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Managing corporate performance: Investigating the relationship between corporate social responsibility and financial performance in emerging markets

Author

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  • Güler Aras

Abstract

Purpose - Corporate social responsibility is important and fundamental to the sustainable operations of corporations. Similarly financial performance is undoubtedly fundamental to the continuing operating of any corporation. This paper aims to investigate the relationship between corporate social responsibility and firm financial performance. Design/methodology/approach - The main part of this paper is based upon an exploration of the relationship between corporate social responsibility and financial performance in developing countries. The authors do this by investigating the Istanbul Stock Exchange (ISE) 100 index companies and their social responsibility policy and financial indicators. The relationship between CSR and financial performance is empirically examined between 2005 and 2007 with different approaches and measurement methods. The authors show that some causality is related to lagging between periods for financial performance and CSR. Based upon previous empirical studies, this study conducts the analysis based on the assumption that there may be a relationship between firm size, profitability, risk level and CSR. Findings - In doing this analysis the authors found a relationship between firm size and corporate social responsibility. However the authors were not able to find any significant relationship between corporate social responsibility and financial performance/profitability. Research limitations/implications - The paper has implications in enhancing the understanding of performance management through understanding the relationship between corporate social responsibility and financial performance particularly in a developing country, although it is necessarily limited by the size of the sample. Originality/value - This paper increases the understanding of the relationship between corporate social responsibility and financial performance. This research is also the first research that has examined Turkish companies.

Suggested Citation

  • Güler Aras, 2010. "Managing corporate performance: Investigating the relationship between corporate social responsibility and financial performance in emerging markets," International Journal of Productivity and Performance Management, Emerald Group Publishing, vol. 59(3), pages 229-254, March.
  • Handle: RePEc:eme:ijppmp:v:59:y:2010:i:3:p:229-254
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    Citations

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    Cited by:

    1. María del Mar Miras‐Rodríguez & Amalia Carrasco‐Gallego & Bernabé Escobar‐Pérez, 2015. "Are Socially Responsible Behaviors Paid Off Equally? A Cross‐cultural Analysis," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 22(4), pages 237-256, July.
    2. Guler Aras & Nuray Tezcan & Ozlem Kutlu Furtuna, 2018. "The value relevance of banking sector multidimensional corporate sustainability performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(6), pages 1062-1073, November.
    3. Soytas, Mehmet Ali & Denizel, Meltem & Durak Usar, Damla, 2019. "Addressing endogeneity in the causal relationship between sustainability and financial performance," International Journal of Production Economics, Elsevier, vol. 210(C), pages 56-71.
    4. Mohammed L. Ashour & Nafez N. Ali & Mahmoud S. Allan, 2020. "Corporate Social Responsibility and Competitive Advantage: Relationships and Mechanisms," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 161-175.
    5. Jajja, Muhammad Shakeel Sadiq & Asif, Muhammad & Montabon, Frank & Chatha, Kamran Ali, 2020. "The indirect effect of social responsibility standards on organizational performance in apparel supply chains: A developing country perspective," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 139(C).
    6. Abbas Rezazadeh Karsalari & Mehdi Aghaee & Fatemeh Ghasemi, 2017. "The Effect of Mandatory Corporate Social Responsibility on Accounting Conservatism in Tehran Stock Exchange Corporations," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 7(3), pages 120-125, July.
    7. Alexandra ZBUCHEA & Florina PÎNZARU, 2017. "Tailoring CSR Strategy to Company Size?," Management Dynamics in the Knowledge Economy Journal, College of Management, National University of Political Studies and Public Administration, vol. 5(3), pages 415-437, September.
    8. Emmanuel Lawal & Gökan May & Bojan Stahl, 2017. "The Significance of Corporate Social Disclosure for High‐Tech Manufacturing Companies: Focus on Employee and Community Aspects of Sustainable Development," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 24(4), pages 295-311, July.
    9. Kansal, Monika & Joshi, Mahesh & Batra, Gurdip Singh, 2014. "Determinants of corporate social responsibility disclosures: Evidence from India," Advances in accounting, Elsevier, vol. 30(1), pages 217-229.
    10. Ramanathan, Ramakrishnan & Ramanathan, Usha & Bentley, Yongmei, 2018. "The debate on flexibility of environmental regulations, innovation capabilities and financial performance – A novel use of DEA," Omega, Elsevier, vol. 75(C), pages 131-138.
    11. repec:mth:ijafr8:v:9:y:2019:i:1:p:122-134 is not listed on IDEAS
    12. Liu, Zuoming, 2020. "Unraveling the complex relationship between environmental and financial performance ─── A multilevel longitudinal analysis," International Journal of Production Economics, Elsevier, vol. 219(C), pages 328-340.
    13. Ziogas, Ioannis & Metaxas, Theodore, 2018. "CSR in South Europe during the financial crisis and its relation to the financial states of Greek companies," MPRA Paper 92453, University Library of Munich, Germany.
    14. Ramakrishnan Ramanathan, 2018. "Understanding Complexity: the Curvilinear Relationship Between Environmental Performance and Firm Performance," Journal of Business Ethics, Springer, vol. 149(2), pages 383-393, May.
    15. Lakshmi Viswanathan, 2016. "Corporate social responsibility and corporate financial performance: Evidence from Indian capital market," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 6(9), pages 240-248, September.
    16. Majid Khan & James C. Lockhart & Ralph J. Bathurst, 2018. "Institutional impacts on corporate social responsibility: a comparative analysis of New Zealand and Pakistan," International Journal of Corporate Social Responsibility, Springer, vol. 3(1), pages 1-13, December.
    17. Fraile, Isabel acero & Fradejas, Nuria alcalde, 2012. "Gobierno Corporativo y Rendición de Cuentas: ¿Existe Algún Efecto Sobre la Performance Empresarial?," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 15(1), pages 143-178.

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