The Effect Of CSR Strategy To The CSR-financial Performance Relationship

Since the early20th century, with the rapid development of society and productivity, thewhole world’s economy has become prosperous. However, corporates, as the main support to theeconomy, carry out many behaviors against social ethics and moralities such as ignoringemployee’s rights, arbitrarily exploiting non-renewable resources, manufacturing and sellingcounterfeits, and other behaviors damaging customers’ interests, etc. Since that, the public areadvocating that corporates not only lay emphasis on economic benefits, but also should concerninterests of all stakeholders such as for investors, customers, environments, societies,governments, etc. Therefore, corporate social responsibility has become a hot topic from all walksof life, even an issue about whether the corporate can stand firmly in the competitive market. As iswell-known, the performance of social responsibility will increase the corporate’s operation costand impose additional financial pressure thereon, so various countries’ scholars start to carry outresearches on whether the performance of corporate social responsibility (CSR) will affect thecorporate financial performance (CFP). Researches on relation between corporate socialresponsibility and corporate financial performance have been initiated since1970s. There arenumerous controversies about whether the performance of corporate social responsibility canimprove the corporate financial performance, while the mainstream view holds that if corporateperforms its social responsibility, its financial performance will be positively promoted. Thisessay carries out a research on adjustment functions of corporate performance strategies of socialresponsibility on relation between corporate social responsibility and corporate financialperformance, striving to answer how corporate implements its social responsibility can improveits corporate financial performance.First, this essay describes the research background and significance, reviews thedevelopment process of the corporate social responsibility theory, and then summarizes relevantreferences for corporate social responsibility and corporate financial performance. And then,combined with internationalized evaluation system on corporate social responsibility--ISO26000and Chinese corporates’ actual conditions and based on stakeholders theory, this essay summarizesan evaluation index system on Chinese listed corporates’ social responsibility from five dimensions, namely, employees, fair operations, customers, environments, and communities.Through analyzing104listed corporates’ social responsibility reports and financial statements andcombining with their performance strategies of corporate social responsibility, this essaysummarizes several adjustment functions of performance patterns on corporate socialresponsibility on relation between corporate social responsibility and corporate financialperformance.Recent research on the corporate social responsibility(CSR)——corporate financialperformance(CFP) relationship proposes a variety of contextual and organizational factors tocreate a more strong link. However, few of these studies explore the role of the CSR engagementstrategy. Drawing on absorptive capacity theory and related perspectives such as timecompression diseconomies, asset mass efficiencies, and path dependence theory, we argue thatwhen a firm engages in CSR slowly and consistently, focuses on related CSR dimensions, andstrats with internal dimensions of CSR, CFP will be enhanced. With longitudinal data collectedfrom104firms in2012and2013, we find that firms benefit more when they adopt a CSRengagement strategy that is consistent, involves related dimensions of CSR, and begins withaspects of CSR that are more internal to the firm. The pace of the CSR engagement strategy,however, does not moderate the CSR-CFP relationship.This study helps fill the gap in CSRresearch by showing that, regardless of contextual factors, a firm can choose the proper strategy toenhance the financial benefits of the CSR engagement.