Article2018

The influence of social responsibility on employee productivity and sales growth

Andrea M. Romi · Kirsten A. Cook · Heather R. Dixon‐Fowler

54 citations0/0 files storedSustainability Accounting Management and Policy Journal

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Corporate Social Responsibility Reporting Entrepreneurship Studies and Influences Corporate Social Responsibility and Sustainability

Abstract

Purpose The purpose of this paper is to examine whether B corps’ (for-profit entities whose owners voluntarily commit to conduct business in a socially responsible manner, beyond traditional CSR, that generates profits, but not at the expense of stakeholders) commitment to social issues influences two aspects of financial performance: employee productivity and sales growth. Design/methodology/approach This paper is an exploratory analysis of B corps. This paper examines B corps with B Lab’s B Impact Assessment reports and PrivCo financial data, for descriptive information. This paper also analyzes the financial impact of obtaining and reporting on excellence in both employee and consumer focus, as well as the differences in financial growth between B corps and non-hybrid peers. Findings Overall, results suggest that, among B corps whose treatment of employees (consumers) is recognized as an “area of excellence,” employee productivity (sales growth) is significantly higher. Additionally, sales growth is significantly higher for B corps relative to their peer, non-hybrid, matched firms. Practical implications Results from this study inform states considering the adoption of the B corp legal status – this legal status does not hinder firm profitability, but instead enhances long-term firm value while allowing firms to beneficially affect their communities, consumers, employees and the environment. Social implications Results from this study provide important insights regarding the current paradigm shift from the traditional business focus on profit maximization to a fruitful coexistence of profits with social interests and initiatives, within a structure of dissolving national boundaries and increasingly divergent logics. Originality/value This paper provides an initial empirical examination of B corp performance.

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References

2010Strategic management a stakeholder approach 1995Toward a New Conception of the Environment-Competitiveness Relationship 2007The Social Responsibility of Business Is to Increase Its Profits 1995The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications 2003Corporate Social and Financial Performance: A Meta-Analysis 1999Whence Consumer Loyalty?1997THE CORPORATE SOCIAL PERFORMANCE-FINANCIAL PERFORMANCE LINK 2007Why would corporations behave in socially responsible ways? an institutional theory of corporate social responsibility

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