Measuring corporate social responsibility using composite indices: Mission impossible? The case of the electricity utility industry

Juan Diego Paredes-Gazquez, José Miguel Rodriguez-Fernandez and Marta de la Cuesta-Gonzalez

Revista de Contabilidad - Spanish Accounting Review, 2016, vol. 19, issue 1, 142-153

Abstract: Corporate social responsibility is a multidimensional concept that is often measured using diverse indicators. Composite indices can aggregate these single indicators into one measurement. This article aims to identify the key challenges in constructing a composite index for measuring corporate social responsibility. The process is illustrated by the construction of a composite index for measuring social outcomes in the electricity utility industry. The sample consisted of seventy-four companies from twenty-three different countries, and one special administrative region operating in the industry in 2011. The findings show that (1) the unavailability of information about corporate social responsibility, (2) the particular characteristics of this information and (3) the weighting of indicators are the main obstacles when constructing the composite index. We highlight than an effective composite index should has a clear objective, a solid theoretical background and a robust structure. In a practical sense, it should be reconsidered how researchers use composite indexes to measure corporate social responsibility, as more transparency and stringency is needed when constructing these tools.

Keywords: Composite index; Corporate social responsibility (CSR); CSR evaluation; Electricity utility industry; Social dimension; Índice sintético; Responsabilidad Social Corporativa (RSC); Evaluación de la RSC; Industria eléctrica; Dimensión social (search for similar items in EconPapers)
JEL-codes: F63 G24 L94 M14 M16 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:spacre:v:19:y:2016:i:1:p:142-153

DOI: 10.1016/j.rcsar.2015.10.001

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