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Meta-analyses on Corporate Social Responsibility (CSR): a literature review

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• Published: 18 March 2021
• volume  72 ,  pages 627–675 ( 2022 )

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• Patrick Velte   ORCID: orcid.org/0000-0001-5960-8449 1  

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This paper addresses quantitative meta-analyses on corporate governance-related determinants and firms’ (non) financial consequences of Corporate Social Responsibility (CSR). Legitimacy theory as our theoretical framework assumes that, through a social contract, a company must fulfil the respective society’s values and expectations and gain legitimacy. We also rely on the business case argument, assuming a positive relationship between CSR and financial outcomes of the firm. This analysis focusses on 54 quantitative meta-analyses on CSR and includes a structured literature review in order to increase our knowledge, which corporate governance variables and proxies of firm’s (non) financial outcome have been heavily included in archival research, and if there is an overall impact of these variables. Prior meta-analyses indicate that board independence, board gender diversity, and board size have a positive impact on CSR performance. Moreover, both CSR performance and environmental performance increase financial performance. This literature review makes a useful contribution to prior studies by summarizing the overall impact of corporate governance variables on CSR and their (non) financial consequences and by deducing recommendations for future research.

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1 Introduction

Since the financial crisis of 2008–09, public interest entities (PIEs) are very active in Corporate Social Responsibility (CSR) strategies in line with the triple bottom line (economic, social, and environmental goals). In view of various (inter)national frameworks, e.g., the Global Reporting Initiative (GRI) Standards and their voluntary character in many regimes, stakeholders criticize the reliability of CSR reports and included CSR performance measures due to greenwashing policy and information overload (Huang and Watson 2015 ). CSR performance measures and reports are connected with increased managerial discretion as a potential self-impression tool (Huang and Watson 2015 ). According to the famous business case argument for CSR (Schaltegger et al. 2019 ), successful CSR strategies should lead to better firm’s (non) financial performance and increased firm value. A proper corporate governance system is needed to decrease greenwashing and information overload (Ortas et al. 2017 ) and to increase firm reputation. Especially, monitoring duties of non executive directors and the implementation of incentive-based compensation systems for top managers should strengthen substantial CSR management systems and avoid symbolic CSR activities (Guerrero-Villegas et al. 2018 ).

In line with the increased relevance in business practice, CSR represents a key topic in empirical-quantitative research. Next to numerous literature reviews on the business case of CSR (Schaltegger et al. 2019 ) who focus the variation of different theories, research methods and CSR proxies within this field, quantitative meta-analyses on CSR research become important during the last few years (e.g., Majumder et al. 2017 ; Cafri et al. 2010 ). As there are very different results in empirical-quantitative CSR studies, meta-analyses statistically summarize the existing research and increase the validity of CSR research and its implications. Another main goal of meta-analyses is the implementation of relevant moderator analysis across multiple studies (Velte 2019a ; Friede et al. 2015 ; Parmigiani and Rivera-Santos 2011 ). As we notice an increased amount of CSR-related meta-analyses during the last years, we are surprised that no literature review on CSR meta-analyses exists so far. In more detail, we just identify four literature reviews on meta-analyses in business administration: a literature review of meta-analyses on accounting (Khlif and Chalmers 2015 ), auditing (Hay 2019 ), finance (Geyer-Klingeberg et al. 2020 ) and accounting, auditing and corporate governance (Velte 2019b ). We see a major research gap on conducting a literature review on prior CSR meta-analyses in view of the following reasons: First, archival CSR research has been increased during the last decade and show heterogeneous results, leading to increased use of meta-analyses on CSR. Prior meta-analyses have used different methods, variables, and moderators, stressing the need to structure the results with the help of a literature review. Second, in line with legitimacy theory and the business case argument for CSR, it is questionable whether prior CSR meta-analyses reported a positive impact of corporate governance on CSR and whether CSR is connected with positive (non) financial consequences. We thus question whether corporate governance as a monitoring and incentive tool is needed for top managers to decrease opportunistic behaviour and strengthen their CSR efforts. Third, as CSR proxies are also very heterogeneous in practice and research, we know very little about the overall impact of corporate governance on different CSR proxies and their consequences, based on meta-analyses. We thus differentiate between the most used variables in prior research: CSR performance, reporting and their related subpillars (e.g., environmental or carbon issues), board gender diversity, Sustainable Supply Chain Management (SSCM) and Socially Responsible Investments (SRI). Fourth, one of the main goals of meta-analyses is to include relevant moderator and mediator analyses . Significant results may be related to moderating and meditating variables, so that it increases our knowledge on factors that may have an impact on the business case for CSR. Therefore, the goal of our study is to evaluate 54 quantitative CSR meta-analyses by addressing the following main research questions:

What are the main corporate governance-related determinants of CSR?

What are the key firms’ (non) financial consequences of CSR?

Which moderator and mediator variables have been included in prior CSR meta-analyses?

Our literature review on CSR meta-analyses indicates that the majority of included studies has focussed on the CSR-financial performance-link. In view of the key corporate governance-related determinants, we note that board independence, board gender diversity and board size have a positive impact on CSR performance. Thus, corporate governance tools can fulfil a main incentive and monitoring tool for top managers in order to increase their CSR efforts. Moreover, in line with our business case argument, CSR (environmental) performance leads to increased financial performance according to our literature review. Thus, shareholders and other stakeholder groups include successful CSR strategies in their decision-making and this may lead to an increased firm value.

The following review provides useful information for researchers, regulators, and practitioners, which may stimulate future researchers to conduct more quantitative meta-analyses on CSR. Furthermore, business practice and regulatory bodies should be aware of the great need to strengthen the comparability of CSR performance and related CSR reporting tools. Regulators may be encouraged to implement stricter regulations on sustainable corporate governance in order to decrease greenwashing policies and lower information overload with regard to CSR.

This article is structured as follows: after introducing our legitimacy theoretical framework and our research framework (Sect.  2 ), we portray the main results of our literature view on CSR meta-analyses (Sect.  3 ). Then, we stress main restrictions of existing research and present selective recommendations for future research activities (Sect.  4 ). A summary of our results will be focussed in Sect.  5 .

2 Legitimacy theoretical foundation and research framework

2.1 general remarks.

Legitimacy theory has established as one of the most important organizational and management theories. This theory assumes that an organization has an implicit social contract with the society in which it operates. This social contract (Shocker and Sethi 1973 ) should motivate managers to comply with a society’s specific values, norms and boundaries by implementing adequate structures and processes (Dowling and Pfeffer 1975 ). Thus, the long-term success and survival of a firm is subject to its ability to meet society’s expectations through suitable systems. If a legitimacy gap arises or is detected, organizations adopt legitimating strategies (Fernando and Lawrence 2014 ).

However, societal values are dynamic (Deegan 2002 ), especially with regard to CSR. Therefore, legitimization is a continuous process, which is supported by effective tools for communicating organization’s legitimization actions. CSR efforts therefore enhance an organization’s image as a good corporate citizen (O'Donovan 1999 ). Such legitimization strategies improve an organization’s access to resources, their image and their customer, employee and investor relationships, which will subsequently enhance their competitive position. If society suspects a lack of transparency, its legitimacy suffers (Aguilera et al. 2007 ).

Heterogeneous stakeholders’ information needs can only be fulfilled by the implementation of substantial CSR management systems, e.g., by SRI policy, SSCM, CSR reports and precise CSR performance measures. CSR reporting and the communication of CSR performance represent major challenges in order to gain legitimacy of main stakeholder groups. As greenwashing policy and information overload (Mahoney et al. 2013 ) are major risks in business practice, stakeholders expect reliable CSR information. Related managerial discretion in CSR and opportunistic behaviour of top managers may be reduced by proper corporate governance systems. Corporate governance is related with internal and external incentive and monitoring tools in order to strengthen CSR strategies in line with stakeholder demands (sustainable corporate governance). Legitimacy theory assumes that CSR strategies can be both symbolic or substantive (Mahoney et al. 2013 ). Substantive CSR strategies imply a careful implementation of CSR into the firm’s business model and risk management system (Brown and Fraser 2006 ). An integrative view of economic, environmental, and social goals is required in order to prevent a symbolic use of CSR. Symbolic CSR activities are intended to meet stakeholders’ expectations and enhance public image and financial outputs as offensive greenwashing policy (Maroun 2020 ). As there is no integration of CSR within the business model and risk management, financial and non financial performances are analysed separately in this context. This also refers to the separate publication of traditional financial statements and CSR reports as a simple marketing tool. Thus, it is not clear, whether corporate governance mechanisms are needed in order to stipulate CSR and whether CSR strategies lead to positive firm’s (non) financial performance (Byron and Post 2016 ). In this literature review, we rely on the business case argument for CSR. The business case argument for CSR proposes that top management follows an “enlightened self-interest” by achieving financial goals while considering CSR aspects (Schaltegger et al. 2019 ) and vice versa. In more detail, management evaluates a trade-off between CSR and financial success. In line with firm’s (non) financial performance as a consequence of CSR activities, the business case argument also assumes that corporate governance-related pressure may mainly influence this direction.

Effective corporate governance should put pressure on top managements to implement substantial CSR strategies. Corporate governance can be classified as a legitimacy tool toward stakeholders’ demands regarding the reliability of CSR activities. The following two main subgroups can be found: internal corporate governance (board composition), and external corporate governance (ownership structure) (e.g., Velte et al. 2020 ). As internal and external corporate governance represent different concepts, a clear differentiation is justified. This differentiation is also very useful to characterize corporate governance regimes. Countries with a clear focus on internal corporate governance (insider systems), e.g., Continental Europe, strengthen their regulations on board effectiveness, e.g., by audit committees. Regimes with a focus on external corporate governance (outsider- or market systems) increase their regulations on shareholder rights and on enforcement to monitor firms and put pressure on top managers to conform with shareholders’ interests.

2.2 Internal corporate governance

Internal corporate governance is mainly linked to board composition. Management should act in line with stakeholders’ interests in their investment and strategic decisions. The board of directors, at the apex of internal control systems, advise and monitor the management (executive directors) and has to duty to hire, fire, and to compensate the senior management (Gillan 2006 ; Shleifer and Visny 1997 ). Research on corporate boards has concentrated on the links between board structure and firm value. Legitimacy theory assumes that board effectiveness leads to increased CSR activities (e.g., performance and reporting) to improve firm reputation and gain social legitimacy. As CSR strategies are linked with restricted objectivity and thus increased managerial discretion, greenwashing behaviour and information overload may threaten stakeholders’ interests. In our literature review, we assume that board composition as board effectiveness will have a positive impact on CSR outputs.

2.3 External corporate governance

In line with Shleifer and Vishny ( 1997 ), shareholders use monitoring mechanisms to ensure that they will gain a return on their investments. Shareholders, as the residual claimants, elect board members and boards owe a fiduciary obligation to shareholders. In line with shareholders, other stakeholders have information needs which have to be addressed by executive directors (Gillan 2006 ). Normally, shareholder do not just rely on the monitoring by the board of directors. They implement individual monitoring mechanisms to put pressure on the top management to fulfil their goals. Say on pay voting is a major example for active monitoring by shareholders. The degree of monitoring is mainly dependent on the individual ownership structure within a firm. Corporate governance research mainly stresses the monitoring role of institutional investors and blockholders in view of their increased power and influence on senior managers (Gillan 2006 ; Shleifer and Visny 1997 ). From a traditional perspective, investors’ goals mainly rely on financial performance. During the last decade, social responsible investors with long-term and non-financial preferences have entered the capital market (Velte et al. 2020 ). These investors are normally part of institutional investors and blockholders, leading to an increased influence on firms’ CSR strategies, e.g., climate change policies. Legitimacy theory assumes that strong monitoring by shareholders as (non) financial shareholder activism will put pressure on senior management to increase their CSR efforts.

2.4 Firms’ (non) financial consequences of CSR

We stated in Sect.  2.1 that both internal and external corporate governance are connected with increased CSR activities of the firm. But all corporate governance elements, both the board of directors and shareholders, are not only interested in an appropriate CSR performance and reporting. They also demand an adequate level of financial performance to guarantee going concern of the firm. Legitimacy theory assumes that the senior management increases their efforts to reach legitimacy of the society. Firm reputation can only be reached by a conglomeration of financial and CSR-related success of firm strategies. CSR efforts can be classified as “pre-financials” and they will be transferred into financial outcome if the market will honour the management activities. Moreover, as CSR strategies include a bundle of different aspects, an increase of a specific CSR variable, e.g., CSR performance, may also related to future changes in CSR reporting or supply chain management.

According to the business case argument for CSR, firm value, shareholder trust and other stakeholder demands are dependent from each other and gain legitimacy for firms (Dowling and Pfeffer 1975 ). There may be both intrinsic or extrinsic motivation of the top management to implement CSR management systems. Firms with better CSR tools can mainly influence their financial benefits in the long run (e.g., increased cash flows, liquidity) and thus gain better stakeholder reputation (Schaltegger et al. 2019 ). Stakeholders use CSR measures, e.g., CSR performance or CSR reporting quality, in order to analyse the reliability of CSR management and related firm risks (Velte et al. 2020 ). If stakeholders assume a low risk of greenwashing policy and information overload in a specific firm, they may not leave the firm or may increase their engagement with higher firm value as a financial consequence (Schaltegger et al. 2019 ). But certain CSR measures could also increase overall CSR performance as a consequence of professional CSR management, stressing the interlocks between various CSR efforts (e.g., the promotion of gender diversity in boards and their impact on CSR performance) (Byron and Post 2016 ). As successful CSR efforts should be linked with better stakeholder relations and firm reputation, CSR should also be value relevant for the capital market (Velte and Stawinoga 2017 ), especially for sustainable investors. Thus, we differentiate between financial performance and CSR performance as firm’s (non) financial consequences of CSR strategies .

2.5 Research framework

Figure  1 presents an overview of our research framework. In line with the business case argument for CSR and legitimacy theory, CSR (and related subpillars) will be connected with better firms’ (non) financial performance. Furthermore, an appropriate corporate governance is needed as a firm-specific pressure for executive directors to increase their CSR activities and lower the possibility of greenwashing behaviour and self-impression management. Indeed, corporate governance as a monitoring mechanism should lead to higher substantial CSR efforts and thus increased CSR performance and reporting in line with stakeholders’ needs. Thus, the goal of our literature review on prior CSR meta-analyses is a detailed analysis of the corporate governance-related determinants of CSR and their (non) financial consequences with a clear focus on financial performance. As CSR variables are heterogeneous in empirical-quantitative research, we differentiate between the most used variables in our review: CSR (and related subpillars) performance and reporting, board gender diversity, sustainable supply chain management (SSCM) and socially responsible investments (SRI). We are also interested in moderator and mediator analyses in this research strength.

Research framework on CSR meta-analyses

Based on legitimacy theory and the business case argument, our analysis focusses on the impact of corporate governance on CSR. We assume that greenwashing and information will be decreased by strict monitoring by the board of directors and shareholders. Then, we assume that successful CSR strategies should lead to increased (non) financial performance. The board of directors and shareholders will put pressure on the management to implement substantial CSR management systems. These substantial CSR efforts will strengthen (non) financial performance from a long-term perspective. Firm reputation and legitimacy by the society include both financial success and CSR performance. However, we are aware of the fact that the research on these two topics is very complex and linked with many interdependencies. Researchers include possible moderator and mediator variables to address those interdependencies. The implementation of moderators and mediators represents one of the major goals of meta-analyses. We like to incorporate prior findings on CSR meta-analyses whether certain moderators and mediators drive our two relationships. Thus, as a summary, the following three research questions are stated:

Which corporate governance determinants influence CSR in a positive way?

Does CSR lead to increased (non) financial performance ?

Which moderator and meditator variables influence the link between corporate governance and CSR on the one hand and firms’ (non) financial consequences on the other hand?

Our analysis is based on established papers on conducting high-quality structured literature reviews (Torraco 2005 ). We identify a major research gap in meta-analyses on the business case for CSR, leading to a closer look on the determinants and consequences of CSR. While CSR-related meta-analyses have increased during the last years, we do not find any literature review on prior meta-analyses on that topic. In more detail, we stress that only four literature reviews on meta-analyses in business administration exist so far: a review of accounting (Khlif and Chalmers 2015 ), auditing (Hay 2019 ), finance (Geyer-Klingeberg et al. 2020 ) and accounting, auditing and corporate governance (Velte 2019b ). We see a major research gap on the business case research on CSR, as regulators, practice and research currently controversially discuss whether corporate governance-issues are related to better CSR and whether a stricter regulation on sustainable corporate governance is needed. Moreover, we like to stress top managers’ incentives to increase CSR activities as it may lead to higher financial and CSR performance in the long run.

We use several international databases to the end of December 2020 to select our sample of included studies (Web of Science, Google Scholar, SSRN, Ebsco, Science Direct). A targeted search was conducted using the keyword “meta-analysis” in connection with “CSR”, “Sustainability”, “Corporate Social Responsibility”, “CSR Performance”, “CSR Reporting”, “Sustainability Reporting”, “Sustainability Performance”, “gender diversity”, “socially responsible investment”, “sustainable supply chain management” and related terms. We also included broad terms such as “Corporate Governance” and “firm value”. A temporal restriction on the included CSR meta-analyses was not necessary because of the relatively young research tradition. We begin with an initial sample of 71 meta-analyses.

As exclusion criteria, we only recognize quantitative meta-analyses on CSR as our goal is to analyse economic determinants and consequences of CSR. Thus, 5 studies were dropped. In line with other literature reviews, we only include meta-analyses published in English in peer-reviewed journals. Working papers were excluded. This step leads to a reduction of 12 studies. Thus, 54 studies represent the final sample of our literature review.

3 Main results of CSR meta-analyses

3.1 content analysis.

Prior CSR meta-analyses are characterized by a heterogeneity of collected data, study designs, theoretical approaches, and analytical techniques. Literature reviews have become a relevant research method for scholars, practitioners, and regulators seeking to increase our knowledge about a complex research topic (Webster and Watson 2002 ). For scholars, a literature review should create new knowledge about CSR using existing meta-analyses that covers the selected topic. A literature review should also contribute to theory development and may close research gaps and revealing precise research recommendations. For practitioners, a literature review gives useful information and insights into effective organizational developments for future business strategies and guidance for policy-making and implementation. As many regulators currently discuss stricter regulations on CSR, sustainable corporate governance, and sustainable finance, our literature review should guide regulatory bodies in these issues. We present a structured literature review in line with our theoretical foundation and our research framework. We mainly focus on our key research questions, addressing corporate governance-related determinants of CSR, the impact of CSR on (non) financial performance, and moderator and mediator variables on these links.

Table 1 gives an overview of the papers per publication year (Panel A), journal (Panel B), content (Panel C) and CSR variables (Panel D). According to Panel A, we note an increased research activity during the last few years (2017–2010) and a rather young research discipline (first study in 1997). Moreover, referring to Panel C, most meta-analyses in our review have been published in Business Ethics and Sustainability journals, e.g., Business and Society , Business Strategy and the Environment , Corporate Social Responsibility and Environmental Management , or Journal of Business Ethics . Management and corporate governance journal are also included to a higher amount. Most of the meta-analyses address the consequences of CSR, especially the impact of CSR performance on financial performance (Panel C). Determinants of CSR are of lower attraction yet. Panel D stresses that CSR performance represents the most important CSR variable included in prior meta-studies.

Table 2 gives an overview about included moderator and mediator variables. One of the main advantages of meta-analyses is to identify possible moderator and mediator variables. With few exceptions, most papers include moderators (51). Methodological moderator variables are recognized in nearly every meta-analysis, while the differentiation of measures of independent and dependent variables is rather common (29). Moreover, firm-specific variables, e.g., industry, and country-related governance factors, e.g. cultural aspects, are important in our literature review. In contrast to this, accounting and corporate governance-related moderators are rarely included yet. We also note a very low amount of mediator variables in prior CSR meta-analyses (3).

3.2 Corporate governance determinants

We already noted that many meta-analyses relate on determinants of CSR as dominant research topic. In line with prior literature (Velte 2019b ), we differentiate between internal corporate governance (board composition) and external corporate governance (ownership structure) with a focus on board composition measures. The average number of included studies within the meta-analyses is rather low (24–158). In our literature review, we mention those studies with a relatively high and low amount of included studies. A possible reason for this is the restricted amount of single studies on the link between corporate governance and CSR. All of our included studies with a specific description of the applied procedures included random-effects models, assuming the variability between effect sizes is due to sampling error in addition to the variability in the population. Most of prior meta-analyses on the link between corporate governance and CSR included bivariate meta-analyses. A bivariate meta-analysis is a special type of meta-analysis that summarises the results from separately performed diagnostic test studies while keeping the two-dimensionality of the data.

3.2.1 Internal corporate governance (board composition)

The main duty of the board of directors is to monitor the executive directors in line with stakeholders’ interests (Byron and Post 2016 ; Maroun 2020 ; Wintoki et al. 2012 ). During the last decade, many different board characteristics were implemented in order to analyse board effectiveness. Board effectiveness should lead to increased executives’ incentives to rely on CSR activities. In this literature review, we note a research intensity on board independence, board gender diversity, board size, board activity and CEO duality as main determinants of CSR performance and reporting.

