Chapter 2

Literature Review of Corporate Social

Responsibility

2.1 Introduction
The early roots of corporate social responsibility can be traced back to 1917, when
Henry Ford announced that the aim of Ford Motor company is that To do as much as
possible for everybody concerned, to make money and use it, give employment, and
send out the car where the people can use it : : : and incidentally to make money (Lee
2008, p. 54). Eighty years later, Henry Fords great-grandson, William Clay Ford Jr
emphasised that Ford company valued all stakeholders interests as well as the social
welfare of employees and shareholders, as he said that we want to find ingenious new
ways to delight consumers, provide superior returns to shareholders and make the
world a better place for us (Meredith 1999, p. 157).

From a business practice perspective, Ford was one of those companies, who
initiated social responsibility activities. From a research perspective, many
scholars believe that Bowens Social Responsibilities of the Businessman (1953)
is the first work to discuss the relationship between corporations and society
(Carroll 1979; Wartick and Cochran 1985). In this book Bowen (1953) argues that
firms need to be cognisant of business ethics to achieve long-term superior
performance. CSR initiatives are very important in the context of business ethics
(Maignan and Ferrell 2004). During the last 57 years, several findings have caught
the attention of CSR practitioners and scholars. These include studies which
suggested that CSR activities provide an insurance-like protection when
negative events happen (Godfrey et al. 2009); that CSR activities not only
influence sales growth, but also influence the employment and investment
domains (Sen et al. 2006); and that firms with higher CSR ratings may have a
sustainable competitive advantage rooted in human capital as they attract more
and better employees than firms with lower CSR ratings (Carmeli 2005; Hunt et
al. 1989; Turban and Greening 1997). Consequently, in order to pursue sustainable
development, and, achieve a good reputation in a fiercely competitive market,
more and more companies are publishing their CSR disclosures and CSR reports.
Springer-Verlag Berlin Heidelberg 2015
S. Wang, Chinese Strategic Decision-making on CSR, CSR,
Sustainability, Ethics & Governance, DOI 10.1007/978-3-662-44997-4_2

2 Literature Review of Corporate Social Responsibility

2.1.1 Previous Conceptualisation in the CSR Area

Since the 1950s, CSR and its related terms, such as corporate social responsiveness,
corporate social responses, corporate social performance, corporate citizenship, and
corporate philanthropy have been conceptualised and mainly originated from the
management area (e.g., Carroll 1979; Matten and Crane 2005; Wood 1991). Based on
previous business and management knowledge, different CSR scholars explore the
CSR theme and related notions derived from various perspectives, such as social
obligation, marketing, stakeholder-relation, integrated strategy, and leadership themes.
This section reviews the main CSR conceptual views driven by those related
management themes.

2.1.1.1 Social Obligation Driven

The first definition of CSR is suggested by Bowen (1953), as the social obligation
to pursue those policies, to make those decisions, or to follow those lines of
action which are desirable ion terms of the objectives and values of our society
(p. 6). The social obligation view of CSR is the foundation of future research in
the CSR area. Following Bowens (1953) book, Carroll (1979) identifies the CSR
pyramid, which includes four stages of CSR development: economic, legal,
ethical, and philanthropic obligations. Further, Carroll (1979) argues that these
four categories are not mutually exclusive, nor are they intended to portray a
continuum with economic concerns on one end and social concerns on the other
(p. 499). In particular, economic responsibility represents that companies are
supposed to provide goods and services that the society needs and sell them at a
profit. Legal responsibility means that companies should obey societal laws and
regulations. Ethical responsibility can be described as societal expectations of
business over and above legal requirement. Philanthropic responsibility indicates
these roles are purely voluntary, and the decision to assume them is guided only
by a businesss desire to engage in social roles not mandated, not required by law,
and not even generally expected of businesses in an ethical sense (Carroll 1979,
p. 500). Overall, this CSR pyramid embodies the four levels of social
responsibilities that society expects companies to do.

