In theory (and likely practice), corporate social responsibility (CSR) boosts value and profitability; conduces capital inflows from more varied sources; helps attract, motivate, and retain personnel; enhances customer relations; facilitates relations with regulatory authorities; generates clean and renewable energy (from environment-focused CSR); and improves company reputation. (The benefits from CSR will be interlinked, if not mutually reinforcing.)

In theory (and likely practice), some cons are that CSR shifts companies away from their profit-making objective, which some (such as Milton Friedman) see as the main obligation towards shareholders; exacerbates the costs of production (which fall disproportionately on small businesses), at least in the short term; can create shareholder resistance; may impact company reputation if unpalatable shortcomings must be disclosed; may strain customer conviction if instant results are not obvious; and can promote greenwashing. (One might note there are four types of CSR, e.g., environment-focused (mentioned earlier), community-based, human resource-based, and charity-based, and that not all initiatives—and what investments are associated with them—are necessarily comparable.)

All in all, however, it would appear that environmentally- and socially-responsible companies are becoming the choice of consumers, as our societies and economies battle increasingly complex and interrelated global, regional, national, and local challenges.

Dear Srikanth Potharla,

You can check also ISO 26000. Here are some useful links:

http://www.siccsr.org/WebSite/crs/Upload/File/201202/20120224135241687500.pdf

http://www.ecologia.org/isosr/ISO26000Handbook.pdf

https://www.researchgate.net/publication/230531075_ISO_26000_guidance_on_social_responsibility

Article ISO 26000 guidance on social responsibility

Hi and good morning to Hyderabad

in addition to negotiation approaches and the ISO 26000 guidance, I'd like to take up an additional dimension, which aims (in that sense similar to ISO 26000) at an integrated sustainability management : assessing more completely the assets of a company as well as of the communities it it is related to - and how this assets are affected by firm performance and CSR.

In efforts to get a better understanding of all their assets they can invest to generate income and improve their performance, companies have extended their traditional focus on financial and physical capital, to human capital, environmental capital, and also to cultural capital and social capital.

This becomes more visible in annual company reports, and there are efforts at the macro-level by international organisations (e.g. Worldbank since the 1980's) and national governments. For social capital, frameworks have been designed e.g. by Australia and New Zealand.

So far, all this is FAR from perfect, i.a. because the different types of capital have  different ratios of private/public returns, are more or less of a non-rival nature, or are just not easy to define, and much less to measure.

What is missing so far, to my knowledge, is addressing the even more complex question of how these assets are affected by the relationships between the Quadruple Helix actors - and consequently, focused on your question, how firm performance is affected by (which?) CSR foci.

A better understanding of their assets (i.e. theoretical advances) as well as better approaches to assess/measure them (includes a lot of empirical work) is both necessary for firms to move forward on this front.

thanks to all the professor for providing more detailed and relevant answer to my question 

Like Olivier said in theory it adds to the value proposition a "social" component that in turn attracts a certain clientele willing to pay a premium for that social component.

There is however also research raising the question whether customers care to the extent necessary to make a (financial) impact.

Increasingly, and that is my observation, the public makes these demands whether they are sensible and relevant or not. As a business you have the choice to adapt or perish but keep in mind the value proposition seems to take priority over the social component, see Apple/Foxconn or Amazon/working conditions controversies.

Best

Roland

I think there is a clear difference between "public" and "customer".  An additional component is also the level of continuity between "public" and "shareholder".  A final question is of public, customer and shareholder where? I very much agree your personal observation for "public", in the West, Roland. Social concerns in my mind have become quite embedded, but that doesn't seem to relate through to an action content in terms of not buying from Amazon or Primark. Next, what level of continuity is there between "public" and "shareholder". In many countries the general public are significant shareholders, but only through pension funds. I don't recall a pension fund being pressured over its shareholdings on grounds of social responsibility, by fund members or their representatives. I would imagine that personal shareholding by members of the public is pretty low wherever you care to name. Institutional shareholding is the name of the game. I see plenty that says institutional shareholders look for social motivations, indeed embedded social motivations in companies they buy into (note my very carefully chosen words!), but I've seen precious little actual illustration. At the opposite end of the scale, not corporates or institutional shareholders, I find Crowdcube fascinating. It deals, of course, in crowdfunding miniscule start-ups and near-start-ups, from £10. The pitches interest me - totally subjective this - in their lack of concern to express social motives or, if so only in terms of ethical sourcing and ethical treatment of staff. Sometimes I sense these small businesses positively avoiding the warm and fuzzy, to portray themselves as grown-up. Certainly, death of the founder is an insufficient exit strategy!

When companies give back to society a portion of their earnings with no strings attach, the public in general will regard it as altruistic behavior.  This will further nurture in their subconscious mind that these corporations or entity have the heart for the needy.  In effect, this will build direct on indirect loyalty. 

Generally, there is a positive relationship between the two. However, it also depends on the success of the CSR campaigns on how significant of an impact it makes on the firm performance.

Firm performance may depend on the availability of resources. The resources derived from the firm itself, from difficult-to-imitate technologies as well as CSR strategies. This indicates that firm performance and CSR has a positive relationship. So CSR is a substantial competitive advantage for firm performance. Moreover, when firm performance increase on ROA, ROE, ROS with tolerable debt financing on the capital structure of the firm, CSR also increases. So they have positive relationships among them.