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Corporate Social and Financial Performance Re-Examined: Industry Effects in a Linear Mixed Model Analysis


  • Philip Baird


  • Pinar Geylani


  • Jeffrey Roberts



In this research, we shed new light on the empirical link between corporate social performance (CSP) and corporate financial performance (CFP) via the application of empirical models and methods new to the CSP–CFP literature. Applying advanced financial models to a uniquely constructed panel dataset, we demonstrate that a significant overall CSP–CFP relationship exists and that this relationship is, in part, conditioned on firms’ industry-specific context. To accommodate the estimation of time-invariant industry and industry-interaction effects, we estimate linear mixed models in our test of the CSP–CFP relationship. Our results show both a significant overall CSP effect as well as significant industry effects between CSP and CFP. In conflict with expectations, the unweighted average effect of CSP on CFP is negative. Our industry analysis, however, shows that in over 17% of the industries in our sample, the effect of CSP on CFP for socially responsible firms is positive. We also examine the multidimensional nature of the CSP construct in an industry context by exploring the CSP dimension–industry nexus and identify dimensions of social performance that are associated with either better or worse financial performance. Our results confirm the existence of disparate CSP dimension–industry effects on CFP, thus our results provide important and actionable information to decision makers considering whether and how to commit corporate resources to social performance. Copyright Springer Science+Business Media B.V. 2012

Suggested Citation

  • Philip Baird & Pinar Geylani & Jeffrey Roberts, 2012. "Corporate Social and Financial Performance Re-Examined: Industry Effects in a Linear Mixed Model Analysis," Journal of Business Ethics, Springer, vol. 109(3), pages 367-388, September.
  • Handle: RePEc:kap:jbuset:v:109:y:2012:i:3:p:367-388
    DOI: 10.1007/s10551-011-1135-z

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    References listed on IDEAS

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    2. repec:kap:rqfnac:v:50:y:2018:i:1:d:10.1007_s11156-017-0630-4 is not listed on IDEAS
    3. repec:kap:jbuset:v:145:y:2017:i:2:d:10.1007_s10551-015-2852-5 is not listed on IDEAS
    4. Anand Nair & Tingting Yan & Young K. Ro & Adegoke Oke & Todd H. Chiles & Su-Yol Lee, 2016. "How Environmental Innovations Emerge and Proliferate in Supply Networks: A Complex Adaptive Systems Perspective," Journal of Supply Chain Management, Institute for Supply Management, vol. 52(2), pages 66-86, April.
    5. Roberto Fernández-Gago & Laura Cabeza-García & Mariano Nieto, 2016. "Corporate social responsibility, board of directors, and firm performance: an analysis of their relationships," Review of Managerial Science, Springer, vol. 10(1), pages 85-104, January.
    6. Taiwen Feng & Dan Wang, 2016. "The Influence of Environmental Management Systems on Financial Performance: A Moderated-Mediation Analysis," Journal of Business Ethics, Springer, vol. 135(2), pages 265-278, May.
    7. Roberto Fernández-Gago & Laura Cabeza-García & Mariano Nieto, 2016. "Corporate social responsibility, board of directors, and firm performance: an analysis of their relationships," Review of Managerial Science, Springer, vol. 10(1), pages 85-104, January.
    8. Gerard Hirigoyen & Thierry Poulain-Rehm, 2015. "Relationships between Corporate Social Responsibility and financial performance: What is the Causality?," Post-Print hal-01430986, HAL.
    9. Sara Hajmohammad & Stephan Vachon, 2014. "Safety Culture: A Catalyst for Sustainable Development," Journal of Business Ethics, Springer, vol. 123(2), pages 263-281, August.
    10. repec:rss:jnljms:v3i8p1 is not listed on IDEAS


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