Board independence represents one major requirement of board effectiveness, as non executives should conduct their monitoring tasks without major conflicts of interests in line with stakeholders’ needs. There are clear indications that board independence significantly increases both CSR performance (Endrikat et al. 2020 ; Ortas et al. 2017 ) and CSR reporting (Lagasio and Cucari 2019 ; Velte 2019a ; Guerrero-Villegas et al. 2018 ). However, Majumder et al. ( 2017 ) found insignificant results, based on just 29 included studies. During the last decade, board gender diversity also gets main attraction in CSR research. A greater range of board diversity, especially with regard to gender, should lead to increased awareness of CSR strategies. Thus, prior meta-analyses state that board gender diversity is linked with better CSR performance (Endrikat et al. 2020 ; Byron and Post 2016 ) and CSR reporting (Lagasio and Cucari 2019 ; Velte 2019a ; Guerrero-Villegas et al. 2018 ). Again, Majumder et al. ( 2017 ) did not find any significant results. Board size and board activity are our next internal corporate governance determinants in our literature review. Literature assumes that an appropriate board size and board meeting frequency are necessary to guarantee board effectiveness (Endrikat et al. 2020 ). With regard to board size, there are indications of a positive impact on both CSR performance (Endrikat et al. 2020 ; Zubeltzu-Jaka et al. 2020 ) and CSR reporting (Lagasio and Cucari 2019 ; Guerrero-Villegas et al. 2018 ; Majumder et al. 2017 ). However, Velte ( 2019a ) did not find any significant impact on CSR reporting. Board activity is of lower relevance yet. According to Majumder et al. ( 2017 ), board meetings and CSR reporting are positively related, while insignificant results are also available (Lagasio and Cucari 2019 ). Heterogeneous results can be stated for CEO duality . From a theoretical perspective, CEO duality can either contribute to better board effectiveness and CSR activities or may be linked to a reduced monitoring activity with regard to powerful and opportunistic CEOs. Most of the included meta-analyses stated a non-significant relationship between CEO duality and CSR (Endrikat et al. 2020 ; Lagasio and Cucari 2019 ; Velte 2019a ; Majumder et al. 2017 ). According to Guerrero-Villegas et al. ( 2018 ), CEO duality decreases CSR reporting. Le et al. ( 2015 ) is the only study in our review with a focus on top managements’ values and demographic characteristics . The authors just included 29 studies and found that stakeholder values and diversity in experience of top managers are related with increased CSR performance. However, CEO ethical leadership, age and tenure are not related with CSR (Le et al. 2015 ). We also identify one study on the determinants of board gender diversity ( Halliday et al. 2020 ), based on 158 included studies. The authors found female CEO, female chairperson, CEO duality and board independence to have a positive impact on board gender diversity, while board age decreases it.

As the key goal of meta-analyses is to identify and analyse possible moderators and mediators of CSR, we also stress the key results. In this context, we note a very low attractiveness of mediator analysis in prior meta-analyses. One exception is Endrikat et al. ( 2020 ), who found a significant mediator influence of CSR committees on the impact of selective board composition variables on CSR performance.

With regard to moderators , board independence and code law regimes strengthen the positive influence of board size on CSR performance (Zubeltzu-Jaka et al. 2020 ). This is in line with the moderating impact of civil law regimes on the link between board independence and CSR performance (Ortas et al. 2017 ). Majumder et al. ( 2017 ) found that the differentiation between developed and developing countries impacts the positive relationship between board size and CSR reporting. Other country-related aspects as significant moderator variables are the degree of shareholder protection (Endrikat et al. 2020 ; Velte 2019a ; Byron and Post 2016 ), legal enforcement (Velte 2019a ), country-related gender parity (Endrikat et al. 2020 ; Byron and Post 2016 ), low country commitment to sustainable goals (Guerrero-Villegas et al. 2018 ) and market conditions (Ortas et al. 2017 ) with an impact on the relationship between corporate governance variables and CSR. Moreover, country-related gender parity weakens the link between a female CEO and board diversity (Halliday et al. 2020 ). Finally, different CSR proxies represent important moderator variables in the included meta-analyses (Endrikat et al. 2020 ; Ortas et al. 2017 with regard to self-reporting proxies; Le et al. 2015 with regard to social performance).

3.2.2 External corporate governance (ownership structure)

External corporate governance is linked with external stakeholders’ monitoring. Prior corporate governance research heavily relies on shareholders as key stakeholders of PIEs. In this context, ownership structure can have a major impact on management strategies. Certain groups of shareholders, mainly sustainable investors, may put pressure on top management to increase CSR strategies in line with other stakeholder interests. Until now, a low research activity on external corporate governance determinants can be found. Canavati ( 2018 ) stated a positive influence of family ownership on CSR performance. This contrasts the results by Lagasio and Cucari ( 2019 ) and Majumder et al. ( 2017 ) who stressed insignificant results on ownership structure in general and on government, foreign and institutional ownerships in particular.

With regard to moderator variables , according to Canavati ( 2018 ), private family firms and weak labor and corporate governance frameworks positively contribute to the impact of family ownership on CSR performance. Moreover, big four audits have a positive and managerial and concentrated ownership have a negative impact on CSR reporting (Majumder et al. 2017 ).

3.3 Firms’ (non) financial consequences of CSR

In line with the business case argument, most archival research on CSR relies on firms’ financial consequences . Literature states that both CSR performance and CSR reporting may lead to positive financial developments within companies in the long run (e.g., Busch and Friede 2018a ). As stakeholders’ demands on CSR-related information and successful CSR strategies increased since the financial crisis of 2008–09, high CSR performance and CSR reporting quality may be connected with increased firm reputation, better stakeholder relations and thus higher firm valuation. Next to firm’s financial consequences, CSR performance and reporting may have a significant impact on other CSR-related consequences. This strength of research addresses the connectivity between various CSR measures. Thus, in our literature review, we separate between financial performance and CSR performance on the one hand and between CSR and related subpillars (e.g., environmental performance) on the other hand.

In comparison to Sect.  3.2 , we note a higher average amount of studies included in prior meta-analyses on (non) financial consequences of CSR (18–437 studies). This can be explained by a relatively long tradition of studies on the CSR-financial performance-link and the increased amount of meta-analyses on that topic. In line with our results in Sect.  3.2 , random-effects models were dominantly used. One major exception is the use of fixed-effects models on the impact of environmental (green) supply chain management on (non) financial performance. Fixed-effects models in meta-analyses assume that there is one true effect size that underlies all the studies in the analysis. While we stress a variety of different methods (uni-, bi-, and multivariate meta-analyses), bivariate meta-analyses are mainly used in this research topic. This is line with our remarks in Sect.  3.2 . However, we note a relatively high amount of included meta-analyses with a lack of transparency on the applied procedures. This reduces the validity of the analyses.

3.3.1 Financial performance

Most of the included meta-analyses on the consequences of CSR address the CSR performance-financial performance-link . In this context, a differentiation between accounting-based (e.g., ROA) and market-based (e.g., Tobin’s Q) measures is common. Some researchers also separate between accounting-, market- and perception-based proxies of financial performance (Orlitzky et al. 2001 ). There are several indications for a positive significant impact of CSR performance on financial performance (Vishwanathan et al. 2020 ; Busch and Friede 2018a ; Plewnia and Guenther 2017 ; Hou et al. 2016 ; Lu and Taylor 2016 ; Friede et al. 2015 ; Wang et al. 2016 ; Quazi and Richardson 2012 ; Allouche and Laroche 2005 ; Orlitzky et al. 2003 ; Frooman 1997 ). More specifically, Busch and Friede ( 2018a ) included 25 prior meta-analysis and state a bidirectional link between CSR and finanicial performance. According to Hou et al. ( 2016 ), the impact is stronger by including environmental performance and operational performance. In a recent study, however, based on 437 included studies, no significant results between CSR and financial performance can be found (Huang et al. 2020 ). Orlitzky and Benjamin ( 2001 ) stated a positive bidirectional link between CSR performance and firm risk.

A great variety of moderator variables have been included on this link. Vishwanathan et al. ( 2020 ) included 344 studies and have identified firm reputation, stakeholder reciprocation, firm risk mitigation and innovation level as relevant moderators. Plewnia and Guenther ( 2017 ) come to the conclusion, that time lags, region (US-settings), continuous time horizons, controls for advertising intensity and public ownership control moderate the CSR-financial performance link. According to Lu and Taylor ( 2016 ), referring to 198 CSR studies, long-term effects, environmental performance, non US-settings, pre-2000 studies and multi-industries are relevant moderators. Moreover, journal quality (Busch and Friede 2018a ), SMEs, private firms and developing firms (Hou et al. 2016 ), environmental performance and developed countries (Wang et al. 2016 ) and sample size (Quazi and Richardson 2012 ) moderate this relationship. Orlitzky ( 2011 ) referred to 388 CSR studies and stressed that, in comparison to different publication outlets, economics journals concentrate on positive significant results. This might be a main argument for a problematic publication bias. The different measures of CSR and financial performance also represent major moderators in the included meta-analyses with a significant impact (Busch and Friede 2018a ; Hou et al. 2016 ; Lu and Taylor 2016 ; Allouche and Laroche 2005 ; Orlitzky et al. 2003 ; Orlitzky and Benjamin 2001 ). In his main research objective, Orlitzky ( 2001 ) concluded that firm size does not moderate the CSR-financial performance relationship. Huang et al. ( 2020 ) addressed two main challenges of prior business case research. Economic fluctuations and endogeneity concerns limit the reliability of archival CSR research. The authors found that the elimination of confounding effects of economic fluctuations and the recognition of proper estimation methods due to endogeneity concerns lead to a positive CSR-financial performance link.

Environmental performance represents one major subpillar of CSR performance. In view of the current climate change discussions from an international perspective, it is not surprising that many prior studies focus on environmental performance as CSR proxy. There are also indications that environmental performance leads to better financial performance (Hang et al. 2019 ; Endrikat 2016 ; Endrikat et al. 2014 ; Albertini 2013 ; Dixon-Fowler et al. 2013 ). In more detail, Hang et al. ( 2019 ) stressed a short run (1 year) one-way link and a long run bidirectional link (after 1 year). Endrikat et al. ( 2014 ) also reported a partially bidirectional relationship. Furthermore, according to Endrikat ( 2016 ), market reactions are stronger negative for negative events than positive for positive events. In a current meta-analysis by Tsai et al. ( 2020 ), environmental management also leads to better financial performance. Busch and Lewandowski ( 2018b ) included just 32 studies on carbon performance and found a positive impact on financial performance. Horvathova ( 2010 ) is the only meta-analysis in our review with insignificant results on the impact of environmental performance on financial performance.

We identify a variety of moderator variables on the environmental-financial performance link: employees’ age, gender and culture (Wang et al. 2020 ), event windows related to event studies (Endrikat 2016 ), proactive strategic approaches, sampling, addressing endogeneity and financial risks (Endrikat et al. 2014 ), performance measures, regions, industry, time frame (Albertini 2013 ) and the differentiation between small firms, public firms and US-settings (Dixon-Fowler et al. 2013 ). Tsai et al. ( 2020 ) stressed that financial performance proxies, the year of data collection, industry, economic development and cultural aspects moderate the environmental-financial performance link. Moreover, according to Busch and Lewandowski ( 2018b ), specific performance measures (relative emissions, market based financial performance) influence this relationship.

Next to environmental performance, we note that one meta-analysis also states a positive link between social performance and financial performance (Lopez-Arceiz et al. 2018 ). Size criteria for financial performance and social performance based on stakeholder criteria moderate this relationship.

As board gender diversity is controversially discussed with regard to the business case argument, some meta-analyses refer to the impact of female directors on financial performance. Hoobler et al. ( 2018 ), based on sales performance, and Post and Byron ( 2015 ), based on accounting returns, stated a positive impact. However, Pletzer et al. ( 2015 ) did not find any significant relationship. Cultural aspects (Hoobler et al. 2018 ), the degree of shareholder protection (Post and Byron 2015 ) and employees’ perceived CSR and employees’ perception of organization performance (Wang et al. 2020 ) can be qualified as main moderator variables on this relationship.

During the last decade, SSCM has gain main attraction in CSR research. The main goal of SSCM is the integration of environmentally and socially viable practices into the full supply chain lifecycle, from product design and development, to material selection, manufacturing, packaging, transportation, warehousing, distribution, consumption, return and disposal. Govindan et al. ( 2020 ) and Golicic and Smith ( 2013 ) found a positive impact of SSCM on financial performance. Moreover, the branch of industry (manufacturing) (Govindan et al. 2020 ; Golicic and Smith 2013 ), measurements of SSCM, region and time (Golicic and Smith 2013 ) represent relevant moderator variables.

SRI are investments that are considered socially responsible due to the nature of the business the firm conducts. Common themes for SRI include green and socially conscious investing. SRI can be made into individual companies with good green and social value, or through a socially conscious mutual fund or exchange-traded fund (ETF). Kim ( 2019 ), Revelli and Viviani ( 2015 ) and Rathner ( 2013 ) analyse whether SRI perform better in comparison to conversional funds. The authors state a non-significant relationship. As main significant moderators, the economic crisis, control groups, the SRI measure, sampling and methodology (Kim 2019 ), survivorship bias and US focus (Rathner 2013 ) are recognized.

3.3.2 CSR performance

Next to financial performance, CSR strategies or subpillars can improve future CSR performance , stressing the various interlinks between CSR variables. This assumption was stated by Gabriel and Nathwani ( 2014 ), while this link is more pronounced by proactive CSR strategies. With regard to the link between CSR reporting and CSR performance, Gallardo-Vazquez et al. ( 2019 ) did not find any significant results. However, region, firm size and CSR disclosure type were included as significant moderators (Gallardo-Vazquez et al. 2019 ). There are also indications that green supply chain management and CSR performance are positively linked (Fang and Zhang 2018 ; Qorri et al. 2018 ; Geng et al. 2017 ). The authors used fixed-effects models as research design. The most important moderators in this context are industry, ISO, export orientation, culture (uncertainty avoidance) (Fang and Zhang 2018 ), region, industry or firm size (Qorri et al. 2018 ; Geng et al. 2017 ).

Doan and Sassen ( 2020 ) reported a weak negative influence of environmental performance on environmental reporting . The different proxy variations represent a main moderator variable. According to Erauskin-Tolosa et al. ( 2020 ), environmental management practices lead to better environmental performance , moderated by mature certification and environmental innovation. Finally, CSR performance leads to better brand loyalty (Aljarah and Ibrahim 2020 ), customer relationship quality (Aljarah et al. 2020 ) and increased employees’ attitudes and behaviour (Zhao et al. 2020 ). The innovation level and the manufacturing industry weaken the link between CSR and brand loyalty. Cultural collectivism, experience product types and online survey designs strengthen the link (Aljarah and Ibrahim 2020 ). The relationship between CSR and customer relationship quality is even stronger by customer relationship proxy trust (Aljarah et al. 2020 ). Organizational justice, trust and identification mediate the link between CSR and employees’ attitudes and behaviour (Zhao et al. 2020 ).

3.4 Key results

With regard to corporate governance determinants, we find that board independence, board gender diversity and board size have a positive impact on CSR performance . These results are in line with the assumption that corporate governance and CSR represent two dependent disciplines (sustainable corporate governance). As CSR activities can be used for greenwashing policy and self-impression management, corporate governance attributes strengthen monitoring quality, and incentive alignment and put pressure on top managers to include substantial CSR strategies. Moreover, according to our literature review, both CSR performance and environmental performance lead to increased financial performance . Thus, firm can follow the business case argument for CSR and may increase their firm value. Other relationships in this literature review are inconclusive. The amount of meta-analyses are either too low or these studies found insignificant results (e.g., CEO duality, SRI out-performance). This leaves room for many research recommendations in the next chapter. Figure  2 summarize our key results and Table 3 gives a detailed overview of included meta-analyses on CSR.

Key results of our literature review

4 Research recommendations

4.1 internal corporate governance.

Due to the lack of standardization of CSR, we stress a high degree of managerial discretion (e.g., by the choice of CSR reporting frameworks or performance measures), leading to a low comparability of CSR proxies over time and between PIEs (Mahoney et al. 2013 ). Furthermore, greenwashing and impression management mainly influence CSR activities and may be connected with symbolic use of CSR. Our literature review on prior CSR meta-analyses indicates that the majority of included studies concentrate on CSR performance as main proxy, financial performance as major consequence of CSR and variations of CSR measures as moderator variables. We recommend to conduct future meta-analyses on other corporate governance determinants, e.g., sustainable board expertise, on CSR reporting and subpillars of CSR, e.g., carbon reporting. As current discussions heavily rely on carbon performance and disclosure, we know very little about the overall effects of corporate governance on carbon-related issues (Doan and Sassen 2020 ). Moreover, as mediator analyses are very low in amount (Endrikat et al. 2020 ), other corporate governance variables may mediate the impact of CSR on financial outputs. In this context, future moderators should be more linked with the separation between symbolic/substantive and extrinsic/intrinsic motivations of senior managers in view to CSR strategies. Interestingly, the reliability of CSR performance and reporting by voluntary CSR assurance services, e.g., by professional accountants, is not included in meta-analytical research designs yet (Velte and Stawinoga 2017 ). Next to classical content analysis and scoring method, advanced methods of textual analysis (e.g., by the use of artificial intelligence, recognition of social media) can mainly impact the future empirical business case research on CSR e.g., by including readability measures or by analysing tone management. The current focus on archival (secondary) studies with regard to CSR research and their recognition in quantitative meta-analyses should be complemented by experimental designs in order to include individual preferences of various stakeholder groups.

Furthermore, individual manager characteristics and traits, e.g. by the CEO and other members of the top management team, should be included in meta-analytical designs. In line with upper echelons theory (Hambrick and Mason 1984 ), behavioural corporate governance aspects might also influence CSR strategies. CEO, CFO or other Chief officers characteristics, e.g. education and professional backgrounds, personality and preferences, as well as sustainability-related attitudes, should be addressed. In line with the monitoring role of corporate governance mechanisms, incentive alignment between managers and stakeholders can be mainly achieved by sustainable management compensation systems. As Winschel and Stawinoga ( 2019 ) conduct a literature review on the determinants and consequences of sustainable CEO compensation, we do not find any meta-analysis on this important topic yet.

4.2 External corporate governance

Interestingly, external corporate governance factors (ownership structure) are rarely used in comparison to board composition. We know very little about the impact of different types of investors on CSR in view of their time horizon and their (non) financial interests. However, traditional corporate governance research has a main focus on ownership structure and their impact on financial performance. In line with the portfolio theory, shareholders’ investment decisions are linked with considerations of risk and return (Cumming and Johan 2007 ; Hoq et al. 2010 ; Faller and Knyphausen-Aufseß 2018 ). While institutional investors are primarily focused on financial results and investment risks, SRIs explicitly consider ESG aspects in their investment decisions (Clark and Hebb 2005 ). The time horizon of institutional investors plays an important role in this context (Cox et al. 2004 ). Thus, long- and short-term investors on the one hand, and active and passive institutions on the other hand, realise different investment strategies (Soliman et al. 2013 ). Future meta-analyses should include the impact of institutional ownership on CSR due to the increased amount of studies on that topic.

Other stakeholder groups, e.g., customers or suppliers, are rarely included in prior empirical-quantitative research on CSR (Winschel and Stawinoga 2019 ). We know very little about the impact of other stakeholder groups on CSR strategies and a possible moderator influence. In line with corporate governance, many researchers analyse the impact of country-related governance on CSR, e.g., shareholder rights or cultural aspects. Thus, there are many research gaps in view of conducting meta-analyses on possible determinants of CSR, if the amount of single studies on that topic reaches an appropriate range.

4.3 (Non) financial consequences of CSR

We already mentioned that most of our included meta-studies focussed on the impact of CSR performance on financial performance. But other (non) financial consequences also important in recent CSR studies, e.g. the impact of CSR on earnings management or tax avoidance, indicating heterogeneous results. Literature assumes that intrinsic motivations of managers may lead to a negative impact of CSR strategies on both earnings management and tax avoidance (Velte et al. 2020 ). Opportunistic manager behaviour (greenwashing policies) may lead to a positive relationship between these variables.

In many ways, we know very little about reversed causality in CSR meta-regressions (Endrikat et al. 2014 ). A bidirectional link between corporate governance-related determinants and CSR on the one hand and firms’ (non) financial consequences of CSR on the other hand may be more realistic (Endrikat et al. 2014 ). Increased CSR activities may be the consequence of higher financial circumstances and successful CSR management may also lead to increased corporate governance mechanisms in the future. In view of these important endogeneity concerns, future meta-analyses on CSR should explicitly include moderator variables whether included single studies have used “advanced” regression models, e.g., two or three stage least squares (SLS) or generalized method of moments (GMM) models with instrumental variables (Wintoki et al. 2012 ). While the amount of meta-analyses on firm’s (financial) consequences of CSR has increased during the last years and recent studies increased their number of included studies and samples, we recommend to increase the transparency of explanations of applied procedures. Some meta-analyses do not explicitly include whether they conducted a uni-, bi- or multivariate meta-analysis or whether they have chosen a random- or fixed effects model.

Stakeholders of PIEs demand an appropriate CSR management system that includes diversity concepts, CSR reporting and performance measures (Maroun 2020 ). During the last decade, firm valuation is not only dependent on financial performance, but also on environmental and social strategies and successful management strategies on these issues. As a main challenge, greenwashing policy and information overload are main risks in business practice, which have been criticized by many stakeholder groups (Mahoney et al. 2013 ). With reference to the business case argument for CSR (Schaltegger et al. 2019 ), it is not clear, whether CSR-oriented firms will have better (non) financial performance in the future. Thus, the impact of corporate governance as key determinants of successful CSR practices might be crucial. During the last decade, massive research has been conducted on the corporate governance-related determinants and firm’s (non) financial consequences of CSR activities (e.g., Endrikat et al. 2020 ). We also recognize many literature reviews (e.g., Velte et al. 2020 ) and meta-analyses on CSR. However, no literature review on CSR-related meta-analyses exists so far. Prior literature review of meta-analyses only address accounting (Khlif and Chalmers 2015 ), auditing (Hay 2019 ), finance (Geyer-Klingeberg et al. 2020 ) and accounting, auditing and corporate governance (Velte 2019b ) without any focus on CSR. We see a major research gap on focussing CSR meta-analyses, as it is questionable, which corporate governance determinants are most important in prior research and will positively influence CSR efforts. Moreover, we are interested whether CSR strategies will lead to positive (non) financial consequences for firms. Meta-analyses are more suitable for inclusion in literature reviews as single studies because their aggregation of information leads to an increased statistical power (Cafri et al. 2010 ). It increases our knowledge about archival CSR research because the overall effect of various single studies on CSR can be included. Thus, we offer the first comprehensive, legitimacy theory-based framework on the business case of CSR meta-studies. In this context, we systematically include empirical-quantitative meta-analyses on CSR and differentiate between in- and external corporate governance drivers on the one hand and (non) financial performance as main firms’ consequences on the other hand. We are also interested in prior moderator and mediator analysis within meta-analytic designs.

