The Inverted U‐Shaped Relationship between Corporate Philanthropy and Spending on Research and Development: A Case of Complementarity and Competition Moderated by Firm Size and Visibility

Gao, Yongqiang; Wu, J.; Hafsi, Taı̈eb

doi:10.1002/csr.1420

Cited by 37 publications

(30 citation statements)

References 103 publications

(156 reference statements)

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“…We propose that the business case for CSP can be considered well proved. Research designs taking into account non‐linear CSP‐CFP relations may even further increase the explanatory power of the CSP‐CFP relation (Barnett & Salomon, ; Gao, Wu, & Hafsi, ; Trumpp & Guenther, ; Wagner, Van Phu, Azomahou, & Wehrmeyer, ).…”

Section: Discussionmentioning

confidence: 99%

The Robustness of the Corporate Social and Financial Performance Relation: A Second‐Order Meta‐Analysis

Busch

Friede

2018

Corp Soc Responsibility Env

242

147

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For many decades, there has been a debate about the relation between corporate social/environmental performance (CSP) and corporate financial performance (CFP). Our study presents a review of academic research on this topic by applying a second-order meta-analysis. The data sample combines 25 previous meta-analyses yielding a sample size of one million observations. Our results demonstrate a highly significant, positive, robust, and bilateral CSP-CFP relation. The relation is positive regardless of whether firms focus on ecological or social aspects, though corporate reputation turns out to be a key CSP determinant. We find a particularly strong CSP-CFP relation for operational CFP. Furthermore, we add a new perspective on potential biases resulting from the studies' publishing source: social issues-oriented journals and methodological weaker papers do not distort the positive CSP-CFP relation. Our conclusion is: Based on the extant literature, the business case for being a good firm is undeniable. found a significant, positive, and bidirectional correlation of CSP with CFP. Despite these findings, the authors claim that this relation cannot be generalized across all CSP dimensions and CFP categories, detecting a large variabilityeven after correcting for sampling error and measurement error. Since then, the picture has become even more ambiguous and critical debates have resurfaced about the actual CSP-CFP relation (one hand, many scholars claim that, to date, the literature on the CSP-CFP relation remains inconclusive. On the other hand, a whole range of new studies and further meta-analyses have been published supporting a positive relation. Thus, more than a decade after Orlitzky et al. (2003), it seems to be the right time to revive the paper's spirit and ask: when generalizing existing research, is there still evidence that it pays off to be a good firm?To answer this question, we apply a second-order meta-analysis. In other scientific disciplines like medicine, psychology, or education (i.e. research areas typically also experiencing vast amounts of data and conflicting results), meta-analytic techniques are widespread and have been applied since the 1960s (Glass, 1976;Hedges & Olkin, 1985;Hunter, Schmidt, & Jackson, 1982). With the growing number of meta-analyses, the idea of cumulative meta-analysis also appeared (Kazrin, Durac, & Agteros, 1979). Several labels have been used for such analyses: overview of reviews, review of reviews, umbrella reviews, meta-reviews, cumulative meta-analyses, meta-meta-analysis, and second-order meta-analysis (Cooper & Koenka, 2012). However, until recently, no standard procedure with comparable rigour to first-order meta-analytical approaches had emerged. This paper makes use of the novel method for conducting second-order meta-analysis proposed by Schmidt and Oh (2013).We contribute to the academic inquiry on the CSP-CFP relation in several regards. By summarizing the findings of existing meta-analyses and utilizing a data sample that is more than 25 times larger compare...

