The Complexity of Relationship between Corporate Social Responsibility (CSR) and Financial Performance

Golrida Karyawati P, Bambang Subroto, Sutrisno T, Erwin Saraswati


This study argues that, inconsistent results of the Corporate Social Responsibility (CSR) relationship with financial performance is due to the complexity of relationship between two variables. The complexity of relationship stems from the nature of CSR, which is unseparable from its environment. This nature of relationship brings unfavourable impact on empirical research. The conclusion obtained from empirical evidents of such relationship will be highly contextual and lack generalization. This study proposes variables that led to the complexity of CSR relationship and financial performance, which are country characteristics as well as CSR forms and dimensions. Country characteristics determine the tendency of CSR practices, which finally influence the strength of CSR relationship with financial performance. The selection of CSR forms and dimensions to be done is part of a company’s strategy in an effort to achieve legitimacy.


CSR; Financial Performance; Country Characteristics; Form and Dimension of CSR

Full Text:



Afiff, S & Anantadjaya,S.P.D. 2013. CSR & Performance: Any Evidence from Indonesian LQ45?, Review of Integrative Business & Economics Research, 2 (1), 85-101.

Aupperle, K.E, Carroll, A.B, & Hatfield J.D. 1985. An Empirical Examination of The Relationship Between Corporate Social Responsibility and Profitability, The Academy of Management Journal, 28 (2 ), 446-463.

Barnett, M.L. & Salomon, R.M. 2006. Beyond Dichotomy: The Curvilinear Relationship Between Social Responsibility dan Financial Performance, Strategic Management Journal, 27 (1), 1101-1122.

Baughn, C, Bodie.N & McIntosh. 2007. Corporate Social and Environmental Responsibility in Asian Countries and Other Geographical Regions, Corporate Social Responsibility and Environmental Management, 14 (4), 189-205.

Beddewela, E. & Herzig, C. 2013. Corporate Social Reporting by MNCs’ Subsidiaries in Sri Lanka, Accounting Forum, 37, 135-149.

Billings, B.K. 1999. Revisiting The Relation Between The Default Risk of Debt dan The Earnings Response Coefficient, The Accounting Review, 74 (4), 509-522.

Brammer, S & Millington, A. 2008. Does It Pay to Be Different? An Analysis of The Relationship Between Corporate Social and Financial Performance, Strategic Management Journal, 29 (12), 1325-1343.

Brammer, S, Brooks, C & Pavelin, S. 2006. Corporate Social Performance and Stock Returns: UK Evidence from Disaggregate Measures, Financial Management, 35 (3), 97-116.

Brammer, S & Millington, A. 2005. Corporate Reputation and Philanthropy: An Empirical Analysis, Journal of Business Ethics, 61, 29-44.

Branco, M.C & Rodrigues, L.L. 2006. Corporate Social Responsibility and Resource-Based Perspectives, Journal of Business Ethics, 69 (2), 111-132.

Chapple, W & Moon, J. 2005. Corporate Social Responsibility (CSR) in Asia: A Seven Country Study of CSR Website Reporting, Business and Society, 44 (4), 415-441.

Cheung, Y.L, Tan, W, Ahn, H.J & Zhang, Z. 2010. Does Corporate Social Responsibility Matter in Asian Emerging Markets?, Journal of Business Ethics, 92 (3), 401-413.

Chih, H.L, Chih, H.H, & Chen, T.Y. 2010. On The Determinants of Corporate Social Responsibility: International Evidence on The Financial Industry, Journal of Business Ethics, 93 (1), 115-135.

Dean, D. 2003. Consumer Perceptions of Corporate Donations: Effects of Company Reputationfor Social Responsibility and Type of Donation, Journal of Advertising, 32 (4), 91-102.

DeOliveira, J.A.P. 2006. Corporate Citizenship in Latin America: New Challenges for Business, The Journal of Corporate Citizenship, 21, 17-20.

Donaldson, T & Preston, L.E. 1995. The Stakeholder Theory of The Corporation: Concepts, Evidence, and Implications, The Academy of Management Review, 20 (1), 65-91.

Elsayed, K & Paton, D. 2005. The Impact of Environmental Performance on Firm Performance: Static and Dynamic Panel Data Evidence, Structural Change and Economic Dynamics, 16 (2005), 395-412.