2.1.1.2 Marketing Driven

Marketing scholars started to consider CSR issues from 1960s and they only emphasised on the social obligations related to marketing functions, without thinking of other
aspects of CSR activities. The CSR-related studies in the marketing area focus on the
marketing dimensions, such as cause-related marketing (Barone et al. 2000;
Varadarajan and Menon 1988), social sponsorship (Simmons and Becker-Olsen 2006),
environmental marketing (e.g., Crouch 2006; Handelman and Arnold

2.1 Introduction

1999; Menon and Menon 1997; Zeithaml and Zeithaml 1984), communicating
with consumers concerning CSR issues (Caruana and Crane 2008), customers
response to organisational CSR behaviour (e.g., Brown and Dacin 1997; Ellen et
al. 2006; Handelman and Arnold 1999; Sen and Bhattacharya 2001), and corporate
reputation (e.g., Berens et al. 2005; Brown and Dacin 1997; Lichtenstein et al.
2004; Wagner et al. 2009).
Cause-related marketing is defined as a form of horizontal tie-in between
corporate philanthropy and sales promotion, as synonymous with corporate sponsorship of charitable causes, and as the initiation and funding of deserving causes
(Varadarajan and Menon 1988, p. 59). Meanwhile, other scholars examine how to
utilise CSR activities to create customer satisfaction, increase market value (Luo
and Bhattacharya 2006), and build up corporate brand dominance (Berens et al.
2005).
These research studies discussed above establish the relationship between CSR
and marketing management, which broadens our knowledge in both CSR and
marketing areas. However, the thinking of CSR from the marketing aspect only
emphasises the relations with one of the stakeholders, namely consumers.
Managers gradually notice that there are more social responsibility initiatives (e.g.,
employee satisfaction and environment management) and broader stakeholder
groups need to be considered.
2.1.1.3 Stakeholder-Relation Driven
Stakeholder theory is another foundation of CSR theme development. According
to Maignan and Ferrell (2004), there are two main motivations of organisational
CSR activities concerning stakeholder-relations: the first one is the instrumental
approach. As companies rely on stakeholders for their continuous support or
providing resources (Barney 1991), managers have to consider the claims and
needs from stakeholders. The other one is from the moral perspective, as
Donaldson and Preston (1995) argue that all persons or groups with legitimate
interests participating in an enterprise do so to obtain benefits and [ : : : ] there is
no prima facie priority of one set of interests or benefits over another (p. 68).
Scholars examine CSR issues from the stakeholder relation perspective,
focusing on communications with stakeholders (Basu and Palazzo 2008), the
influence of stakeholder relations on corporate sustainability (Choi and Wang
2009), CSR aware-ness among stakeholders and its relationship with corporate
financial performance, corporate investment, and employee loyalty (Sen et al.
2006). Furthermore, Mitchell et al. (1997) bridge stakeholder theory and the CSR
theme to suggest a new concept, stakeholder salience, which facilitates the
analysis of stakeholder relations in the CSR area.

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2 Literature Review of Corporate Social Responsibility

2.1.1.4 Integrated Strategy Driven

Based on the discussion of marketing and stakeholder-relation management in the
CSR area, more and more scholars value the examination of CSR issues from the
integrated strategy aspect (e.g., Baron 1995). For instance, Maignan and Ferrell
(2004) point that organisations act in a socially responsible manner when they
align their behaviours with the norms and demands embraced by their main
stakeholders (p. 6) and they illustrate a framework to analyse the antecedents and
outcomes of organisational CSR behaviour from major stakeholder perspective.
Aguilera et al. (2007) produce a figure to explain during the social change process,
the role of stakeholders, stakeholder-company relations, and how stakeholders
influence organisational strategy through the mechanisms. McWilliams and Siegel
(2011) observe that CSR which is embedded in an integrated strategy may be
labelled strategic CSR. From the resource-based theory approach, they discuss
those conditions under which strategic CSR contributes to the organisational
sustainable competitive advantage. Some scholars examine the integrated corporate activities in political context and argue that practioners need to pay more
attention to the ethical aspects of their subject, as failure to do so will weaken the
community conceptually and thereby undermine its credibility and legitimacy
(Lawton 2011, p. 8).

