Is Corporate Social Responsibility Worth It?

Over the last several decades, corporate social responsibility (CSR) has been defined and studied from several angles. The main question analyzed is, does it pay off? Some analysts even question whether a relationship between CSR and profitability is even realistic. Because CSR is susceptible to emotional and conceptual interpretations, one problem is finding the ability to measure it against the easily measured profitability (Aupperle, et al 1985). Over the last few decades the focus has been on creating a standard by which to define and measure these relationships. So at what point to CSR and profitability meet the interests of both the business and its shareholders?

McWilliams and Siegel (2001) define CSR as, “actions that appear to further some social good, beyond the interests of the firm and that which is required by law.” (p. 117) Corporate social responsibility is considered both strategic, in that it yields a firm benefits, and non-strategic, in that it encompasses an observed behavior (Burke and Logsdon 1996). There is also a perception that CSR encompasses a zero-sum trade-off with the economic interests of the business. It is somewhat accepted that accepting CSR strategies will be a more long-term payoff, while entailing short-term costs, leading modern businesses to abandon it in order to appease the interests of shareholders.

Burke and Logsdon (1996) focus on strategic CSR by outlining five dimensions: centrality, specificity, proactivity, voluntarism and visibility. They define centrality by measuring how close a firm’s CSR fits with its mission. They propose this measurement can supply both feedback and direction for the company’s future. A firm’s specificity measures the ability of the firm to absorb the benefit...

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...varies depending on the strategy or mission of the business. Managers who are interested in long-term profitability should asses CSR strategies in order to maintain the longevity of the company. Which strategies should be employed depend heavily both on the firm’s outlook and the interests of the shareholders. Because of this, each company will have a varying degree of CSR strategy.

Works Cited

Aupperle, K. E., Carroll, A. B., & Hatfield, J. D. (1985). An empirical examination of the relationship between corporate social responsibility and profitability. Academy of management Journal, 28(2), 446-463.

Burke, L., & Logsdon, J. M. (1996). How corporate social responsibility pays off. Long range planning, 29(4), 495-502.

McWilliams, A., & Siegel, D. (2001). Corporate social responsibility: A theory of the firm perspective. Academy of management review, 26(1), 117-127.