This in an excerpt from this book
Corporate Social Responsibility (CSR) basically covers any business approach that aims at sustainable development through its delivery of economic, social and environmental benefit for the stakeholders involved in the complete process. The CSR concept along with all the practices are wide and varied. Similarly, Corporate Social Action (CSA) involves all the acts performed and executed by the corporate houses as part of their greater goal to contribute to the betterment of the society as a whole. Corporate Social Performance or popularly known as CSP is nothing but the result with regard to that of CSA, which can be observed.
Here we endeavor to go beyond the causal relationship between CSR and firm performance, by presenting different factors that influence the corporate decision to engage in CSA, and the nature and scope of this engagement. For example, studies taken here reveal the importance of corporate governance such as top management pay dispersion and ownership structure to the propensity of the firm involved in none other than CSA.
Indeed, the way by which the firm prioritizes its social action, investments and values concerning society and stakeholders is related to its business strategy.
One view is that caring for the firm’s various stakeholders would positively influence its social and financial performance and enhance its reputation For example, it is sometimes argued that CSA contributes to the firm’s legitimacy and leads to its endorsement by those with direct bearing on its economic position (Margolis & Walsh, 2001; Orlitzky et al., 2003). An alternative view is that engagement in CSA is detrimental to CFP.
For example, from a liberal market point of view, the financial performance of firms that decide to act responsibly should deteriorate due to costs related to the introduction of CSA. Consequently, CSA initiatives worsen the firm’s ability to effectively compete in the market against firms less inclined toward CSA (Aupperle et al., 1985; Wood, 2010). An additional approach that integrates the two opposing views is that the value of CSA is contingent on the firm’s strategy.
Firms and companies those are publicly trading are gradually adapting to investor as well as public regarding their very own environmental and social performance and that is a topic of great public policy interest and one worthy of scholarly investigation. When the first US Toxic Release Inventory (TRI) data were released around the beginning of 1990s, scholars and researchers got hold of quantitative information on different corporate performance involving environment.
This enabled the building of better models to investigate the linkage between environmental and financial performance and to probe the causal structure that lies behind the positive correlation between the broader notion of corporate social performance (CSP) and corporate financial performance (CFP) that has been found in a lot of studies that were published since 1994. The focus on 1994 as a watershed year is justified not only because of the availability of the TRI data, but also because the late 1980s and early 1990s saw increased activity and corporate leadership in the US in what has been dubbed corporate social responsibility (CSR).
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