2.1.1.5 Leadership Driven

On the basis of current leadership styles (e.g., transformational, charismatic,
authentic, ethical, participative, servant, shared, and spiritual leadership), some
scholars attempt to incorporate CSR into leadership theory (Bass and Steidlmeier
1999; Waldman and Galvin 2008). Maak and Plesss (2006) study is one of the
first endeavours in this area. They name the leadership approach based on the
ideals of CSR as responsible leadership and define it as the art and ability
involved in building, cultivating and sustaining trustful relationships to different
stakeholders [ : : : ] to achieve a meaningful, commonly shared business vision
(p. 334). There are some arguments about the definition of the so-called
responsible leadership. For example, there is a fierce debate between Waldman
and Siegel (2008), where they argue whether the responsible leaders are economic
driven or morally driven, whether the responsible behaviours will benefit the
organisational financial performance or not. Moreover, Waldman et al. (2006)
examine the relationship between CEO leadership style with organisational CSR
values and find that the CEOs vision of CSR may impact their subordinate
managers view of CSR in their decision-making process.
Overall, the exploration of CSR starts with some scholars and practitioners who
notice that the aims of companies are not only to make profit, but also to consider
social obligations and benefits to society. Following that, this section briefly reviews
the CSR conceptualisation process from the perspectives of marketing, stakeholderrelations, integrated strategy, and leadership. Especially, the evolution of the CSR
2.1 Introduction

theme has promoted leadership theory development and has produced a new
concept, responsible leadership. The investigation of this CSR-related leadership
is at the very early stage and there are many gaps to be filled, such as the structure
and measurement of this leadership style.
Notwithstanding its long-term development, CSR theory has remained controversial and ambiguous and has not yet fully matured. In particular, continuing
disagreements have made CSR somewhat controversial. For instance, some
scholars believe that corporate social performance (CSP) is the outcome of CSR
activities (Aupperle et al. 1985) while others argue that CSP includes CSR
principles (Wood 1991). Another debate surrounds the relationship between CSP
and corporate financial performance (CFP), as some studies suggest that it is
positive (Aupperle et al. 1985; Lev et al. 2010; Waddock and Graves 1997) while
others, viewing the results of different samples and causal patterns, suggest it is
neutral (Aupperle et al. 1985; McWilliams and Siegel 2000). CSR theory is still
not clearly defined as there is no universal agreement to distinguish it from other
terms which it closely resembles, such as corporate citizenship and corporate
philanthropy. Compared to the earlier research studies of CSR, CSR theory has
made great progress in the twenty-first century (see significant developments and
pivotal articles of Sect. 2.3.1), but there is no typology or milestones to mark its
history and research agenda. Another ambiguity is embedded in the CSP-CFP link.
It is still unclear whether good CSP leads to revenue growth or if firms with higher
CFP have the capabilities to conduct more CSR activities, or if it is a virtuous
circle (Lev et al. 2010). As a result, it is timely to commence a systematic review
in the CSR area to clarify these ambiguous and controversial issues.
Until now, there have been few efforts to understand and summarise CSR
theory. Although existing reviews have their strengths, their weaknesses have
become increasingly apparent as the theory develops. Firstly, Wood (1991, 2010)
provides an explicit construct of CSP and formulates a CSP theory with more
detailed CSP measurements. The thesis advances here, however, contends that
CSP is the outcome of CSR activities and that Woods (1991, 2010) work only
explains parts of CSR theory. Secondly, Lee (2008, p. 56) elaborates on the
evolutionary path of CSR theory and suggests trends in CSR research as well as
some pivotal publications, but his review is more a historical description rather
than a scientific analysis. Thirdly, Garriga and Mel (2004) attempt to map the
CSR territory, and categorise this theory from the perspectives of instrumental,
political, integrative, and ethical theories. It can be argued that their typology is
based solely on the authors perception. Fourthly, although Lockett et al.s (2006)
work appears comprehensive, the following defects can be identified: it focuses on
CSR studies between 1992 and 2002, which only examines the adolescent
development stage (see Sect. 2.3.1); it includes tables of journal articles discussing
CSR, but does not analyse the statistics behind those tables. Although CSR is a
very important topic, the existing CSR reviews are dated or incomplete.
This literature review has three main purposes: firstly, to fill a gap in the review
of the CSR literature; secondly, to identify the milestones in CSR development
and further understand the evolution of CSR theory; thirdly, to encourage the