In contrast to narrative literature reviews and single studies, quantitative meta-analyses as an alternative research method become important in CSR research during the last few years. This literature review includes 54 meta-analyses on CSR and states that the majority of quantitative CSR research concentrates on the CSR-financial performance-link. In line with the business case for CSR, board independence, board gender diversity and board size as key corporate governance factors have a positive impact on CSR performance. These corporate governance determinants seem to be most relevant in prior CSR research and significantly promote CSR strategies. Moreover, with regard to firms’ (non) financial consequences, both CSR performance and environmental performance lead to increased financial performance. There are clear indications that the business case argument for CSR does exit in business practice. However, prior meta-analyses do not mainly address the challenges of symbolic or substantive use of CSR efforts. Mediator analyses are rare and moderator analyses mainly rely on methodological aspects and classical firm-related attributes (e.g., industry). We propose research recommendations from a methodological and content-related perspective in this literature review in line with our main research questions.

Our analysis is not only useful for researchers, but it also makes a main contribution for regulatory bodies and business practice. First, based on our first research question, corporate governance mechanisms may promote successful CSR management strategies as an incentive and monitoring tool in line with our business case hypothesis. Executives should be aware of stakeholder pressure in conducting substantial instead of symbolic CSR in order to prevent information overload and greenwashing policy. Firms should clearly integrate CSR issues into their business model and their risk management processes. Second, based on our second research question, a positive link between CSR and financial performance includes a proper integration of different firm departments and a dynamic dialogue (e.g., finance and accounting department, IT, marketing, and sustainability) and sustainability expertise in the board of directors. Increased sustainability expertise by managers will strengthen CSR management and a more balanced view of both risks and chances (future value drivers) of intensive CSR investments and reorganization of business strategies. CSR efforts as “pre-financials” may be transferred into financial outputs from a long-term perspective and increase firm reputation and legitimacy. A stricter link between CSR and financial performance may be realistic, if firms switch from classical financial reporting and CSR reporting to an integrated report. A clear connectivity between financial and CSR information as integrated thinking may have a positive influence on substantial CSR strategies. Integrated reporting can be also most useful for external valuation by capital market participants and other stakeholders. Thus, a long-term transformation from CSR management to integrated thinking processes as a clear interaction of financial and CSR aspects is favorable. Finally, based on our third research question, the impact of corporate governance on CSR and their (non) financial consequences are most complex and heterogeneous in business practice. Corporate governance may only be related with increased CSR efforts if a specific environment is existent (e.g., other firm-related or country-related aspects as moderators or mediators). Similar aspects may be most important due to the CSR-financial performance link.

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Velte, P. Meta-analyses on Corporate Social Responsibility (CSR): a literature review. Manag Rev Q 72 , 627–675 (2022). https://doi.org/10.1007/s11301-021-00211-2

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Impact of corporate social responsibility on organization’s financial performance: evidence from Maldives public limited companies

• Ibrahim Sameer   ORCID: orcid.org/0000-0002-1177-4066 1  

Future Business Journal volume  7 , Article number:  29 ( 2021 ) Cite this article

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The main objective of this study is to determine the CSR disclosure and to find out the association between CSR and FP by the public companies of Maldives. This study used a mixed-method research choice and is longitudinal research. The study period was from 2014 to 2018. Data were collected from annual reports of the listed companies in MSE. The sampling technique used was judgmental sampling, and the data were analyzed from STATA 15 software by using panel data regression. The finding reveals that diversity and ROA, environment and ROE, diversity, and EPS, and when the size of the firm controlled, there exhibit significant negative relation between CSR and ROA; hence, it can conclude that there exists a significant negative relationship between CSR and FP. This study has implications for the academician and corporate world in understanding CSR and FP in developing countries like the Maldives. One of the main consequences of this study is the CSR framework adopted in this study which is not a custom-tailored instrument specific to the Maldives instead chose from another research paper. Further, the sample size was also very limited due to that generalization may not be possible in a large population. This paper spreads the understanding of the relationship between CSR and FP.

Introduction

Corporate social responsibility (CSR) is one of the most controversial and significant topics since the 1950s, and it has been growing since then [ 29 ]. CSR discipline is one of the rigorous research areas among practitioners and academicians [ 28 ]. In the history of the corporate world for the first time, CSR was mention by Bowen [ 21 ] in his seminal book Social Responsibility of the Businessmen in 1953. In his book, the central question, he argues that and continues to be asked, was “ what is the responsibilities to society may businessmen reasonably be expected to assume .” Bowen [ 21 ] also stresses the importance of knowing business ethics so that it can lead to superior enduring performance. Cruz et al. [ 43 ] confirm that CSR initiatives are significant in the context of business ethics and found a healthy positive attitude toward business ethics and CSR.

Despite the long history of CSR discipline, up to date, it remains to be debatable and immature in some areas. For instance, one area that is debatable and one of the central focus given is determining the relationship between CSR and corporate financial performance (CFP). According to Das and Bhunia [ 47 ], the whole literature on this area can be categorized into three. Some studies show a positive correlation between CSR initiatives on FP [ 167 , 197 ] and Yeganeh and Barzegar [ 7 ]. On the other hand, Hirigoyen and Rehm [ 78 ] and Madugba and Okpara [ 118 ] found negative correlation between CSR and FP. Lastly, [ 35 , 104 ] found no correlation between CSR and FP.

During the past six decades of CSR discipline, numerous finding has caught the attention of CSR practitioners and academicians [ 195 ]. These studies results suggest that CSR provides insurance like effect on financial performance against adverse events of company [ 147 , 203 , 204 ], CSR initiatives can enhance employee organizational commitment and organizational performance [ 5 ], and most of the workers like to work and can attract more potential employees for an organization that has an excellent reputation for being socially responsible [ 69 , 77 , 112 ]. Therefore, now a day to pursue sustainable development and enhance the goodwill of companies has started to publish CSR disclosures in annual company report or CSR reports.

In the Maldives, it is not mandatory for public companies to publish the CSR report. Nowadays, companies announced CSR disclosure through the annual report. It indicates the prominence given by companies to CSR activities, but the effect of CSR on financial performance is not locally being investigated so far in the Maldives, due to several reasons. First, research base culture did not exist in the Maldives and recently public university came into the picture. Secondly, public companies in the Maldives assume that similar management practices (such as CSR) adopted by foreign countries might be relevant in the Maldives. According to [ 181 ], most of the research done on CSR is investigated in a western developed nation such as the USA, UK, Germany, and Australia and is not that clear whether it can apply in developing nations. Burton et al. [ 25 ] and Khan [ 97 ] suggested that to understand CSR, it is a must to understand the cultural aspects of that country because developed nations' influential factors may not apply to the Maldives. Third, there is no CSR measurement practice in the Maldives and how it should report. Fourth, the impact of CSR on financial performance has not been investigated locally so far in the Maldives. Due to these reasons, it is worth investigating the association between CSR and financial performance.

From the above discussion, it is clear that most of the research done on CSR was dominated by a western developed nation such as the USA, UK, Germany, and Australia [ 181 ]. According to Das and Bhunia [ 47 ] though there are intensive empirical research done in order to find relationship between CSR on FP [ 14 , 62 , 137 ], the result of previous studies is indeterminate. Hence, this is a gray area with inconclusiveness, and this research gap motivates the researcher to conduct a study on this topic.

According to Wang et al. [ 196 ], there are numerous researches on CSR discipline in respect of FP in foreign countries, especially in developed nations, indicating a dearth of studies in the Maldives context. As per the researcher's knowledge so far, there is only one study done [ 175 ] in the local context on CSR. In that research, the author investigates the CSR context in the Maldives and has not explored the CSR and FP relation. Hence, this provides a gap for further studies in finding the relationship between CSR and FP in public listed companies in the Maldives. Therefore, this study of CSR and FP in public listed companies in the Maldives tries to attempt to fill this gap in the literature.

To establish whether CSR (community, workplace, environment and diversity) positively/negatively correlated with Financial Performance (FP) of public companies in Maldives using ROA.

To determine whether CSR (community, workplace, environment and diversity) positively/negatively correlated with Financial Performance (FP) of public companies in Maldives using ROE.

To decide whether CSR (community, workplace, environment and diversity) positively/negatively correlated with Financial Performance (FP) of public companies in Maldives using EPS.

Following this brief introductory section, the rest of the paper is divided in the following manner: “ Literature review ” section discusses the meaning of CSR, why companies engage in CSR and empirical evidence of CSR and FP and theoretical framework. “ Research methodology ” section discusses the data collection and sampling procedure, model used in the study and the specification test. “Finding and analysis” section presents the empirical findings and discussion of the results, and finally, “Conclusion” section is the conclusion of the paper.

Literature review

According to [ 27 ], there were a vast number of definitions of CSR that have emerged in the academic literature. Some of the notable contributors that have defined CSR include [ 21 , 30 , 56 , 91 ]. In general, CSR can be defined as its responsibility toward its ecosystem.

Although there is a diverse definition given by scholars around the globe about CSR, there is no universally accepted definition of CSR [ 45 ]. Dahlsrud analyzed 37 most commonly used definitions of CSR. He concluded that there is a lot of congruency in the description and suggested that there are five dimensions in all the explanations and those are environmental, social, economic, stakeholders, and charity dimension. In the same tone [ 161 ] stated that there is no unique definition of CSR that can be acceptable around the globe. Finally, Hamidu et al. [ 72 ] reviewed CSR definition, its core characteristics, and theoretical perspective. They have suggested that in the academic world, there is no clear agreed definition of CSR, and the lack of homogeneity in the definition of CSR is due to the ever-shifting roles of CSR in the corporate world.

Empirical evidence regarding the relationship between CSR and FP

In the academic literature, the theoretical linkage between CSR and FP of the organization found inconsistency results [ 122 , 139 ]. Hence, the body of knowledge in this regards can be categorized into three spectra that is some argue that CSR can enhance FP of the organization, other researchers argue that CSR rather reduced firms’ performance, and finally, other schools of thought argue that there exists no relation between CSR and organization performance. Table 1 describes the summary of empirical findings of CSR and FP researches, and also it highlights the different variables used in the various study.

Researchers that are in favor of CSR and FP linkage argue that when company initiates CSR activities, it creates positive image in the mind of stakeholders; hence, the more company satisfy its stakeholders, the better financial performance of the company [ 51 , 53 ]. Likewise, the other proponents on this linkage advocate that by satisfying the interest of stakeholders and being more accountable to them can have positive effects on the financial performance of the company [ 38 , 151 , 201 ]. In light of stakeholder’s theory, [ 19 , 135 ] stated that consumers are willing to pay premium price for CSR initiatives companies’ products, and CSR activities can improve the image of the company among consumers and it help to improve customer loyalty [ 123 , 150 , 158 , 173 ]. Likewise, Turban and Greening [ 184 ] posit that CSR firms can attract more potential applicants, which in turn can be a competitive advantage for the organization. Another recent research done by them [ 68 ] documented that socially responsible companies can attract more talented employees to work on that organization, and also CSR firms can retain their employees over a long period, hence, it can lead to a competitive advantage over other companies. The proponent believed that engaging CSR-related programmed can benefit the organization in several ways, such as reduction in labor turnover [ 206 ], enhance reputation of company and achievement of business strategy [ 86 , 207 ], created sense of belongingness [ 34 ], attract more talented staffs [ 92 , 117 ], job satisfaction [ 109 ] and Sharma and Mishra [ 162 ] and be more committed to their work [ 20 , 54 ].

Conversely to the above argument, [ 58 ] advocates that there is only one responsibility of a corporate firm that maximizes shareholders' wealth. In line with this argument, [ 143 ] supports [ 58 ] claim stating that CSR is motivated by a socialist-collectivist agenda which are in paradox with capitalist/libertarian values of free enterprise and individualism. Furthermore, [ 132 ] suggest that the consumer does not check whether it is an SR company or not when making purchase decisions. But [ 140 ] documented that when making purchase decision consumer do take whether it is an SR company or not but the positive attitudes of consumer not transferred into actual purchase decision of consumer and this further being supported by [ 64 ] stating that buying SR product is a "moral duty" and this duty can be overridden by other preferences of consumer especially if it is budget consumer. Hence, this line of argument was stress by [ 58 ] documented that organization manager use firms’ resources for non-profit social activities at the expense of shareholders, and this has been supported by [ 88 ] in the "agency cost problem" which stated that the CSR cost incurred outweigh the benefits it brings to the company.

In the academic literature, the early research that supports the inverse relationship between CSR and FP is [ 105 , 157 , 188 ]. Vance's [ 188 ] support [ 58 ] preposition founds that being socially responsible does not bring any economic benefits to the company, rather, it reduces company stock returns. Further, this has validated by [ 11 ] who documented that the firm level of SR hinders FP compared to rivals. Likewise, [ 157 ] stated that engaging CSR activities lead wasting firms’ resources that can use in more productive opportunity for the firms. Further, they argue that managers of the company may engage in CSR not to increase shareowners' wealth, instead gain personal benefits. Looking into more recent studies on this line of the argument states that CSR is a manifestation of agency problem and is done at the expense of shareowner [ 80 ]. Moreover, [ 102 ] supported the findings of [ 157 ] and stated that the organization manager gets a good reputation at the expense of shareowner by investing more in CSR and also suggest that when the organization releases positive CSR news, then investors react slightly negative to those disclosures. Bhandari and Javakhadze [ 18 ] reveal that when an organization wants to satisfy its broad stakeholder’s entire group, then it may need to forgo lots of positive NPV project that may increase the shareholder's wealth.

The academic debate on CSR and FP has another possibility that both these are mutually exclusive, meaning CSR has no significant impact on FP of a company [ 122 , 139 ]. The scholars of this line of reasoning argue that CSR has no effect on financial performance of companies [ 61 , 95 , 137 ]. There are several studies conducted across the globe in finding the linkage between CSR and FP of specific industries or countries [ 55 ] and industries or countries specific research is incomplete up to date [ 44 ]. Kiliç [ 99 ] investigated online CSR disclosure practices by 25 banks in Turkey, the results suggest that all the banks in the country do at least disclose one dimension of CSR on the corporate website and also documented that highly visible banks disclose more information compared to the less visible bank. Furthermore, Pérez and Del Bosque [ 148 ] and Pratihari and Uzma [ 156 ] investigated CSR disclosure in Spain (former), and India (latter) founds that CSR positively impacts a customer in identifying the bank and CSR helps company in building brand and customer loyalty. Due to stated reasons, [ 14 , 83 ] found a positive association between CSR and FP. On the other hand, the influence on industry characteristics is also another area that has been investigated by scholars. For example, [ 15 ] called for more research to be done on potential heterogeneity of CSR’s influence on organizational performance across different industries. The reason for that is due to the impact the organization that brings to society is different. For instance, compared to other industries (such as banking, tourism and retail), the controversial sector (e.g., tobacco, alcohol, petroleum, utility, and steel) harms the environment more [ 89 ]. Therefore, [ 177 ] suggested that controversial industries are exposed more to the environment and social risk; therefore, companies in these industries need to do more CSR activities to gain the confidence of stakeholders.

Looking into empirical side of CSR and FP indicated positive relation mostly in developed and developing nation [ 14 , 42 ] and Maqbool and Bakr [ 162 ]. Conversely, some empirical studies show the inverse relationship between CSR and FP [ 169 ] and Hirigoyen and Rehm [ 78 ]. Yet there is body of empirical knowledge that do not support either of the above argument and those scholars found neutral or no relation between CSR and FP [ 95 , 109 , 137 , 163 ].

Though there are controversies in the above empirical studies, [ 32 , 142 ] conducted two different meta-analysis using 30 years of data. The authors have documented that CSR positively correlated with CFP. Further, another meta-analysis conducted by [ 17 ] also found that there is clear empirical evidence for a positive relation between CSR and FP. Conversely [ 123 ] meta-analysis of 251 studies documented positive (but small) association between CSR and FP. But meta-analysis of [ 146 ] included 159 reviews and recorded that 63% of the studies show positive, 15% indicated the contrary, and 22% shows a neutral or mixed association between CSR and FP.

In light of above discussion, it is clear that CSR and FP are inclusive in the academia. Therefore, this paper tries to investigate empirically whether there is any association between CSR and FP in developing nation such as Maldives. Most of the literature done in this discipline is in the developed nations, few studies in the developing nation, and no studies in the context of Maldives. Furthermore, this study tries to fill the imbalance that is there in the academia when public advocate companies in Maldives become more CSR orient. Hence, different hypotheses developed for this paper are given under conceptual framework (Fig. 1 ).

Conceptual framework

Research methodology

Population and sample.

This study focuses on listed companies of MSE. At present, there are eight companies listed in the stock exchange; two companies do not fit in the study period because the study period of this research is from 2014 to 2018. For this study, the remaining six companies' data have taken as a sample (75% of the population). This study adopts non-probability sampling and uses judgmental sampling techniques. Judgmental sampling is more useful when the researcher desires to collect data from a specific group to bring more reliable and precise results [ 171 , 179 ]. Žmuk et al. [ 208 ] recommended that if the researcher's target population is small, then to get satisfactory precision and accuracy level of the parameter of the estimate, researcher needs to include 70% of the samples population; here, in this study researcher study 75% of the population.

CSR framework for this study

It has been observed that CSR disclosure made by Maldivian Public companies is voluntary, and also it has been observed that there is no specific CSR framework in the Maldives. In determining CSR disclosure in academia, there are many different indices used in measuring CSR disclosure. The most well-known indices include: Dow Jones Sustainability Index [ 37 ], Fortune magazine reputation index [ 159 ], Global Reporting Initiative [ 113 ], MSCI KLD 400 social index [ 160 ] and Vigeo Index [ 100 ].

These indices have widely used in academia for measuring CSR performance (Waddock and Graves [ 191 ]). CSR disclosures vary between countries to countries, and there is no " one size fit all " approach [ 79 ]. For example, [ 199 ] argues national culture, political, and the civil system which often determines CSR disclosure. Xiao et al. [ 202 ] stated that CSR disclosure depends on the stage of social and economic development of the country. Moreover, [ 46 ] noted that the theories that are in the developed countries might not be entirely applicable due to different drivers of CSR. Conversely, in developing countries, CSR is more toward the economic environment (such as creating more jobs), filling government shortfall areas, and philanthropic charitable donations and ethics.

Furthermore, [ 59 ] stated that at this time, there is no generally accepted CSR reporting standard across the globe. In the same vein, [ 180 ] noted that the western world CSR concept could not be adapted as it is. It required modification based on the country/geographical needs. Therefore, in this study researcher is going to use the CSR standard developed by [ 122 ]. The adoption of this "CSR instrument" for this study is due to three reasons. Firstly, they have designed that instrument by taking into account different international standards, and academic literature [ 165 ], Centre for Corporate Research and Training 2003, Confederation of Indian Industry 2002). Secondly, it is developed based on the developing nation's cultural needs and thirdly very latest instrument.

Content analysis and coding procedure

This study uses the content analysis technique and uses the annual report to developed CSR index for public companies in the Maldives. Content analysis is a technique that has been commonly used in social science research for quite a long period [ 3 ]. Further, this method has been quite often used in CSR and FP research as well [ 62 , 95 ].

In content analysis, themes must be developed to make an inference from the data. In line with this reasoning, Milne and Adler [ 130 ] stated that construction and categorization of schemes are the essential part when using content analysis. This research adopted the [ 122 ] CSR framework; hence, the researcher used the categories of [ 122 ] CSR framework. It includes mainly four components, namely community, environment, workplace, and diversity. In this study, each public company listed in MSE has coded about different CSR disclosure categories identified in the annual report. Companies CSR is measured using adopted CSR framework under each category, there are eight different themes, and based on that researcher decides whether it is CSR disclosure or not.

One of the prerequisites of content analysis is that it requires systematic coding using predetermine criteria [ 70 ]. For this study, the different keyword used is the work of [ 122 ] CSR framework. This makes the coding process straightforward, and also it lessens the prejudice in determining CSR disclosure and how to categorize them. When the keyword and categories are used, it helps in decision rules, and also it improves the reliability and accuracy of the coding process [ 130 ]. For this study, the researcher uses the unit of analysis as a “ sentence .”

The procedure used in the content analysis of this study is that two independent coders were selected. Before coding and classification process begins, these two coders are given full training by the researcher on CSR disclosure, use of coding instruments, and explanation of different categories and types of disclosure in [ 122 ] CSR framework. In order to check degree of reliability and accuracy of intercoder, this study used four main methods that are used in checking the validity of content analysis [ 62 , 95 ], that is percentage of agreement [ 41 , 178 ], Scott’s π [ 174 ], Cohen’s κ [ 41 ] and Krippendorff’s α [ 101 ]. The intercoder reliability test of this study is presented in the below table.

After reviewing different methodologies in the content analysis, [ 136 ] suggested that a reliability test coefficient value higher than 0.90 would be acceptable at all levels, and any amount above 0.80 would be acceptable in most cases and stated that there exists a significant disagreement between the coder. Therefore, based on the accuracy benchmark suggested by [ 136 ], the results are cited in Table 2 , and all the reliability test values are higher than 0.90. Hence, it is safe to conclude that the reliability of this study is considerably high because the reliability test values are significantly higher than benchmark values.

Data collection procedures and sampling

In this study, the content analysis is used in extracting CSR information from the annual reports of the company, and CSR has been divided into four categories (community, environment, workplace and diverse) covering 32 items, to change qualitative information present in the annual report; this study used content analysis and changes that qualitative data to quantitative information using a dichotomous approach. In the dichotomous approach, if the item is disclosed (CSR instrument), then “1” is given, and if items not disclosed, then “0” and total CSR score of “ T ” company is calculated based on the following formula.

where di = “1” if disclosed and “0” if not disclosed. n  = maximum number of disclosed.

In this study, the proxy of CSR categories is considered as community, environment, workplace, and diverse, and the FP proxy is considered as ROA, ROE, and EPS, and moderating variables considered as firm size. The following section details down how the ration is calculated.

