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The relationship between corporate social performance and corporate financial performance and the role of innovation: evidence from German listed firms

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  • Thomas Fischer
  • Angelika Sawczyn

Abstract

Corporate social performance (CSP) has become increasingly important in recent years, primarily because of growing stakeholder requirements regarding a firm’s environmental and social concerns. Satisfying stakeholder expectations and needs through transparent corporate activities may actually improve a firm’s reputation and financial results. With an empirical study of the CSP disclosures of large German listed firms, we tested the hypothesized causal relationship between CSP and corporate financial performance (CFP). We measure CSP as an equal weighted CSP-Index based on Global Reporting Initiative’s social and environmental core key performance indicators. CFP is measured by return on assets. Based on correlation and regression analyses, we find support for a positive and significant interaction between CSP and CFP for large German listed firms. Our findings indicate that the CSP–CFP relationship is affected by the degree of innovation. Furthermore, there is evidence for a unidirectional Granger causal relationship running from CFPt-1 to CSPt. Thus, firms with superior CFP may use their surplus of monetary or non-monetary resources for further improvements of their CSP. Copyright Springer-Verlag Berlin Heidelberg 2013

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  • Thomas Fischer & Angelika Sawczyn, 2013. "The relationship between corporate social performance and corporate financial performance and the role of innovation: evidence from German listed firms," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 24(1), pages 27-52, May.
    • Handle: RePEc:spr:metrik:v:24:y:2013:i:1:p:27-52
    DOI: 10.1007/s00187-013-0171-5
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    6. Davide Fiaschi & Elisa Giuliani & Federica Nieri, 2014. "Bric Companies Seeking Legitimacy Through Corporate Social Responsibility," Discussion Papers 2014/183, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    7. Liu Wu & Zhen Shao & Changhui Yang & Tao Ding & Wan Zhang, 2020. "The Impact of CSR and Financial Distress on Financial Performance—Evidence from Chinese Listed Companies of the Manufacturing Industry," Sustainability, MDPI, vol. 12(17), pages 1-19, August.
    8. Camelia Oprean-Stan & Ionica Oncioiu & Iulia Cristina Iuga & Sebastian Stan, 2020. "Impact of Sustainability Reporting and Inadequate Management of ESG Factors on Corporate Performance and Sustainable Growth," Sustainability, MDPI, vol. 12(20), pages 1-31, October.
    9. Jialu Ma & Jeffrey Kuo, 2021. "Environmental self‐regulation for sustainable development: Can internal carbon pricing enhance financial performance?," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 3517-3527, December.
    10. Ho-Tan-Phat Phan & Francesco De Luca & Lea Iaia, 2020. "The “Walk” towards the UN Sustainable Development Goals: Does Mandated “Talk” through NonFinancial Disclosure Affect Companies’ Financial Performance?," Sustainability, MDPI, vol. 12(6), pages 1-20, March.
    11. Eduardo Duque-Grisales & Javier Aguilera-Caracuel, 2021. "Environmental, Social and Governance (ESG) Scores and Financial Performance of Multilatinas: Moderating Effects of Geographic International Diversification and Financial Slack," Journal of Business Ethics, Springer, vol. 168(2), pages 315-334, January.
    12. Muhammad Khalid Anser & Zhihe Zhang & Lubna Kanwal, 2018. "Moderating effect of innovation on corporate social responsibility and firm performance in realm of sustainable development," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(5), pages 799-806, September.
    13. Raluca ANDREEV & Mihaela TULVINSCHI & Anamaria-Geanina MACOVEI, 2022. "Analysis Of The Impact Of Social Performance On Financial Performance," European Journal of Accounting, Finance & Business, "Stefan cel Mare" University of Suceava, Romania - Faculty of Economics and Public Administration, West University of Timisoara, Romania - Faculty of Economics and Business Administration, vol. 10(2), pages 59-65, June.
    14. Fabricio Carlos Schmidt & Roselaine Ruviaro Zanini & André Luis Korzenowski & Reno Schmidt Junior & Karl Benchimol Xavier do Nascimento, 2018. "Evaluation of Sustainability Practices in Small and Medium-Sized Manufacturing Enterprises in Southern Brazil," Sustainability, MDPI, vol. 10(7), pages 1-11, July.
    15. Günther, Finn & Möller, Klaus & Wenig, Philipp, 2015. "Erfolgswirkung einer proaktiven Unternehmensstrategie zur Integration natürlicher Ressourcen," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 69(1), pages 25-53.
    16. Claudio Nuber & Patrick Velte & Jacob Hörisch, 2020. "The curvilinear and time‐lagging impact of sustainability performance on financial performance: Evidence from Germany," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(1), pages 232-243, January.
    17. Hong-Long Chen, 2021. "Impact of Industry 4.0 on Corporate Financial Performance: A Moderated Mediation Model," Sustainability, MDPI, vol. 13(11), pages 1-16, May.
    18. Anne Michaels & Michael Grüning, 2018. "The impact of corporate identity on corporate social responsibility disclosure," International Journal of Corporate Social Responsibility, Springer, vol. 3(1), pages 1-13, December.
    19. Fuzhong Chen & Haifeng Li & Huini Wei & Wani Nelson, 2022. "The Ownership, Innovation, and Sustainable Development of Micro and Small Enterprises: Evidence of China," SAGE Open, , vol. 12(4), pages 21582440221, November.
    20. Mariusz Karwowski & Monika Raulinajtys‐Grzybek, 2021. "The application of corporate social responsibility (CSR) actions for mitigation of environmental, social, corporate governance (ESG) and reputational risk in integrated reports," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(4), pages 1270-1284, July.
    21. Alexander Landau & Janina Rochell & Christian Klein & Bernhard Zwergel, 2020. "Integrated reporting of environmental, social, and governance and financial data: Does the market value integrated reports?," Business Strategy and the Environment, Wiley Blackwell, vol. 29(4), pages 1750-1763, May.
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