Corporate Social Responsibility And Executive Compensation With Firm Performance

Because corporations are established to profit and shareholders invest money with expectations of a greater return, managers cannot be given a directive to be “socially responsible” without providing specific criteria of checks and balances to which needs to adhere. Therefore, it is imperative to the success of a corporation for managers to not act solely but rather to act within the policies of the shareholders.

Corporate Social Responsibility (CSR) is something that affects all companies and should be an active factor in the company’s decision making. It is something all corporations need to care about. CSR is when business’ or corporations take part in an initiative or campaign for a cause that will benefit society and/or in some way make the world a better place (Taylor, 2015). Initially, Corporate Social Responsibility started to take shape around the 1950’s, but some say that it dates all the way back to the 1800s, the idea of CSR was seen (Carroll, 2007). One may think that because it is dated so long ago, it doesn’t have an important impact today nevertheless, it is proven that Corporate Social Responsibility is a pathway for entities to self benefit as they are in the process of benefitting society.

Anyone who owns public shares in a company has invested hard-earned money into a corporation based upon their perception that the company will be profitable and sustainable. The corporation’s board of directors are then responsible to manage the company in such a way as to increase their share-holders’ investment. For hundreds of years, this attempt to increase a corporation’s worth was done with little or no interest in social responsibility. Until very recently this topic was not very much in the public eye. However, at the moment the global economy is rapidly changing and business transparency is increasing through the accessibility of information across the world. Social and global change is moving faster than ever and progressing

Another abstract contributes to the research of the 100 companies to work for is Ahmed, Nanda, & Schnusenberg (2010). This research aim to identify “Can Firms Do Well While Doing Good?” in term of applying to financial economic. They are looking at the relationship between a firm’s social responsibility and its performance. They argue that Fortune’s approach to identify the Best Companies to Work For is mainly based on employee (not shareholder) surveys, which may provide a more direct measure of the relationship between a firm’s degree of social responsibility and its financial performance.

Corporate social responsibility (CSR) exercises can possibly make more grounded connections between firms and stakeholders. In spite of the fact that the promoting specialists have concentrated on the effects of CSR exercises on shareholder or stakeholder reactions, the CSR activities and results measured have been varied and conflicting. (Peloza & Shang, 2011). The author argues that

All the companies need a tool to exam their social performance (Hanson, 1995). The Spiller’s (2000) CSR model provide a tool that the corporation can diagnose their performance. And it can combine various management technologies to develop the performance of the corporations. On the other hand, it offered a tool to exam employee satisfaction (Spiller, 2000).

As Kline (2017) stated, “Socially responsible companies can reduce their credit spread by 40%, avoid market losses from crises (saving millions), double the probability of receiving investment grade ratings, reduce share price volatility 2-10%, and reduce systematic or market risk by 4%.” More interestingly, Kline (2017) mentioned, “...the researchers found that corporate responsibility could potentially increase the market value of a company by up to 6% over a 15- year period. Market value may grow even more -- to 40-80% higher than peers ' and competitors ' market value -- for companies with strong relationships with stakeholders such as environmental and social NGOs.” Similarly, Kline (2017) voiced, “The study found several advantages on the human resources front due to retention of talent attracted to CR. Staff turnover rates are 25 to 50% lower in responsible companies, who can save around $3700 on average in wage increases to encourage an employee to stay when he or she would rather go elsewhere.” Kline (2017) brought up some engaging trends, “ In fact, in responsible companies 5% of employees say they are willing to accept a decline in compensation. These companies register a 7.5% increase in

Corporations, their activities and governance have long been of interest to management and social scientists (see for example, Sampson, 1983). As it has gained a higher profile on the political, economic and business agendas in recent years (see for example, www.csr.gov.uk; Commission of the European Communities, 2001, 2002), corporate social responsibility (CSR) has received increased attention from academics (see Whetten et al., 2002; Arpan, 2005; Evuleocha, 2005; Riese, 2007; Birch, 2008). Corporate governance can be defined in a narrow and a broad way. For those who define it narrowly corporate governance is largely concerned with board level management issues. Reporting on the situation in the UK the Committee on the Financial Aspects of Corporate Governance (1992, p. 15) described the term as ‘‘the system by which companies are directed and controlled’’. Such a narrow definition, adopting and advocating as it does a top

Corporate social responsibility (CSR) is a topic under spotlight in recent years, firms become more committed to involve in corporate philanthropy by giving away gifts or monetary contributions to social and charitable causes. However, different firms tend to have a different level of commitment towards corporate philanthropy, which means that some firms are more committed to corporate philanthropy than others. Therefore, this essay discusses why some firms are more committed to corporate philanthropy than others by analyzing the motives of the firms on the individual level, firm level and field level.