Ewing, M.T. & Windisch, L.E. 2007. Contemporary Corporate Social Responsibility in China: An Extension of Confucian Philosophy?, Asian Business and Economics Research Unit Discussion Paper 44, Monash University.

Falck, O & Heblich, S. 2007. Corporate Social Responsibility: Doing Well by Doing Good, Business Horizons, 50, 247-254.

Filbeck, G & Gorman, R.F. 2004. The Relationship Between The Environmental and Financial Performance of Public Utilities, Environmental and Resource Economics, 29, 137-157.

Fiori, G, Donato, F.D.D & Izzo, M.F. 2007. Corporate Social Rersponsibility and Firms Perfomance An Analysis on Italian Listed Companies,

Freeman, R. 2001. A Stakeholder Theory of The Modern Corporation, Perspectives in Business Ethics, 3 (144), 38-48.

Friedman, M. 1970, September 13. The Social Responsibility of Business Is to Increase Its Profi ts, New York Times Magazine.

Fryxell, G.E. & Wang, J. 1994. The Fortune Corporation Reputation Index: Reputation for What?, Journal of Management, 20 (1), 1-14.

Gerson, B. 2007. CSR Best Practices, China Business Review, May-June, 20-25.

Godfrey. P.C. 2005. The Relationship Between Corporate Philanthropy and Shareholder Wealth: a Risk Management Perspective, Academy of Management Review, 30 (4), 777-798.

Goll, I & Rasheed, A.A. 2004. The Moderating Effect of Environmental Munificence and Dynamism on The Relationship Between Discretionary Social Responsibility and Firm Performance, Journal of Business Ethics, 49 (1), 41-54.

Griffin, J.J & Mahon, J.F. 1997. The Corporate Social Performance and Corporate Financial Performance Debate, Business and Society, 36 (1), 5-31.

Grosbois, D.D. 2012. Corporate Social Responsibility Reporting by The Global Hotel Industry: Commitment, Initiatives and Performance, International Journal of Hospitality Management, 31, 896-905.

Halme, M & Laurila, J. 2009. Philanthropy, Integration or Innovation? Exploring The Financial and Societal Outcomes of Different Types of Corporate Responsibility, Journal of Business Ethics, 84 (3), 325-339.

Harjoto, M & Jo, H. 2011. Corporate Governance and CSR Nexus, Journal of Business Ethics, 100, 45-67.

Hess, D, Rogovsky, N & Dunfee, T. 2002. The Next Wave of Corporate Community Involvement: Corporate Social Initiatives, California Management Review, 44 (2), 110-125.

Hillman, A.J & Keim, G.D. 2001. Shareholder Value, Stakeholder Management, and Social Issues: What's The Bottom Line? Strategic Management Journal, 22 (2), 125-139.

Husted, B.W & Allen, D.B. 2009. Strategic Corporate Social Responsibility and Value Creation: A Study of Multinational Enterprises in Mexico, Management International Review, 49 (6), 781-799.

Husted, B.W & Allen, D.B. 2006. Corporate Social Responsibility in The Multinational Enterprise: Strategic and Institutional Approaches, Journal of International Business Studies, 37 (6), 838-849.

Husted, Bryan W. 2000, A contingency theory of corporate social performance, Business and Society, 39 (1), 24-48.

Hutchins, M.J & Sutherland, J.W. 2008. An Exploration of Measures of Social Sustainability and Their Application to Supply Chain Decisions, Journal of Cleaner Production, 16, 1688-1698.

Inoue, Y & Lee, S. 2012. Effects of Different Dimensions of Corporate Social Responsibility on Corporate Financial Performance in Tourism-Related Industries, Tourism Management, 32 (2011), 790-804.

Jamali, D, Safieddine, A.M & Rabbath, M. 2008. Corporate Governance and Corporate Social Responsibility Synergies and Interrelationships, Corporate Governance, 16 (5), 443-459.

Jamali, D & Mirshak, R. 2007. Corporate Social Responsibility (CSR): Theory and Practice in a Developing Country Context, Journal of Business Ethics, 72 (3), 243-262.

Jensen, M.C. 2001. Value Maximisation, Stakeholder Theory, and Corporate Objective Function, European Financial Management, 7 (3), 297-317.

Jensen & Meckling 1976. Theory of The Firm: Managerial Behaviour, Agency Costs and Ownership Structure, Journal of Financial Economics, 3 (4), 305-360.

