Managerial Efficiency, Corporate Social Performance, and Corporate Financial Performance

Seong Y. Cho () and Cheol Lee ()
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Seong Y. Cho: Oakland University
Cheol Lee: Wayne State University

Journal of Business Ethics, 2019, vol. 158, issue 2, No 11, 467-486

Abstract: Abstract Managers face an ethical dilemma in the allocation of scarce resources to corporate social responsibility (CSR) because the underlying managerial incentives behind such CSR spending can range from pure altruism to complete financial orientation. Despite the importance of the managerial role in implementing CSR, prior studies generally have treated the role of managers as an exogenous factor. This study builds on recent studies on the managerial characteristics in studies on CSR by examining how managerial efficiency influences the outcomes of CSR. Using a newly developed measure of managerial efficiency, we find that, on average, managerial efficiency is positively associated with a subsequent change in corporate social performance (CSP), although the association is weak in the level of total CSP. We find that efficient managers are more likely to engage in the product-related CSR that directly connects to corporate financial performance (CFP) but are less likely to engage in environment-related CSR. We also find that CSP is positively associated with CFP with efficient managers. Our findings contribute to management and other stakeholders’ understanding of the association of CSR to its outcomes, CSP and/or CFP, which is hinged by the indispensable moderating role of managerial efficiency.

Keywords: Managerial efficiency; Corporate social responsibility; Corporate social performance; Corporate financial performance; Ethical corporate social responsibility (search for similar items in EconPapers)
JEL-codes: G30 G34 L21 M14 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (24)

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DOI: 10.1007/s10551-017-3760-7

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