Donald S. Siegel

Corporate social responsibility and financial performance: correlation or misspecification?

Researchers have reported a positive, negative, and neutral impact of corporate social responsibility (CSR) on financial performance. This inconsistency may be due to flawed empirical analysis. In this paper, we demonstrate a particular flaw in existing econometric studies of the relationship between social and financial performance. These studies estimate the effect of CSR by regressing firm performance on corporate social performance, and several control variables. This model is misspecified because it does not control for investment in R&D, which has been shown to be an important determinant of firm performance. This misspecification results in upwardly biased estimates of the financial impact of CSR. When the model is properly specified, we find that CSR has a neutral impact on financial performance. Copyright

Corporate Social Responsibility: Strategic Implications

We describe a variety of perspectives on corporate social responsibility (CSR), which we use to develop a framework for consideration of the strategic implications of CSR. Based on this framework, we propose an agenda for additional theoretical and empirical research on CSR. We then review the papers in this special issue and relate them to the proposed agenda.

Commercial knowledge transfers from universities to firms: improving the effectiveness of university-industry collaboration.

There has been a rapid rise in commercial knowledge transfers from universities to practitioners or university–industry technology transfer (UITT), through licensing agreements, research joint ventures, and start-ups. The purpose of this study was to analyze the UITT process and its outcomes. Based on 98 structured interviews of key UITT stakeholders (i.e., university administrators, academic and industry scientists, business managers, and entrepreneurs) at five research universities in two regions of the US, we conclude that these stakeholders have different perspectives on the desired outputs of UITT. More importantly, numerous barriers to effective UITT were identified, including culture clashes, bureaucratic inflexibility, poorly designed reward systems, and ineffective management of university technology transfer offices (TTOs). Based on this qualitative evidence, we provide numerous recommendations for improving the UITT process.

An Empirical Analysis of the Strategic Use of Corporate Social Responsibility

Recent theories of the strategic use of corporate social responsibility (CSR) emphasize the role of information asymmetry and how CSR is likely to be incorporated into a firms product differentiation strategy. A key empirical implication of these theories is that firms selling experience or credence goods are more likely to be socially responsible than firms selling search goods. Using firm-level data, we report evidence that is consistent with this hypothesis.

Components of CEO Transformational Leadership and Corporate Social Responsibility

abstract We use transformational leadership theory to explore the role of CEOs in determining the extent to which their firms engage in corporate social responsibility (CSR). We test this theory using data from 56 US and Canadian firms. CEO intellectual stimulation (but not CEO charismatic leadership) is found to be significantly associated with the propensity of the firm to engage in ‘strategic’ CSR, or those CSR activities that are most likely to be related to the firms corporate and business‐level strategies. Thus, studies that ignore the role of leadership in CSR may yield imprecise conclusions regarding the antecedents and consequences of these activities. We also critique transformational leadership theory, in terms of its overemphasis on charismatic forms of leadership. This leads to a reconceptualization of transformational leadership, which emphasizes the intellectual stimulation component in the context of CSR.

Strategic Corporate Social Responsibility and Environmental Sustainability

The authors review three theoretical approaches to strategic corporate social responsibility (CSR), which can be defined as voluntary CSR actions that enhance a firm’s competitiveness and reputation. The end result of such activities should be an improvement in financial and economic performance. Based on an overview of recent empirical evidence, the authors conclude that economic theories of strategic CSR have the greatest potential for advancing this field of inquiry, although theories of strategic leadership should also be incorporated into this perspective. In the remainder of the article, they provide focused summaries of the articles presented in this special issue and outline an agenda for future research on strategic CSR and environmental sustainability.

Creating and Capturing Value: Strategic Corporate Social Responsibility, Resource-Based Theory, and Sustainable Competitive Advantage

The authors analyze the creation and capture of private and social value by firms that adopt corporate social responsibility (CSR) strategies. Strategic CSR is defined as any “responsible” activity that allows a firm to achieve a sustainable competitive advantage, regardless of motive. To provide a roadmap for managers to accomplish this objective, the authors integrate the resource-based theory (RBT) framework with concepts and tools from economics, such as hedonic pricing, contingent valuation, and the new literature on the economics of industrial organization, where CSR is referred to as “the private provision of public goods.” By linking CSR, RBT, economic models of private provision of public goods, and pricing models, the authors demonstrate how RBT can provide a structure for determining the strategic value of CSR. They then discuss the conditions under which CSR can contribute to sustainable competitive advantage.

Assessing the impact of university science parks on research productivity: exploratory firm-level evidence from the United Kingdom

Abstract University science parks are alleged to stimulate technological spillovers. However, there is virtually no empirical evidence on the impact of these facilities on research productivity. We begin to fill this gap by examining whether companies located on university science parks in the United Kingdom have higher research productivity than observationally equivalent firms not located on a university science park. The preliminary results appear to be consistent with this hypothesis and are robust to the use of alternative econometric procedures to assess relative productivity.

Assessing the Impact of Management Buyouts on Economic Efficiency: Plant-Level Evidence from the United Kingdom

We assess the total factor productivity of 35,752 manufacturing establishments before and after management buyouts (MBOs). MBO plants are less productive than comparable plants before the transfer of ownership. They experience a substantial increase in productivity after a buyout, which appears to be due to measures undertaken by new owners to reduce the labor intensity of production, via outsourcing of intermediate goods and materials. These findings, which are pervasive across industries, imply that MBOs reduce agency costs and enhance economic efficiency. Our evidence is consistent with Jovanovic and Rousseau (2002), who suggest that ownership changes shift resources to more efficient uses and to better managers.

Does the Market Respond to an Endorsement of Social Responsibility? The Role of Institutions, Information, and Legitimacy

A consensus has emerged in the burgeoning literature on corporate social responsibility (CSR) that “virtuous” firms are often rewarded by the marketplace. Unfortunately, the mechanisms through which those rewards materialize are not well understood. Furthermore, it is difficult for managers and investors to know whether a company is actually engaged in responsible behavior. Thus, many stakeholders rely on institutional assessments of a firm’s social practices to inform their own judgments about that company’s CSR reputation. In this article, we draw on institutional theory and research on reputation and legitimacy to investigate the relationship between institutional endorsements (and repudiation) of CSR and firm financial performance. Our empirical results indicate that institutional intermediaries influence market assessments of a firm’s social responsibility and highlight the importance of the legitimacy-conferring function of expert bodies in understanding the relationship between social and financial performance. Our findings also illustrate the delicate interplay among different social performance assessments, reputation, and measures of financial and operating performance such that operating performance may serve as an advanced indicator of social performance and one type of social performance assessment may temper market reactions to another.