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Corporate Social Responsibility Trajectory: Mining Reputational Capital

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  • Lars E. Isaksson

    (School of Business and Law, Queensland University of Technology, Brisbane, QLD 4001, Australia)

Abstract

This study proposes that MNCs might withdraw from the CSR concept to gain tangible benefits, like improved corporate financial performance (CFP), and intangible benefits, such as reputational capital (RC). This represents a paradigm shift from the philanthropic end of the spectrum to the strategic win–win side, where all investments are expected to yield a return. Being tacit, quests for reputational returns are discussed in terms of corporate social performance (CSP) with its currency being RC (an intangible asset). However, this requires a deep understanding of the CSP concept and ‘good management’. This study argues that CSR will change trajectory based on three facets. First, we argue for the replacement of CSR by CSP, where ESG becomes ‘business as usual’. Second, regulatory categories (voluntary or legislated) will merge. Third, ethics endorsing ‘good management’ will alter executive mindsets, making CSP deeply embedded in corporate behavior. Organizational behavior towards CSP must, therefore, be sincere yet not embedded overwhelmingly. We extend previous discussions regarding the relationship between CSP and CFP, who present robust evidence that (1) absent CSR embedment has no/neutral CSP and CFP effect; (2) inadequate CSR yields negative CSP and CFP; and (3) productive CSR positively affects CSP and CFP. Consequently, this study argues that (4) strategic CSR (SCSR) maximizes positive CSP and that (5) excessive CSR is detrimental, yielding negative effects on both CSP and CFP. This study, therefore, conjectures the existence of a ‘sweet spot’, where SCSR optimizes CSP and CFP outcomes. The contributions address ESG engagement as a ‘sweet spot’ concept and provide a model enabling SCSR discussion, CSP evaluations, and an implementation framework for its achievement. The framework gives executives a toolbox to influence their stakeholders toward improved CFP. Therefore, our perspective supports CSP embedment, enabling firms to address business growth and sustainability requirements.

Suggested Citation

  • Lars E. Isaksson, 2025. "Corporate Social Responsibility Trajectory: Mining Reputational Capital," Administrative Sciences, MDPI, vol. 15(3), pages 1-25, March.
    • Handle: RePEc:gam:jadmsc:v:15:y:2025:i:3:p:95-:d:1609461
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    References listed on IDEAS

    as
    1. Patrick Velte, 2022. "Meta-analyses on Corporate Social Responsibility (CSR): a literature review," Management Review Quarterly, Springer, vol. 72(3), pages 627-675, September.
    2. Jaepil Choi & Heli Wang, 2009. "Stakeholder relations and the persistence of corporate financial performance," Strategic Management Journal, Wiley Blackwell, vol. 30(8), pages 895-907, August.
    3. Kristen DeTienne & Bradley Agle & James Phillips & Marc-Charles Ingerson, 2012. "The Impact of Moral Stress Compared to Other Stressors on Employee Fatigue, Job Satisfaction, and Turnover: An Empirical Investigation," Journal of Business Ethics, Springer, vol. 110(3), pages 377-391, October.
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