Return on asset (ROA)

ROA measures profits as a percentage of total assets, and ROA gives an impression to the investors how efficient the company in managing its assets in generating profits. The higher the ROA, better it is, and the formula used in calculating ROA is given below [ 69 ]:

Return on equity (ROE)

ROE measures profits as a percentage of total shareholders’ equity, and ROE gives an impression to the investors how efficient the company is generating profits using its shareholder's funds, or in other words, it measures profits made on each dollar of shareholders’ funds. ROE is calculated using the below formula [ 69 ]:

Earning per share (EPS)

EPS measures earning made for each common stockholders, and it also shows how much money the company is making for its stockholder; as a rule of thumb, if EPS is higher, better it is. EPS is calculated using the below formula [ 69 ]:

In the academic literature on CSR discipline, different scholars have used different control variables [ 193 ] such as firm size, firms age, firms leverage, capital intensity, and industry heterogeneity. For this study researcher going to use “firm size” as the control variables, the reason for that is because previous research has shown that larger firm tend to spend more on CSR than smaller firm [ 168 ], larger firm seen as the leader of the industry or they are the playmaker in the industry [ 76 ]. To measure the firm size, this study used the natural logarithm of total assets and is calculated using the following formula:

Panel data analysis

To test the hypothesis, “ Stata 15 ” software is used for quantitative data analysis. The data were gathered from 2014 and 2018 to test the relationship between CSR and FP. To test the relationship between CSR and FP, many scholars have used regression analysis [ 36 , 38 ]; however, this kind of analysis was critics by its multicollinearity errors [ 189 ]; hence, to avoid that error this research is going to used panel data, and panel data have widely been used in academia in order to check the relationship between CSR and FP [ 111 , 180 ].

The model used in the study

The CSR dimensions used in this research are community, environment, workplace and diverse; on the other hand, financial performance dimensions used are ROA, ROE, and EPS, and the control variable used in this study is the firm size. The independent variable and dependent variables of this study are CSR and FP, respectively. To estimate the direct relationship between CSR and FP, the three dependent variables (ROA, ROE, and EPS) equation used in this study can be expressed in the following ways:

where ROA = return on assets, ROE = return on equity, EPS = earning per share, Comm = community, Div = diverse, Env = environment and Wor = work.

To estimate the indirect relationship between CSR and FP, the moderating variables are included in the above equation, and it can be stated in the following ways:

where ROA = return on assets, ROE = return on equity, EPS = earning per share, Comm = community, Div = diverse, Env = environment, Wor = work and Fsize = firm size (natural logarithm of total asset).

In this study, three different kinds of panel data models are used, namely the pool regression model by OLS (ordinary least square), fixed-effect model, and random-effects model. In the pooled regression model, it pooled all the data together, ignoring the time series and cross-section nature of the data; hence, when pool regression combined all the data into one, it ignores the heterogeneity of the data that may exist [ 152 ].

The next model that is there is a fixed effect model (FEM) or LSDV model (least square dummy variables). This method allows for individual differences, meaning that it will enable heterogeneity compared with the OLS method. FEM methods are used in social science and business management research, by various academicians [ 13 , 40 ]. The main advantage of using this method is that it estimates the effects of independent variables on the dependent variable while controlling the effects of unobserved variables [ 162 ].

The last but not the least model used in this study is the random effect model (REM). One of the assumptions of REM is that the individual-specific effects are not correlated with the independent variables. Therefore, in the REM model, it can have varying interception value between cross-sectional data, and this variation is purely random. The main advantage of REM is it helps in controlling for unobserved heterogeneity when the heterogeneity is constant over time. The FEM and REM model can be denoted in the following formula, respectively:

where \(u_{i}\) is a fixed or random effect specific to individual (group) or time period that is not included in the regression, and errors are independent identically distributed, \(v_{{it}}\)  ~ IID (0, \(\sigma ^{2} _{v}\) ).

Specification test for the study

For this study, the researcher used three above discussed model, and to choose the best model, the following specification test has been carried out to select the best model.

Pooled OLS model or FEM model

This test examined whether pooled OLS or FEM model is best in examining the group effect in the panel data set. The hypothesis significance can be check through F -test value; if the null hypothesis is accepted, then pooled OLS is better than the FEM model [ 200 ]. The null hypothesis is stated in the following manner:

Pooled OLS model or REM model

This test examined whether pooled OLS or REM model is best in examining the random effect in the panel data set. REM can be tested through the Breusch–Pagan Lagrange multiplier (LM) test [ 200 ]. The hypothesis significance can be checked through Chi-square value; if the null hypothesis is accepted, then pooled OLS is better than the REM model. The null hypothesis can be stated in the following manner [ 4 ]:

FEM or REM model: Durbin–Wu–Hausman test (Hausman specification test)

Hausman specification test runs to check whether FEM or REM is the most appropriate model in the panel data. The Hausman statistic χ 2 is computed from the following formula [ 4 ].

where βc  is the coefficient vector from the consistent estimator. βe  is the coefficient vector from the efficient estimator. Vc  is the covariance matrix of the consistent estimator. Ve   is the covariance matrix of the efficient estimator.

The hypothesis for Hausman specification test can be stated as follows:

If the p value is less than 5%, then reject the null hypothesis and accept an alternative hypothesis meaning that in that case, the FEM model is more appropriate than the REM model. On the other hand, if the p value is more than 5%, then accept the null hypothesis meaning that the REM model is more appropriate than the FEM model [ 4 , 200 ].

Findings and analysis

Relationship between csr and fp, dependent variable: roa.

In assessing the impact of CSR and FP, Table 3 shows the results obtained from the regression analysis between the independent variables, which are data capturing the CSR and the dependent variable represented by ROA. The panel analysis for the pooled, fixed, and random effect model is presented below without the control variable.

The specification test shows that the random model is the most appropriate model for this analysis. The R -squared of 0.2568 indicates that the independent variables explain about 25.68% of the variability in the dependent variable ROA. Furthermore, the result shows that there is a strong negative relationship between diversity and ROA, while the result did not show a significant relationship between community, environment, work, and ROA. The random effect model can be specified below as follows:

After controlling for the size of the company, the result shows that size has a highly statistical significant P value of 0.000. However, the relationship between size and the ROA of firms exhibits a negative relationship, as shown in Table 4 . The result further shows that diversity has a significant negative relationship with ROA as it was before the control variable added to the model, and this shows that a percent increase in diverse will bring about a 44.78% decrease in ROA. Community, environment, and work did not show a significant relationship with ROA.

The R -square, which shows the extent to which the independent variables explain the model, has a value of 70.76% (0.7076). This means that the model explains about 70.76% of the variability in the ROA of the companies. The P value of 0.000 of the F -test shows that the model is a good fit, and the overall significance of the model is subtle. CSR relationship has been examined by different researchers, and the coefficient of size as a control variable has varied, though most of the time, always found significant [ 159 ].

The result from the random effect model with the control variables can be specified as follows:

Dependent variable: returns of equity (ROE)

Table 5 presents the result of the regression analysis using pooled OLS, fixed effect, and random effect model with ROE as the dependent variable. The number of companies examined is six, and the time period was 5 years.

The two-specification test shows that the pooled OLS is the most appropriate model for this analysis. The R -squared of 0.2506 indicates that the independent variables explain about 25.06% of the variability in the dependent variable ROE. The result also shows that there is a strong negative relationship between environment and ROE, while the result did not show a significant relationship between community, diverse, work, and ROE. The Pooled model can be specified below as follows with ε representing the unexplained part of ROE:

The pooled OLS result with control for the size of the company shows that the size of the company is not statistically significant as it has a P value of 0.163. Also, the relationship between size and the ROE of firms exhibits a negative relationship, as shown in Table 6 . The result further indicates that community, diverse, environment, and work did not show a significant relationship with ROE.

The R -square value, which represents to what extent the independent variables, explains the model comes out with a value of 0.3103. This means that the model explains about 31.03% of the variability in the ROE of the companies. The P value of 0.0927 of the F -test shows that the model is not overall significant.

The result from the pooled OLS model with size as the control variables can be specified as follows:

Dependent variable: EPS

Table 7 shows the results obtained from the regression analysis between the independent variables, which are data, used to cover the CSR and the dependent variable represented by EPS. The panel analysis for the pooled, fixed, and the random effect is presented below without the control variable.

The fixed-effect model is the most appropriate model for this analysis, as shown in Table 7 by the specification test. R -squared of 0.1658 shows that the independent variables explain about 16.58% of the variability in the dependent variable EPS. Furthermore, the result shows that there is a strong negative relationship between diversity and EPS, while the result did not show a significant relationship between community, environment, work, and EPS. The fixed-effect model can be specified below as follows with ε explaining the part of the model not captured by the independent variables:

In adding the control variable, which is the size of the company, the result shows that firm size has an insignificant statistical P value of 0.639. However, the relationship between size and the EPS of firms shows a positive relationship, as shown in Table 8 . The result further shows that diversity has a significant negative relationship with EPS as it was before the control variable added to the model. Lastly, community, environment, and work did show an insignificant relationship with EPS.

The R -square, which shows the extent to which the independent variables explain the model, has a value of 0.1100. This means that the model explains about 11% of the variability in the EPS of the companies. The P value of 0.1014 of the F -test shows that the overall model significance of the model is not strong enough.

The result from the fixed effect model with the control variables can be specified as follows:

Testing for multicollinearity

As presented in Table 9 , the multicollinearity result, which based on the rule of thumb, is that if VIF with a value less than five but must not be more than value is 10. The result shows that there were no multicollinearity problems with the independent variables. The work variable has the highest collinearity, but however, it is not more than 10. The values of all the VIF are still within the acceptable level of not more than 10.

CSR and FP relation

Table 10 depicts a summary of the hypothesis tested in this study. The subsequent part of this section discusses in detail the CSR and FP relationship of this research.

Relationship between community and FP (ROE, ROA and EPS)

Based on the findings of the study, H1, H2 and H3 were rejected, meaning that there is no significant relationship between CSR (community) and FP (ROE, ROA and EPS). This finding contradicts previous literature and there can be several possible reasons for that.

Firstly, CSR is a novel idea that “ creating shared value ,” which is proposed by Porter and Kramer [ 69 ] in the HBR. The basic idea behind this principle is that an organization generates economic benefit by way of creating value for the society, but [ 164 ] stated that this norm is not valid. The reason for the invalidation of Porter and Kramer [ 69 ] preposition is because CSR is multifaceted, so just by philanthropic giving the shared value cannot achieve, rather a company should develop a clear CSR program that aligns with the business purpose. In line with this reasoning [ 175 ] stated that in the Maldives only a few companies have formal CSR strategy. Thus, just by donating money to the community by the Maldives, public companies may not increase the FP of the enterprise. Furthermore, [ 164 ] suggested organization should run planned coordinated CSR program, otherwise that may not bring any benefits to the company, in line with this rational [ 175 ] stated that companies in the Maldives conduct CSR activities more “ informal and unplanned ” ways and indicated that in the Maldives only 23% of companies consult relevant parties when planning CSR programs for the upcoming years hence, that might be the reason for insignificant results of this study.

Secondly, CSR initiatives vary from industry to industry [ 31 ]. In line with this argument, [ 66 ] stress “ consumer service ” industries such as banking, general retail, and insurance, etc., companies focus more on community engagement CSR programs. Conversely, “ heavy ” industries such as oil and gas refining and utility, etc. companies concentrate more on natural environment CSR programs than community involvement programs. Hence, the CSR initiatives undertaken by Maldives public companies might have overlooked the industry it operates when developing CSR programs. That might be the reason for the insignificant result of this study.

Thirdly, McLennan and Banks [ 162 ] stated that understanding the need of the local community framing CSR community development programs is a necessity because of the heterogeneous nature of the city. Eweje [ 52 ] points out the main reason for the failure of the CSR community development program is due to not addressing the social and environmental issues that are intended to solve and lack of trust community have on the company. In the case of Maldives, some of the public company community development CSR programs politically driven. Shareef et al. [ 175 ] affirm in the Maldives, most of the prominent local entrepreneur is politically motivated. Hence, the CSR initiatives undertaken by Maldives public companies might be politically driven, conduct CSR community development programs without assessing needs, and unfulfilled promise leads to mistrust between companies and community might be the reason for the insignificant result of this study.

Relationship between environment and FP (ROE, ROA and EPS)

Based on the findings of the study, H4 was accepted, meaning that there is a significant relationship between CSR (environment) and FP (ROE), but the results found are negative. This finding is in line with [ 116 , 159 ]. These scholars argue that when the firm engages in disclosing environmental-related CSR programs leads to negative financial performance, and the reason is the cost involve in such programs outweighs the cost than the benefits it brings to the company. Shareef et al. [ 175 ] affirms that in the Maldives, only 18% of businesses people believe cost reduce when the organization engages in CSR (environment) related activities.

Conversely, based on the findings of the study H5 and H6 were rejected, meaning that there is no significant relationship between CSR (environment) and FP (ROA and EPS). Therefore, this study finding contradicts previous other literature and there can be several possible reasons for that.

Firstly, Maldives is a developing country, and the state regulates most of the corporate-related things as the caretaker of the country. Therefore, most of the things related to environment protection such as air pollution, biodiversity, carbon emission, deforestation, and energy efficiency strictly governed through laws and regulations rather than business-driven initiatives. According to [ 134 ] CSR as a voluntary contribution and does not require laws to follow. But in developing countries like the Maldives, CSR is more government-driven than business-driven. As discussed earlier, a caretaker of the society government has enacted and made a mandatory requirement for business by law that may be related to the environment. Hence, stakeholders in the Maldives do not consider mandatory CSR disclosure as real CSR initiatives. Due to that, the improved financial benefits may not be evident in environment-related affairs.

Secondly, the so-called " environmental investors " are still the minority in the investor's markets [ 7 ]. A country like the Maldives, where CSR is at its infancy stage, may not have " environmental investors ." In line with this reasoning [ 175 ] stated that CSR in the Maldives is " mediocre " and documented that environmental protection and ethical standards are CSR practices of business, but customers do not consider environmental protection and ethical standards are CSR practices that local companies should adhere. Therefore, in the Maldives context, " environmental investors " dilemma might not be true due to that in the short term, firms may not gain any financial benefits.

Thirdly, CSR disclosure between the firms, especially the Industry, which it operates, leads to more CSR disclosure [ 22 , 60 ]. In line with this thinking [ 190 ], argue that companies that negatively affect the environment tend to disclose more compare with other Industry. In line with this reasoning, [ 175 ] suggest that the primary focus of tourism companies in the Maldives focuses on environment protection than any other aspect of CSR. The other business owners belong to other Industries focus their CSR activities on another aspect, such as community development. In line with this thinking, most of the sample companies listed in the MSE not regarded as a controversial Industry hence financial gain not materialized.

Relationship between workplace and FP (ROE, ROA and EPS)

Based on the findings of the study, H7, H8 and H9 rejected, meaning that there is no significant relationship between CSR (workplace) and FP (ROE, ROA and EPS). This finding is in line with [ 93 , 155 ], which stated workplace and FP have no significant relation. On the other hand, this finding contradicts previous literature and there can be several possible reasons for that.

Firstly, in the academic literature, CSR and workplace (employees) show a very positive picture. CSR-related programmed can reduce labor turnover, created a sense of belongingness, attract more talented staff, and be more committed to their work. Conversely Brieger et al. [ 162 ] advocated that the dark side of the CSR has not been explored. CSR companies might do some window dressing to portray to the public that the company is a socially responsible company at the expense of employees [ 7 ]. For example, in the Maldives, some public companies' MD salary is very high, but the employee's salary was not competitive. Previous literature shows that socially responsible reputed companies' wages are significantly low [ 138 ]. Furthermore, Brieger et al. [ 162 ] founds that working in CSR committed company may lead to employee work addiction, which may harm the well-being of the worker, family, and friends. Due to the stated reasons, employees working in public companies in the Maldives may not have considered CSR disclosure is vital.

Secondly, [ 175 ] affirms that in the Maldives, employees are the major second most frequently target group of CSR activities. They suggest that companies provide medical expenses coverage, different training programs, recreational activities, and some financial assistance programs as well, and these things lead to workers' loyalty to boost by 52%. The single most striking observation that emerges from the study shows no significant relationship, and this is an alarming result. A likely reason is that the investment made by Maldivian public companies on human capital outweighs the FP measured during the study period. There can be a possibility that Maldivian public companies have taken substantial steps toward the development of the workforce in their organization. However, the organization may not have reaped the benefits in the form of financial gain.

Thirdly, CSR is considered as “ two-way street ” Tsavdaridou and Metaxas [ 183 ] that mutually benefits both (stakeholders and business) parties. Contrary to this line of reasoning [ 175 ] suggest that in the Maldives, CSR is perceived to be “ one-way street ” rather than “ two-way street .” Further, documented that in Maldives organization does not expect anything in return on CSR activities, and if the company expects anything in return, then it is considered as the outside realm of CSR initiatives. This might be because the Maldives is 100% Muslim country, this perception comes from the Islamic religion of almsgiving (Zakat or Sadaquath), which advocates donation to vulnerable people, and by helping poor people, we should not expect material benefit return in this world.

Fourthly, sometimes, the entrepreneur may not be able to reap the benefits of CSR initiatives due to a lack of awareness of CSR among the stakeholders. This line of thinking supported by [ 175 ] posit that in the Maldives one of the most significant barriers in implementing and institutionalizing CSR within business is due to lack of awareness among the public, and it noted that 50% of the people believe that in the Maldives the main barrier in implementing CSR initiatives is due to lack of awareness.

Relationship between diverse and FP (ROE, ROA and EPS)

Based on the findings of the study H11 and H12 were accepted, meaning that there is a significant relationship between CSR (diverse) and FP (ROA and EPS), but the results found are negative. This finding is in line with [ 6 , 103 ] posited that diversity leads to negative employee productivity and performance. As stated earlier, this study found a significant relationship between CSR (environment) and FP (ROA and EPS), but the results found are negative, and there can be several possible reasons for that.

Firstly, when there is a different ethnic group within the company leads the worker to indulge in disagreements that may not directly relate to their work; hence, it may lead to conflicts between the employees, and in the end, company productivity goes down. For example, the Maldivian worker and Sri Lankan worker may argue on the religious differences among them. In line with this thinking, [ 75 ] stated a deep level of divergences between the groups could lead to a negative impact on organizational performance. Furthermore, [ 127 ] suggests that interpersonal deviations arise between the employees may lead to a negative emotion that may detrimental to organizational productivity.

Secondly, the use of emigrant workers remains widespread due to a lack of skilled labor force [ 1 ]. According to [ 131 ], the number of emigrant workers has increased by 188% between, 2000 to 2011 and estimated that, on average, a 5% increase would be there in every alternative year. These numbers show alarming figures indicating the different nationals working in various companies in the Maldives. Hence, companies' workforce diversity can have a considerable impact on organizational performance. Most of the time, in Maldives expatriate workers, does the odd job in the construction industry Maldivian considers those workers as very inferior and discriminates their workers [ 151 ]. This might be the case in public companies; hence, if the employees discriminated, then it leads to unhappy work condition may result in the productivity of the companies. In the same vein, [ 187 ] posit if employees are not happy and if they are discriminated based on their cultural differences, it will lead to low morale in the working environment and dissatisfy and at the end it leads to negative performance and affects the productivity of the organization.

Thirdly, a diverse workforce leads to employee turnover and absenteeism to go up, which leads to lower productivity of the organizations [ 26 ]. Leonard and Levine [ 110 ] acknowledged if employees are isolated based on cultural differences, age or gender from coworkers may increase labor turnover. In line with this [ 198 ] conceive that diversity leads to negative dynamics such as stereotyping, cultural classes, and ethnocentrism, and these negative dynamics lead to employee turnover and absenteeism. This might be the case in public companies in the Maldives. Hence, if diversity is overlooked or not adequately handled by the top management, it may detract the productivity of the companies.

Based on the findings of this study, H10 was rejected, meaning that there is no significant relationship between CSR (diverse) and FP (ROE). Therefore, this finding is in line with scholars that argue on diversity, and organizational performance has no relation. For example, [ 6 , 103 , 126 ] found that ethnicity diversity has no significant relation with innovation within an organization.

Conversely there is a large volume of published studies describing that diversity leads to improve financial performance [ 9 , 115 ]. As stated earlier, this study found no significant relationship between CSR (diverse) and FP (ROE), and there can be several possible reasons for that.

Firstly, according to the corporate governance code (clause 1.6(a)(v)(vi)) of Maldives, all public company boards should have a 30% representation of women [ 7 ]. But the samples taken for this study except one company remaining five companies didn't strictly follow the corporate governance code accordingly. It found that BML board have 33% of female, STO has 14% of female, Dhirague has 14%, MTDC has 22% female, Amana Takaful have 0%, and MTCC has 0% female representation. According to [ 154 ] board, diversity is not just a simple " number game ." Having the right mix of gender diversity in the boardroom leads to better financial performance [ 115 ]. Therefore, it is important for public companies in the Maldives to follow corporate governance code thoroughly so that in the future, that may improve the financial position of the company. Though currently public companies not following the CG code may not lead any adverse implication but maybe in the future, when the investors get to know the importance of diversity in the board may punish the companies.

Secondly, if the female directors appointed as “ token ,” then it may not leads to a positive impact. According [ 94 ], the theory of “ tokenism ” if the group representation is less than 15%, then it is considered as appointed as “token.” If female directors appointed as “ token ,” then it may lead to negative/no significant impact on organization performance. In the context of Maldives, the average female board representation of the six-sample company is 13%. Therefore, it is safe to conclude that there is no significant statistical relationship between CSR (diversity) and FP (ROE) in the Maldivian plc context is due to “ tokenism .”

Thirdly, a report published by the Ministry of Environment indicated that lack of women in the decision-making level is a challenge that Maldives face in a time of advocacy of gender equality and empowerment [ 162 ]. In the same vein, the UNFPA Maldives bulletin indicated that only 25% of women work in the decision making level in the country. As stated earlier in the context of Maldives, the average female board representation of the six-sample company is 13%, one of the possible reasons for that low representation can be due to the " glass ceiling ." According to [ 50 ], the " glass ceiling " is a phenomenon where the promotion of certain people, especially women, doesn't go beyond a certain level in the hierarchy. In public companies, the highest top-ranking occupation considered as the board of directors' jobs, due to cultural thinking in the Maldives and the " glass ceiling " phenomena, sometimes, female employees do have difficulty climbing up in the leader of the hierarchy and be in the boardroom. Therefore, it is safe to conclude that there is no significant statistical relationship between CSR (diversity) and FP (ROE) in the Maldivian plc context is due to the " glass ceiling " phenomena.

Control variable (firm size)

Based on the findings of the study, H13-01 and H13-03 rejected, meaning control variable firm size is not a significant thing that affects organization CSR disclosure or FP. This result is consistent with [ 182 ] and Adeneye and Ahmed [ 2 ], and they posit that firm size cannot influence CSR or FP. Further, based on finding H13-02 accepted indicating firm size have a significant effect on ROA, this result consistent with [ 33 , 141 ].

