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The Robustness of the Corporate Social and Financial Performance Relation: A Second‐Order Meta‐Analysis

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  • Timo Busch
  • Gunnar Friede

Abstract

For many decades, there has been a debate about the relation between corporate social/environmental performance (CSP) and corporate financial performance (CFP). Our study presents a review of academic research on this topic by applying a second‐order meta‐analysis. The data sample combines 25 previous meta‐analyses yielding a sample size of one million observations. Our results demonstrate a highly significant, positive, robust, and bilateral CSP‐CFP relation. The relation is positive regardless of whether firms focus on ecological or social aspects, though corporate reputation turns out to be a key CSP determinant. We find a particularly strong CSP‐CFP relation for operational CFP. Furthermore, we add a new perspective on potential biases resulting from the studies’ publishing source: social issues‐oriented journals and methodological weaker papers do not distort the positive CSP‐CFP relation. Our conclusion is: Based on the extant literature, the business case for being a good firm is undeniable. © 2018 The Authors. Corporate Social Responsibility and Environmental Management published by ERP Environment and John Wiley & Sons Ltd.

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  • Timo Busch & Gunnar Friede, 2018. "The Robustness of the Corporate Social and Financial Performance Relation: A Second‐Order Meta‐Analysis," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(4), pages 583-608, July.
    • Handle: RePEc:wly:corsem:v:25:y:2018:i:4:p:583-608
    DOI: 10.1002/csr.1480
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