Jo, H & Harjoto, M.A. 2011. Corporate Governance and Firm Value: The Impact of Corporate Social Responsibility, Journal of Business Ethics, 103 (3), 351-383.

Jones, T. 1995. Instrumental Stakeholder Theory: A Synthesis of Ethics and Economics, Academy of Management Review, 20, 404-437.

Kang, K.H, Lee, S & Huh, C. 2010. Impacts of Positive and Negative Corporate Social Responsibility Activities on Company Performance in The Hospitality Industry, International Journal of Hospitality Management, 29, 72-82.

Kimber, D & Lipton, P. 2005. Corporate Governance and Business Ethics in The Asia-Pacific Region, Business & Society, 44 (2), 178-210.

Li, S, Fetscherin, M, Alon, I, Lattemann, C & Yeh, K. 2010. Corporate Social Responsibility in Emerging Markets: The Importance of The Governance Environment, Management International Review, 50 (5), 635-654.

Macdonald, J.B. & Maher, M. 2013. The Relationship Between Equity Dependence and Environmental Performance, Journal of Leadership, Accountability and Ethics, 10 (2), 35-45.

McGuire, J.B, Sundgren, A. & Schneeweis, T. 1988. Corporate Social Responsibility and Firm Financial Performance, The Academy of Management Journal, 31 (4), 854-872.

McWilliams, A, Siegel, D.S & Wright, P.M. 2006. Corporate Social Responsibility:Strategic Implications. Journal of Management Studies, 43 (1), 1-18.

McWilliams, A & Siegel, D. 2001. Corporate Social Responsibility: A Theory of The Firm Perspective, The Academy of Management Review, 26 (1), 117-127.

McWilliams, A & Siegel, D. 2000. Corporate Social Responsibility and Financial Performance: Correlation or Misspecification? Strategic Management Journal, 21 (5), 603-609.

Mehar, A & Rahat, F. 2007. Impact of Corporate Social Responsibility on Firm’s Financial Performance, South Asian Journal of Management Sciences, 1 (1), 16-24.

Michelon, G, Boesso, G & Kumar, K. 2013. Examining The Link Between Strategic Corporate Social Responsibility and Company Performance: An Analysis of The Best Corporate Citizens, Corporate Social Responsibility Environmental Management, 20, 81-94.

Midttun, A, Gautesen, K & Gjølberg, M. 2006. The Political Economy of CSR in Western Europe, Corporate Governance International Journal of Business in Society, 6 (4), 369-385.

Mishra, S & Suar, D. 2010. Does Corporate Social Responsibility Influence Firm Performance of Indian Companies?, Journal of Business Ethics, 95 (4), 571-601.

Muller, A & Kräussl, R. 2011. The Value of Corporate Philanthropy During Times of Crisis: The Sensegiving Effect of Employee Involvement, Journal of Business Ethics, 103 (2), 203-220.

Orlitzky, M, Schmidt, F.L & Rynes, S.L. 2003. Corporate Social and Financial Performance: A Meta-analysis, Organization Studies, 24 (3), 403-441.

Porter, M. & Kramer, M. 2006. Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility, Harvard Business Review, 85 (12), 1-14.

Porter, M. & Kramer, M. 2002. The Competitive Advantage of Corporate Philanthropy, Harvard Business Review, 80, 56-68.

Porter, M.E & Linde, C.V.D. 1995. Toward a New Conception of The Environment-Competitiveness Relationship, The Journal of Economic Perspectives, 9 (4), 97-118.

Qu, R. 2007. Corporate Social Responsibility in China: Impact of regulations, Market Orientation and Ownership Structure, Chinese Management Studies, 1 (3), 198-207.

Rettab, B, Brik, A.B & Mellahi, K. 2009. A Study of Management Perceptions of The Impact of Corporate Social Responsibility on Organisational Performance in Emerging Economies: The Case of Dubai, Journal of Business Ethics, 89 (3), 371-390.

Roper, J. & Weymes, E. 2007. Reinstating The Collective: A Confucian Approach to Well-Being and Social Capital Development in a Globalised Economy, Journal of Corporate Citizenship, 26, 135-144.

Saiia, D.H, Carroll, A.B & Buchholtz, A.K.. 2003. Philanthropy as Strategy: When Corporate Charity Begins at Home, Business & Society, 42 (2), 169-201.

