Is corporate social responsibility a key to profitability? A quantitative examination of the 2012 best corporate citizens

by Patterson Shirey, Wendy L., Ph.D., CAPELLA UNIVERSITY, 2013, 149 pages; 3601971

Abstract:

Corporate social responsibility (CSR) and the possible link to corporate financial performance (CFP) has been a topic of interest since the 1920’s. Although extensive research focusing on the relationship between CSR and CFP has been conducted, neither consistent results nor a consensus has been achieved. This dissertation focused on determining if a significant link exists between CSR and CFP. The study was guided by the overall research question: How does stakeholder theory explain the relationship between CSR and CFP? CSR was identified through the use of the Corporate Responsibility 2012 Best Corporate Citizens list. Group 1 consisted of the firms recognized as the most socially responsible garnered from the top one-fourth of this list. Group 2 consisted of the firms recognized as the least socially responsible garnered from the bottom one-fourth of this list. This study was controlled for the effects of firm size (annual revenue), for industry (Standardized Industry Classification [SIC] division code), and for the number of years each firm had been in business. Accounting-based financial measures and financial profitability ratios were used to represent CFP. CFP was evaluated using annual revenue, common equity, net income, profit margin, return on assets (ROA), return on equity (ROE), and total assets. Overall, the results of this research indicated a significant positive relationship was present between six of the seven postulated hypotheses. These findings suggest a significantly positive correlation between CSR and CFP which may have an impact on a corporation’s triple bottom line (people, planet, and profit). In conclusion, corporations may benefit from the development of a symbiotic relationship promoting good corporate citizenship with its stakeholders.

AdviserRobert Hockin
SchoolCAPELLA UNIVERSITY
Source TypeDissertation
SubjectsManagement
Publication Number3601971

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