Sustainable development and corporate social responsibility in Japanese manufacturing companies

Many firms are now conscious about engaging in corporate social responsibility (CSR) for managing their business operations. The CSR is an approach that comprises a wide range of components such as corporate governance and workforce diversity. Among them, environmental protection has emerged as an important business issue in recent decades. This study focuses on the environmental protection from corporate efforts measured by CSR and socially responsible investment (SRI) that may serve as a proxy of CSR. This study considers that the level of sustainable development is measured by two unified (operational and environmental) efficiencies. To examine the sustainable development of Japanese manufacturing firms, we utilize a data set consisting of 110 manufacturing companies during 2013–2015. All the companies examined in this study are listed in the first section of the Tokyo Stock Exchange. This research first applies data envelopment analysis intermediate approach as a holistic method to assess their two efficiency measures. Then, we apply the panel data Tobit estimation to examine whether CSR and/or SRI influence their unified efficiency measures. This research finds that the SRI incorporation increases the efficiencies, enhancing their sustainable developments. However, the compliance with various CSR standards does not have such a direct influence probably because it increases complexity within firms.