Links Between Corporate Social Performance And Financial Performance

1319 Words6 Pages
Literature review In different streams of literature and thought, organisation have been called upon to measure, manage and report on their environmental, social and governance performance. In addition to each being recognised as important in its own right, various studies have sought to identify the links between corporate social performance and financial performance (lee, 2009; peloza, 2009). A challenge for proponents of these non- traditional dimensions of performance has been to find ways to integrate them into existing performance measurement regimes (Figge,et al.,2002). This is important because the way in which individuals are measured and reward will impact on the decision that they make. To extent that evaluation and…show more content…
A consistent finding is that evaluators rely more heavily on those measures that they understand and accept the importance of. Unable to simultaneously process all of the measures, evaluators must focus on a subset or find some other way to decrease the cognitive complexity of the task, and this introduces bias. Subsequent research has sought to identify ways to reduce this bias to avoid strategically important measures being ignored. The biases identified in previous research, and other biases, may be exacerbated by the introduction of an additional perspective to measure environmental, social, or governance performance. This has important implications for the inclusion environmental measures. Figge et al. (2002) consider three options for including environmental performance in BSC format. The first is to integrate measures in to existing four perspectives, the second is to develop a separate sustainability scorecard, and the third is to add an additional, fifth perspective to the traditional BSC. Kaplan and Wisner (2009) provide an empirical evaluation of the effects of including environmental performance as a separate BSC perspective, or integrating those measures into the traditional four perspectives. They find that providing a separate a separate environmental perspective is not effective unless decision makers receive additional information about the strategic importance of those
Open Document