The corporate social responsibility studies and reports we spotlight cover the following topics: attaining sustainable growth through corporate social responsibility; CSR emergence as a crucial instrument for minimizing conflicts with stakeholder; the impact on proactive policies on employees, consumers and diversity and their relationship to the firm’s financial performance; the notion of a socially responsible corporation is potentially an oxymoron because of the naturally conflicted nature of the corporation, using corporate Social Responsibility to Understand the Credit Crisis; a look at whether the modern corporate governance model is sustainable; and the impact of political views on corporate decision-making and corporate social responsibility.
Attaining Sustainable Growth Through Corporate Social Responsibility – Today, more than ever, organizations are focused on environmental and social responsibility as a strategic objective. The survey of senior executives worldwide shows that 60 percent believe that corporate social responsibility (CSR) has increased in importance over the past year. Only 6 percent say it’s a lower priority. To be sustainable, businesses are now embracing a relatively new objective: optimizing their operations to improve environmental and social outcomes in a manner that maximizes overall performance. As a result, executives face entirely new decisions and must manage an intricate new set of trade-offs. This new objective calls for new information, which many organizations are still missing, by a wide margin. Outperforming organizations, by contrast, have proved to be far better at collecting relevant and timely information from across their ecosystems, including their customers. These organizations and leaders in CSR point to a path forward – developing new sources of information and new levels of insight for meeting strategic sustainability objectives.
Political Views and Corporate Decision-Making: the Case of Corporate Social Responsibility. By Amir Rubin, Simon Fraser University – Finance Area – The study establishes a relationship between political beliefs of corporate stakeholders and the corporate social responsibility (CSR) of their firms. Companies with a high CSR rating tend to be located in Democratic states, while companies with a low CSR rating tend to be located in Republican states. Amir Rubin of Simon Fraser University analyzed the 2004 presidential election results of communities in which corporate headquarters are located. The results from the election provide relevant data to analyze the correlation between political views of individual communities and the CSR ratings of firms located in those communities. Results show that firms with high CSR ratings are more likely to be located in states with Democratic majorities, and firms with low CSR ratings are more likely to be located in states with Republican majorities. Corporate executives tend to reside near a firm’s headquarters. one can conclude that corporate decision makers would align their policies with the views of their stakeholders in order to reduce conflict and create value for the firm.
Corporate Social Performance, Stakeholder Coalitions, Corporate Governance and Performance – Punit Arora and Milena T. Petrova of Syracuse University examined the relationship between investment in different corporate social domains and firm performance. The results indicate that proactive policies with respect to employees, consumers and diversity are strongly related to firm’s financial performance. In addition, results show that commitment-based work practices and higher instructional ownership help firms improve their capacity to benefit from their performance on other corporate social performance domains, while poor shareholders’ rights protection detriments firms’ ability to benefit from their investment in social responsibility domains, which they believe indicates preliminary support for the concept of stakeholder influence capacity.
Corporate Social Responsibility and Shareholder’s Value: An Event Study Analysis – In today’s global economy, corporate social responsibility (CSR) is a core component of corporate strategy. Due in part to financial scandals, losses, and the diminished reputation of the affected listed companies, CRS is emerging as a crucial instrument for minimizing conflicts with stakeholders. While corporations are busy adopting and enhancing CSR practices, there is (beyond a very few notable exceptions) no established empirical research on its impact and relevance for the capital market. Our paper investigates this issue by tracing market reactions to corporate entry into and exit from the Domini 400 Social Index (a recognized CSR benchmark) between 1990 and 2004. Our paper highlights two main findings: i) a significant upward trend in absolute values of abnormal returns, irrespective of the event (entry/exit vis-a-vis the index) type; and ii) a significant negative effect on abnormal returns after announcement from the Domini index. The latter effect continues to persist even after controlling for concurring financial distress shocks and stock market seasonality.
Is the Socially Responsible Corporation a Myth? The Good, Bad and Ugly of Corporate Social Responsibility – Despite differences of opinion about the efficacy of the concept of corporate social responsibility there is a general consensus amongst academics, policy makers and practitioners that corporations operate with social sanction that requires that they operate within the norms and mores of the societies in which they exist. In this article, the author argues that the notion of a socially responsible corporation is potentially an oxymoron because of the naturally conflicted nature of the corporation. This has profound implications for our understanding of corporate social responsibility, what we view as the relevant issues relating to it and how we investigate its role and impact.
Can Corporate Social Responsibility Help Us Understand the Credit Crisis? – The financial crisis that started in the United States in 2007 and which has spread throughout the world has many causes, one of which is the abundance of unethical behaviors on the part of many of those who made the financial decisions, such as regulators, supervisors, managers or employees – and also on the part of a not insignificant number of their clients. In this paper, we will seek to shed light on the crisis’s ethical content and show how the generalized practice of corporate social responsibility within financial institutions could have helped reduce the magnitude of the crisis, perhaps not systemically but definitely in some of the organizations that have been most affected by the crisis. However, to do so, it would have been necessary to apply a particular concept of social responsibility, a responsibility with an ethical basis – or, more specifically, a voluntarily-assumed ethics that was capable of giving rise to self-generated duties among financial decision-makers.
Beyond Shareholder Value: Normative Standards for Sustainable Corporate Governance – This paper explores whether the modern corporate governance model is sustainable. For many, particularly large, corporations, there is a separation between ownership and management, with an emphasis by management on short-term gains at the expense of long-term sustainability. This paper explores the role of corporate directors, particularly vis-à-vis shareholders, from an interdisciplinary perspective, analyzing legal case law as well as legal, management, and finance literature. This paper then explores emerging trends in expanding notions of corporate governance that incorporate concerns beyond just shareholders, recognizing the interrelationship between business and society. It is suggested that in order to remain viable and competitive, corporations need to normalize longer views of sustainability that encompass numerous stakeholders, rather than simply trying to maximize profits during the current quarter.
Who Should Head Up Your Corporate Responsibility Approach? The Who and Why of Finding Your Head of Corporate Responsibility – They conducted more than 30 detailed interviews with businessmen and women – including CEOs, main board directors responsible for Corporate Responsibility as well as a number of Corporate Responsibility and Sustainability directors. Those interviewed are from companies considered leading the way in embedding CR into business practice, who view being responsible as the right thing to do. The study addresses the following: How has the operational approach to CR evolved; backgrounds of CR heads; the rise of a new C-suite board role, such as a Chief Sustainability Officer; and reporting lines of CR heads and key attributes of the CR Director.
© 2009, Tracey de Morsella. All rights reserved. Do not republish.