on the basis of data from California hospitals for fiscal years 1983-1988. The analysis suggests that list price inflation has greatly exceeded actual inflation--by a factor of two for recent years. These findings have broad implications for evaluating not only inflation but also the impact of cost containment strategies.

https://www.jstor.org/stable/info/3766097

Mark Shanley

Papers

Vertical group formation: A social process perspective

Determinants of HMO formulary adoption decisions.

Determinants and Consequences of Post-Acquisition Change

A note on the relational aspects of hospital market definitions.

How fast are hospital prices really rising