Corporate social responsibility and profitability: trade‐off or synergy

Abstract

Purpose: An abundance of academic studies have been devoted to the investigation of corporate social responsibilities, and although the business world seems to have accepted the general idea that it should be socially responsible, it has never been asked what executives perceive their social responsibilities to be. Additionally, extensive research in an attempt to identify the relationship between corporate social and financial performance by investigating companies' annual and financial reports has shown largely inconclusive results. This paper therefore aims to investigate the insights of corporate executives on both the issues of the social responsibilities of business and the link between corporate social responsibility (CSR) and financial performance. With respect to corporate executives, the authors investigated if there are differences between the perceptions of executives of FTSE 100 and FTSE All-Share. Design/methodology/approach: The data was collected via online survey and semi-structured interviews with the executives of FTSE All-Share companies. Out of 531 executives, the authors received 82 responses of a response rate of 17 per cent. They contacted 178 executives representing FTSE 100 companies and received 29 responses of a response rate of 17.6 per cent. In order to build a phenomenological approach to this study, the authors interviewed four executives to document their opinions and thoughts. Findings: The results indicate that the business world holds a narrow view of its social responsibilities whilst maintaining that it is possible to be both profitable and respectful to its stakeholders. The analysis also reveals that socially responsible businesses employ CSR in pursuit of their commercial interests and consider it to be their competitive advantage. Moreover, the business seems to have integrated CSR into all its operations and activities and considers it as a necessity rather than luxury, which suggests that CSR and financial performance are in synergy. Originality/value: One major contribution of this study is the difference analysed between perceptions of executives of FTSE 100 and other FTSE All-Share companies on whether CSR policies and activities are implemented only when extra financial resources are available. This might suggest that FTSE 100 companies are more likely to have already integrated CSR into their business strategy and therefore devote financial resources to their CSR programs. Other FTSE All-Share companies, in contrast, might still be regarding CSR as an add-on and therefore spend monies on CSR only when they have extra financial resources available. The similar explanation can be offered for the difference between perceptions of executives of FTSE 100 and other FTSE All-Share companies as to whether implementation of CSR policies and activities will increase overheads, increase share prices in the following years and help raise new capital. © Emerald Group Publishing Limited.

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