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2 Literature Review of Corporate Social Responsibility

development of CSR studies and practices at organisational level. As the adoption

of a CSR orientation may help organisations to achieve sustainable competitive
advantage, it is imperative that it is correctly defined and understood. In addition,
the CSR literature review proceeds in four sections. It discusses the methodology
the author adopted together with an explanation of why content analysis was
utilised to analyse the CSR literature; it presents the authors research findings and
comments on previous work, as well as attempts to outline the development of
CSR theory in management and organisation literature.

2.2 Methodology Used for the CSR Literature Review

2.2.1 Content Analysis
The author conducted a content analysis, which is a scientific and systematic
method for observing and analysing information (Budd et al. 1967). Why has the
author chosen this as a method of analysis? Although content analysis is primarily
a qualitative method of analysis, it has some advantages which allow a
quantitative element to be included using techniques such as frequency analysis.
Thus, content analysis can be considered superior to those purely qualitative
methodologies, such as literary interpretation, which are mainly based on authors
perception (Cascio and Aguinis 2008). It is particularly suited to the formulation
of a literature review in the CSR area for several reasons. To begin with, content
analysis is a replicable methodology (Cascio and Aguinis 2008). This helps to
summarise the intrinsic value of information, without the disadvantage of bias.
Second, it assesses the effects of corporate context (Kolbe and Burnett 1991), as
CSR strategy and the consequences of CSR activities have significantly different
motivations (e.g. due to different institutional, industrial, and organisational
environmental effects). Third, content analysis is highly flexible (Cascio and
Aguinis 2008), which makes it more efficient as CSR involves various fields (e.g.
marketing, human resource management, and stakeholder management) and these
are not easy to categorise unless one uses content analysis.
In addition, utilising content analysis, this CSR review overcomes weaknesses
evident in previous CSR literature reviews in the following way. Firstly, the author
selected several key words concerning CSR in order to provide a comprehensive
literature review of CSR. Secondly, based on the empirical work of content
analysis, the author examined the underlying trend of the literature on CSR
development, something which has not been done in previous studies.
2.2 Methodology Used for the CSR Literature Review

