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Does it Pay to be Socially Responsible? An Empirical Examination of Impact of Corporate Social Responsibility on Financial Performance

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  • Shveta Kapoor

    (Shveta Kapoor is Lecturer in Department of Commerce, D.A.V. College, Amritsar. E-mail: shveta_2k@rediffmail.com)

  • H.S. Sandhu

    (H.S. Sandhu is Professor in Department of Commerce and Business Management, Guru Nanak Dev University, Amritsar. E-mail: sandhu_hs12@yahoo.com)

Abstract

This article attempts to examine the impact of corporate social responsibility (CSR)on corporate financial performance (CFP)in terms of profitability and growth after controlling for the effect of other variables on financial performance. Secondary data on CSR based on 93 companies operating in India have been analyzed by applying content analysis of annual reports for the year 2005–06 and individual websites of the companies. For CFP and control variables, secondary data have been collected for seven-year period from 1999–2000 to 2005–06 from Prowess, electronic database developed by Centre for Monitoring Indian Economy (CMIE), Mumbai. Statistical tests like factor analysis and multiple regression analysis have been applied. The results indicate significant positive impact of CSR on corporate profitability and insignificant positive impact on corporate growth. The present study is helpful for managers in considering the positive impact of CSR on corporate profitability while taking decisions about investing in CSR areas.

Suggested Citation

  • Shveta Kapoor & H.S. Sandhu, 2010. "Does it Pay to be Socially Responsible? An Empirical Examination of Impact of Corporate Social Responsibility on Financial Performance," Global Business Review, International Management Institute, vol. 11(2), pages 185-208, June.
    • Handle: RePEc:sae:globus:v:11:y:2010:i:2:p:185-208
    DOI: 10.1177/097215091001100205
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    Cited by:

    1. Khawaja Fawad Latif, 2018. "The Development and Validation of Stakeholder-Based Scale for Measuring University Social Responsibility (USR)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 140(2), pages 511-547, November.
    2. Shafat Maqbool, 2019. "Does corporate social responsibility lead to superior financial performance? Evidence from BSE 100 index," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 46(3), pages 219-231, September.

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