To what Extent is Corporate Social Responsibility Beneficial to a Company’s Performance?

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In recent years, there have been a growing number of companies that have an explicit Corporate Social Responsibility (CSR) plan. As stated by European Commission (2001), CSR is defined as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” It is believed that the motives for CSR are gradually converting from philanthropic rationale to performance-driven orientation, but the question of better company performance resulting from the implementation of CSR has often been the centre of debate. The purpose of this paper is to examine how CSR can positively contribute to company performance, which refers to the quantitative values such as profits and stock price. This paper begins by reviewing how investors and managers perceive CSR as a value-creating tool. It will then go on to discuss how CSR helps to build employer-employee relationship and customer loyalty. Companies with CSR initiatives have better access to finance in capital markets that is essential for firms to produce goods and generate profits. Earlier study by Mcguire, Sundgren and Schneeweis (1988) reports that contributions to the environment and society are an important factor when banks and institutional investors are evaluating investment opportunities. Moreover, enterprises pursuing CSR practices tend to widely publicize their socially responsible behavior and thus become more transparent and understandable. Higher levels of transparency minimize the asymmetric information between the company and investors so investors become less aware of the risks associated with the investment projects (Cheng, Ioannou, & Serafeim, 2014). Consequently, more s... ... middle of paper ... ... 46. Montgomery, D. B., & Ramus, C. A. (2007). Including Corporate Social Responsibility, Environmental Sustainaibility, and Ethics in Calibrating MBA Job Preferences. PriceWaterhouseCoopers. (2002). 2002 Sustainability Survey Report. Raman, M., Lim, W., & Nair , S. (2012). The Impact of Corporate Social Responsibility on Consumer Loyalty. Kajian Malaysia , 30 (2), 71-93. Saunders, R. (2006, 12 18). CSR: How to get an ethical advantage. Retrieved from Stawiski, S., Deal, J. J., & Gentry, W. A. (2010). Employee Perceptions of Corporate Social Responsibility: The Implications for Your Organization. Center for Creative Leadership. Turban, D. B., & Greening, D. W. (1997). Corporate social performance and organizational attractiveness to prospective employees. Academy of Management Journal , 40, 658-672.

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