A selection of interesting research and articles we found recently on Corporate Social Responsibility.

Does corporate social responsibility enhance access to finance?
Apparently so, according to Beiting Cheng, Ioannis Ioannou and George Serafeim, who hypothesised that better access to finance can be attributed to
(1) reduced agency costs due to enhanced stakeholder engagement and
(2) reduced informational asymmetry due to increased transparency.

Using a large cross-section of firms, Cheng et al. found that firms with better CSR performance face significantly lower capital constraints: both better stakeholder engagement and transparency around CSR performance were important in reducing capital constraints, which was confirmed using multiple measures. Finally, the authors showed that both the social and environmental dimensions of CSR drove the relationship.

Full details are available at: Beiting Cheng, Ioannis Ioannou and George Serafeim. 2014. Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), 1–23.


Do CSR ratings effect value creation from M&A?
Yes, according to Gunae Choi, Petra Christmann and Ivan Montiel. The acquisition literature has not paid much attention to effects of differences in CSR between target and acquiring firms on the value created by acquisitions. Choi et al. suggest that acquisitions of targets with superior CSR by acquirers with inferior CSR likely raise concerns among the target stakeholders that their CSR will be reduced. This is because acquiring firms are generally in a dominant position in the integration process and are likely to create unified practices for the combined firms that are based more on the acquirer’s existing practices than the target’s practices.

In response to the expected reduction in CSR, target stakeholders may exhibit dysfunctional behaviours, eg employees lowering work effort or leaving the target, which reduces the value of the target to the acquirer. The authors hypothesise that the size of the overall CSR gap and the workforce-oriented CSR gap between targets and acquirers negatively affects shareholder value for acquirers. Additionally, they predicted that the negative effect of the workforce-oriented CSR gap would be larger for targets in human asset intensive industries. Results using 267 acquisitions in the US announced between 1995 and 2009 confirmed the hypotheses.

You can access the paper at: Gunae Choi, Petra Christmann and Ivan Montiel. 2014. Stakeholder Response to Expected Change in CSR: Do CSR Ratings Effect Value Creation from M&A?
Academy of Management Proceedings


Does CEO narcissism affect CSR practices?
Researchers Petrenko, Aime, Ridge and Hill examined the effects of CEO’s narcissism on CSR practices. They argue that CSR can be a response to leaders’ personal needs for attention and image reinforcement, and hypothesize that CEO narcissism has positive effects on levels and profile of organisational CSR. In addition, CEO narcissism was predicted to reduce the effect of CSR on performance.

The researchers found support for these ideas in a sample of Fortune 500 CEOs, after operationalising CEO narcissism with a novel media-based measurement technique that uses third-party ratings of CEO characteristics with validated psychometric scales.

For full details see: Petrenko, O. V., Aime, F., Ridge, J. and Hill, A. 2015. Corporate social responsibility or CEO narcissism? CSR motivations and organizational performance.
Strategic Management Journal,
doi: 10.1002/smj.2348


When does CSR increase performance?
Professors Story and Neves investigated whether employees attribute different motives to their organisation’s CSR efforts and if these motives influence employee performance. Could employees distinguish between intrinsic and extrinsic CSR motives? The researchers surveyed 229 employee–supervisor pairs from companies with reputable CSR programs in Portugal across various industries, and the impact of perceptions of intrinsic and extrinsic CSR motives in CSR on in-role and extra-role performance of subordinates.

They found that employee task performance increases when employees attribute both intrinsic and extrinsic motives to CSR. Moreover, when employees perceive that their organisation invests in a CSR practice that is both intrinsic and extrinsic, they also tend to exert extra effort in their work.

Read more at: Story, J. and Neves, P. 2014. When Corporate Social Responsibility (CSR) Increases Performance: Exploring the Role of Intrinsic and Extrinsic CSR Attribution.
Business Ethics: A European Review.


CSR and enhancing value: What does the literature say?
Mahfuja Malik reviews the contemporary business literature that focuses on the role of corporate social responsibility (CSR) to enhance firm value. The main objective of this review is to proffer a precise understanding of what has already been investigated and the findings of those investigations regarding the value-enhancing capabilities of CSR for public firms.

In addition, this review identifies gaps in the existing literature, evaluates inconsistent findings, discusses possible data sources for empirical researchers, and provides direction for exploring other promising avenues in future studies. The thrust of the CSR literature largely acknowledges the value-enhancing capabilities of firms’ social and environmental activities.

However, the predominance of inconsistent theoretical grounds in major CSR-benefits-related areas suggests that there is ample room for future research to contribute to the extant literature. Anecdotal evidence, the prevalence of theoretical arguments, and the availability of large cross-sectional firm-level data suggest that future research will enrich the literature by investigating the real insights behind several unanswered questions, by establishing implicit understandings regarding recognized findings, and by developing new theories in this emerging field.

More information is in Malik, Mahfuja. 2015. Value-Enhancing Capabilities of CSR: A Brief Review of Contemporary Literature.
Journal of Business Ethics, 127(2), 419-438.