Corporate Social Performance, Financialization, and Real Investment in US Manufacturing Firms

Abstract

In recent years, the global financial and economic crisis are rewriting the relationship between business and society, focusing, among other things, on the role of the process of financialization, not only in the economy as a whole but also within non-financial companies. Shareholder value maximization, together with the commoditization of business, has led to a general short-term approach at the expense of capital accumulation and core business activity, to the detriment of not only firms’ competitiveness and productivity but also of human capital, strategic innovation, business ethics, and long-term growth. Within this framework, this study investigates the role of corporate sustainability, analyzing the nexus between financialization, accumulation of real capital, and corporate social performance, an issue that has been neglected so far. Using a sample of US manufacturing firms from 2002 to 2017, we found that, while financialization was negatively correlated with corporate real investment, the environmental and social firm performance positively impacted corporate capital accumulation. Our results support the belief that a focus on environmental, social, and governance standards, fostering real investments, may enhance a firm’s long-term growth with a positive effect on its long-term value.

Where Does CSR Come from and Where Does It Go? A Review of the State of the Art

“…Many of the research studies carried out on CSR have found relationships between the company's social, environmental, and financial and economic performance (Brogi and Lagasio 2019;Chowdhury et al 2019;Taliento et al 2019), concluding that the three dimensions are interconnected, and joint action ensures long-term sustainability. Likewise, all of them have a bearing on the generation of value for stakeholders in the long term, on the improvement of the relationship between stakeholders and the company, and on management's control and planning mechanisms that protect stakeholders' interests and expectations (Cupertino et al 2019;Jamali 2008;Pirnea et al 2011). Through the development of CSR practices, the reconciliation of social and economic objectives and the reconciliation of the interests of the company and society are achieved (Bagire et al 2011;Degie and Kebede 2019;Park et al 2014;Saiia et al 2003).…”

Sustainability and Firm Performance: A Review and Analysis Using Algorithmic Pathways in the Throughput Model

“…Finally, as most previous studies have suggested (e.g., Cupertino et al [96]; Masocha [97]; Xue et al [98]) the sustainability issues such as environmental, social, and governance standards, may enhance an organization's innovation and long-term growth with a positive effect on its long-term value. The next section adds to this literature by incorporating a model (i.e., throughput model) that examines sustainability issues via a process apparatus as opposed to a black box.…”

How High-Polluting Firms Suffer from Being Distracted form Intended Purpose: A Corporate Social Responsibility Perspective

“…Li and Wu pointed that there is a performance gap of CSR engagements between stakeholders-related and shareholders-related activities [ 13 ]. The findings of Cupertino et al also found this performance gap, indicating that financialization can promote the capital accumulation of firms with some social responsibility practices [ 32 ]. Lu et al made an analysis of the impact of different dimensions of CSR on corporate competitiveness, and found that the environmental and social dimensions of CSR can be the main factors in promoting financial performance [ 33 ].…”