When can corporate social responsibility (CSR) become a reliable strategic asset? There is a scarcity of both theoretical arguments and empirical evidence investigating the trade-off between the risk and return of CSR. We intend to fill this gap by (1) investigating CSR’s simultaneous impact on firm value and the reliability of this impact, and (2) exploring the conditions under which CSR’s impact on firm value becomes more or less reliable. The presented findings suggest that CSR by itself is an unreliable value enhancer, in that it increases firm value but also increases the variance of expected value distribution. Yet, the impact of CSR on firm value becomes more reliable when a firm has immediately redeployable slack or when a firm has stronger risk management capabilities. This research provides practical implications to managers and investors regarding the riskiness of CSR investments and strategies for mitigating such risks.

While most studies view small island economies as a homogenous group with multiple similar vulnerabilities, few studies argue that they are a heterogenous group due to their political jurisdictions (independent versus dependent economies), with mostly environmental vulnerabilities in common. Departing from these two premises, our study is the first empirical attempt at examining inter-small island jurisdiction (SIJ) heterogeneity from the social construct perspective of stakeholders’ perceptions and within the context of environmental sustainability and energy policymaking. We quantitatively explore, across 34 Caribbean SIJs, multiple stakeholders’ perceptions of the influence of the electricity sector as a leader in environmental performance. The results show that when the governments of independent SIJs exclude electricity sector stakeholders and include other primary energy stakeholders in energy policymaking, the electricity sector actors are better perceived as leaders in environmental performance. In a global context where inclusiveness is important for sustainability, this finding suggests that within the systemic contexts of SIJs, stakeholders view the exclusion of powerful incumbent energy actors from policymaking as a viable approach for moving the environmental sustainability mandate forward. Our study has implications for policymakers and scholars on the democratic process of policymaking, and for practitioners in terms of building social trust.