Does CSR create shareholder wealth?

Due to increasing pressures on organisations to behave in socially responsible ways, corporate social responsibility (CSR) is becoming a “must have” component of corporate strategy. This is a good development for the society at large as the massive rate of industrialization in the last century has placed a heightened burden on the limited resources our planet has to offer. However, the primary responsibility of managers of corporations, particularly of the publically owned ones, is not to increase social welfare but to maximize the returns on investments of their shareholders. The same members of the society who look for social responsibility from firms are often ready to take managers to task for not delivering consistent financial growth to their investments as shareholders. This places a dilemma for managers, with the central question confronting them: Is CSR worth it from the perspective of shareholder wealth?

Saurabh Mishra is Associate Professor of Marketing and Desautels Faculty Scholar in the Desautels Faculty of Management, McGill University, Canada. His primary research interests are in understanding the financial value of firm marketing strategies. Within this area, he also has a special interest in exploring the link between corporate social responsibility and firm shareholder wealth. His research has appeared in top academic journals, including Journal of Marketing, Marketing Science, Journal of Operations Management, Journal of the Academy of Marketing Science, and Journal of Business Ethics.

Read full article: LSE Business Review