Meta-analysis of the relation between corporate social performance and corporate financial performance

Abstract

According to the stakeholder theory, companies which coordinate the interests of their several stakeholders show better performance than companies which prioritize only shareholders’ interests, and thus also show a better corporate social performance (CSP, or better addressing stakeholders’ interests), which leads to a better corporate financial performance (CFP). The interest in this subject has elicited a series of empirical studies testing the relation between CSP and CFP. In the beginning of the 2000’s most part of those studies revealed a positive association between CSP and CFP and consequently academia has taken it to be generally positive. However at least two issues deserve closer examination: “Does the prevalence of a positive relation between CSP and CFP still hold in more recent research?” and “Which stakeholders are more positively associated to the financial performance?” The aim of the present paper is to analyze the relation between CSP and CFP in the light of empirical research in the last few years. The meta-analysis technique, has been employed on articles published between 1998 and 2010. Results do not confirm generalization of a positive relation between CSP and CFP. Furthermore, when the link between each stakeholder’s performance and respective financial performance was tested, only the “employee” stakeholder presented a clear positive relation. Such results suggest a more cautious use of the positive CSP/CFP relation by company management, as well as the pursuit of further studies on the nuances of this relation.

Keywords:
Stakeholder; Social responsibility; Social performance; Financial performance; Meta-analysis