Corporate Social Responsibility: How much is enough? A Higher Dimension Perspective of the Relationship between Financial and Social Performance

Iordanis Kalaitzoglou, Hui Pan, Jacek Niklewski

Research output: Contribution to journalArticlepeer-review

Abstract

We investigate the nature of the relationship between Corporate Social Responsibility (CSR) and Corporate Financial Performance (CFP) by examining how it changes across a third dimension that accounts for firm-specific factors. We propose a semi-latent specification of an endogenous control variable, which can, for the first time, explicitly identify, for each individual firm, the threshold level where the marginal impact of CSR on CFP turns positive. We provide empirical evidence that this threshold depends on the additional dimension and consequently, the previously reported U-shape seems to be an aggregation of relationships of differential magnitude and direction. This disaggregation fits the data better and therefore, we maintain that the addition of a higher dimension, along with the identification of the threshold level, can explain the conflicting results in the literature.
Original languageEnglish
Pages (from-to)(In-Press)
JournalAnnals of Operations Research
Volume(In-Press)
Early online date17 Dec 2020
DOIs
Publication statusE-pub ahead of print - 17 Dec 2020

Keywords

  • Corporate Social Responsibility (CSR)
  • Firm Size
  • Corporate Financial Performance (CFP)
  • Endogeneity
  • Asymmetric Relationship

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