2.2.2 The Process of Journal and Article Selection

Following Laplume et al.s (2008) paper selection approach, the author used Harzings
(2011) journal quality list to select journal papers based on impact factors and only
analysed those papers from leading academic journals. These included the following
eight management journals: academy of management journal, academy of management
review, strategic management journal, administrative science quarterly, organisation
science, organisation studies, journal of management, and journal of management
studies, in addition to two marketing journals: journal of marketing and journal of the
academy of marketing science. The author also analysed the following three
managerial practice journals: Harvard business review, Sloan management review,
California management review, and four specialised journals: business & society,
business ethics quarterly, and journal of business ethics. The principal reason for the
selection is that primary CSR articles are published in the management area, and a
number of CSR articles have a close connection to marketing strategy and,
accordingly, such papers are likely to be found in marketing journals. Additionally,
those specialty journals were selected as some significant papers concerning CSR were
published in them (see Appendix A), and some seminal attempts to examine CSR
issues are published there.
In the paper selection process, the author reviewed definitions of the key term
corporate social responsibility and terms which resemble CSR, such as corporate
social performance, corporate citizenship, and corporate philanthropy. The author
selected articles with those key words in their titles, abstracts, or subject matter. A
further explanation of keywords selected is offered in the section Definition of CSR
and CSR-related Concepts. The author mainly utilised the EBSCO host search engine
to select articles. The author also searched CSR articles with the same keywords in the
social sciences citation index (SSCI) database to ensure that high citation articles in the
CSR area were selected. To be thorough, the author additionally referred to the
bibliographies of numerous reviews in the CSR area, such as the review of previous
studies regarding the linkage between CSP and CFP (Orlitzky et al. 2003) and the
review of CSP measurements (Wood 2010). The author did not select articles in the
forms of dialogues, responses, and book reviews, as those types of articles are not
always based on logical reasoning or rigorous empirical work. The final CSR sampling
database (see Appendix A) consists of 762 articles, including 110 articles from leading
academic journals, 68 articles from leading managerial journals, and 584 articles from
specialised journals.

2.2.3 Coding Process and Agreement Check

The content analysis is an important method to explore the main themes in the CSR
area. Following Laplume et al. (2008), as well as Cascio and Aguiniss (2008) ways of
classification, the author categorised the papers in the database based on themes.

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2 Literature Review of Corporate Social Responsibility

The author found that most of the papers can be categorised under five headings
which are named: corporate context, strategic management, corporate reputation,
CSP predictors, and CFP predictors. In order to provide a systematic foundation
for coding and categorising each article, the author developed a taxonomy that
includes five broad categories (i.e. the 5 headings) and 16 subcategories (see
Appendix B). Following Cascio and Aguiniss (2008) approach to improve the
reliability of content analysis taxonomy, the author attempted to map sets of
categories onto each other, regardless of their previous categorisation, in order to
challenge the existing categories. As this study is the first to produce a categorical
content analysis in the CSR area, the author cannot claim that there is no other
possible taxonomy or this classification is based on a comprehensive and
systematic codebook. However, the author is satisfied with this content analysis of
762 selected articles, especially the 110 selected articles from leading academic
journals, which makes the taxonomy sufficiently complete.
To ensure plausibility and reliability, the author performed additional checking
on the coding process. The author asked two scholars, who are knowledgeable in
the CSR field and do not know the existing categories that the author created, to
code and categorise the data again. The author then compared this categorisation
with that of these two scholars and conducted several rounds of meetings and
discussions. Although the classifications between different scholars are quite
similar, the author modified some categories after several meetings. Each of these
meetings resulted in a refinement of the taxonomy to improve interpretive validity
and inter-rater reliability for future coding. During this process, when an article
was attached to more than one category, the author chose the category with the
perceived best fit. This may result in the potential under-representation of some
areas, although there is no evidence to demonstrate this potential underrepresentation is systematic across articles (Cascio and Aguinis 2008).

2.3 Results and Discussion

2.3.1 Background,
Significant
Development, and Definitional Period
Following Bowens (1953) first suggestion about CSR, a number of subsequent
researchers helped to develop the CSR concept. However, until recently there has
been no universally accepted definition of this concept (McGee et al. 1998) (see
below Sect. 2.3.1 definitions of CSR and CSR-related concepts). Thus, CSR
theory stands out as an interesting field of studies and it encompasses a large
number of implicitly competing ideas, such as CSP (Barnett 2007; Wood 1991),
corporate citizenship (Matten and Crane 2005), and corporate philanthropy
(Godfrey 2005; Post and Waddock 1995). As all these terms describe CSR theory
from different perspectives, this article not only focuses on CSR, but also
discusses related concepts and their relationships with CSR.
2.3 Results and Discussion