The main objective of this study is to find out the relationship between CSR initiatives to the financial performance of the public companies in the Maldives.

The results of this research broadly classified into three broad spectrums that are ROA, ROE, and EPS with CSR. ROA, as a dependent variable, result shows there is a robust negative relationship between diversity and ROA, while the result did not show a significant correlation between community, environment, work, and ROA. ROE, as a DV result also shows there is a robust negative relationship between environment and ROE while the result did not show a significant correlation between community, diverse, work, and ROE. Besides, to check the effect of the control variable on ROE, the results indicated the size of the company is not statistically significant. Similarly, the relationship between size and the ROE of firms exhibits a negative correlation. The result further shows Community, Diverse, Environment, and Work did not show a significant relationship with ROE. EPS, as a DV, the result shows there is a robust negative relationship between diversity and EPS, while the result did not show a significant correlation between community, environment, work, and EPS. Furthermore, to check the effect of the control variable on EPS, the results indicated that the size of the company has an insignificant. Nevertheless, the relationship between size and the EPS of firms shows a positive relationship. The result further indicates diversity has a significant negative correlation with EPS as it was before the control variable added to the model. Lastly, Community, Environment, and Work did show an insignificant relationship with EPS.

There are several vital contribution this study made; firstly, the CSR research done in the developing countries was very limited especially in the context of Maldives, In doing so, the results of this study suggest that public companies in the Maldives are practicing CSR, and companies are reporting CSR initiatives in the annual report of the companies. Secondly, this study has examined the relevance of different management theories that are developed in the field of CSR and tries to identify the association between different variables that affect CSR theories. This study confirms the importance of stakeholders’ theory in understanding CSR in the Maldivian market. Thirdly, this research used panel data, that is widely been used in academia in order to check the relationship between CSR and FP [ 111 , 180 ]. Therefore, this study used improved data methods in identifying the association between CSR and FP and documented that there is statistical significance between the CSR and FP of public limited companies in the Maldives. Fourthly, this study is one of its kind that has explored, the relationship between CSR and FP of listed companies in the Maldives, therefore, this study contributes existing body of knowledge as a reservoir hence in future this research work can be reference materials for researchers and students who wants to explore this subject matters in the future.

The empirical outcomes suggested in this research should be considered in the light of some constraint because no research is without limitation; hence, this study also has several limitations due to the methodology adopted by this study. Firstly, the major limitation of this study is the “ CSR instrument ” adopted by this research. Secondly, the sample size used in this study is six, and the time horizon of the study is 5 years from 2014 and 2018 due to limited companies listed on the stock exchange, and the small number of samples size might be the reason for negative results of this research. Therefore, generalizability of this research finding might not be applicable to all companies in the Maldives. Thirdly, to assess the CSR disclosure by the public companies in the Maldives, this research used the company annual report using the content analysis and to convert the qualitative data to quantitative data, the dichotomous process has been used to calculate each company CSR disclosure under each specific criterion identified in CSR framework. Since the primary documents used in measuring CSR is an annual report; therefore, the finding of this research largely depends on the quality of information presented in the annual report. Fourthly, the primary dependent variable of this study was FP, and the proxies of FP included as ROE, ROA, and EPS. This financial ratio calculated from the financial statement; hence, the reliability of this finding largely depends on the “ true and fair ” values presented in the financial statement.

Several suggestions can be given for the future researcher in making a more judgmental decision in making this research more meaningful. First is developing a “ CSR instrument ” for local context and testing the relationship between CSR and FP. Secondly, it includes more samples and extending the study duration may give more meaningful results. Further, this study purely used annual report in identifying CSR disclosure, future researcher advisable to used website information and standalone CSR report can also use that may get more meaningful results. Thirdly, this study focuses only public listed company in Maldives stock exchange; the future researcher can look into both public and private company, that may give more conclusive information related to CSR, and it can augment the external validity of the finding of this study, and also can used other advanced econometric technique that analyzes the relationship between CSR and FP such as continuous wavelet transformation (CWT) method proposed by (Kenourgios, Drakonaki and Dimitriou). Fourthly, it can include more variables or other different variables in both CSR and FP measurement and check the association between CSR and FP can augment the external validity of the finding of this study. Furthermore, different other control variables such as R and D, institutional ownership, and leverage can be used. Therefore, future work can include these variables and check the association between CSR and FP.

Availability of data and materials

Abbreviations.

Corporate Social Responsibility

Financial Performance

Return on Assets

Return on Equity

Earnings Per Share

Ordinary least-squares

Fixed Effect Model

Random Effect Model

Maldives Transport and Contracting Company

Maldives Tourism Development Corporation

State Trading Organization

Bank of Maldives

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A literature review of the history and evolution of corporate social responsibility

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There is a long and varied history associated with the evolution of the concept of Corporate Social Responsibility (CSR). However, a historical review is missing in the academic literature that portrays the evolution of the academic understanding of the concept alongside with the public and international events that influenced the social expectations with regards to corporate behavior. The aim of this paper is to provide a distinctive historical perspective on the evolution of CSR as a conceptual paradigm by reviewing the most relevant factors that have shaped its understanding and definition, such as academic contributions, international policies and significant social and political events. To do so, the method used is a comprehensive literature review that explores the most relevant academic contributions and public events that have influenced the evolutionary process of CSR and how they have done so. The findings show that the understanding of corporate responsibility has evolved from being limited to the generation of profit to include a broader set of responsibilities to the latest belief that the main responsibility of companies should be the generation of shared value. The findings also indicate that as social expectations of corporate behavior changed, so did the concept of Corporate Social Responsibility. The findings suggest that CSR continues to be relevant within the academic literature and can be expected to remain part of the business vocabulary at least in the short term and as a result, the authors present a plausible future for CSR that takes into consideration its historical evolution. Finally, this paper gives way for future academic research to explore how CSR can help address the latest social expectations of generating shared value as a main business objective, which in turn may have practical implications if CSR is implemented with this in mind.

Introduction

The current belief that corporations have a responsibility towards society is not new. In fact, it is possible to trace the business’ concern for society several centuries back (Carroll 2008 ). However, it was not until the 1930’s and 40’s when the role of executives and the social performance of corporations begun appearing in the literature (Carroll 1999 ) and authors begun discussing what were the specific social responsibilities of companies. In the following decades, the social expectations towards corporate behavior changed and so did the concept of Corporate Social Responsibility (CSR). The aim of this article is to find out which have been the main factors and/or events that have influenced the evolutionary process of CSR and how they have shaped the understanding of the concept. This will allow to recognize CSR as a concept that reflects the social expectations of each decade and be able to explore if it will remain relevant in the near future.

This review focuses on the most relevant academic publications and historical events that have influenced the evolution of CSR as a conceptual paradigm. The review begins with the historical roots of social responsibility and then explores the early stages of the formal and academic writing about the social responsibilities of corporations and goes through its evolution to the latest understanding of CSR. Considering that the history of CSR is long and vast, it is necessary to point out that this article focuses on publications that have provided an original perspective and understanding to the concept of CSR along with the most significant papers with regards to the evolution of the social expectations of corporate behavior (see Appendix for additional recommended readings). Along with these papers, the review takes into consideration articles that have been cited the most and can be considered as significant contributors to the evolution of the concept as well as publications that provide new definitions and frameworks. It is relevant to point out that this paper will focus on the development of CSR as a definitional construct and will not explore in detail alternative concepts that emerged in the late twentieth century.

This article reviews the key historical events that played a role in the evolution of CSR. In particular, the paper focuses on events that influenced to a certain extent corporations to assume broader social responsibilities Accordingly, this article focuses on the relevant inputs to the definitional construct of the concept, most of which are of Anglo-American character, but it also considers that the growing attention on CSR has been influenced by specific calls for better business practices, such as the European CSR Strategy. As such, this paper does not portray the entire literature on the subject but highlights the key factors that shaped the evolution of CSR. Accordingly, the authors provide a summary of the evolution of the concept through a chronological timeline that allows the reader to follow the history of CSR by pointing out the most relevant academic contributions as well as the most significant events that played a role in shaping it as a conceptual paradigm.

The main contribution of this paper is a structured historical review that is accompanied with a chronological timeline of the evolution of CSR. Accordingly, the article contributes to the literature by exploring how the societal expectations of corporate behavior of each period have influenced the understanding and definitional construct of CSR. Furthermore, this article contributes to the literature on CSR by providing an innovative review of the evolution of the concept that contextualizes its development with a connection to the wider changes happening in each period. This paper also contributes to the current understanding of CSR by including a review of the development of CSR in the early twenty-first century, a period that has not been reviewed as much as earlier periods of the development of the concept.

Research method

The formal publications and literature on CSR begun as early as the 1930’s and continues to be relevant among academic journals, business magazines, books, and reports from international bodies as well as from non-governmental organizations and associations. This means that the literature on the subject is broad and a specific method is needed to achieve a comprehensive review. Given these aspects, the research was carried out following a systematic literature review (SLR) as understood by Okoli and Schabram ( 2010 ) who built on from Fink’s ( 2005 ) definition of a research literature review to define it as a systematic, explicit, comprehensive and reproducible method. The motivation for following a SLR is because it is commonly used to summarize the existing literature and identify gaps, to describe the available body of knowledge to guide professional practice, to identify effective research and development methods, to identify experts within a given field and to identify unpublished sources of information (Fink 2005 ; Okoli and Schabram 2010 ).

The extensive nature of the CSR literature required to limit the scope of the research to thematic areas directly related to the evolution and history of the concept and also limited to publications of academic or institutional character considering that they have already undergone a rigorous peer review that indicates a suitable quality for this SLR. The initial search was conducted for published journal articles using the search words “corporate social responsibility”, “history of CSR” and “evolution of CSR” on the online databases of Science Direct, ProQuest and Web of Science along with the search engine of Google Scholar. The searches were made within the search windows of the website of each database in the titles, abstracts and body of the articles and the results were provided in order of relevance. The first selection was limited to the titles of the publications and was followed by a review of the keywords and abstracts of the preferred articles. To determine the suitability of some of the articles it was necessary to review their introduction and scope. The next step in the selection of articles was focused on their quality and relevance which was determined by reviewing the level of impact factor of the journal of publication as well as the amount of citations the article has had, looking specifically for a high impact factor for each individual paper. Each article was then reviewed to determine its relevance for the research. Some articles pointed to additional references outside the initial search scope which were then searched online for their review. This included business magazines, books, and reports from international bodies and non-governmental organizations and associations. These references were reviewed and selected according to their pertinence and contribution for this paper. Following this systematic strategy allowed to review published journal articles with high impact factors along with publications of relevance mentioned by the authors of such articles. Some publications with regards to CSR had to be excluded from this review because they did not contribute directly to the evolution of the concept but we believe they are of interest in the CSR literature and thus they are listed in Appendix . Finally, the paper is structured in a way that each section corresponds to a particular period making it easier to follow the evolutionary process of CSR.

Historical roots of social responsibility

For Chaffee ( 2017 ), the origins of the social component in corporate behavior can be traced back to the ancient Roman Laws and can be seen in entities such as asylums, homes for the poor and old, hospitals and orphanages. This notion of corporations as social enterprises was carried on with the English Law during the Middle Ages in academic, municipal and religious institutions. Later, it expanded into the sixteenth and seventeenth centuries with the influence of the English Crown, which saw corporations as an instrument for social development (Chaffee 2017 ). In the following centuries, with the expansion of the English Empire and the conquering of new lands, the English Crown exported its corporate law to its American colonies where corporations played a social function to a certain extent Footnote 1 (Chaffee 2017 ).

During the eighteenth and nineteenth centuries, the Christian religious philosophy and approach to the abiding social context were seen as a response to the moral failure of society, which was visible in terms of poverty of the overall population in the English Empire and some parts of Europe (Harrison 1966 ). This religious approach gave way to social reforms and to the Victorian philanthropy which perceived a series of social problems revolving around poverty and ignorance as well as child and female labor (Carroll 2008 ; Harrison 1966 ). The religious roots of the Victorian social conscience gave Victorian Philanthropists a high level of idealism and humanism, and by the late 1800’s, the philanthropic efforts focused on the working class and the creation of welfare schemes with examples that could be seen in practice both in Europe as in the United States of America (USA) (Carroll 2008 ; Harrison 1966 ). A clear case was the creation of the Young Men’s Christian Association (YMCA), a movement that begun in London in 1844 with the objective of applying Christian values to the business activities of the time, a notion that quickly spread to the USA (see: Heald 1970 ).

During the late 1800’s and early 1900’s, the creation of welfare schemes took a paternalistic approach aimed at protecting and retaining employees and some companies even looked into improving their quality of life (Carroll 2008 ; Heald 1970 ). For Heald ( 1970 ), there were clear examples that reflected the social sensitivity of businessmen, such as the case of Macy’s in the USA, which in 1875 contributed funds to an orphan asylum and by 1887 labeled their charity donations as Miscellaneous Expenses within their accounting books, and the case of Pullman Palace Car Company which created a model industrial community in 1893 with the aim of improving the quality of life of its employees.

Also during this period, there was a growing level of urbanization and industrialization marked by large-scale production. This brought new concerns to the labor market such as: new challenges for farmers and smalls corporations to keep up with the new interdependent economy, the creation of unions of workers looking for better working conditions, and a middle class worried for the loss of religious and family values in the new industrial society (Heald 1970 ). As a response to these new challenges, and with the aim of finding harmony between the industry and the working force, some business leaders created organizations for the promotion of values and improvement of the working conditions. Such was the case of the Civic Federation of Chicago, an organization created to promote better working conditions and where religious values merged with economic objectives with a sense of civic pride (Heald 1970 ).

By the 1920’s and early 1930’s, business managers begun assuming the responsibility of balancing the maximization of profits with creating and maintaining an equilibrium with the demands of their clients, their labor force, and the community (Carroll 2008 ). This led to managers being viewed as trustees for the different set of external relations with the company, which in turn translated into social and economic responsibilities being adopted by corporations (Carroll 2008 ; Heald 1970 ). Later, with the growth of business during World War II and the 1940’s, companies begun to be seen as institutions with social responsibilities and a broader discussion of such responsibilities began taking place (Heald 1970 ). Some early examples of the debate of the social responsibilities of corporations can be found in The Functions of the Executive by Barnard ( 1938 ) and the Social Control of Business by Clark ( 1939 ).

1950’s and 1960’s: the early days of the modern era of social responsibility

It was not until the early 1950’s that the notion of specifically defining what those responsibilities were was first addressed in the literature and can be understood as the beginning of the modern definitional construct of Corporate Social Responsibility. In fact, it was during the 1950’s and 1960’s that the academic research and theoretical focus of CSR concentrated on the social level of analysis (Lee 2008 ) providing it with practical implications.

The period after World War II and the 1950’s can be considered as a time of adaptation and changing attitudes towards the discussion of corporate social responsibility, but also a time where there were few corporate actions going beyond philanthropic activities (Carroll 2008 ). Perhaps the most notable example of the changing attitude towards corporate behavior came from Bowen ( 1953 ), who believed that the large corporations of the time concentrated great power and that their actions had a tangible impact on society, and as such, there was a need for changing their decision making to include considerations of their impact.

As a result of his belief, Bowen ( 1953 ) set forth the idea of defining a specific set of principles for corporations to fulfill their social responsibilities. For him, the businessman ’s Footnote 2 decisions and actions affect their stakeholders, employees, and customers having a direct impact on the quality of life of society as a whole (Bowen 1953 ). With this in mind, Bowen defined the social responsibilities of business executives as “the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society” (Bowen 1953 , p. 6). As Carroll ( 2008 ) explains, it seems that Bowen ( 1953 ) was ahead of his time for his new approach to management which aimed at improving the business response to its social impact and by his contributions to the definition of corporate social responsibility. Furthermore, the relevance of Bowen’s approach relies on the fact that this was the first academic work focused specifically on the doctrine of social responsibility, making Bowen the “Father of Corporate Social Responsibility” (Carroll 1999 ).

After Bowen, other authors were concerned with corporate behavior and its response to the social context of the time. For example, in the book Corporation Giving in a Free Society published in 1956, Eells ( 1956 ) argued that the large corporations of the time were not living up to their responsibility in a time of generalized inflation. In a similar way, with the book A moral philosophy for management published in 1959, Selekman ( 1959 ) explored the evolution of the moral responsibility of corporations as a response to the labor expectations of the time.

These early explorations of CSR as a definitional construct, along with the social context of the time, gave way to a growing interest of scholars to define what CSR was and what it meant (Carroll 2008 ). Naturally, it is understandable that the interest in CSR during 1960’s was influenced by growing awareness in society and social movements of the time. However, it is necessary to point out that the effect of this growing interest was perhaps more visible in the USA, which is why some examples of the following sections might seem to center on this particular country.

Some of society’s main concerns during this period revolved around rapid population growth, pollution, and resource depletion (Du Pisani 2006 ) and were accompanied with social movements with respect to the environment and human and labor rights (Carroll 1999 ). At the same time, books such as The Silent Spring by Carson ( 1962 ) and The Population Bomb by Ehrlich ( 1968 ) begun raising questions with regards to the limits of economic growth and the impact that society and corporations were having on the environment.

During the 1960’s there was also a new social context marked by a growing protest culture that revolved mainly around civil rights and anti-war protests. In the case of the USA, the protests transformed from being student-led sit-ins, walk-outs and rallies, to more radical political activism which, in most cases, saw business corporations as an integral part of the “establishment” they wanted to change (Waterhouse 2017 ). These protests put pressure on companies that, in the protestors’ view, represented the “establishment” (i.e. banks and financial institutions as well large scale corporations) but had a strong focus on those with direct links to war. An example is the case of the Dow Chemical Company which produced napalm used in the Vietnam War and as a result faced constant protests and accusations (Waterhouse 2017 ).

Accordingly, during the 1960’s scholars approached CSR as a response to the problems and desires of the new modern society. A notable example of this period was Keith Davis ( 1960 ), who explained that the important social, economic and political changes taking place represented a pressure for businessmen to re-examine their role in society and their social responsibility. Davis ( 1960 ) argued that businessmen have a relevant obligation towards society in terms of economic and human values, and asserted that, to a certain extent, social responsibility could be linked to economic returns for the firm (Carroll 1999 ; Davis 1960 ). The significance of Davis’ ideas is that he indicated that the “social responsibilities of businessmen need to be commensurate with their social power” (p. 71) and that the avoidance of such would lead to a decrease of the firm’s social power (Davis 1960 ).

Other influential contributors of the time were Frederick ( 1960 ), McGuire ( 1963 ) and Walton ( 1967 ). Frederick ( 1960 ) saw the first half of the twentieth century as an intellectual and institutional transformation that changed the economic and social thinking and brought with it an increased economic power to large scale corporations. To balance the growing power of businessmen, Frederick ( 1960 ) proposed a new theory of business responsibility based on five requirements: 1) to have a criteria of value (in this case for economic production and distribution), 2) to be based on the latest concepts of management and administration, 3) to acknowledge the historical and cultural traditions behind the current social context, 4) to recognize that the behavior of an individual businessmen is a function of its role within society and its social context, and, 5) to recognize that responsible business behavior does not happen automatically but on the contrary, it is the result of deliberate and conscious efforts; then McGuire ( 1963 ), who reviewed the development of business institutions and observed changes in the scale and type of corporations, changes in public policies, and regulatory controls for businesses as well as changes in the social and economic conditions of the time. As a response to these changes, McGuire ( 1963 ) argued that the firm’s responsibility goes beyond its legal and economic obligations, and that corporations should take an interest in politics, the social welfare of the community, and the education and happiness of its employees; and Walton ( 1967 ), who explored the ideological changes taking place during the 1950’s and 60’s which were reflected in public policies, some of which saw corporations as potential contributors to the improvement of the social and economic conditions of the time (see: Walton 1967 ; Walton 1982 ). Accordingly, he provided a definition of social responsibility with which he acknowledged the relevance of the relationship between corporations and society.

It is relevant to point out that even when some scholars begun applying a wider scope to the social responsibilities of corporations, there were others who were skeptical of the notion of CSR. Notably, Milton Friedman, a renowned economist and later a Nobel laurate in economics (1976), gave in 1962 a particular perspective of the role of corporations in a free capitalist system in which firms should limit to the pursuit of economic benefits (see: Friedman 1962 ). Friedman would further explore this notion in the article The Social Responsibility of Business is to Increase its Profits published in (Friedman 1970 ) in which he sees CSR activities as an inappropriate use of company’s resources that would result in the unjustifiable spending of money for the general social interest.

Even when the social context of the 1960’s was, to some extent, reflected in the academic approach to CSR, its practical implementation remained mostly with a philanthropic character (Carroll 2008 ). Nonetheless, by the end of the decade the overall social context was reflected in the form of a strong pressure on corporations to behave according to the social expectations of the time, most of which were vividly expressed in protests and environmental and antiwar campaigns (Waterhouse 2017 ).

The 1970’s: CSR and management

The antiwar sentiment, the overall social context, and a growing sense of awareness in society during the late 1960’s translated into a low level of confidence in business to fulfill the needs and wants of the public (Waterhouse 2017 ). In fact, the low level of confidence in the business sector reached a significant point when in 1969 a major oil spill in the coast of Santa Barbara, California led to massive protests across the USA and eventually resulted in the creation of the first Earth Day celebrated in 1970. During the first Earth Day, 20 million people across the USA joined protests to demand a clean and sustainable environment and to fight against pollution, which was caused mainly by corporations (e.g. oil spills, toxic dumps, polluting factories and power plants) (Earth Day 2018 ). The first Earth Day influenced the political agenda of the USA in such a significant manner that it played a role in pushing forward the creation of the Environmental Protection Agency (EPA) by the end of 1970 (Earth Day 2018 ) and translated into a new regulatory framework that would later influence corporate behavior and create additional responsibilities for corporations.

It is equally important to mention that in the year 1970 there was a recession in the USA that was marked by a high inflation and very low growth followed by a long energy crisis (Waterhouse 2017 ). As a response to this context, and as a result of the social movements of the 1960’s and early 1970’s, the federal government of the USA made significant advances with regards to social and environmental regulations. The most notable examples were the creation of the EPA, the Consumer Product Safety Commission (CPSC), the Equal Employment Opportunity Commission (EEOC) and the Occupational Safety and Health Administration (OSHA), all of which addressed and formalized to some extent, the responsibilities of businesses with regards to the social concerns of the time (Carroll 2015 ).