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Section: Discussionmentioning

confidence: 99%

The Robustness of the Corporate Social and Financial Performance Relation: A Second‐Order Meta‐Analysis

Busch

Friede

2018

Corp Soc Responsibility Env

242

147

View full text Add to dashboard Cite

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“…At the same time, with higher firm visibility, more benefits would be obtained from CSR practice [49]. Such benefits could be growing digital and representation effects [46], enhancing stakeholder recognition, improving financial performance [15] and gaining more investment for research and development expenditure [50], and promoting more enterprise innovation [51]. Therefore, we can infer that firm visibility is the key institution factor that affects the impact of ethics on performance.…”

Section: Firm Visibilitymentioning

confidence: 99%

Does ethics really matter to the sustainability of new ventures? The relationship between entrepreneurial ethics, firm visibility and entrepreneurial performance

Cao

Jiang

et al. 2020

PLoS ONE

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This paper aims to explore whether entrepreneurial ethics can improve entrepreneurial performance in new ventures. The dynamic impact of entrepreneurial ethics on entrepreneurial performance (survival and sustainable growth) is investigated from an institutional perspective, and the moderating role of firm visibility between them is explored. From different regions of China, 296 valid questionnaires are obtained and analyzed. We find that entrepreneurial ethics is adverse to the survival of new ventures but conducive to their sustainable growth of new ventures. We also find that high firm visibility can help entrepreneurial ethics be more effective in improving entrepreneurial performance. This study provides a new insight to explain the theoretical controversy of entrepreneurial ethics and provides guidance for the establishment of the internal ethical structures of new ventures. Suggestions for government and industry regulators on the management of entrepreneurial ethics are also provided.

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“…In this context, the social CSR-innovativeness relationship may be treated as a specific example of the inverted U-shaped relationship between CSR and CFP (Singh, Sethuraman, & Lam, 2017). Interestingly, an inverted U-shaped relationship between CSR and R&D spending was argued by Gao, Wu, and Hafsi (2017). This is supported by McWilliams andSiegel (2011, p. 1485), who claimed that "there is some optimal level of investment in RBT resources that will maximize firm profit.…”

Section: Contributionsmentioning

confidence: 99%

The mediating role of natural and social resources in the corporate social responsibility—corporate financial performance relationship

Ratajczak

2020

Manage Decis Econ

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Failure to obtain definitive results regarding the influence of corporate social responsibility (CSR) on corporate financial performance (CFP) has prompted scholars to investigate mechanisms behind this relationship. This paper follows the same path and distinguishes two dimensions of CSR (social and environmental) to expand the pool of potential mediators on the basis of natural-and social resource-based view (RBV) of the firm. In a unique dataset comprising seven potential mediators for 300 companies, a direct relationship only existed between environmental CSR and CFP, in contrast to the "new road" from social CSR to CFP that goes through external reputation and innovativeness-variables that form an opposing mediation. 1 | INTRODUCTION Corporate social responsibility (CSR) is an increasingly common subject of research, especially in the areas of management and finance. CSR activities are increasingly common among managers (Horváth et al., 2017) and "firms have greatly increased the amount of resources allocated to [CSR] activities" (Barnea & Rubin, 2010, p. 71). This gives rise to questions on the relationship between CSR and corporate financial performance (CFP). As Wang, Sewon, and Claiborne (2008) noted, CSR needs economic justification, because without evident benefits for companies, CSR may not continue to flourish. CSR programs are costly and must compete for companies' limited financial resources. Although empirical research on the CSR-CFP relationship spans nearly 50 years,1 the findings are ambiguous, as repeatedly demonstrated in literature reviews (De Bakker, Groenewegen, & Den

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The Inverted U‐Shaped Relationship between Corporate Philanthropy and Spending on Research and Development: A Case of Complementarity and Competition Moderated by Firm Size and Visibility

Cited by 37 publications

References 103 publications

The Robustness of the Corporate Social and Financial Performance Relation: A Second‐Order Meta‐Analysis

The Robustness of the Corporate Social and Financial Performance Relation: A Second‐Order Meta‐Analysis

Does ethics really matter to the sustainability of new ventures? The relationship between entrepreneurial ethics, firm visibility and entrepreneurial performance

The mediating role of natural and social resources in the corporate social responsibility—corporate financial performance relationship

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