The research conclusion of the relevance between corporate social responsibility and corporate economic performance is not similar. They can be mainly divided into three views. One view is that company’s social obligation has a negative relevance with the economic performance of companies; another view is that corporate social obligation can cut down transaction expenses, enhance the competitive power and the manufacture efficiency, finally it increases the company 's financial performance. Some literature studies think that there is no relevance between company’s social obligation and its financial obligation or the relationship is nonlinear.

In this paper Cheng et al. (2014) argued that the implementation of successful CSR policies leads to lower idiosyncratic risk due to improved stakeholder engagement, which reduce agency costs of an organisation, and increased transparency, which results a company becoming less capitally constrained and enhances a firm’s access to finance in capital markets. In order to achieve their aim the authors use cross sectional analysis of firms around the world and apply different variables and methods. They concluded that there is a link between good CSR activities and access to finance; however, social and environmental components of CSR are more significant for investors than the factor of governance since the former ones have higher impact on capital constraints.

　　Corporate Social Responsibility (CSR) is defined as the corporate initiatives taken by the company which take responsibility to its stakeholders (Tricker, 2012). Over the years, most of the public listed companies are moving away from shareholders-oriented to stakeholders-oriented. This might be because they realised that it was no longer enough to focus on financial performance alone to enhance business sustainability and credibility. The companies with stakeholder perception believe that the CSR practices has a positive impact on their Corporate Financial Performance (CFP) and reputation.

Second, although researchers have provided convincing arguments for the potential strategic benefits of CSR activities, scholars have not reached a consensus on whether or not, and how, CSR affects organisational performance (Husted and Allen, 2007; Margolis and Walsh, 2003; Orlitzky et al., 2003). They disagree, for example, as to whether CSR has a positive or a negative impact, or a neutral impact on organisational performance (Margolis and Walsh, 2001; McWilliams and Siegel, 2000; Orlitzky et al., 2003; Wright and Ferris, 1997). A number of scholars have argued that the lack of consensus is due partly to the use of questionable measures of organisational performance (Carroll, 1991; Griffin and Mahon, 1997; Waddock and Graves, 1997; Wokutch and McKinney, 1991). In particular, scholars highlight the limitations of single measures of performance (Egri et al., 2004) and over-reliance on financial performance that, in isolation, does not capture the full impact of CSR on the firm’s overall performance (Husted and Allen, 2007). In this study, we address this issue with three measures of organisational performance: the oft-used financial performance measure, as well as employee commitment and corporate reputation. This study is important for two reasons. First, while the study of the relationship between CSR and organisational performance is important in its own

This essay will evaluate the relationship between Corporate Strategy, Corporate Social Responsibility and will give some examples in order to give an idea to companies why they should engage in CSR and the consequences of engaging on it. It has been told that engaging on Corporate Social Responsibility is a cost, but recently has been demonstrated that if it is well managed the money that you put on CSR implementation can be taken into account as an investment. Companies engage in CSR not only because moral questions, it has been demonstrated that CSR is a door to an increase in the reputation of the company. In the long term companies realize that customers really appreciate the engagement of the company to social or environmental activities. Managers nowadays realize on how the consumers mind are changing towards a more responsible consumption and how these consumers look for information on how the products they consume have been produced. So these managers in order to increase in a long term base the good reputation of the company are investing nowadays on changing their strategy and trying all the company to engage in responsible practices. As explained in more detail in this paper the consequences of engaging in CSR are worth more than the cost of changing the company’ strategy. Some of them are the increase of consumer loyalty, investor attractiveness, political stability and economic benefits.

The Corporate Social Responsibility (CSR) originated in 19537 with the publication of Bowen’s book Social Responsibilities of Businessmen (Carrol, 1999). Some perceived that at that time, the emphasis is placed on business people’s social conscience, rather than on the company itself. Some argue that corporate entities do not have any social responsibility except the ones that were written in agreement with government while establishing corporate entities, whereas others justify that corporate entities do have social responsibility. The roots of critics of CSR are so old that it is a challenge to the neoclassical business model itself (Valor, 2005). According to Smith (2005), there are five major arguments against corporate social responsibility. These are the problem of competing claims, competitive disadvantage, competence, fairness and legitimacy. We will discuss below the arguments made against the concept of CSR and also we will counter argue these prepositions.