Does it really pay to be good, everywhere? A first step to understand the corporate social and financial performance link in Latin American controversial industries

Abstract

Most research studying the corporate social performance (CSP)-corporate financial performance (CFP) link has utilized developed country samples. Also, this literature has generally focused on a wide variety of industries, ignoring the fact that certain sectors -such as controversial industries -have graver social and environmental issues. Hence, a gap exists in this tradition when it comes to emerging markets and controversial industries. This paper attempts to fill this void by providing preliminary evidence and insight on the matter. Based on an exploration in six Latin American countries and five controversial industries, we find a negative bidirectional association (or a non-significant one at best) between CSP and CFP. These results tend to contradict the mainstream conclusion of a positive bidirectional link, suggesting that institutional and market-level forces play a major role in shaping this relationship.

Be bad but (still) look good: Can controversial industries enhance corporate reputation through CSR initiatives?

“…From an internal lens, we highlight the distinction made by scholars between “strategic CSR” and “corporate philanthropy” (Rodrigo et al, ; Toppinen & Korhonen‐Kurki, ). The difference lies in that the former socio‐environmental activities stem from a firm's core business and hence prioritize addressing aspects of its regular operations.…”

“…Accounting research has reported that stakeholders in these sectors have greater informational needs, making companies more prone to disclose CSR reports (Grougiou et al, ; Kilian & Hennigs, ). Cai et al () argue that better social performance increases firm value, but Rodrigo, Duran, and Arenas () hint otherwise because stakeholders differ due to market‐level (business‐to‐business or business‐to‐consumer) or institutional factors (developed or emerging nation).…”

Which Dimension of Corporate Social Responsibility is a Value Driver in the Oil and Gas Industry?

“…The environmental dimension of CSR includes ecoefficient business processes to reduce pollution, resource depletion, and environmental damage (Rodrigo et al, 2016). The extant literature suggests that innovative environmental technologies minimize operational costs, optimize energy use, improve manufacturing efficiency, and reduce costs associated with waste disposal and air pollution (Shrivastava, 1995).…”

“…There is a general concern about how companies in controversial industries gain legitimacy through their policies and initiatives related to corporate social responsibility (CSR). Rodrigo, Duran, and Arenas (2016), however, suggest that theoretical and empirical implications in non-controversial industries should not be directly applied to controversial industries. Cai, Jo, and Pan (2012), for instance, show a positive impact of CSR engagement on the firm value of American companies in eight controversial industries.…”

Authorship trends and collaboration patterns in business ethics literature

“…To survive in competitive environments, companies consider their stakeholders when formulating and implementing strategies or tactics at operational, business, and corporate levels (Bridoux & Stoelhorst, ; Fassin, de Colle, & Freeman, ; Menon & Yao, ; Prusty, Mohapatra, & Mukherjee, ). While the outcomes of these strategies, tactics, or actions may be good or right for one company, they may be bad or wrong for others (Epstein, Peysakhovich, & Rand, ; Rodrigo, Duran, & Arenas, ; Trevino & Nelson, ). Consequently, conflicts may emerge among groups or individuals (Smith, Gonin, & Besharov, ).…”