Impact of Corporate Social Responsibility on Corporate Financial Performance

Abstract

In this modern society, corporation and its managers are publically pressurized to play an active role in society; it is called corporate social responsibility. The relationship between corporate social responsibility and corporate financial performance has been discussed by different researchers and scholars. This relationship has always been a topic of debate for last decades. Different researches have been conducted to explain the relationship between corporate social responsibility and corporate financial performance and also explore the impact of social responsibilities on corporation performance. However, there have been many variations in the results of researchers finding about the relationship between corporate social responsibility and corporate financial performance variables either positive or negative. There are few studies also pointed out that this relationship is mix or neutral. The objective of our study is to explain the relationship corporate social responsibility and firms financial performance and also found to know whether corporate social responsibility has any impact on corporate financial performance or not. As per finding of our study, there is a strong positive relationship between corporate social responsibility and corporate financial performance. There is varying impact of corporate social responsibility on corporate financial performance as the result of different studies. Some studies indicate positive impact where as other findings that this relationship to be negative. Difference in results of these studies is due to different CSR metrics, methodology and statistical tools and the mediating variables (R&D and company size).

Keywords: corporate social responsibility, corporate financial performance, research & development, ethical practices