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Signaling virtue: Does firm corporate social performance trajectory moderate the social performance–financial performance relationship?

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  • Brower, Jacob
  • Kashmiri, Saim
  • Mahajan, Vijay

Abstract

Over the past 40years, scholars have demonstrated the effects of corporate social performance (CSP) on corporate financial performance (CFP), finding mixed results on the main effect of CSP on CFP. This study moves beyond the search for a universal main effect of CSP on CFP to examine factors that drive some firms to experience greater returns from their CSP efforts. Building from the signaling and stakeholder theory definitions of reputation and the trajectory literature in psychology, this study examines the following question: what is the impact of a firm's CSP reputation on the relationship between CSP actions and CFP in the current period? Findings based on a sample of 351 US firms demonstrate that firms with either a history of growth in negative CSP, a propensity toward increasing negative CSP, or a more inconsistent history of positive or negative CSP, experience decreased returns from current period investments in CSP.

Suggested Citation

  • Brower, Jacob & Kashmiri, Saim & Mahajan, Vijay, 2017. "Signaling virtue: Does firm corporate social performance trajectory moderate the social performance–financial performance relationship?," Journal of Business Research, Elsevier, vol. 81(C), pages 86-95.
    • Handle: RePEc:eee:jbrese:v:81:y:2017:i:c:p:86-95
    DOI: 10.1016/j.jbusres.2017.08.013
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    References listed on IDEAS

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    Cited by:

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    5. Jacob Brower & Peter A. Dacin, 2020. "An Institutional Theory Approach to the Evolution of the Corporate Social Performance – Corporate Financial Performance Relationship," Journal of Management Studies, Wiley Blackwell, vol. 57(4), pages 805-836, June.
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    7. Gross, Hellen P. & Ingerfurth, Stefan & Willems, Jurgen, 2021. "Employees as reputation advocates: Dimensions of employee job satisfaction explaining employees’ recommendation intention," Journal of Business Research, Elsevier, vol. 134(C), pages 405-413.
    8. Minh-Hieu Le & Wen-Min Lu & Qian Long Kweh, 2023. "The moderating effects of power distance on corporate social responsibility and multinational enterprises performance," Review of Managerial Science, Springer, vol. 17(7), pages 2503-2533, October.
    9. Fang Chen Kao & Minh‐Hieu Le, 2022. "Effects of corporate social responsibility on pharmaceutical multinational enterprises performance: Research and development and business efficiency perspectives," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3419-3434, December.

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