Similarly, two relevant contributions from the early 1970’s that responded to the social expectations of the time came from the Committee for Economic Development (CED) of the USA, first with the publication of A New Rationale for Corporate Social Policy which explored to what extent it is justified for corporations to get involved in social problems (Baumol 1970 ) and then with the publication of the Social Responsibilities of Business Corporations which explored the new expectations that society begun placing on the business sector (Committee for Economic Development 1971 ). These publications are of relevance because they advanced the public debate around CSR by acknowledging that “business functions by public consent, and its basic purpose is to serve constructively the needs of society – to the satisfaction of society” (Committee for Economic Development 1971 , p. 11).

As Carroll ( 1999 ) and Lee ( 2008 ) point out, these publications reflect a new rationale with regards to the roles and responsibilities of corporations. Furthermore, the Committee for Economic Development ( 1971 ) acknowledged that the social contract between business and society was evolving in substantial and important ways and specifically noted that: “Business is being asked to assume broader responsibilities to society than ever before and to serve a wider range of human values. Business enterprises, in effect, are being asked to contribute more to the quality of American life than just supplying quantities of goods and services. Inasmuch as business exists to serve society, its future will depend on the quality of management’s response to the changing expectations of the public” (Committee for Economic Development 1971 , p. 16).

The Club of Rome, formed in 1968 by a group of researchers that included scientists, economists and business leaders from 25 different countries, published in 1972 the report The Limits to Growth (World Watch Institute n.d. ), a study led by the Massachusetts Institute of Technology (MIT) which questioned the viability of continued growth and its ecological footprint (The Club of Rome 2018 ). The report became of relevance for the international community because it brought the attention towards the impact of population growth, resource depletion and pollution, and pointed out the need of responsible business practices and new regulatory frameworks.

The 1970’s saw the creation of some of today’s most renowned companies with respect to social responsibility. Such is the case of the Body Shop, which was created in 1976 in the United Kingdom and Ben & Jerry’s founded in 1978 in the USA. Whether as a response to the new social expectations, a new regulatory framework, or due to a first-mover strategy, these are two notable examples of companies that begun formalizing and integrating policies that addressed the social and public issues of the time, and as a result the 1970’s entered into what Carroll ( 2015 , p. 88) called an era of “managing corporate social responsibility”. This meant that the term Corporate Social Responsibility became increasingly popular which resulted in its use under many different contexts and to such an extent that its meaning became unclear, and as a consequence it meant something different for everybody (Sethi 1975 ; Votaw 1973 ).

For instance, for Preston and Post ( 1975 ), corporations have a public responsibility that is limited by clear boundaries, meaning that anything outside is not an obligation for the firm and explained that going beyond those limits offers no clear direction for achieving the company’s main goals and can translate into an inefficient re-orientation of activities. In fact, Preston and Post stated that companies are not responsible for improving social conditions or addressing social problems and argued that a firm’s responsibility extends only to the direct consequences of their decisions and activities in which they engage (Preston and Post 1975 ). A different perception came from Sethi ( 1975 ), for whom social responsibility entails that corporate behavior should be coherent with the social norms, values and expectations, and as a result it should be prescriptive.

The unrestricted use of the term Corporate Social Responsibility during the 1970’s created an uncertainty with regards to its definition. This lasted until 1979, when Carroll proposed what is arguably the first unified definition of Corporate Social Responsibility stating that: “The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time” (Carroll 1979 , p. 500). Even when Carroll’s ( 1979 ) approach to social responsibility corresponded to the discussion on corporate behavior of the time, and was mainly driven by the social movements of the 1960’s and the new legislations in the USA, its relevance relies on the fact that his definition builds on from the work of other scholars (including the CED) to provide a clear and concise conceptualization that could be applicable under any context, which was not the case of previous definitions of CSR (see previous definitions from: Davis 1973 ; Frederick 1960 ; M. Friedman 1962 ; McGuire 1963 ; Walton 1967 ). Another relevant contribution of Carroll’s understanding of CSR is that it does not see the economic and social objectives as incompatible trade-offs but rather as an integral part of the business framework of total social responsibility (Lee 2008 ).

During the 1970’s, the understanding of CSR was influenced by social movements and new legislations. This was reflected in the academic publications which provided companies with an approach that looked into how to comply with the new responsibilities that have been given to them by the new legislations that now covered environmental aspects as well as product safety, and labor rights (Carroll 2008 ). This gave way to the 1980’s where the discussion revolved on the ways for implementing CSR.

The 1980’s: the operationalization of CSR

During the 1970’s, there were a growing number of legislations that attended the social concerns of the time and gave a broader set of responsibilities to corporations. By contrast, during the 1980’s the Reagan and Thatcher administrations brought a new line of thought into politics with a strong focus on reducing the pressure on corporations and aiming to reduce the high levels of inflation that the USA and the United Kingdom (UK) were facing (see: Feldstein 2013 ; Wankel 2008 ). For Reagan and Thatcher, the growth and strength of the economies of their countries depended on their ability to maintain a free market environment with as little as possible state intervention (Pillay 2015 ). To do so, Reagan’s main economic goals focused on reducing the regulations on the private sector complemented with tax reductions (Feldstein 2013 ).

With governments reducing their role in regulating corporate behavior, managers were faced with a need to answer to different interest groups that still expected corporations to fulfill the social expectations of the time. Notably, the reduced regulatory framework led scholars to look into business ethics and the operationalization of CSR as a response to groups such as shareholders, employees and consumers, and the term stakeholder became common (Carroll 2008 ; Wankel 2008 ). However, scholars also begun looking into alternative or complementary concepts to CSR, some of which include corporate social performance, corporate social responsiveness, and stakeholder theory and management (Carroll 2008 ). For the purpose of this paper we will continue to focus our attention on the development of CSR as a definitional construct.

In 1980, Thomas M. Jones ( 1980 ) was arguably the first author to consider CSR as a decision making process that influence corporate behavior. Jones’ ( 1980 ) contribution gave way to a new area of debate around CSR which focused more on its operationalization than on the concept itself. This translated into the creation of new frameworks, models, and methods aimed at evaluating CSR from an operational perspective. Some notable examples of the 1980’s came from Tuzzolino and Armandi ( 1981 ), who presented a need-hierarchy framework through which the company’s socially responsible performance can be assessed based on five criteria (profitability, organizational safety, affiliation and industry context, market position and competitiveness, and self-actualization); Strand ( 1983 ), who proposed a systems model to represent the link between an organization and its social responsibility, responsiveness and responses and who identified internal and external effects of company’s behavior; Cochran and Wood ( 1984 ), who used the combined Moskowitz list Footnote 3 , a reputation index, to explore the relation between CSR and financial performance; and Wartick and Cochran ( 1985 ) who reorganized Carroll’s understanding of CSR (1979) into a framework of principles, processes, and social policies.

Perhaps the best way to understand the operationalization approach to CSR during the 1980’s is by keeping in mind that during this time there were new societal concerns. Notably, these concerns can be observed in a series of events that reflected the approach of the international community towards sustainable development and to a certain extent, to corporate behavior. The most relevant include: the creation of the European Commission’s Environment Directorate-General (1981), the establishment of the World Commission on Environment and Development chaired by the Norwegian Prime Minister Gro Harlem Brundtland (1983), the Chernobyl nuclear disaster (1986), the publication of the report Our Common Future presented by the Brundtland Commission which provided a definition of sustainable development (1987), the United Nations (UN) adoption of the Montreal Protocol (1987), and the creation of the Intergovernmental Panel on Climate Change (IPCC) (1988).

Even when these events did not relate directly to CSR, and hence did not influence directly the evolution of the concept, they reflected a growing sense of awareness of the international community with regards to environmental protection and sustainable development, and indirectly to corporate behavior. In fact, for Carroll ( 2008 ), the most relevant societal concerns and expectations of corporate behavior during the 1980’s revolved around “environmental pollution, employment discrimination, consumer abuses, employee health and safety, quality of work life, deterioration of urban life, and questionable/abusiveness practices of multinational corporations” (p. 36). As Carroll ( 2008 ) explained, this context gave way for scholars to begin looking into alternative themes, and during the 1980’s the concepts of business ethics and stakeholder management became part of the business vocabulary being part of a wider discussion around the corporate behavior of the time.

The 1990’s: globalization and CSR

During the 1990’s, significant international events influenced the international perspective towards social responsibility and the approach to sustainable development. The most relevant include: the creation of the European Environment Agency (1990), the UN summit on the Environment and Development held in Rio de Janeiro which led to the Rio Declaration on Environment and Development, the adoption of Agenda 21 and the United Nations Framework Convention on Climate Change (UNFCCC) (1992), and the adoption of the Kyoto Protocol (1997). The creation of these international bodies and the adoption of international agreements represented international efforts for setting higher standards with regards to climate-related issues and, indirectly to corporate behavior (see: Union of Concerned Scientists 2017 ).

The 1990’s were no exception to the growing interest in CSR, and in fact, it was during this decade that the concept gained international appeal, perhaps as the result of the international approach to sustainable development of the time in combination to the globalization process taking place. As Carroll ( 2015 ) explained, during the 1990’s the globalization process increased the operations of multinational corporations which now faced diverse business environments abroad, some of them with weak regulatory frameworks. For these global corporations it meant new opportunities that came along with a rising global competition for new markets, an increased reputational risk due to a growth in global visibility, and conflicting pressures, demands, and expectations from the home and the host countries (Carroll 2015 ).

Many multinational corporations understood that being socially responsible had the potential to be a safe pathway to balance the challenges and opportunities of the globalization process they were experiencing and as a result, the institutionalization of CSR became stronger (Carroll 2015 ). The most notable example of the institutionalization of CSR was the foundation in 1992 of the association Business for Social Responsibility (BSR) which initially included 51 companies with the vision of a becoming a “force for positive social change - a force that would preserve and restore natural resources, ensure human dignity and fairness, and operate transparently” (Business for Social Responsibility 2018 , para. 2).

The European Commission (EC) also played a relevant role in encouraging the implementation of CSR and begun promoting it as early as 1995 when 20 business leaders adopted the European Business Declaration against Social Exclusion in response to the EC’s call to combat social exclusion and unemployment (CSR Europe n.d. ). This resulted 1 year later, in the launch of the European Business Network for Social Cohesion (later renamed CSR Europe) which gathered business leaders with the aim of enhancing CSR within their organizations (CSR Europe n.d. ).

Even when the institutionalization of CSR grew stronger in the 1990’s, the concept itself didn’t evolve as much (Carroll 1999 ). Nevertheless, there are three contributions to CSR that are relevant to point out: Donna J. Wood ( 1991 ), driven by what she saw as a need for a systematical integration of conceptual aspects into a unified theory, built on the models of Carroll ( 1979 ) and Wartick and Cochran ( 1985 ) to create a model of Corporate Social Performance (CSP). Wood ( 1991 ) defined three dimensions of CSP: first, the principles of Corporate Social Responsibility, which include legitimacy (institutional level), public responsibility (organizational level), and managerial discretion (individual level). Second, she defined the processes of corporate social responsiveness as environmental assessment, stakeholder management, and issues management. Third, she specified the outcomes of corporate behavior as social impacts, social programs, and social policies. As a result, Wood’s model (1991) was broader and more comprehensive than the ones presented earlier by Carroll ( 1979 ) and Wartick and Cochran ( 1985 ), and its relevance relies on its contextualization of aspects of CSR within the business-social interaction by emphasizing explicitly the outcomes and performance of firms (Carroll 1999 ).

Also in 1991, Carroll ( 1991 ) presented the “Pyramid of Corporate Social Responsibility” with the aim of providing a useful approach to CSR for the executives that needed to balance their commitments to the shareholders with their obligations to a wider set of stakeholders which originated from the new governmental bodies and regulations of the USA, mainly from the establishment of the EPA, the Equal Employment Opportunity Commission (EEOC), the Occupational Safety and Health Administration (OSHA) and the Consumer Product Safety Commission (CPSC) (Carroll 1991 ). With the Pyramid of CSR, Carroll ( 1991 ) represented what he defined as the four main responsibilities of any company: 1) the economic responsibilities which are the foundation for the other levels of the pyramid; 2) the legal responsibilities of the firm; 3) the ethical responsibilities that shape the company’s behavior beyond the law-abiding duties, and; 4) the philanthropic responsibilities of the corporation with regards to its contribution to improve the quality of life of society. Besides the graphical representation of CSR in terms of responsibilities , Carroll ( 1991 ) asserted that a firm should be a good corporate citizen , a concept that he would develop further at the end of the 1990’s (see: Carroll 1998 ).

The third notable contribution of the 1990’s to the concept came from Burke and Logsdon ( 1996 ), who aimed to find evidence to link CSR to a positive financial performance of the firm, and by doing so they were arguably the first to evaluate the benefits of the strategic implementation of CSR. For them, CSR can be used with a strategic approach with the aim of supporting the core business activities and as a result improve the company’s effectiveness in achieving its main objectives (Burke and Logsdon 1996 ).

Moreover, Burke and Logsdon ( 1996 ) identified five dimensions of strategic CSR which, for them, are essential for achieving the business objectives as well as for value creation:1) centrality, which represents how close or fit is CSR to the company’s mission and objectives; 2) specificity, which represents the ability to gain specific benefits for the firm; 3) proactivity, in terms of being able to create policies in anticipation of social trends; 4) voluntarism, explained as the discretionary decision making process that is not influenced by external compliance requirements, and; 5) visibility, which refers to the relevance of the observable and recognizable CSR for internal and external stakeholders (Burke and Logsdon 1996 ). Furthermore, Burke and Logsdon ( 1996 ) argued that the implementation of strategic CSR through these five dimensions would translate into strategic outcome in the form of value creation that can be identifiable and measurable, but limited to economic benefits for the firm.

Another key contribution to the debate around corporate behavior came from the concept of “The Triple Bottom Line”, first conceived by Elkington in 1994 as a sustainability framework that balances the company’s social, environmental and economic impact. Later, Elkington ( 1998 ) explained that the way to achieve an outstanding triple bottom line performance (social, environmental, and economic) is through effective and long-term partnerships between the private and public sectors, and also among stakeholders. The triple bottom line concept became popular in the late 1990’s as a practical approach to sustainability and it has remained relevant in the CSR discussion because it indicates that corporations need to have socially and environmental responsible behavior that can be positively balanced with its economic goals. Footnote 4

As mentioned before, the globalization process of the 1990’s increased the global reach of multinational corporations and capitalism expanded rapidly, which meant that corporations began having concerns with regards to competitiveness, reputation, global visibility and an expanded network of stakeholders (Carroll 2015 ). This gave way to alternative subjects such as stakeholder theory (see: Donaldson and Preston 1995 ; Freeman 1994 ), corporate social performance (see: Swanson 1995 ), and corporate citizenship (see: Carroll 1998 ). The introduction of new themes, even when almost all of them were consistent with, and built on the existing CSR definitions and understanding (Carroll 1999 ), created an uncertainty with regards to the definition of CSR to the extent that the concept ended up having “unclear boundaries and debatable legitimacy” (Lantos 2001 , p. 1). This meant that by the end of the 1990’s there was a lack of a globally accepted definition of CSR (Lantos 2001 ), which was accompanied by a social and institutional impetus for making companies become good corporate citizens (see: Carroll 1998 ).

2000’s: recognition and implementation of CSR

The decade of the 2000’s is divided in two sections due to the amount of relevant events around CSR. The first section is focused on the recognition and expansion of CSR and its implementation, while the second section is focused on the strategic approach to CSR provided by the academic publications of the time.

The debate around CSR has been brought forward several times by public figures. Footnote 5 Such was the case of President Reagan who, with the aim of stimulating the economy and generating economic growth in the 1980’s, called upon the private sector for more responsible business practices and emphasized that corporations should take a leading role in social responsibility (Carroll 2015 ). During the 1990’s, it was President Clinton who brought the attention towards the notion of corporate citizenship and social responsibility with the creation of the Ron Brown Corporate Citizenship Award for companies that were good corporate citizens (Carroll 1998 ).

However, it was not until 1999 that CSR gained global attention with the landmark speech of then Secretary General of the United Nations, Kofi Annan, who at the World Economic Forum said: “I propose that you, the business leaders gathered in Davos, and we, the United Nations, initiate a global compact of shared values and principles, which will give a human face to the global market” (United Nations Global Compact n.d. , para. 5). As a result, the United Nations Global Compact (UNGC) was launched on July 2000 gathering 44 global companies, 6 business associations, and 2 labor and 12 civil society organizations (United Nations Global Compact n.d. ). Notably, the idea behind the creation of the UNGC was to create an instrument that would fill the gaps in governance of the time in terms of human rights and social and environmental issues and to insert universal values into the markets (United Nations Global Compact n.d. ).

Perhaps the most notable achievement of the UNGC was the definition of ten principles that guide the corporate behavior of its members, who are expected to incorporate them into their strategies, policies and procedures with the aim of creating a corporate culture of integrity with long term aims (United Nations Global Compact n.d. ). Even when the UNGC was never directly linked to CSR, it can be understood that the ten principles, with their focus on human rights, labor, environment, and anti-corruption, brought the global attention towards social responsibility.

It was also in the year 2000 when the United Nations adopted the Millennium Declaration with its eight Millennium Development Goals (MDGs) and set the international agenda for the following 15 years. Even when the MDGs and the debate around them was not directly linked to CSR, the United Nations Development Program (UNDP) pointed it out as a framework for the UN – private sector cooperation with the aim of achieving its goals (Murata n.d. ) and as a result the global recognition of the concept became stronger.

The promotion of CSR as a distinct European strategy begun 1 year after the adoption of the MDGs and the creation of the UNGC, when the EC presented a Green Paper called Promoting a European framework for Corporate Social Responsibility (2001) which derived from the new social expectations and concerns of the time, including the growing concern about the environmental impact of economic activities (Commission of the European Communities 2001 ). Notably, the Green Paper presented a European approach to CSR that aimed to reflect and be integrated in the broader context of international initiatives such as the UNGC (Commission of the European Communities 2001 ). This was the first step towards the European Strategy on CSR adopted in 2002 and since then, the EC has led a series of campaigns for promoting the European approach to CSR which derives from the understanding that CSR is: “the responsibility of enterprises for their impacts on society and outlines what an enterprise should do to meet that responsibility” (European Commission 2011 , para. 2).

Between 2001 and 2004 the EC held a series of conferences for discussing CSR (“What is CSR” in Brussels, “Why CSR” in Helsinki, and “How to promote and implement CSR” in Venice) which resulted in its adoption as a strategic element for the Plan of the General Direction of Business of the European Commission (Eberhard-Harribey 2006 ). Accordingly, in 2005 the EC launched the “European Roadmap for Businesses – Towards a Competitive and Sustainable Enterprise” that outlined the European objectives with regards to CSR for the following years (CSR Europe n.d. ). In practical terms, these events translated into a unified vision and understanding of CSR that would be promoted around European businesses.

In 2011, the EC published the renewed European Union (EU) strategy for CSR for the years 2011–2014 followed by a public consultation in 2014 with regards to its achievements, shortcomings, and future challenges. The 2014 consultation showed that 83% of the respondents believed that the EC should continue engaging in CSR policy and 80% thought that CSR played an important role for the sustainability of the EU economy (European Commission 2014a ). In 2015, the EC held a multi-stakeholder forum on CSR which concluded that the Commission should continue to play an important role in the promotion of CSR and help embed social responsibility into company’s strategies (European Commission 2015 ).

In 2015, CSR Europe launched the Enterprise 2020 Manifesto which aimed to set the direction of businesses in Europe and play a leading role in developing an inclusive sustainable economy (CSR Europe 2016 ) and can be understood as a response to the EU Strategy on CSR as well as to the United Nations Sustainable Development Goals. The Manifesto is perhaps the most relevant contribution from CSR Europe in the second half of the 2010’s mainly because it has a strategic approach that aims to ensure value creation for its stakeholders through the 10,000 companies reached through its network (CSR Europe 2016 ). The Manifesto focuses on the generation of value on five key areas: 1) societal impact through the promotion of responsible and sustainable business practices; 2) membership engagement and satisfaction which is meant to guarantee the continuity in the work of CSR Europe to achieve its mission and societal impact; 3) financial stability; 4) employee engagement focused on the investment of individual development as well as organizational capacity, and; 5) environmental impact assessment to determine areas of improvement (CSR Europe 2016 ).

The global recognition of CSR has also been influenced by international certifications designed to address social responsibility. Such is the case of the ISO 26000 which history can be traced to 2002 when the Committee on Consumer Policy of the International Organization for Standardization (ISO) proposed the creation of CSR guidelines to complement the quality and environmental management standards (ISO 9001 and ISO 14001) (ISO n.d.-a ). A working group led by Brazil and Sweden collaborated with stakeholders and National Standards Bodies for a period of 5 years (2005–2010) and came up with the approved ISO 26000 – Social Responsibility in September 2010 (ISO n.d.-a ).

The development of the ISO 26000 is of relevance for the CSR movement not only because it serves as a guideline for the way in which businesses can operate in a socially responsible way, but more so because it was developed by 450 experts of 99 countries and 40 international organizations and so far it has been adopted by more than 80 countries as a guideline for national standards (ISO n.d.-b , n.d.-c ).

2000’s: strategic approach to CSR

Beyond the institutional and public influence in the implementation of CSR, the 2000’s saw relevant contributions to the concept through the academic literature. In the early years of the twenty-first century, Craig Smith ( 2001 ) explained that corporate policies had changed as a response to public interest and as a result this often had a positive social impact. This meant that the scope of social responsibility (from a business perspective) was now inclusive to a broader set of stakeholders and a new definition was set forward: “Corporate social responsibility (CSR) refers to the obligations of the firm to its stakeholders – people affected by corporate policies and practices. These obligations go beyond legal requirements and the firm’s duties to its shareholders. Fulfillment of these obligations is intended to minimize any harm and maximize the long-run beneficial impact of the firm on society” (Smith 2001 , p. 142).

Smith’s definition of CSR (2001) gave hints of the need of making CSR part of a company’s strategic perspective in order to be able to fulfill its long term obligations towards society. This was reaffirmed by Lantos ( 2001 ) that same year, who pointed out that during the twenty-first century society would demand corporations to make social issues part of their strategies (see also: Carroll 1998 ).

