Strategic CSR: A Concept Building Meta‐Analysis

• Author: Marc Essen,Hans (J.) van Oosterhout,Pursey P. M. A. R. Heugens,Patricio Duran,Pushpika Vishwanathan
• Date: 01 March 2020
• Published date: 01 March 2020
• DOI: http://doi.org/10.1111/joms.12514

© 2019 The Authors. Journ al of Management Stud ies published by Societ y for the Advancement of Mana gement

Studies and Joh n Wiley & Sons Ltd.

Strategic CSR: A Concept Building Meta-Analysis

Pushpika Vishwanathana, Hans (J.) van Oosterhoutb,

Pursey P. M. A. R. Heugensb, Patricio Duranc and

Marc van Essend

a University of Am sterdam; b Era smus Universit y; c Universidad A dolfo Ibáñez; d Universi ty of South

Carolina

ABST RACT This study develops t he concept of Strategic Corporate Social Re sponsibility

(Strategic CSR) by meta -analyzing the available empir ical evidence on the relationship

between CSR and corpor ate financial performa nce (CFP). Using meta-analyt ic structural

equation modeling on ef fect size data from 34 4 primary studies, our st udy documents four

empirical mecha nisms explaining how CSR pos itively affect s CFP: by 1) enhancing firm

reputation, 2) increasi ng stakeholder reciprocation, 3) mitigatin g firm risk, and 4) str engthen-

ing innovation capac ity. We propose these four mechanisms to identi fy four causally relevant

attributes that a llow us to conceptually disti nguish Strategic CSR from C SR more generally.

Our find ings indicate that the four mechan isms combined explain 20 per cent of the CSR-

CFP relationsh ip, suggesting that considerable room remai ns for future empirical research.

The development of an empirical ly informed, causal conceptuali zation of Strategic CSR

responds to a long-heard cal l for better-specif ied concepts in empirical CSR resea rch.

Keywo rds: concept formation, corporate social responsibility, financial performa nce,

meta-ana lysis, strateg y

INTRODUCTION

The concept of corporate social responsibil ity (CSR) has inspired empir ical research

in management for almost half a centur y (Aguin is and Glavas, 2012). Early empirical

CSR research initially had the (often only implicit) ambition of showing that t he so-

cially benef icial activ ities denoted by the CSR concept could be strategica lly justif ied by

Journal of Man agement Studi es 57:2 March 2020

doi:10. 1111/j om s. 12 514

Address for re prints: Pu shpika Vishwanat han, Assista nt Professor, Amsterdam Bus iness School, Universit y of

Amsterda m, P.O. Box 15953, 1001 NL Amsterdam, T he Netherlands (P.Vishwanathan@uva.n l).

This is an op en access article under the t erms of the Creat ive Commo ns At tri butio n-NonCo m mercial

License, which p ermits use, distr ibution and reproduction in any mediu m, provided the origin al work is

properly cited and is not us ed for commercial purposes.

Strategic CSR: A Concept Build ing Meta-Ana lysis 315

© 2019 The Authors. Journ al of Management Stud ies published by Societ y for the Advancement of Mana gement

Studies and Joh n Wiley & Sons Ltd.

their positive performance impl ications for the firms undertaking them (Rowley and

Berman, 200 0; Wood and Jones, 1995). Orlitzky and colleagues (2003) synthesized t he

findi ngs of 52 primary stud ies on the relationship between CSR and cor porate finan-

cial performance (CF P) produced in these early years. By documenting a small positive

association between CSR and CF P, t hey corroborated that CSR can indeed be justified

strategical ly.

Over the last two decades, however, CSR research has shifted its focus from investigat-

ing the CSR-CFP relationship as a whole to identifying the concrete empirical mecha-

nisms through which CSR activities affect firm-level financial outcomes. This shift seems

to have been motivated by three reasons. First, the documentation of a small positive

relationship between CSR and CFP by Orlitzky and colleagues (2003) obviated the jus-

tificatory ambition to show that CSR mattered, thereby making room for the explana-

tory question of how CSR mattered instead (Barnett, 2007; Wang et al., 2016). Second,

scholars became increasingly critical of the coarse-grained and over-inclusive approach

to conceptualizing CSR, which produced a concept referring to a diverse set of empirical

phenomena (Gond and Crane, 2010). As a response, finer-grained research was increas-

ingly undertaken, focusing on specific types of CSR activities and their indirect effect

on firm performance (Flammer, 2013; King and Lenox, 2002; Wang and Qian, 2011).

Third, CSR research became methodologically more sophisticated as scholars started to

use more advanced research designs (Flammer, 2013, 2015a; Ortiz-de-Mandojana and

Bansal, 2016), better data (Henisz et al., 2014; Lev et al., 2010; Zhao and Murrell, 2016),

and more rigorous analytical techniques (Cheng et al., 2014; Surroca et al., 2010), that

required a shift towards more focused research questions (Godfrey et al., 2009; Koh et

al., 2014; Ortiz-de-Mandojana and Bansal, 2016).

