The Complexity of Relationship between Corporate Social Responsibility (CSR) and Financial Performance

Abstract

This study argues that, inconsistent results of the Corporate Social Responsibility (CSR) relationship with financial performance is due to the complexity of relationship between two variables. The complexity of relationship stems from the nature of CSR, which is unseparable from its environment. This nature of relationship brings unfavourable impact on empirical research. The conclusion obtained from empirical evidents of such relationship will be highly contextual and lack generalization. This study proposes variables that led to the complexity of CSR relationship and financial performance, which are country characteristics as well as CSR forms and dimensions. Country characteristics determine the tendency of CSR practices, which finally influence the strength of CSR relationship with financial performance. The selection of CSR forms and dimensions to be done is part of a company’s strategy in an effort to achieve legitimacy.

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