In fact, Lantos ( 2001 ) built on from Smith’s definition of CSR and included strategic considerations to his own understanding of the concept concluding that: “CSR entails the obligation stemming from the implicit ‘social contract’ between business and society for firms to be responsive to society’s long-run needs and wants, optimizing the positive effects and minimizing the negative effects of its actions on society” (Lantos 2001 , p. 9). Accordingly, Lantos ( 2001 ) explained that CSR can become strategic when it is part of the company’s management plans for generating profits, which means that the company would take part in activities that can be understood as socially responsible only if they result in financial returns for the firm and not necessarily fulfilling a holistic approach such as the triple bottom line.

The way Lantos ( 2001 ) explained the boundaries of CSR was arguably the first time the term strategic was inherently linked to CSR. Since then, the literature on CSR begun including strategic traits to the concept and some academics (see: Husted and Allen 2007 ; Porter and Kramer 2006 ; Werther and Chandler 2005 ) begun using the term Strategic Corporate Social Responsibility (SCSR). During the early 2000’s, Freeman ( 2001 ) and A. L. Friedman and Miles ( 2002 ) provided a new perspective to stakeholder theory which reinforced the belief that corporations should be managed in the benefit of a broader set of stakeholders. Freeman ( 2001 ) argued that corporations have a responsibility towards suppliers, consumers, employees, stockholders and the local community and as a result should be managed accordingly while A. L. Friedman and Miles ( 2002 ) defined that the relation between corporations and their stakeholders is dynamic and has different levels of influence on the firm. With this new perspective, Freeman ( 2001 ) and A. L. Friedman and Miles ( 2002 ) contributed to the CSR evolution by reinforcing the belief that corporations are responsible to a broader set of stakeholder than before.

Marrewijk ( 2003 ) presented an overview of the concepts of CSR and Corporate Sustainability in which he recognized this novel perspective towards CSR. Marrewijk ( 2003 ) explained this new societal approach to CSR as a strategic response to the new corporate challenges which, as he explained, are an outcome of the evolution of the roles and responsibilities of each sector of society [emphasis added]. For Marrewijk ( 2003 ), firms respond to their challenges by adopting different levels of integration of CSR into a company’s structure, a topic that is still discussed in the literature.

Accordingly, Marrewijk ( 2003 ) gave five interpretations to his concept of Corporate Sustainability, which he recognized as the contemporary understanding of CSR. These interpretations can be understood as the level of integration of CSR into the company’s policies and structure. The holistic interpretation provided by Marrewijk ( 2003 ) is perhaps the most relevant for the purpose of this paper because it represents the full integration of CSR motivated by the search for sustainability in the understanding that companies have a new role within society and consequently have to make strategic decisions to adapt to its social context.

The strategic response that companies make to their evolving social context was further explored by Werther and Chandler ( 2005 ) who, with their first work published together, focused on the implementation of strategic CSR as part of brand management in order to achieve and maintain legitimacy in a context of globalized brands. The relevance of their work relies on the emphasis placed on the shift of social responsibility by transforming “CSR from being a minimal commitment … to becoming a strategic necessity” (Werther and Chandler 2005 , p. 319).

Furthermore, Werther and Chandler ( 2005 ) claimed that an effective integration of SCSR must come from a “genuine commitment to change and self-analysis” (p. 322) and must be done with a top-down approach throughout the company’s operations for it to translate into a sustainable competitive advantage. Even when their approach to SCSR focused mainly on the competitiveness and legitimacy of companies, their main contribution comes from explicitly claiming CSR as a strategic necessity and thus making it indispensable for any corporation.

One year afterwards, Porter and Kramer ( 2006 ) built on the notion that companies can achieve a competitive advantage through SCSR and explained that corporations can address their competitive context through a strategic approach that results in the creation of shared value in terms of benefits for society while improving the firm’s competitiveness. For Porter and Kramer ( 2006 ), a company should first look inside out to map the social impact of its value chain and identify the positive and negative effect of its activities on society and then focus on the ones with the greatest strategic value. Then, the firm should look outside in to understand the influence of their social context on their productivity and on the execution of its business strategy (Porter and Kramer 2006 ). This way, corporations would be able to understand its interrelationship with their social environment and be able to adapt its business strategies (Porter and Kramer 2006 ).

The work of Porter and Kramer ( 2006 ) provided a new understanding of SCSR as a way to maximize the interdependence between business and society through a holistic approach to the company’s operations and offered an explanation of the advantages of using SCSR as a holistic business framework instead of a limited goal-oriented perspective. In fact, Porter and Kramer ( 2006 ) argued that if CSR is used without a holistic approach and only focused on certain objectives (e.g. CSR used as a tool for achieving the social license to operate, or for achieving and maintaining a reputational status, or for addressing stakeholder satisfaction) it limits the company’s potential to create social benefits while supporting their business goals.

The notion of creating value through SCSR was reinforced by Husted and Allen ( 2007 ) who performed a survey of Spain’s largest firms by number of employees with the aim of finding out the main strategic dimensions that companies consider essential for generating value through SCSR. To do so, Husted and Allen ( 2007 ) built on four of the five dimensions of strategic CSR established by Burke and Logsdon ( 1996 ) to then provide their own definition of SCSR as the company’s ability to: “1) provide a coherent focus to a portfolio of firm resources and assets (centrality); 2) anticipate competitors in acquiring strategic factors (proactivity); 3) build reputation advantage through customer knowledge of firm behavior (visibility); 4) ensure that the added value created goes to the firm (appropriability)” (Husted and Allen 2007 , p. 596). It is important to highlight that Husted and Allen ( 2007 ) left out the concept of voluntarism proposed by Burke and Logsdon ( 1996 ) from their definition of strategic CSR but pointed out its relevance as a key dimension in CSR for the creation of value.

Based on the five dimensions of CSR established by Burke and Logsdon ( 1996 ), Husted and Allen ( 2007 ) surveyed 110 top managers of Spain’s largest companies and found out that visibility, appropriability, and voluntarism were considered the main strategic dimensions of CSR that can be linked to the creation of value (even when voluntarism is not part of their definition of SCSR). Their findings show that visibility, in terms of the presence of CSR on the media as well as a positive image of the company, can be linked to the creation of value through increased customer loyalty and the attraction of new customers, as well as developing new areas of opportunity for products and markets (Husted and Allen 2007 ). With regards to appropriability, the way in which the company manages to retain the value created, Husted and Allen ( 2007 ) pointed out that the surveyed companies designed their CSR policies with the aim of creating value, but such value seems to be limited to the economic benefits of the companies themselves and not necessarily for all their stakeholders. Finally, Husted and Allen ( 2007 ) acknowledged voluntarism, the strategic management of socially-oriented policies going beyond legal requirements, as a key aspect for the creation of value. Nevertheless, their findings show that the surveyed firms were not implementing CSR policies beyond the legal requirements which might be the consequence of the intangibility and immeasurability of such activities (Husted and Allen 2007 ).

Furthermore, the most relevant contributions provided by Husted and Allen ( 2007 ) to the concept of SCSR are twofold: first, SCSR generates new areas of opportunity through the constant drive for creating value, which in turns results in innovation. Second, implementing SCSR with the aim of creating value is inevitably linked to social demands. However, Husted and Allen ( 2007 ) pointed out that the surveyed companies looked into the generation of value with a perspective limited the economic benefits of the corporations themselves and not necessarily for all their stakeholders which raises the question if those companies were in fact implementing CSR with a holistic approach.

The belief of achieving competitive advantage and creating value through SCSR was further developed by Heslin and Ochoa ( 2008 ) who claimed that even when SCSR practices are most effective when they are tailor made, they still follow common principles. To prove their hypothesis, Heslin and Ochoa ( 2008 ) analyzed 21 exemplary CSR practices and observed that seven common principles guide the strategic CSR approach of the selected companies: cultivate the needed talent, develop new markets, protect labor welfare, reduce the environmental footprint, profit from by-products, involve customers, and green the supply chain.

The relevance of the principles proposed by Heslin and Ochoa ( 2008 ) comes from the belief that companies can improve their business opportunities while they provide benefits to the social context in which they operate. For instance, to cultivate the needed talent is explained as the need of companies to foster and retain qualified and skilled employees which result in better and more stable career opportunities (Heslin and Ochoa 2008 ). Likewise, the strategic relevance of the protection of labor welfare relies not only on the prevention of child labor but on the creation of innovative solutions for the company-specific social context Footnote 6 (Heslin and Ochoa 2008 ).

The exemplary SCSR practices presented by Heslin and Ochoa ( 2008 ) provide an insight of the potential benefits of SCSR for creating shared value, for the companies themselves, their stakeholders, and the social context in which the firms operate. Based on the work of Heslin and Ochoa ( 2008 ), it would seem that at least for some of the globally renowned companies, the belief of generating shared value became a driver for integrating global and complex issues into the company’s SCSR policies. Then, by the end of the 2000’s SCSR was understood as having the potential for generating shared value and for addressing social concerns.

2010’s: CSR and the creation of shared value

The concept of creating shared value was further developed by Porter and Kramer ( 2011 ) who explained it as a necessary step in the evolution of business and defined it as: “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress” (Porter and Kramer 2011 , p. 2).

For Porter and Kramer ( 2011 ), the need for Creating Shared Value (CSV) is in part the result of the conventional narrow-viewed business strategies which usually don’t take into account the broad factors that influence their long term success. Notably, Porter and Kramer ( 2011 ) place CSR into this category seeing it as an outdated and limited concept that has emerged as a way for improving company’s reputation, and as a consequence, they claim that CSV should replace CSR.

Perhaps Porter and Kramer’s ( 2011 ) most relevant contribution comes from the claim that “the purpose of the corporation must be redefined as creating shared value” (p. 2) and by pointing out that the first step to do so is the identification of the societal needs as well as the benefits or harms that the business embodies through its products. Accordingly, Porter and Kramer ( 2011 ) established three ways for creating shared value: by reconceiving products and markets, by redefining productivity in the value chain, and by creating supportive industry clusters where the company operates.

Even when Porter and Kramer ( 2011 ) did not contribute directly to the concept of CSR, they called for a change in the business strategies which, in their opinion, should now focus on generating shared valued as a main objective. This perspective of the creation of shared value is evident on what Leila Trapp ( 2012 ) called the third generation of CSR, which she explained as the moment in which corporations reflect their concerns about social and global issues on their activities, even when some of those concerns might not be directly linked to their core business. Even when this might seem similar to the philanthropic responsibilities of companies, defined as the fourth level of the Pyramid of CSR proposed by Carroll ( 1991 ), it is in fact rooted on a different understanding of the roles of corporations within their social context.

For Carroll ( 1991 ), companies which engage on activities to improve the social context in which they operate are doing so with a philanthropic perspective that is discretionary and voluntary, and as a result, this perspective is less relevant than the other three categories proposed in the Pyramid of CSR. In contrast, Trapp ( 2012 ) built on the historical understanding of CSR proposed by Marrewijk ( 2003 ) to explain what she called the third generation of CSR as an outcome of the evolution of the roles and responsibilities of each sector of society in which the private, public and social sectors have become increasingly interdependent. Then, the third generation of CSR proposed by Trapp ( 2012 ) can be understood as the result of corporations acknowledging and assuming their new roles and responsibilities towards society.

Trapp ( 2012 ) exemplified the third generation of CSR through a case study of Vattenfall, the Swedish state-owned energy company that in 2008 launched a CSR-backed stakeholder engagement campaign focused on climate change mitigation. The case study showed that even when Vattenfall’s campaign addressed clear social and global issues (climate change), it still reflected typical business objectives (in this case creating an interest in the company’s environmental effort and creating a brand image linked to the fight to climate change that would be a first-mover competitive advantage) (Trapp 2012 ). With this, Trapp ( 2012 ) contributed to the concept of CSR by exemplifying the new roles and responsibilities that corporations are willing to take in order to generate shared value.

In the third edition of Chandler and Werther’s book Strategic Corporate Social Responsibility (2013), the authors acknowledged the relevance of creating shared value, a constant in the previous editions, and highlighted its significance by modifying the subtitle of the book from Stakeholders in a Global Environment to the new version Stakeholders, Globalization, and Sustainable Value Creation . In fact, in the third edition of the book Chandler and Werther ( 2013 ) claim that SCSR has the potential for generating sustainable value and that the first step to do so is by identifying the social problems for which the company can create a market-based solution in an efficient and socially responsible way.

Later, in the fourth and most recent edition of the book, Chandler ( 2016 ) reflects on the evolution of CSR and its growing acceptance as central to the company’s strategic decision making as well as to their day-to-day operations. What is evident from this edition, is that Chandler ( 2016 ) understands the generation of sustainable value as one of the main objectives of SCSR. In fact, the subtitle of the fourth edition, Sustainable Value Creation , summarizes Chandler’s ( 2016 ) new perspective on SCSR in which “value creation cannot be avoided…[instead] it must be embraced” (p. xxvii). A key aspect to point out is that Chandler ( 2016 ) builds from the work of Porter and Kramer ( 2006 ) to conclude that “the firm creates the most value when it focuses on what it does best, which is defined by its core operations” (p. 250).

A key contribution from Chandler and Werther ( 2013 ) is their definition of SCSR which is the result of their exploration of CSR and their pragmatic approach to its effective implementation. Chandler and Werther ( 2013 ) defined SCSR as: “The incorporation of a holistic CSR perspective within a firm’s strategic planning and core operations so that the firm is managed in the interests of a broad set of stakeholders to achieve maximum economic and social value over the medium to long term.” (p. 65). In the fourth edition of the book, Chandler ( 2016 ) presents a slightly modified definition which reflects his new perspective on the generation of value: “The incorporation of a holistic CSR perspective within a firm’s strategic planning and core operations so that the firm is managed in the interests of a broad set of stakeholders to optimize value [emphasis added] over the medium to long term” (Chandler 2016 , p. 248).

Perhaps Chandler and Werther’s (2006; 2010; 2013) most valuable contribution comes from their particular perspective on the implementation of Strategic CSR, which in the fourth edition of the book written by Chandler ( 2016 ) builds from the previous publications to encompass five major components instead of the four proposed in previous editions: first, the complete incorporation of the CSR perspective into the company’s strategic planning process and their corporate culture; second, the understanding that all the company’s actions are directly related to the core operations; third, the belief that companies seek to understand and be responsive to their stakeholders’ needs, which means that the incorporation of a stakeholder perspective is a strategic necessity; fourth, the company passes from a short term perspective to a mid and long term planning and management process of the firm’s resources which is inclusive of its key stakeholders, and; fifth (the new component), firms aim to optimize the value created (Chandler 2016 ; Chandler and Werther 2013 ).

The new component of SCSR, the optimization of value , reinforces Chandler’s ( 2016 ) updated perspective in which the maximization of profit, or tradeoffs, is no longer an acceptable objective. Instead, companies should aim at optimizing value over the long term by focusing on their areas of expertise and by doing so there would be a reorientation of efforts towards the creation of shared value instead of profit maximization (Chandler 2016 ). To do so, an essential aspect of SCSR is the integration of the five components into a corporate framework that sets the parameters for the decision making process as well as their integration into the corporate culture with clear guiding values (Chandler 2016 ). This reflects Chandler’s ( 2016 ) belief that SCSR should be part of the day-to-day operations in order for it to be successful, a notion constantly highlighted by him through his articles and books. Then, the explicit call for the full immersion of SCSR into a company’s corporate culture, decision making process, and day-to-day operations is yet another relevant contribution from Chandler and Werther’s work (Chandler 2016 ; Chandler and Werther 2013 ).

In 2015, Carroll resumed his work on CSR with an overview of the evolution of the concept which complemented his literature review of 1999 and of 2010 (see: Carroll 1999 ; Carroll and Shabana 2010 ), but this time he looked at the competing and complementary concepts that have become part of the modern business vocabulary. Carroll ( 2015 ) reviewed the concepts of stakeholder engagement and management, business ethics, corporate citizenship, corporate sustainability, and the creation of shared value and concluded that all of them are interrelated and overlapping. Notably, Carroll ( 2015 ) pointed out that all of these concepts have been incorporated into CSR which is the reason why he defines it as the benchmark and central piece of the socially responsible business movement (see: Chandler and Werther 2013 ; Heslin and Ochoa 2008 ; Trapp 2012 ).

The year 2015 can be considered as the most relevant in the decade because the 15 years to follow after it will be marked by the Paris Agreement, the launch of the 2030 Agenda for Sustainable Development, and the adoption of seventeen Sustainable Development Goals (SDGs) which represent a “shared vision of humanity and a social contract between the world’s leaders and the people” (Ban 2015 , para. 1). Even when the SDGs do not represent any commitments for the private sector, the countries that adopt them will have to create specific policies and regulations that will translate into pressure for firms to implement new business practices or to improve their current ones. This is particularly relevant considering that the SDGs cover a wide range of areas, from climate change to the eradication poverty and hunger, as well as the fostering of innovation and sustainable consumption. Beyond that, the SDGs are interconnected, which means that addressing one particular goal can involve tackling issues of another one (UNDP 2018 ).

Considering that the SDGs do not represent any commitments for the private sector, it is relevant to mention that the EU law, through the Directive 2014/95/EU, requires large companies of public interest (listed companies, banks, insurance companies, and other companies designated by national authorities as public-interest entities) to disclose non-financial and diversity information beginning on their 2018 reports and onwards (European Commission 2014b ; n.d. ). The Directive is of interest to this paper because it derives from the European Parlamient’s acknowledgement of the vital role of the divulgation of non-financial information within the EC’s promotion of CSR and as a result can be expected to have an impact on the expansion of CSR reporting within the EU as well as with the Global Reporting Initiative (GRI).

This context presents an opportunity for CSR and SCSR to continue growing in terms of conceptualization and implementation, mainly because businesses can adopt it as a strategic framework with the objective of creating shared value (see: Chandler 2016 ). The expansion is particularly notable within the academic literature where it is possible to see that since 2010 the number of academic publications around CSR has increased considerably (see Table  1 ). As can be seen in Table 1 , in the case of Science Direct, the publications more than doubled from 1097 in the year 2010 to 2845 in 2017 (2.59 times) while in Web of Science they almost quadrupled passing from 479 to 1816 in the same years (3.79 times). In the case of ProQuest the publications increased considerably from 2010 to 2016 passing from 5715 to 8188, but decreased to 5670 in 2017. It is also important to notice that the years 2015 and 2016 had the highest amount of publications around CSR this far. It is also relevant to observe that the number of publications declined after 2015 for Science Direct and after 2016 for Proquest, while for Web of Science the amount kept growing.

The increase in the number of publications is not necessarily linked to the launch of the SDGs, but it shows that the concept has remained relevant after the year 2015, when the Paris Agreement called for a change from business as usual to new business frameworks. A key point to mention is that looking into the newest academic publications available since 2015 it is possible to see that most of these revolve around the implementation of CSR and its impact on specific areas of performance in some way related to the SDGs but do not necessarily contribute to the definitional construct or the evolution of the concept (for example see: Benites-Lazaro and Mello-Théry 2017 ; Chuang and Huang 2016 ; Kao et al. 2018 ).

The aim of this paper is to provide a distinctive historical perspective on the evolution of CSR as a conceptual paradigm through a literature review of the academic contributions to the concept as well as the most relevant factors that have shaped its understanding and definition. As the review shows, the development of the modern understanding of CSR as a definitional construct is long and varied and can be traced as far back to the 1930’s when the debate around the social responsibilities of the private sector begun. However, it was in the 1950’s when Bowen ( 1953 ) defined what those responsibilities were by explaining that the social responsibility of business executives was to make decisions according to the values of society and provided what was perhaps the first academic definition of CSR. During the 1960’s, the academic literature brought forward a new understanding of the concept in which it acknowledged the relevance of the relationship between corporations and society (see: Davis 1960 ; Frederick 1960 ; Walton 1967 ), yet, this perspective remained limited to concerns of employee satisfaction, management and the social welfare of the community and focused mainly on the generation of economic profit.

The 1970’s were influenced by the social momentum of the time in which there was a growing sense of awareness with regards to the environment and human and labor rights which led to higher social expectations of corporate behavior. As a result, a new rationale was brought forward by the Committee for Economic Development ( 1971 ) of the USA based on the premise that the social contract between business and society was evolving and that the private sector was expected to assume broader social responsibilities than before. As a consequence, CSR became increasingly popular during the 1970’s but remained discretionary and with a limited focus on aspects such as waste management, pollution and human and labor rights. Its growing popularity led to the unrestricted use of the term CSR under different contexts and by the end of the decade the concept became unclear and meant something different for everyone.

Perhaps the first unified definition of CSR was presented in 1979 by Carroll ( 1979 ), who placed specific responsibilities and expectations (economic, legal, ethical and discretionary) upon corporations and who understood the economic and social objectives of firms as an integral part of a business framework and not as incompatible aspects. This gave way to the debate around the operationalization of CSR during the 1980’s and into the early 1990’s which brought forward a new understanding of the concept as a decision making process (see: Jones 1980 ) and was accompanied by the proposal of models and frameworks for its implementation (see: Cochran and Wood 1984 ; Strand 1983 ; Tuzzolino and Armandi 1981 ). In 1991, Carroll ( 1991 ) presented the “Pyramid of Corporate Social Responsibility” to represent what he defined as the four main responsibilities of any company and explicitly placing specific responsibilities on corporations. It was also during this period when the adoption of international agreements on sustainable development reflected, to a certain extent, a growing a sense of awareness with respect to the impact of corporate behavior (e.g. the creation of the World Commission on Environment and Development in 1983, the UN adoption of the Montreal Protocol in 1987, the creation of the IPCC in 1988, the creation of the European Environmental Agency in 1990 and the UN summit on the Environment and Development held in Rio de Janeiro which translated into the adoption of the Agenda 21 and the UNFCCC in 1992). This represented a change in the understanding of CSR and as a result, international organizations and companies alike saw CSR as a way to balance the challenges and opportunities of the time and its institutionalization begun spreading globally.

In 1996, Burke and Logsdon ( 1996 ) argued that the strategic use of CSR can result in identifiable and measurable value creation in the form of economic benefits for the firm and presented an innovative perspective that gave way to the debate around the strategic implementation of CSR during the late 1990’s. It was also during this period that alternative subjects gained attention such as stakeholder theory, corporate social performance and corporate citizenship, and even when they were consistent with the prevailing CSR understanding, their use created an uncertainty with regards to the definition of CSR and by the end of the decade the concept lacked a globally accepted definition and unclear boundaries (as explained by Lantos 2001 ).

