CSR Activities Enhance A Company’s Performance, Reveal A new Study
Dailycsr.com – 23 December 2015 – Minimum “three common factors” have been identifies, whereby a new study reveals that CSR boosts the bottom line of a company. A total of “163 research papers from top-tier journals published from 2000 to 2014” which established the link between the performance of a company and its CSR activities were reviewed by academics.
The Journal of Management published the “Nonmarket Strategy Literature: Toward a Multi-Theoretical Integration”. In a review of the same “Kemal Mellahi, of Warwick Business School, Jedrzej Frynas, of Middlesex University, Pei Sun, of Fudan University, and Donald Siegel, of University at Albany SUNY” argue about whether or not proper CSR activities improve the performance of a company. In words of Professor Mellahi:
“It is clear that the results are far from consistent. A lot of firms haven’t found the sweet spot of doing well while doing good at the same time. More than one third of CSR studies did not find a positive relationship between CSR and performance. Several studies found that CSR actually has a negative impact on performance. But some interesting trends can be observed.”
As mentioned earlier, the study highlights “three factors” that directly links the impact of CSR activities on a company’s performance.
In the first case, if CSR activity is aligned and adapted keeping the concerns of the stakeholders in mind, it has the ability to improve the relationship of a company with its stakeholders. In case, a company posses the said quality it can, in turn, “identify, act on, and profit from opportunities to improve stakeholder relationships”.
While, the second case is a pointer towards the importance of communicating the CSR activities of a company, whereby professor Mellhali adds:
“The visibility of CSR is very important. While managers are right to worry about self-promoting and publicising their CSR activities as they can be seen as ‘goodwashing’ or ‘greenwashing’, they need to be transparent about what they are doing, where the investment is going and the impact it’s having.”
Finally, the third factor deals with the consistency issue, whereby it shows that a company needs to be “consistent” in its CSR activities and be dedicated to the work, although professor Mellhai warns:
“CSR may backfire if the firm is accused of hypocrisy, where it boasts about its CSR achievements in one area while acting irresponsibly in another.”
The “negative impact” of CSR is something every company and administrators need to be aware of for it stems from the egoistic motives of the managers who promote company CSR activities as a means to boost “personal reputation” at the cause of the company bottom line. Likewise, professor Mellhali continues:
“If an organisation’s CSR is just an indulgence of the CEO then it produces a negative effect on performance. Managers are most likely to support and be loyal to social or political stakeholders to which they are most closely tied and so devise their CSR around them. This is not good for the organisation’s performance though and can alienate other stakeholders.”
“When managers are driven by self-serving motives they tend to spend an exceedingly large amount of resources on initiatives without a clear strategy or visible results.”
References:
http://www.ethicalperformance.com/
The Journal of Management published the “Nonmarket Strategy Literature: Toward a Multi-Theoretical Integration”. In a review of the same “Kemal Mellahi, of Warwick Business School, Jedrzej Frynas, of Middlesex University, Pei Sun, of Fudan University, and Donald Siegel, of University at Albany SUNY” argue about whether or not proper CSR activities improve the performance of a company. In words of Professor Mellahi:
“It is clear that the results are far from consistent. A lot of firms haven’t found the sweet spot of doing well while doing good at the same time. More than one third of CSR studies did not find a positive relationship between CSR and performance. Several studies found that CSR actually has a negative impact on performance. But some interesting trends can be observed.”
As mentioned earlier, the study highlights “three factors” that directly links the impact of CSR activities on a company’s performance.
In the first case, if CSR activity is aligned and adapted keeping the concerns of the stakeholders in mind, it has the ability to improve the relationship of a company with its stakeholders. In case, a company posses the said quality it can, in turn, “identify, act on, and profit from opportunities to improve stakeholder relationships”.
While, the second case is a pointer towards the importance of communicating the CSR activities of a company, whereby professor Mellhali adds:
“The visibility of CSR is very important. While managers are right to worry about self-promoting and publicising their CSR activities as they can be seen as ‘goodwashing’ or ‘greenwashing’, they need to be transparent about what they are doing, where the investment is going and the impact it’s having.”
Finally, the third factor deals with the consistency issue, whereby it shows that a company needs to be “consistent” in its CSR activities and be dedicated to the work, although professor Mellhai warns:
“CSR may backfire if the firm is accused of hypocrisy, where it boasts about its CSR achievements in one area while acting irresponsibly in another.”
The “negative impact” of CSR is something every company and administrators need to be aware of for it stems from the egoistic motives of the managers who promote company CSR activities as a means to boost “personal reputation” at the cause of the company bottom line. Likewise, professor Mellhali continues:
“If an organisation’s CSR is just an indulgence of the CEO then it produces a negative effect on performance. Managers are most likely to support and be loyal to social or political stakeholders to which they are most closely tied and so devise their CSR around them. This is not good for the organisation’s performance though and can alienate other stakeholders.”
“When managers are driven by self-serving motives they tend to spend an exceedingly large amount of resources on initiatives without a clear strategy or visible results.”
References:
http://www.ethicalperformance.com/
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