Corporate social responsibility: Is it a matter of slack financial resources or strategy or both?

Wasiuzzaman, Shaista; Uyar, Ali; Kuzey, Cemil; Karaman, Abdullah S.

doi:10.1002/mde.3537

Cited by 22 publications

(32 citation statements)

References 87 publications

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“…In the short term, managers should thus create liquidity cushions that offset the costs of financial slack Regarding the role of sustainability strategy, the analysis results enrich prior studies' findings (Al-Dhaafri and Alosani, 2021;Demartini and Taticchi, 2021;Fadol et al, 2015). In line with Wasiuzzaman et al (2021), the present paper highlighted that sustainability strategy is a key driver to achieving higher future environmental performance.…”

Section: Discussionsupporting

confidence: 77%

“…In this regard, to date, few studies examined how the sustainability strategy and available slack resources interact. Wasiuzzaman et al (2021) and Fadol et al (2015) highlighted that companies' strategic approach is a key factor affecting the relationship between slack resources and organisational performance. Similarly, Al-Dhaafri and Alosani (2021) emphasised the ability j MEASURING BUSINESS EXCELLENCE j of companies' strategic approaches to influence organisational excellence.…”

Section: Research Hypotheses Developmentmentioning

confidence: 99%

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Analysing the role of available organisational slack resources in affecting environmental performance. A structural equation modelling approach

Vitale

Cupertino

Taticchi

2023

MBE

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Purpose This paper aims to investigate the relationships between business slack resources and environmental performance and considers the possible effects that management commitment, corporate strategy to sustainability and innovation intensity can have on such interactions. Design/methodology/approach We performed partial least squares path modeling regressions on a sample of 697 non-financial listed companies worldwide, considering a time frame of 13 years. Findings Operational and financial slack resources are both detrimental to environmental performance in the short term. Nevertheless, financial slack resources are useful to boost innovation that enhances environmental performance. Environmental performance improvement seems to be more a matter of managerial commitment and strategic approach towards sustainability, rather than the availability of slack resources. Research limitations/implications Due to literature shortcomings on which effects slack resources can have on environmental performance, this paper sheds some light on the topic while also highlighting the role of management commitment, corporate sustainability strategy and innovation. Practical implications Managers should use financial slack resources in innovation activities to improve environmental performance. In doing so, they need to create retaining earnings to offset any costs using financial slack resources. Originality/value Adopting a holistic and net of endogeneity analytical perspective, this paper highlights some virtuous and critical interactions between the managerial commitment and strategic approach to sustainability, the availability of slack resources, innovation intensity and environmental performance to understand which aspects may foster or hinder the ecological transition of businesses.

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Section: Discussionsupporting

confidence: 77%

Section: Research Hypotheses Developmentmentioning

confidence: 99%

Analysing the role of available organisational slack resources in affecting environmental performance. A structural equation modelling approach

Vitale

Cupertino

Taticchi

2023

MBE

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“…While stdENV was the standard deviation across resource use, emissions and eco-innovation dimensions, stdSOC was the standard deviation across the workforce, human rights, community and product responsibility dimensions, and stdGOV was the standard deviation across management, shareholders and CSR strategy dimensions. Following prior studies (Ongsakul et al , 2020; Uyar et al , 2022; Wasiuzzaman et al , 2022b), we also included in the model several control variables, namely, Board size, CEO duality (duoCEO), Firm size, Return on assets (ROA), Leverage, Liquidity, Advertising, Free float and World Governance Indicators (WGI) [1]. While Board size impacts the board’s decision-making efficiency, CEO duality is an indicator of decision-making power (Uyar et al , 2022; Wasiuzzaman et al , 2022b); thus, boards are decisive in determining whether to balance between firm investment and ESG engagement.…”

Section: Methodsmentioning

confidence: 99%

“…We built our investigation on the slack financial resources theory and legitimacy theory. While the former theory is relevant in determining how to allocate funds to firm investment and ESG engagement (Wasiuzzaman et al , 2022b), the latter theory refers to the actions that firms take to legitimize their activities in the society (Karaman et al , 2018; Di Vaio et al , 2022). For managers, allocating available financial resources to protect the rights and investments of shareholders as well as for meeting the expectations of other stakeholders is becoming increasingly important as CSR commitment has become a nearly indispensable part of corporate strategy (Anderson and Bieniaszewska, 2005).…”

Section: Introductionmentioning

confidence: 99%

Over-investment and ESG inequality

Kuzey

Uyar

Karaman

2023

RAF

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Purpose This study aims to test whether over-investment is associated with environmental, social and governance (ESG) variation (i.e. inequality) across its dimensions, which, if so, would imply the prioritization of the interests of some stakeholders over those of others. Design/methodology/approach Drawing on a global sample of 29,428 observations across nine sectors and 41 countries between 2003 and 2019, the authors executed a country-industry-year fixed-effects regression analysis. In the robustness tests, this study also used the entropy balancing and propensity score matching approaches. Findings The authors found that while firm over-investment increases social pillar inequality, it reduces environmental pillar inequality. Further analysis revealed that the over-investment strategy decreases (increases) ESG inequality in low (high) environmental and social performers. This outcome could be of relevance to internal governance mechanisms and policymaking as ESG inequality might raise legitimacy concerns and hamper the long-term sustainability of firms. Practical implications The outcome of the study could be of relevance to internal governance mechanisms as well as policymaking. Considering financial constraints, firms should maintain a balanced strategy between firm investment and addressing stakeholder interests. Otherwise, over-investment might reduce environmental and social engagement in some dimensions, which could prompt criticisms and legitimacy concerns about firms and some stakeholders. Originality/value Past research has intensively focused on whether ESG – rather than ESG inequality – is associated with investment (in)efficiency. In addition, it has mostly formulated the causality running from ESG to firm investment, and hence, the literature lacks heterogeneity in this respect. Nevertheless, the authors believe that the potential effect of firm investment on ESG is of critical importance and has implications for determining whether over-investment causes variations across ESG engagement. Thus, the authors addressed this gap in the literature by investigating the relationship between over-investment and ESG inequality.

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“…According to slack resource theory, slack resources increase CSR expenditure by increasing the free cash flow of enterprises (Islam et al, 2021). Slack resources can enable enterprises to make timely adjustments to their policies and strategies and help further stabilize their earnings, which may provide more policy and financial support for the fulfillment of CSR (Wasiuzzaman et al, 2022). Higher financial slack tends to diversify across multiple CSR dimensions (Bouslah et al, 2022).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Firm Performance and Corporate Social Responsibility: Spatial Context and Effect Mechanism

2023

Sage Open

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This study investigates the effect of firm performance on corporate social responsibility (CSR) in a specific spatial context. The results for a sample of 1,557 listed companies in China suggest that a firm’s CSR performance level is influenced by that of nearby firms. This study also confirms the indirect link between financial and CSR performance through the mediating role of institutional and executive shareholding rates. In addition, the empirical evidence in this study not only supports the spatial context-sensitive thesis but, more importantly, proposes a spatiotemporal context-sensitive thesis. It provides strong empirical support for the true relative value of the spatiotemporal context affecting CSR performance, which yields important theoretical, methodological, and policy implications.

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Corporate social responsibility: Is it a matter of slack financial resources or strategy or both?

Cited by 22 publications

References 87 publications

Analysing the role of available organisational slack resources in affecting environmental performance. A structural equation modelling approach

Analysing the role of available organisational slack resources in affecting environmental performance. A structural equation modelling approach

Over-investment and ESG inequality

Firm Performance and Corporate Social Responsibility: Spatial Context and Effect Mechanism

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