Schreck, P. 2011. Reviewing The Business Case for Corporate Social Responsibility: New Evidence and Analysis, Journal of Business Ethics, 103 ( 2), 167-188.

Seifert, B, Morris, S.A & Bartkus, B.R. 2004. Having, Giving, and Getting:Slack Resources, Corporate Philanthropy,and Firm Financial Performance, Business & Society, 43 (2), 135-161.

Seifert, B, Morris, S.A & Bartkus, B.R. 2003. Comparing Big Givers and Small Givers: Financial Correlates of Corporate Philanthropy, Journal of Business Ethics, 45 (3), 195-211.

Sembiring, E.R. 2005. Karakteristik Perusahaan dan Pengungkapan Tanggung Jawab Sosial: Study Empiris pada Perusahaan yang Tercatat di Bursa Efek Jakarta, Prosiding SNA VIII, 379-395.

Smith, C.N. 1994. The New Corporate Philanthropy, Harvard Business Review, 72 (3), 105-116.

Sprinkle, G.B. & Maines, L.A. 2010. The Benefits and Costs of Corporate Social Responsibility, Business Horizons, 53, 445-453.

Stanwick, P.A. & Stanwick, S.D. 1998. The Relationship Between Corporate Social Performance, and Organizational Size, Financial Performance, and Environmental Performance: An Empirical Examination, Journal of Business Ethics, 17, 195-204.

Suchman, M.C. 1995. Managing Legitimacy: Strategic and Institutional Approaches, Academy of Management Review, 20, 571-610.

Taysir, E.A & Pazarcik, Y. 2013. Business Ethics, Social Responsibility and Corporate Governance: Does The Strategic Management Field Really Care About These Concepts?, Procedia - Social and Behavioral Sciences, 99, 294-303.

Tilling, M. 2004. Communication at The Edge: Voluntary Social and Environmental Reporting in The Annual Report of a Legitimacy Threatened Corporation. APIRA Conference Proceedings.

Uadiale, O.M & Fagbemi, T.O. 2012. Corporate Social Responsibility and Financial Performance in Developing Economies: The Nigerian Experience, Journal of Economics and Sustainable Development, 3 (4), 44-55.

Valiente, J.M.A, Ayerbe, C.G & Figueras, M.S. 2012. Social Responsibility Practices and Evaluation of Corporate Social Performance, Journal of Cleaner Production, 35, 25-38.

Verschoor, C.C. 1998. A Study of The Link Between as Corporation’s Financial Performance and Its Commitment to Ethics, Journal of Business Ethics, 17, 1509-1516.

Visser, W. 2009. Corporate Social Responsibility in Developing Countries,

Wang, H. & Qian, C. 2011. Corporate Philanthropy and Corporate Financial Performance: The Roles of Stakeholder Response and Political Access, Academy of Management Journal, 54 (6), 1159-1181.

Wang, H, Choi, J & Li, J. 2008. Too Little or Too Much? Untangling The Relationship Between Corporate Philanthropy and Firm Financial Performance, Organization Science, (1), 143-159.

Wang, M, Qiu, C & Kong, D. 2011. Corporate Social Responsibility, Investor Behaviors, and Stock Market Returns: Evidence from Natural Experiment in China, Journal of Business Ethics, 101 (1), 127-141.

Weber, M. 2008. The Business Case for Corporate Social Responsibility: A Company-Level Measurement Approach for CSR, European Management Journal, 26, 247-261.

Welford, R. 2004. Corporate Social Responsibility in Europe and Asia: Critical Elements and Best Practice, Journal of Corporate Citizenship, 13 (1), 31-47.

Wiig, A. & Kolstad, I. 2010. Multinational Corporations and Host Country Institutions: A Case Study of CSR Activities in Angola, International Business Review, 19 (2), 178-190.

Williamson, O.E. 1964. The Economics of Discretionary Behavior: Managerial Objectives in a Theory of The Firm, New York: Prentice-Hall.

Zheng, Q, Luo, Y & Maksimov, V. 2014. Achieving Legitimacy Through Corporate Social Responsibility: The Case of Emerging Economy Firms, Journal of World Business, 687, 1-15.



  • There are currently no refbacks.

Copyright (c) 2019 Golrida Karyawati P, Bambang Subroto, Sutrisno, Erwin Saraswati

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.