Question

c) Your managing director, Mr Nicholas is not convinced why your company should give something back to the society, Explain with examples to him in a form of a memo the links between corporate performance, and corporate social responsibility.

Answer 1

Using CSR awards as a social responsibility indicator, socially responsible firms can achieve financial results superior to those of firms which do not pursue CSR initiatives. The relationship remains after endogeneity is treated. The Google Search Volume Index (SVI) is used as a specific proxy for firm visibility, observing that it has a positive influence on the CSR–CFP (Corporate Financial Performance) relationship.

In a financial economic scenario in which the corporate survival of small and medium enterprises (SMEs) is more conditioned than ever by competitive performance, the strategic incorporation of socially responsible actions, more concerned and engaged with stakeholders, contributes to improve the competitiveness of these organizations. Thus, the existence of a direct or mediated relationship between the development of Corporate Social Responsibility (CSR) practices and competitive performance has been analyzed from a multi-stakeholder perspective. Many researches have been done to accomplish this task. In one of the researches, data were collected from a sample of 481 Spanish SMEs and the technique of partial least squares (PLS) was used. Outcomes show that the development of CSR practices contributes to increase the competitive performance both directly and indirectly, through the ability of these organizations to manage their stakeholders. This study, therefore, supported the social impact hypothesis and offers evidence about some intangibles such as the relational capacity mediate the causal effect between CSR and competitive performance.