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The effects of doing better than others and doing better than usual: A longitudinal study of corporate social responsibility

Byungku Lee, University of Nebraska - Lincoln

Abstract

This study examines the relationship between the between-firm and within-firm values of corporate social responsibility and corporate financial performance over time. The between-firm value of corporate social responsibility refers to a firm's competitive advantage generated from being more socially responsible than other firms, while the within-firm value of corporate social responsibility refers to a firm's competitive advantage that stems from becoming internally more socially responsible. This study also investigates the moderating effects of advertising and firm reputation on the relationship. This study hypothesizes that both the between-firm and within-firm values of corporate social responsibility impact corporate financial performance. In addition, this study hypothesizes that bundling resources such as advertising and firm reputation enables firms to maximize the value of corporate social responsibility and, consequently, its impact on corporate financial performance. The findings confirm the validity of the positive effect of corporate social responsibility on corporate financial performance. The between-firm effect of corporate social responsibility was found to significantly affect firm performance over time, and the within-firm effect of corporate social responsibility also significantly affects firm performance over time. Stated differently, both being more socially responsible than others and being more socially responsible than usual tend to pay off financially. This study found no significant moderating effects of advertising and reputation of the firm on the relationship between corporate social responsibility and corporate financial performance over time. In other words, being more socially responsible than others and being more socially responsible than usual affect firm performance over time regardless of advertising and firm reputation. The findings of follow-up analyses showed the marginally significant and positive effect of firm reputation on the relationship between the within-firm corporate social responsibility and firm performance for top 25% of firms in corporate social responsibility ratings, and the marginally significant and negative effect of advertising on the relationship between the between-firm corporate social responsibility and firm performance for bottom 25% of firms in corporate social responsibility ratings. Implications for researchers and practitioners, limitations, and future directions were elaborated.

Subject Area

Management|Labor economics|Labor relations

Recommended Citation

Lee, Byungku, "The effects of doing better than others and doing better than usual: A longitudinal study of corporate social responsibility" (2014). ETD collection for University of Nebraska-Lincoln. AAI3628213.
https://digitalcommons.unl.edu/dissertations/AAI3628213

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