The purpose of this ongoing project is to examine the industry effect as a contingency factor that would impact the relationship between CSR and CFP. Industry characteristics have been shown to largely influence firm's course of strategic actions ( both market and non-market strategies), and thus have a varying impact on firm performance. However, little is known as to the various dynamics and contingency industry-related factors that would determine the form and the sign (direction) of the relationship between CSR and CFP. I am working on this with one colleague and I welcome any true intentions of joining the team.
Book Energy Investments: An Adaptive Approach to Profiting from U...
One way I would suggest in tackling your question is to formulate the following approach:
1. Industries could be "scored" according to its intensity or impact on the environment or social costs of investments. The Equator Principles, a voluntary guideline that many banks adopt for capital intensive projects, may give you guidance on which industries belong to the different categories.
2. Corporate Financial Performance (CFP I presume stands for this) could be measured in cash terms (see residual income theory for this, or Stern's economic value added framework), and correlated according to regulatory and market structures. In my research, highly regulated energy markets tend to show lower divergence of cash returns among firms (and usually lower level of returns as well) than firms operating under competitive markets. Among the reasons for the latter are the initial endowments of firms, ability to differentiate, and managerial competence (or strategic responses - indexation, diversified or asymmetric as described in my book shown in the link above). This strips out the effects of markets and regulatory structures from the CFP.
3. Specific CSR measures, in the case of energy intensive or polluting industries, may be undertaken to mitigate the adverse impact on the environment or communities. The assumption is, with CSR measures, penalties could be avoided by the firm when pollution or negative externalities are internalised through CSR spending.
Trust this provides a starting point in your research.
Thank you very much Dr. Ricardo for this very insightful and thorough input. I will definitely consider that as a major component of my ongoing paper. Best regards!
Dear Marwan,
The following paper may help you in identifying the factors as it is a systematic review for CSR vs CFP.
Article Corporate social responsibility and financial performance re...
Further I May like to be a part of this project if I can contribute something from India.
You may find this paper useful. I may consider being part of the project for a perspective in Kenya
Thank you Tarus. I am focused here on the role of the industry and its characteristics on the extent to which firms committ organizational resources, time, and efforts to CSR.
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