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Abstract
This study investigates the effects on organization’s financial performances of, first, the extent to which the organizations
are involved in controversial business activities, and second, their level of social performance. These companies can be considered
non-socially responsible given the harmful nature of the activities they are involved in. Managers of these companies may
still have incentives to pursue socially responsible actions if they believe that engaging on those actions will help them
to achieve legitimacy and improve investors’ perception about them. We develop a comprehensive methodology to investigate
these corporate social performance (CSP)-related effects in a complex but specific setting. To this end, we analyze a sample
of 202 US firms for the period 2005–2008 using a novel method in this area: partial least squares. Our results indicate that,
contrary to the general findings in prior literature, companies involved in controversial business activities which engage
in CSP do not directly reduce the negative perception that stakeholders have about them. Instead, we found evidence of a positive
mediation effect of CSP on financial market-based performance through innovation.
- Content Type Journal Article
- Pages 1-17
- DOI 10.1007/s10551-012-1503-3
- Authors
- Belen Blanco, Universidad de Navarra, Pamplona, Spain
- Encarna Guillamón-Saorín, Universidad Carlos III de Madrid, Madrid, Spain
- Andrés Guiral, Yonsei University School of Business, 50 Yonsei-ro, Seodaemun-gu, Seoul, 120-749 South Korea
- Journal Journal of Business Ethics
- Online ISSN 1573-0697
- Print ISSN 0167-4544