To What Extent Is Corporate Social Responsibility (csr) Beneficial to a Company’s Performance?

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Yet, the contingent relationship between CSR and company achievements is developed under the prerequisite that CSR actions are strategically aligned to both corporate ability and strategic direction. Corporate ability refers to corporate innovative capacity and cost advantage, which determines whether the company could sustain competitive prices and product qualities and hence perpetuate customer satisfaction (Luo & Bhattacharya, 2006). In the competitive market, although customers are more willing to pay premium prices for socially responsible firms, other purchase considerations such as price, quality and service still remain prominent (Vogel, 2006). Therefore, to realize returns from CSR, companies should assess their ability to maintain competitive differentiation in the market. Also, since every corporation operates in different competitive context, it is imperative that companies systematically tailor CSR initiatives to their corporate strategies, in pursuit of convergence between social impact and corporate growth (Porter and Kramer, 2009). Uncoordinated strategies, which are disconnected to the firm’s core businesses and are generically designed merely to placate the stakeholders, may generate minimal impact both socially and economically (Grow et al., 2005). For example, despite the dedication of Wal-Mart to charitable donation and community outreach, its goodwill plunged and sales growth stagnated once the discriminatory labor policies were revealed (Vogel, 2006). Therefore, to create long-term benefits to both community and business, shared values should be identified when devising CSR initiatives.

In conclusion, CSR activities are found to positively influence organizational performance in relation to three major stakeholders of corporations– employees, customers and investors. Internal benefits of CSR on productivity are first delineated through employee attraction, motivation and retention. This is followed by the external benefits from corporate image enhancement, namely improved customer satisfaction and investors’ stock preference. Nevertheless, to optimally capture these benefits, companies are advised to identify societal issues that are compatible to their long-term goals and competitive advantages. In the study of CSR, the inconsistent results primarily stem from the conditional and interrelated nature of CSR, where some mediating variables or situational factors such as individual firm differences and market sentiments may nuance the research findings. Another methodological limitation is the lack of universal yardstick to assess company performance. Therefore, future research may propose new metrics that are more precise and unbiased in assessing company performance, and study the differential effects of CSR across industries and countries.

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