Effects of Corporate Social Responsibility on Corporate Financial Performance: A Competitive-Action Perspective

• Published in: Journal of management Vol. 44; no. 3; pp. 1097 - 1118
• Main Authors: Kim, Kwang-Ho, Kim, MinChung, Qian, Cuili
• Format: Journal Article
• Language: English
• Published: Los Angeles, CA SAGE Publications 01-03-2018; Sage Publications Ltd
• Subjects: Action; Competition; Corporate responsibility; Financial performance; Social responsibility; Software industry; Strategic management; positive CSR; negative CSR; financial performance; competitive action
• ISSN: 0149-2063; 1557-1211
• DOI: 10.1177/0149206315602530

We attempt to provide a more nuanced view of the relationship between corporate social responsibility (CSR) and firm financial performance using a competitive-action perspective. We argue that competitive action should be considered as an important contingency that determines the effects of CSR activities on firm financial performance. Using data for 113 publicly listed U.S. firms in the software industry between 2000 and 2005, we found that socially responsible activities (positive CSR) enhance firm financial performance when the firm’s competitive-action level is high, whereas socially irresponsible activities (negative CSR) actually improve firm financial performance when the competitive-action level is low. By introducing competitive action as an important contingency, this study contributes to the literature on CSR and strategic management.