THE CORPORATE SOCIAL PERFORMANCE-FINANCIAL PERFORMANCE LINK

• Published in: Strategic management journal Vol. 18; no. 4; pp. 303 - 319
• Main Authors: WADDOCK, SANDRA A., GRAVES, SAMUEL B.
• Format: Journal Article
• Language: English
• Published: Chichester, UK John Wiley & Sons, Ltd 01-04-1997; John Wiley and Sons; Wiley; John Wiley; Wiley Periodicals Inc
• Subjects: Biological and medical sciences; Business structures; Civil penalties; Community relations; corporate social performance; Corporate strategies; Correlation analysis; Finance; Financial management; Financial performance; Financial services industries; Fundamental and applied biological sciences. Psychology; Hypotheses; Investment strategies; Management principles; management quality; Managers; Miscellaneous; Occupational psychology; Psychology. Psychoanalysis. Psychiatry; Psychology. Psychophysiology; Social responsibility; Strategic management; Studies; Working women; United States > US; Human; Financial management; Firm management; Social aspects; Resource allocation
• ISSN: 0143-2095; 1097-0266
• DOI: 10.1002/(SICI)1097-0266(199704)18:4<303::AID-SMJ869>3.0.CO;2-G

Strategic managers are consistently faced with the decision of how to allocate scarce corporate resources in an environment that is placing more and more pressures on them. Recent scholarship in strategic management suggests that many of these pressures come directly from sources associated with social issues in management, rather than traditional arenas of strategic management. Using a greatly improved source of data on corporate social performance, this paper reports the results of a rigorous study of the empirical linkages between financial and social performance. Corporate social performance (CSP) is found to be positively associated with prior financial performance, supporting the theory that slack resource availability and CSP are positively related. CSP is also found to be positively associated with future financial performance, supporting the theory that good management and CSP are positively related.