As individual CSR-CFP studies became finer-grained and more focused, however, the

field as a whole became more fragmented. A diverse and growing body of empirical

findings has emerged identifying a wide variety of empirical mechanisms linking CSR to

CFP. One of the most persistent conce ptual critiques on CSR involved its lack of theo-

retical foundations (Ullmann, 1985), resulting in a poorly specified construct (Rowley and

Berman, 2000; Wood and Jones, 1995) that has highly permeable boundaries (Lockett et

al., 2006). This has led some scholars to claim that CSR hardly meets even the most basic

requirements for explanatory concepts in social science (Van Oosterhout and Heugens,

2008). Although several attempts at conceptual clarification were made (Clarkson, 1995;

Swanson, 1995; Windsor, 2006), scholars seem to have accepted that CSR is better con-

ceived of as an umbrella term rather than a well-defined theoretical concept (Gond and

Crane, 2010). But as empirical research on CSR and on the CSR-CFP relationship con-

tinues to proliferate, the absence of a well-defined theoretical concept increasingly hin-

ders the development of the field (Lockett et al., 2006; McWilliams et al., 2006; Pfeffer,

1993), since a minimal degree of consensus regarding the defining features of a concept

is required for scholars to effectively engage with each other to advance common knowl-

edge (Kuhn, 1962; Suddaby, 2010).

Within the general field of CSR research, we focus specifically on the stream of re-

search investigating the CSR-CFP relationship in order to isolate and develop the concept

of ‘Strategic CSR’. Following Goertz’ (2006) causal approach to explanatory concepts in

social science, we develop a three-level conceptual structure of the concept of Strategic

316 P. Vishwanathan et al.

© 2019 The Authors. Journ al of Management Stud ies published by Societ y for the Advancement of Mana gement

Studies and Joh n Wiley & Sons Ltd.

CSR in an effort to identify its causally most relevant properties for explaining financial

performance differentials between firms. We review the empirical CSR-CFP literature,

and ask three questions about the current state of research. First, what do we currently

know about how CSR affects firm financial outcomes? Specifically, what are the most

important empirical mechanisms through which the variety of CSR activities investi-

gated in the literature affect CFP? Second, does our current knowledge about how CSR

activities affect CFP ‘exhaust’ the overall CSR-CFP relationship, that is, is the relation-

ship between CSR and CFP fully explained (i.e. fully mediated) by the four empirical

mechanisms that we identify in this study? Third, based on the findings of this study,

what potentially fruitful avenues can we suggest for future research on (Strategic) CSR?

We answer these questions using advanced meta-analytic techniques on the empirical

evidence accumulated over five decades of empirical CSR-CFP research. Based on a

review of the literature, we identify four theoretical mechanisms for which empirical evi-

dence is sufficiently available. We then use meta-analytical structural equation modelling

(MASEM: Bergh et al., 2016) on a combined sample of 402,863 firm-year observations

retrieved from 344 empirical studies to provide a simultaneous meta-analytic test of the

four empirical mechanisms identified.

We seek to make three contributions to the CSR literature. First, we synthesize the

growing and increasingly fragmented body of research on the relationship between CSR

and CFP. We document four mechanisms through which CSR activities may contribute

to the financial bottom line of firms: firm reputation, stakeholder reciprocation, risk

mitigation, and innovation capacity. Second, we rely on these four mechanisms to theo-

retically develop the concept of Strategic CSR by defining it in terms of its causally most

relevant attributes in explaining CFP. By developing an evidence-based conceptualiza-

tion of Strategic CSR that can be isolated and carved out from the conceptual domain

of CSR more generally, we respond to the long-heard call for better-specified concepts

in CSR research around which CSR researchers may unite and contribute to the de-

velopment of a shared paradigm (Gond and Crane, 2010; Jones, 1995; Lockett et al.,

2006). Third, our findings serve as a guide for future CSR-CFP research, both in terms

of establishing what we already know and in identifying possible avenues for innovative

research contributions still to be made.

THEORETICAL BACKGROUND

The concept of CSR initially developed in the context of a normative debate, as much

of the early CSR literature evolved around the normat ive question whether firms have

an obligation to promote social betterment over and above their economic and legal

obligations (Carroll, 1999; Frederick, 1994; Matten et a l., 2003). In this debate, CSR

was mostly residually conceptua lized as socia lly valuable f irm activ ities not required by

law or shareholder interests (McWilliams a nd Siegel, 2001), which explains the coarse

and over-inclusive meaning that the concept subsequently acquired i n the literature

(Van Oosterhout and Heugens, 2008). The move to position CSR as a positive explan-

atory concept emerged from one particular l ine of argument in th is debate; that CSR

activities can be strategically just ified because, next to promoting socially benef icial