Impact of corporate social responsibility on automotive firm performance
Prevailing studies on the economic implications of corporate social responsibility (CSR) for companies have, for the most part, emphasised the positive facets of CSR, failing to see that firms also espouse behaviours and initiatives which can be termed as negative CSR. In view of this, this st...
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Format: | Thesis |
Language: | English |
Published: |
2019
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Subjects: | |
Online Access: | http://psasir.upm.edu.my/id/eprint/85525/1/SPE%202020%204%20ir.pdf http://psasir.upm.edu.my/id/eprint/85525/ |
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Summary: | Prevailing studies on the economic implications of corporate social responsibility
(CSR) for companies have, for the most part, emphasised the positive facets of CSR,
failing to see that firms also espouse behaviours and initiatives which can be termed as
negative CSR. In view of this, this study presents a framework connecting positive as
well as negative CSR to firm performance. Acknowledging societal needs and having
effective dialogue with shareholders and stakeholders regarding firms' social profiles
as well as risk management practices are likely to reduce the firm risk, shape firms'
reputation and enhance profitability. These are indeed valuable in the wake of the
scandals for car maker’s continuity and enhancing shareholder value. It is argued that
effective competitive action and innovation are likely to encourage more CSR
activities, reputation and risk management, which in turn is expected to improve stock
prices, profits, enhance firm value and reduce return volatility. This study examines
the potential relationship between CSR (Positive CSR and Negative CSR), firm
performance, firm risk levels, and corporate reputation. It contributes toward a better
understanding of the influence of internal competitive action and innovation
mechanisms on positive and negative CSR and their substantive consequences on firm
performance. Examining 132 top automotive firms, this study uses the dynamic panel
data system Generalise Moment of Method (GMM) estimates to analyse the
relationship between positive CSR, negative CSR and firm performance (e.g.,
corporate financial performance (CFP), firm risk and corporate reputation); this study
also examined the moderating role of competitive action and innovation on the CSRFP
relationship. Based on an investigation of secondary information of 132 global
automotive firms, over the period of 2011–2017, this study found evidence supporting
the relationship between positive CSR and negative CSR and firm performance and
showed that CSR significantly impacted firm performance, with positive CSR
improving it and negative CSR harming it. Correspondingly, the outcomes indicated
that there was no guarantee of the augmentation in firm performance from positive
CSR, with firms possessing high degrees of competitive action and innovation experiencing higher firm performance. The results also suggested that higher positive
CSR score reduced uncertainties of firm risk, improved firm’s profitability and
provided investors with valuable information to assess financial assets and monitor
management practices. This was reflected as an improvement to Goodwill, Return On
Assets and Return On Equity and reduction to return volatility when the present of
competitive action and innovation. |
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