Exploring patterns of corporate social responsibility using a complementary K-means clustering criterion

Abstract

Companies’ objectives extend beyond mere profitability, to what is generally known as Corporate Social Responsibility (CSR). Empirical research effort of CSR is typically concentrated on a limited number of aspects. We focus on the whole set of CSR activities to identify any structure to that set. In this analysis, we take data from 1850 of the largest international companies via the conventional MSCI database and focus on four major dimensions of CSR: Environment, Social/Stakeholder, Labor, and Governance. To identify any structure hidden in almost constant average values, we apply the popular technique of K-means clustering. When determining the number of clusters, which is especially difficult in the case at hand, we use an equivalent clustering criterion that is complementary to the square-error K-means criterion. Our use of this complementary criterion aims at obtaining clusters that are both large and farthest away from the center. We derive from this a method of extracting anomalous clusters one-by-one with a follow-up removal of small clusters. This method has allowed us to discover a rather impressive process of change from predominantly uniform patterns of CSR activities along the four dimensions in 2007 to predominantly single-focus patterns of CSR activities in 2012. This change may reflect the dynamics of increasingly interweaving and structuring CSR activities into business processes that are likely to be extended into the future.

Corporate Social Performance: An Assessment Model on an Emerging Market

“…One would expect that the CSP of large companies in this regard would be more consistent. Our results validate previous findings [63] that consider CSP to be a process of change that evolves from predominantly uniform patterns (using results from 2007) to the predominantly single-focus patterns of CSR (results from 2012). The authors consider that the identified patterns will evolve significantly as the external context changes (e.g., as a result of the COVID-19 crisis), and that the transition process will enable more sophisticated CSP practices in the future.…”

“…The cluster analysis theory enables the identification of different structural patterns of CSR activity along with its dimensions [63]. In the real world, some companies may focus on just one dimension, such as the environment ("going green") or labor (staff development); others might prefer to split their efforts by contributing equally to two or more dimensions [109].…”

“…Different authors consider the interrelation between individual CSR dimensions and company activities in various areas, such as strategy, control, or performance [3,9,[12][13][14]. Nevertheless, few researchers [57,58,63] have analyzed the distribution of corporate efforts across the dimensions of CSR. However, it should also be noted that, while companies utilize different sets of instruments in order to be regarded as ethical organizations (e.g., codes of ethics, ethical values and norms), business practice shows that these companies often operate in completely different ways [64].…”

Analysing corporate social responsibility reports using document clustering and topic modeling techniques

“…According to Chae and Park [24], "structural topic modeling (STM)", a machine learning-based content analysis tool, is used to understand themes or subjects from CSR-related Twitter interactions. Taran and Mirkin [25] apply the popular approach of k-means clustering on the conventional Morgan Stanley Capital International (MSCI) database and focus on four primary dimensions of CSR: environment, social/stakeholder, labor, and governance. Castellanos et al [26] utilizes text data mining (TDM) to analyse the contents of Corporate Social Responsibility (CSR) reports.…”

The Association between Audit Committee Characteristics and Corporate Social Responsibility Disclosure in GCC Countries

“…Mallin et al (2013) argued that various types of stakeholders are exercising pressures on corporations to mitigate their negative impacts on societies and environment. In addition, many authors indicated the negative consequences may happen if a corporation fails to provide a satisfactory Corporate Social Responsibility Disclosure (CSRD) of its activities such as losing reputation, declining firm value and bad publicity (Peloza and Shang 2011;Taran and Mirkin, 2020). Accordingly, the significance of CSRD has been increased as a trigger that measures the corporate compliance towards the society and environment.…”