Sustaining the Financial Value of Global CSR: Reconciling Corporate and Stakeholder Interests in a Less Regulated Environment

• Date: 01 March 2014
• Published date: 01 March 2014
• DOI: http://doi.org/10.1111/basr.12026
• Author: Rani Hoitash,Ariel Markelevich,Mark S. Blodgett

Sustaining the Financial

Value of Global CSR:

Reconciling Corporate and

Stakeholder Interests in a Less

Regulated Environment

MARK S. BLODGETT, RANI HOITASH, AND ARIEL MARKELEVICH

ABSTRACT

In this article we examine the association between corpo-

rate social responsibility (CSR) and firm value. This line of

research is important since firms continue to invest in

CSR even though past studies reveal a limited linkage

between financial value and CSR. However, the business

case for CSR or “doing good while making a profit,”

appears to be advancing within the business ethics litera-

ture as a preferred conception of CSR. We conjecture that

the greater unification and refinement of both profit maxi-

mization and stakeholder interests through corporate

acts, not statements alone, will sustain the financial value

of CSR in a less regulated global business environment.

We study the triangle of what companies say, what com-

panies do, and firm financial performance. We analyze

Fortune 250 firms and find a positive association between

Mark S. Blodgett is Associate Professor of Business Law and Ethics, Sawyer Business School,

Suffolk University, Boston, MA. E-mail: mblodget@suffolk.edu. Rani Hoitash is an Associate

Professor of Accountancy at Bentley University, Waltham, MA. E-mail: rhoitash@bentley.edu.

Ariel Markelevich is an Associate Professor of Accounting at the Sawyer Business School,

Suffolk University, Boston, MA. E-mail: amarkelevich@suffolk.edu.

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Business and Society Review 119:1 95–124

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what companies do based on KLD Research and Analyt-

ics, Inc. (KLD) ratings, and what companies state about

ethics in their CSR statements. We then employ regres-

sion analysis and find that companies’ socially respon-

sible acts are positively associated with overall firm value

and financial performance. Yet we do not find a statisti-

cally significant association between what companies say

regarding ethics in their CSR statements and their finan-

cial outcomes. These results suggest that firm value and

financial performance is associated with what companies

do and not what they say. Our results seem to be driven

by multinational corporations (MNCs) and not by non-

MNCs. This is possibly because MNCs generally operate in

a less regulated global business environment that often

necessitates strong ethical corporate leadership to further

stakeholder interests. Overall, these results help reconcile

corporate and stakeholder objectives since evidence of

a link between financial performance and doing good

sustains global CSR.

INTRODUCTION

Doing good while making a profit is perhaps most poignant

in today’s global economic environment where sustaining

financial value is both a priority and a continuous chal-

lenge. But whether corporate social responsibility (CSR) is a matter

of business strategy, ethics, or altruism (Lantos 2001), sustaining

the financial value of CSR should be consistent with fulfilling the

corporation’s fiduciary duty to shareholders (Friedman 1970) and

with meeting stakeholder responsibilities (Freeman 1994). Milton

Friedman’s assertions of profit maximization are firmly embedded

in corporate governance and economic thought, and stakeholder

theory is well established (Agle et al. 2008). Neither position,

however, operates independently of the other. Acknowledgment of

this inextricable relationship has evolved to such an extent that

Carroll and Shabana (2010, p. 102) state, “Growing support for the

business case among academic[s] and practitioners is evident.”

Both CSR as “business strategy” and the more recently refined

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