Essays in corporate social responsibility
- Autores: Borbala Kulcsar
- Directores de la Tesis: Andrea Fosfuri (dir. tes.), Marco S. Giarratana (dir. tes.)
- Lectura: En la Universidad Carlos III de Madrid ( España ) en 2012
- Idioma: inglés
- Tribunal Calificador de la Tesis: Esther Roca Batllori (presid.), Pascual Berrone (secret.), Giovanni Valentini (voc.)
- Materias:
- Enlaces
- Tesis en acceso abierto en: e-Archivo
- Resumen
The current research thesis consists of three main parts, which analyze the corporate social responsibility (CSR) of public firms. Each part provides an empirical analysis related to the subject of CSR and its role in the organizations. My motivation to study CSR lies in the increasing importance of firms¿ engagement in socially responsible actions and in the disagreement of the benefits of CSR actions in the prior literature. I study corporate social responsibility in order to address these conflicting findings and to fill an important research gap by approaching CSR from a new perspective that identifies an optimal alignment between stakeholder needs and firm investments in CSR actions. The first part of the thesis analyses the relationship between charitable giving and failure in the advertising efforts of the firms. Charitable giving is a common form of corporate philanthropy and represents `altruistic¿ initiatives of the firms. I argue that those firms which invest in such actions want to signal a good firm image towards their stakeholder groups. The difficulty for firms when engaging in philanthropic actions is to measure their outcome. I propose that corporate social actions provide intangible benefits for the firms, which can be for instance measured by a decrease in the failure of the firm¿s advertising efforts. I use a panel dataset of 167 large U.S. firms from the S&P 500 firms list covering a nine years period. I measure failed advertising efforts by abandoned trademarks from the United States Patent and Trademark Office (USPTO) database. This measure is novel in the strategic management literature. I use data from the Kinder, Lydenberg and Domini database (KLD) to measure charitable giving of the firms, expressed as binary variable, taking the value 1 if the firm has consistently given over 1.5 % of trailing three-year net earnings before taxes to charity, or has been notably generous in its giving, and 0 otherwise. Financial data to control for additional factors was obtained from the Compustat database. I use negative binomial regression method given the count dependent variable and the mean-variance inequality. The Hausman-test approved that the fixed-effect specification is correct in my model, therefore we use firm and time fixed effects. The results show evidence about a positive relationship between charitable giving and decreased failure in the advertising efforts of the firms. The explanation of this positive relationship lies in the ability of corporate social actions to create a positive moral capital (Godfrey, 2005) among stakeholders for the firm to protect and increase the firms intangible assets. The second part of the thesis focuses on the stakeholder pressures and their affect on the CSR investments of the firms. Stakeholder groups can act as institutional actors and can influence firms to engage in CSR actions (e.g. social movements). In this study I focus on the geography of the different stakeholder pressures and their relationship to the firms CSR actions. I consider internal, local external and global external stakeholders which can influence firm decisions in order to invest in altruistic and innovative CSR actions. I argue that stakeholder groups, given their geographic location, can assert different pressures on the firms. Firms, given the geography of the pressures, take into account certain characteristics of their altruistic and innovative CSR in order to choose a best response. The three characteristics that firms consider when choosing CSR actions are the visibility, the cost structure and the time constraints. I hypothesize that pressure from internal stakeholder groups, represented by the employees, will encourage firms to invest in innovative rather than altruistic CSR actions. Employees are less sensible to time constraints and to the costs involved and therefore value more those initiatives of the firms that provide a long-term advantage, such as innovative CSR. I also hypothesize that local external pressure coming from local NGO groups have different aims and firms consider investing in both altruistic and innovative CSR actions. Altruistic actions are useful when local groups require a quick answer that needs less resources and more public visibility. Innovative actions are suitable if local NGO pressures are persistent and require a long-term solution, which infers more resources invested and a longer time frame. Moreover, I hypothesize that global external pressure coming from human rights concerns will encourage firms to invest in altruistic CSR actions. In this case altruistic CSR actions are suitable because the firm faces a distant pressure, and, in order to respond to it, the firm choses the most publicly visible and quicker solution. To study these hypotheses I use a panel dataset over nine years and include 151 firms from the S&P 500 list of the largest U.S. firms. The data sources were the KLD database, Wango database and the Compustat database. I use the seemingly unrelated regressions equations model as a methodological approach. The results confirm our hypotheses and provide evidence about stakeholder pressures given a certain geographic location affecting differently firm CSR actions. The third part of my thesis consists of an empirical analysis about the relationship between CSR and firm performance. Prior literature in the field of management approached this link and found mixed results (McWilliams and Siegel, 2000; Orlitzky et al., 2003; Waddock and Graves, 1997). Researchers found positive, negative or neutral relationship between CSR and firm performance. The arguments of these different results lie for instance in the differences in data sources, methodology and theoretical background. Therefore, I address this question in my research and focus on the relationship between CSR and different financial outcomes on the firm level. Additionally, I also connect CSR to the the advertising efforts of the firms. To put it differently, I apply two different categories of outcome variables (financial and advertising) to observe the benefits of CSR actions related accordingly to tangible and intangible firm measures. In particular, I use the following financial measures: return on assets; return on equity; return on sales; and Tobin¿s q. To measure advertising efforts I use data on filed trademarks of the firms on a yearly basis. Relying on the prior literature, I hypothesize a possible positive, negative and neutral relationship between CSR and firm performance. Moreover, I hypothesize a positive relationship between CSR and the advertising efforts of the firms. I use a panel dataset of a nine year period and include 153 firms from the S&P 500 list of firms. To construct my dataset and analyze my hypotheses I use four secondary databases, namely, the KLD, the USPTO, the Fortune¿s reputational rating and the Compustat databases. I use ordinary least squares methodology to observe my first hypothesis and negative binomial regression to observe my second hypothesis. The results show that CSR is negatively related to the firms¿ financial performance. This finding is not suggesting that firms should not invest in CSR actions, but rather strengthens the premises of a strategic assessment of CSR in order to provide tangible benefits. I argue that this negative relationship can be due to the fact that firms perceive CSR as an initial cost in order to build a long term competitive advantage. Also, CSR actions may not be directly related to the financial benefits of the firms but rather to other outcome measures, for instance, the advertising efforts of the firms. Therefore to provide evidence on this hypothesis we look at the relationship between CSR and the advertising efforts of the firms and find that they are positively related to each other. This finding confirms our initial idea about the ability of CSR to provide intangible benefits for the firms.
