The paradoxical nexus between corporate social responsibility and sustainable financial performance: Evidence from the international construction business

Abstract

The aim of the research is to substantiate the hypothesis of a paradoxical dynamic link between corporate social responsibility (CSR) and its material implications including sustainable corporate financial performance (CFP). By analysing a panel of 67 international construction companies from 2006 to 2015, we found that CSR programs can be detrimental to CFP in the short term but conducive to improving it in the long term.The findings of this research indicate that, in the international construction business, the impact of CSR on CFP is not immediate and unchanging, and it takes time to materialize CSR for sustainable development. A significant practical use of this research is to provide evidence for the assertion that business stakeholders should be relieved from short-termism in assuming social responsibility. Further research is recommended to test this support in a more general business setting towards developing a general theory on CSR and sustainable development.

Corporate social responsibility strategy and economic business value of multinational companies in emerging economies: The mediating role of corporate reputation

“…In another study, Nollet et al () suggested that although CSR practices have negative effect on economic business value in the short‐term, in the long run, it increases firms' economic business value. This result has been confirmed recently by Lu et al () who noted similar pattern in how CSR activities affect firms' financial performance. Using a meta‐analysis of 42 studies, Wang et al () showed that CSR leads to enhancement in financial performance of firms.…”

“…In fact, several prior research findings (Beiting, Ioannou, & Serafeim, 2015;Blasi, Caporin, & Fontini, 2018;Easy & Thanathavornlap, 2013;Ghoul, Guedhami, & Kim, 2017;Izzo, 2014;Lu, Ye, Chau, & Flanagan, 2018;Martínez-Ferrero et al, 2016;Nollet, Filis, & Mitrokostas, 2016;Wang, Dou, & Jia, 2016) suggest that CSR strategy can create economic value for a business in various ways. A study by Martínez-Ferrero et al (2016) that used international data indicated that investors and other stakeholders have a positive attitude towards CSR strategy.…”

Institutional pressures on corporate social responsibility strategy in construction corporations: The role of internal motivations

“…CSR research in the construction industry has accelerated in recent years; however, these studies are mainly focused on the development (Lou, Lee, & Mathison, 2011;Lu, Ye, Chau, & Flanagan, 2018;Watts, Dainty, & Fernie, 2015) and evaluation (Jones, Comfort, & Hillier, 2006;Petrovic-Lazarevic, 2008;Zhao, Zhao, Davidson, & Zuo, 2012) of CSR performance indicators. The construction industry is a typical project-based industry; hence, most of the CSR performance research is also project-based research.…”

“…The impact of CSR on corporate financial performance is not immediate and unchanging, and it takes time to realize CSR for sustainable development (Lu et al, 2018). Lowest price bidding causes low profit or even loss and ultimately leads to insufficient resources for construction corporations to survive and perform CSR.…”

Corporate social responsibility “glocalisation”: Evidence from the international construction business

“…Construction by nature is socially responsible, making significant contributions to a nation's economy and creating many jobs (Alaghbari, Al‐Sakkaf, & Sultan, ). It helps to determine the nature, function, and appearance of construction products, such as buildings, roads, and bridges, all of which influence human health, economic activities, social behaviour, cultural identity, and civic pride (Lu, Ye, Chau, & Flanagan, ; Pearce, ). Based on which, Murray et al (, p. 9) emphasise that “it is the impact that the industry's products have on society's well‐being that provides the most compelling reasons for raising the profile of CSR.” However, construction is consistently alleged to be slow in embracing CSR (Lin, Ho, & Shen, ).…”