In the year 2000, the adoption of the MDGs and the creation of the UNGC gave a new dimension to the understanding of social responsibility in which broader responsibilities were placed on corporations, mainly in terms of human and labor rights, environment, anti-corruption and sustainable development. As a result, international institutions, such as the EC, saw in CSR a pathway for addressing the new corporate challenges, which translated into a wider recognition of the concept during the first decade of the twenty-first century.

The definitions of CSR of the 2000’s reflected the belief that corporations had a new role in society in which they need to be responsive to social expectations and should be motivated by the search for sustainability, which meant they would have to make strategic decisions to do so (see: Husted and Allen 2007 ; Porter and Kramer 2006 ; Werther and Chandler 2005 ). This opened the discussion around the benefits of strategic CSR and by the early 2010’s it was believed that companies can generate shared value while improving the firm’s competitiveness through a holistic implementation of SCSR.

In the decade of the 2010’s, the Paris Agreement and the Sustainable Development Goals adopted in 2015, reflected a new social contract in which corporations are expected to play a relevant role in the global efforts to achieve the SDGs. Since then, the literature around CSR has focused on its implementation and its impact on specific areas of performance which can be linked to a certain extent to the SDGs while the understanding of CSR has remained centered on its potential to generate shared value.

At this point in the paper, it is relevant to visualize the most significant academic contributions to the evolution of Corporate Social Responsibility as a conceptual paradigm. To do so, Fig.  1 provides a chronological timeline that highlights the publications that have played a relevant role in modifying the understanding and definition of CSR. It is important to notice that the figures are based on this literature review and do not attempt to represent all the contributions to the evolution of the academic understanding of CSR but only to provide a visual synthesis.

Evolution of the academic understanding of CSR. Source: Developed by the authors as a synthesis of the academic literature

As can be seen in Fig. 1 , the social responsibilities placed upon corporations have evolved from being merely acknowledged in the early publications to being explicitly defined. Perhaps more relevant is the fact that the discussion around what those responsibilities are still continues to this day. Another key aspect that can be visualized with Fig. 1 is that the understanding of CSR evolved from being a personal decision of businessmen in the 1950’s to be understood as decision making process in the 1980’s and to be perceived as a strategic necessity by the early 2000’s. Notably, the purpose of existence of corporations has also evolved from being limited to the generation of economic profits in the 1950’s and 60’s to the belief that business exists to serve society as pointed out in the 1970’s and to the belief in the 2010’s that the purpose of corporations should be to generate shared value.

With Figs.  2 and 3 it is possible to visualize the evolution of CSR from a holistic perspective. The relevance of these figures comes from placing the events that played a significant role in shaping the understanding of CSR within the evolutionary process of the concept, some of them linked to the sustainable development agenda. This graphic synthesis of the evolutionary process of CSR is helpful for observing that the CSR understanding has been influenced by academic publications, governmental decisions (such as the creation of legislations and entities), social movements, public figures, and international movements. More so, from this graphic representation it is possible to observe that the understanding of social responsibility is dynamic and responds to social expectations of corporate behavior.

Visual history of CSR (Part 1 of 2). Source: Developed by the authors based on this literature review. Note: the size of the circles is a subjective representation of the level of influence each aspect had on the evolution of CSR. Hence, a bigger circle represents a higher level of influence

Visual history of CSR (Part 2 of 2). Source: Developed by the authors based on this literature review. Note: the size of the circles is a subjective representation of the level of influence each aspect had on the evolution of CSR. Hence, a bigger circle represents a higher level of influence

The aim of this paper was to provide a distinctive historical perspective on the evolution of CSR which was fulfilled through an exhaustive literature review that shows that the definition and concept of Corporate Social Responsibility has evolved from being limited to the generation of profits to the belief that companies should focus on generating shared value. From the review, it would seem that the evolution of the concept can be linked not only to academic contributions, but also to society’s expectations of corporate behavior. Even when this is not entirely evident across the history of the concept, there are specific cases in which the understanding of CSR clearly reflects the social expectations of the time. A notable example is the publication of A New Rationale for Corporate Social Policy and the Social Responsibilities of Business Corporations by the Committee for Economic Development ( 1971 ) of the USA which were followed by the creation of governmental institutions as a clear response to the social momentum and social demands of corporate behavior of the time. Since then, the definitions and understanding of CSR evolved for the most part in a pragmatic way according to social expectations. For example, during the 1990’s society placed broader responsibilities upon corporations when the international community adopted international agreements with regards to sustainable development and as a response, the debate around CSR centered on its strategic implementation to address the social concerns of the time but still with a limited focus on the economic benefits of the firm. In a similar way, during the early 2000’s the debate around SCSR reflected the new roles and responsibilities placed on corporations by the international community which called on the private sector to play a role in addressing the MDGs and by 2006 it was believed that SCSR could help companies achieve a competitive advantage through the creation of shared value. This belief, of creating shared value through SCSR, is perhaps the most relevant example of how the understanding of CSR reflects the social expectations of the time. The way in which Porter and Kramer ( 2011 ) proposed the creation of shared value to become the main purpose of corporations seems to be fitting to the social expectations of corporate behavior of the 2010’s as well as by those set later by the SDGs adopted in 2015.

From this review it is possible to see ties between some of the events of the sustainable development agenda and the evolution of CSR. These ties are not evident along all the history of CSR, but can be clearly seen in two specific and relevant cases, both of them cases in which events influenced the understanding and evolution of CSR: 1) In the early 1970’s the federal government of the USA established the EPA, the CPSC, the EEOC and the OSHA through which it addressed and formalized to some extent, the social and environmental responsibilities of businesses in response to the social concerns of the time. Years later, Carroll ( 1991 ) presented the Pyramid of Corporate Social Responsibility with the objective of providing business executives a pragmatic approach to their new obligations to a wider set of stakeholders, obligations that originated from the creation of the EPA, CPSC, EEOC and OSHA. It is then evident that one of the most significant contributions to the literature, Carroll’s Pyramid of CSR, was a direct response to the creation of governmental bodies and regulations, which responded to the social expectations of the time. 2) The promotion of CSR as a specific European strategy begun with the publishing in 2001 of the Green Paper called Promoting a European framework for Corporate Social Responsibility which intended to reflect the broader context of international initiatives, particularly in line with the UNGC. Then, it is clear that the UNGC had a direct influence on the Green Paper which later became the basis for the European Strategy on CSR adopted in 2002 which in turn played a role in shaping the perception and implementation of CSR in Europe. Perhaps these two examples are isolated cases in which specific international events had a direct influence on the understanding and implementation of CSR, but they show that the evolution of CSR can be influenced by international events and not only by academic contributions.

Conclusions

The theoretical contributions of this paper to the literature on CSR begin by providing a distinct historical review of the evolution of the academic understanding of the concept along with the public and international events that played a role in shaping social expectations with regards to corporate behavior. A key contribution comes from the chronological timeline established through the paper with which it is possible to observe the way the concept evolved, an aspect that can be clearly visualized through the figures presented by the authors. As a literature review, the paper is limited to the academic publications that refer directly to CSR as well as to information regarding those events that have influenced to some extents the social expectations of corporate behavior. The findings show that there is a link between social expectations of corporate behavior and the way in which CSR is understood and implemented and opens room for future research. From this review it is possible to see that the literature on CSR seems to be lacking specific research with regards to how to address the core business activities through CSR and seems to point out a reason why CSR can be implemented only partially and even may raise questions about its potential benefits. Beyond that, this paper has practical contributions that can be used as the basis for exploring how CSR can address the latest social expectations of generating shared value as a main business objective, which can translate into practical implications if CSR is implemented with the objective of creating shared value, a topic that only few authors have discussed.

Future of CSR

The amount of recent publications revolving around CSR is vast and it seems that the probable future scenario for CSR presented by Archie B. Carroll in 2015 still prevails. In this scenario Carroll ( 2015 ) foresees an increase in: stakeholder engagement, prevalence and power of ethically sensitive consumers, the level of sophistication of non-governmental organizations (NGOs), employees as a CSR driving-force, along with increased CSR activity up, down, and across the global supply chain. With regards to the concept itself, Carroll ( 2015 ) expects CSR to continue its transactional path but to have a limited transformational evolution. While this scenario seems plausible and highly probable, perhaps it would be necessary to add to it that even when CSR is still relevant and its implementation keeps expanding, at least in the literature, there are competing frameworks and new concepts that might slow the global expansion and implementation of CSR and even shift the public interest towards new areas. Some of these concepts are Corporate Sustainability, Corporate Social Performance, Creation of Shared Value, Corporate Citizenship, Environmental Corporate Social Responsibility, Environmental Social and Governance Criteria, among others. However, it is relevant to highlight Archie B. Carroll’s ( 2015 ) work on the competing and complementary frameworks of CSR in which he concluded that all of them are interrelated and overlapping and pointed out that all of these concepts have already been incorporated into CSR, which is an aspect that is sometimes overlooked. Only time will tell if the institutionalization of CSR continues to expand or if the interest shifts towards other concepts.

The future of CSR will also have to take into consideration the latest technological advances and their role as part of new business frameworks and strategies. The adoption and adaptation to new digitalization processes and tools, as well as the incorporation of Artificial Intelligence into the business environment are relevant challenges not only for the CSR debate, but for corporations in general. In this sense, business frameworks will have to adapt and evolve in order to embrace the latest tools, but they will need to do so through an overarching and holistic framework that is based on the principles of social responsibility in a way that it combines the notions of sustainability, the generation of shared value, and the belief that companies can redefine their purpose to do what is best for the world .

Chaffee ( 2017 ) goes into detail to explain the evolution of corporations under the English Crown and also their evolution in the USA where they became subject of legislatures after the Revolutionary War but still kept relatively social functions.

During the 1940’s, 50’s and 60’s, business executives and corporate managers were commonly referred to as businessmen (see Carroll 1999 ) .

The Moskowitz list is a reputation index developed during the early 1970’s by Milton Moskowitz to rate the social performance of a number of firms.

As 2018 marks 25 years since the creation of the Triple Bottom Line, Elkington ( 2018 ) reviewed the concept in the Harvard Business Review in June 2018 and concluded that there is a need for a new radical approach to sustainability that can tackle the challenges of pace and scale needed. In the same article, Elkington ( 2018 ) points out to the B Corporations (commonly known as B Corps) as an example of firms that now approach business with a dedication to do what is “best for the world” (Elkington 2018 , para. 15).

The debate around the participation of corporations in global governance has brought forward the term Corporate Political Responsibility . For example, Tempels et al. ( 2017 ), build on from the concept of corporate citizenship to argue that corporations and governments share the responsibility to tackle societal problems. Furthermore, they see corporations as responsible for helping or pushing governments to fulfill its responsibilities towards society. Another perspective comes from Djelic and Etchanchu ( 2017 ), who contextualized the political role of CSR by exploring different historical periods to conclude that corporations have played relevant social and political roles. With their historical contextualization, they argue that there is no clear separation between the responsibilities of business and state, and as a result, they consider Friedman’s ( 1962 ) approach to the CSR to be a limited a perspective that “is far from describing a natural state of things” (Djelic and Etchanchu 2017 , p. 658)

To exemplify the principle of protection of labor welfare, Heslin and Ochoa ( 2008 ) briefly present the case of Levi Strauss which was faced with the legal and social challenges of employing children under the age of 15 in Bangladesh. A solution based merely on compliance and simplicity would have been to fire all those children, but as a result of analyzing the social context, Levi Strauss observed that these children were in most cases the only way of income for their families and hence the company decided to send them to school while still paying them their regular wages and providing them with a job after completing their education (Heslin and Ochoa, 2008 ).

Abbreviations

Business for Social Responsibility

Committee for Economic Development (USA)

Consumer Product Safety Commission (USA)

Corporate Social Responsibility

Creating shared value

European Commission

Equal Employment Opportunity Commission (USA)

Environmental Protection Agency (USA)

European Union

Global Reporting Initiative

Intergovernmental Panel on Climate Change

International Organization for Standardization

Millennium Development Goals

Massachusetts Institute of Technology

Occupational Safety and Health Administration (USA)

Strategic Corporate Social Responsibility

Sustainable Development Goals

United Kingdom

United Nations

United Nations Development Programme

United Nations Framework Convention on Climate Change

United Nations Global Compact

United States of America

Young Men’s Christian Association

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Acknowledgements

First, we want to thank the two anonymous reviewers for their comments and suggestions which were fundamental for the final version of this article. We also want to thank the editors for their assistance throughout the review process.

We are grateful and acknowledge that this research was made possible by the support of the Mexican National Council for Science and Technology (CONACYT for its abbreviation in Spanish) which granted a 36 month scholarship to ML to conduct his PhD at the University of Iceland.

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The data that support the findings of Table 1 is available from the three online data bases consulted (Science Direct, ProQuest and Web of Science) according to the considerations mentioned for the creation of the table. The rest of the data generated or analyzed during this study is included in this published article.

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This paper is derived from ML’s work towards a PhD in Environment and Natural Resources at the University of Iceland. As such, ML performed a literature review of the history and evolution of CSR. Dr. LJ being the main advisor for ML’s PhD and Dr. BD being the secondary advisor, contributed by guiding the direction of the article through comments, suggestions, information and literature and by contributing in the drafting and revising the work to achieve the academic quality required for a PhD at the University of Iceland. Dr. LJ has provided the overall review. All authors read and approved the final manuscript.

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Correspondence to Mauricio Andrés Latapí Agudelo .

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ML is a PhD student in the Environment and Natural Resources graduate program at the University of Iceland. His current research focuses on the impact of SCSR on the energy sector, in particular on the energy efficiency and environmental performance of energy companies.

Dr. LJ is a professor at the Faculty of Business Administration at the University of Iceland. LJ has published in the areas of CSR, sustainable business models and environmental sustainability. Among her activities, LJ is a Fulbright Arctic Initiative Scholar.

Dr. BD is a professor of Environment and Natural Resources in the Faculties of Life and Environmental Sciences and Economics at the University of Iceland. BD has published in areas of sustainable energy, sustainable development and ecological economics. Among her occupations, BD is the book review editor for the journal Ecological Economics, Director of the University of Iceland Arctic Initiative and sits on the boards of several foundations, institutes and private companies.

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Recommended readings

After having done an exhaustive literature review on CSR and its evolution it has been a challenge to select which contributions should be left out of this paper. With this in mind, we would like to bring the attention of the reader towards the following publications: The Functions of the Executive by Barnard ( 1938 ) along with The Functions of the Executive at 75: An Invitation to Reconsider a Timeless Classic by Mahoney and Godfrey ( 2014 ); the Social Control of Business by Clark ( 1939 ); the Social responsibilities of business corporations published by the Committee for Economic Development ( 1971 ); the Green Paper: Promoting a European framework for Corporate Social Responsibility published by the Commission of the European Communities ( 2001 ) which was the first step towards the European Strategy for CSR; Corporate Social Responsibility: A Theory of the Firm Perspective by McWilliams and Siegel ( 2001 ); the search for a definition of CSR by Dahlsrud ( 2008 ) with How corporate social responsibility is defined: an analysis of 37 definitions ; then The Oxford Handbook of Corporate Social Responsibility by Crane ( 2008 ) which provides a summary of CSR history and points out relevant contributions to the concept; the literature review and analysis of the institutional, organizational, and individual levels of CSR provided by Aguinis and Glavas ( 2012 ) with What We Know and Don’t Know About Corporate Social Responsibility: A Review and Research Agenda ; the case study of reporting initiatives from a CSR perspective presented by Avram and Avasilcai ( 2014 ) through their Business Performance Measurement in Relation to Corporate Social Responsibility: A conceptual Model Development ; the internal and external drivers behind SCSR rationale for the maritime transportation sector presented by Latapí ( 2017 ) in his unpublished master thesis; and, Capturing advances in CSR: Developed versus developing country perspectives by Jamali and Carroll ( 2017 ).

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Latapí Agudelo, M.A., Jóhannsdóttir, L. & Davídsdóttir, B. A literature review of the history and evolution of corporate social responsibility. Int J Corporate Soc Responsibility 4 , 1 (2019). https://doi.org/10.1186/s40991-018-0039-y

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Received : 07 September 2018

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DOI : https://doi.org/10.1186/s40991-018-0039-y

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Free Thesis Proposal On Corporate Social Responsibility

Type of paper: Thesis Proposal

Topic: Drugs , Pharmacy , Responsibility , Company , Medicine , Health , Sociology , Social Responsibility

Words: 1250

Published: 01/23/2020

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IN THE PHARMACEUTICAL RETAIL MARKET

Literature Review Concepts about social responsibility started to be formed in the early 20th century, particularly by religious thinkers and theologians who posited that religious principles could also be applied to business activities (Lantos, 2001). However, before the 1960s, ethics remained to be an area that business people did not give much attention to (Lantos, 2001). During those times, matters that concerned ethics were best left to theologians and the religious. However, the beginning of the 1960s saw an increase in concern over ethical issues in business. Some of the issues that were brought to light included unfair labor practice; the sale of unsafe products; the damage bang done by the business system on the natural environment; economic inequality; bribery; and immorality (]Lantos, 2001). In 1979, Archie Carroll and other researchers proposed that corporations should be judged not only on their economic success but also on their economic criteria (Lantos, 2001). Carroll posited that to become good corporate citizens, corporations had to fulfill “economic, legal, ethical, and philanthropic” (Lantos, 2001, p. 2) responsibilities. Concern over corporate social responsibility prevailed until the 1990s due to the failure of governments to provide solutions to many social problems and because technology, such as satellite communications, has allowed the public to become more aware of these problems. They also became more aware of the shortcomings and faults being committee by businesses. When it comes to pharmaceuticals, George W. Merck, founder and former president of the pharmaceutical company Heartwarming, advocates that medicine is for the people and not for profits (Heal, 2008). This implies that pharmaceutical companies perform well financially by doing good medically. This seems to carry some truth, as pharmaceutical companies have always been one of the most profitable businesses (Heal, 2008). In particular, pharmaceuticals are one of the industries with the highest rates of return on investments and on equity. On the other hand, though, they have also contributed to the good of society by helping to improve the quality of life and by increasing people’s life expectancy. However, despite reducing or eradicating diseases and prolonging people’ life expectancy, pharmaceutical companies still receive a negative perception from the public who criticize these companies for constantly coming out with new drugs that may have very little added benefit to the consumer; for suppressing data, such as information on dangerous side-effects, from the pubic; for aggressively launching advertisements that may be misleading; for sometimes creating the conditions that would necessitate the drugs instead of the other way around; and for forming friendships with doctors for their own gain (Heal, 2008). As well, there are complaints about the constantly increasing prices of medicines so much so that they become inaccessible to poor countries, such as the African countries. Still, another solution to this problem is the aid of charitable foundations, such as the Gates Foundation, which supported the manufacture and distribution of malaria drugs, and the Clinton Foundation, which supported the manufacture and distribution of AIDS drugs (Heal, 2008). Since malaria and AIDS drugs are targeted at people from developing countries who do not have the means to purchase these drugs, the charitable organizations purchase these drugs and distribute them to the people in these poor countries. This gives pharmaceuticals an incentive to continue manufacturing the said drugs, as they also need to earn revenue to keep their businesses running. As well, many pharmaceutical companies have now integrated corporate social responsibility in their operations and strategies (Berete, 2012). For example, the pharmaceutical industry’s spending for the research and development of drugs for neglected diseases has increased by 90% over the last ten years (Berete, 2012). Pharmaceutical companies have also become more actively involved in finding solutions to the health problems of people from poor countries. Moreover, ten of the biggest pharmaceutical companies worldwide have contributed to health-related programs in developing countries, which amounted o $2.2 billion between 1998 and 2002 (Berete, 2012).

Statement of the Problem

Despite the many efforts being made by governments, charitable organizations, and drug companies, problems in accessing medicines still exist. According to Berete (2012), infectious diseases still cause the death of fourteen million people every year and over two billion people with treatable diseases still do not have access to medicines. Moreover, despite these pharmaceutical companies’ willingness to provide for the needs of the people, they also have to consider the business side of their operations in order to ensure that their companies continue to thrive. In particular, they also have to consider the market competitiveness of the pharmaceutical industry; the threat to the company’s operations, the regulations that they must abide with, the economic health of the industry, and stakeholder pressure (Berete, 2012). This is even made more complicated by the fact that the various stakeholders of these companies have different interests. As such, the pharmaceutical companies have to find a way to balance their stakeholders’ interests without compromising their own goals. All of these factors influence how far and extensively pharmaceutical companies are able to fulfill their social responsibilities. Moreover, pharmaceutical companies have different definitions for and understanding of corporate social responsibility (Berete, 2012), which means that they may fulfill these responsibilities in various ways and at various extents. In this regard, this study aims to contribute to the body of research by determining the answers to the following research questions: - What are pharmaceutical companies doing to become good corporate citizens? - How does being socially responsible affect the pharmaceutical companies’ bottom line? - What else can the pharmaceutical industry do to provide people worldwide with better health?

Materials and Methodology

In order to determine the answers to the research questions, the researcher will conduct a qualitative study in the form of a systematic review of what pharmaceutical companies have accomplished so far with regards to corporate social responsibility and what problems they have helped to solve. Since one company alone is not enough to address the needs of the world’s population and to genuinely instigate change, it is important to investigate how different companies over the last three decades have successfully become socially responsible. Only a systematic review can enable the investigation of the scope needed for this research. In addition, a systematic review will also enable the researcher to determine what has worked and what has not worked in the CSR (Corporate Social Responsibility) strategies employed by pharmaceutical companies, which can become the basis for making recommendations on the ways by which health issues can be further addressed by these companies. Sources of information would include journal articles, books, thesis papers, dissertation papers, and other scholarly sources. The researcher will analyze these publications and create themes or categories that will promote a better understanding of the reviewed literature and that would enable the researcher to obtain answers to the research questions posed for this paper.References Berete, M., 2012. Corporate social responsibility of pharmaceutical companies. International Researcher, 1(2), pp. 2-9. Heal, G. M., 2008. When principles pay: Corporate social responsibility and the bottom line. New York: Columbia University Press. Lantos, G. P., 2001. The boundaries of strategic corporate social responsibility. Stonehill College. North Easton, MA. [online] Available at:

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