Integrating corporate social responsibility and profitability into best practice selection: the case of large Taiwanese firms

Corporate social responsibility (CSR) is rarely incorporated into best practice selection, despite the fact that most large multi-national corporations receive heavy pressure from stakeholders to engage in CSR. In contrast with CSR, profitability is always recognized as a major element when selecting best practices (or best firms). Without incorporating CSR into best practice selection, firms with high profitability but low CSR can be identified as best practices. If requested to emulate high-profitability yet low-CSR ‘best practices’ to improve the organizational performance, firms may increase profitability but also lower their social responsibility, eventually causing an abnormality. Data envelopment analysis (DEA) is a powerful benchmarking tool for situations where multiple inputs and outputs need to be assessed to identify best practices and improve productivity in firms. However, simply adding the CSR measure to DEA outputs does not change the selection of best firms. Specifically, when CSR and profitability measures are pooled as DEA outputs, the conventional DEA identifies the firms with low CSR as best practices. To overcome this drawback, a new benchmarking method is proposed to select best practices with an integrated perspective of CSR and profitability. The proposed method is applied to an empirical case including 66 large firms in Taiwan and opens up a new path for future benchmarking research.