No abstract

Although business and society are thought in a vicious relationship for diminishing trust among stakeholders, a few studies indicate the existence of a reciprocal nexus between corporate social performance and corporate financial performance, known as the "virtuous cycle". Despite of some empirical studies in developed countries, little research has been conducted concerning the assumption in emerging markets, where large companies have more responsibilities to create positive and sustainable-shared values. This paper aims to explore the nexus of Chinese companies for their global influential social and environmental impacts together with increasing awareness of corporate social responsibility (CSR). A two-step longitudinal design, including cross-lagged correlation analyses and longitudinal path analyses, is applied to examine the overall and decomposed links between corporate social performance and financial performance. It is found the virtuous cycle does exist in the overall and in most decomposed links within the context of large construction companies in China. These findings are beneficial for interested policy-makers, corporate managers, and the public to create shared value on CSR and therefore contribute to CSR improvements.Analysis results indicate a one-year time lag to be appropriate for examining the lead-lag relationship between corporate social performance and financial performance. The research also inspires a potential generalisation of the CSP-CFP nexus by similarly examining it in other industries or other countries with diverse CSR contexts.

The aim of the research is to substantiate the hypothesis of a paradoxical dynamic link between corporate social responsibility (CSR) and its material implications including sustainable corporate financial performance (CFP). By analysing a panel of 67 international construction companies from 2006 to 2015, we found that CSR programs can be detrimental to CFP in the short term but conducive to improving it in the long term.The findings of this research indicate that, in the international construction business, the impact of CSR on CFP is not immediate and unchanging, and it takes time to materialize CSR for sustainable development. A significant practical use of this research is to provide evidence for the assertion that business stakeholders should be relieved from short-termism in assuming social responsibility. Further research is recommended to test this support in a more general business setting towards developing a general theory on CSR and sustainable development.