2.3.1.1 The Development and Time Blocks for CSR

articles

Specialised journals

of

Based on the selected CSR articles database (see Appendix A), the author
identified trends in CSR articles. Figure 2.1 demonstrates that the number of
articles within the CSR field has been increasing, especially during the 2000s,
with a significant upward trend.
Given the increasing numbers of publications in the CSR arena, this chapter
targets articles selected from leading academic journals which undoubtedly represent the trend seen in CSR studies. An additional reason is that these articles
utilise rigorous methodologies and logical reasoning. Moreover, the author
analysed some articles from leading managerial practice journals as a complement
to the leading academic journals, as those leading managerial practice journals
provide some evidence and opinions from a practical perspective. As can be seen
in Fig. 2.1, the number of CSR articles published in the aforementioned journals
has increased rapidly since the 1970s, while the number of publications seems to
reach a peak every 10 years. Since there are no articles that can be defined as
milestones of CSR theory development, the author aggregated the articles based
on 10-year time blocks, resulting in the following time periods: (a) pre-1980s
(19491979), (b) 1980s (19801989), (c) 1990s (19901999), and (d) 2000s
(20002010). Since the first time period is the initial stage, it comprises a number
of works that offer rudimentary explanations of the concept of CSR. The author
included the articles before 1970 in the 19701979 categories. The techniques of
using 10-year time blocks and commencing with the first year of each decade may
appear arbitrary but allows demonstration of the underlying trends.

journals
Top academic journals

The

number

Top managerial practice

1949- 1975- 1980- 1985- 1990- 1995- 2000- 2005-

Fig. 2.1 Articles by journal and by year

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2 Literature Review of Corporate Social Responsibility

2.3.1.2 Significant Developments and Pivotal Articles

Roughly based on the 10-year time blocks, the author assembled the CSR articles
published during 19492010 in four stages, and named these stages as the incuba-tion
(19491979), exploration (19801989), adolescent development (19901999), and
relative maturity (20002010) stage. Several pivotal articles (see Table 2.1) were
identified in the SSCI according to their citation record. Crucial articles in the 1990s
and the 2000s time periods are cited on average of ten times per year and articles in
the 1980s are on average cited five times per year. For the articles from the 1970s and
earlier, this study found several articles that also have relatively high citation rates.

The sets of pivotal articles for each time period represent milestones in CSR
theory development. During the first time period, the incubation stage, the early
discussion about the CSR field can be found in some managerial practice journals
and book chapters. The early studies are primarily designed to increase awareness
of social and ethical principles among business people (Carroll 1979). During this
theoretical building process, there are several explorations in the CSR area: one
CSR structure is put forward by Carroll (1979), another discusses the relationship
between CSR activities and stock market performance (Alexander and Buchholz
1978), and a third suggests a method of CSR measurement (Abbott and Monsen
1979). Although at that stage, there are insufficient empirical and theoretical
studies to support a comprehensive CSR theory, the CSR research studies during
that period provide a foundation for future understanding of CSR theory.
This thesis names the second period (19801989) exploration, because it is a
continuous stage of CSR incubation. In this stage, researchers attempt to verify or
support those concepts discussed in the first period: initially, suggesting a yardstick to
monitor understandings of CSR (Tuzzolino and Armandi 1981); second, through
reviewing previous studies to verify and develop the structure of CSR and CSP (Boal
and Peery 1985; Wartick and Cochran 1985); finally, utilising Fortune magazines
corporate reputation ratings to examine the relationship between CSP and CFP
(McGuire et al. 1988). During this period, CSR scholars attempt to improve the CSR
Table 2.1 Significant development of CSR themes and its pivotal articles
Stage
Incubation
Exploration
Adolescent development

Relative maturity

2.3 Results and Discussion

concepts structure at the theoretical level and also the reliability and validity of
CSR measurements at the empirical level. During this stage, the CSR topic receive
a great deal of attention and there are 27 articles published in leading academic
journals. The 27 articles enlarge and consolidate the theoretical and empirical
foundations of CSR studies, utilising combinations of other mature theories, such
as stakeholder theory, marketing theory and the resource-based view.
The fourth period (2000present) is termed the relative maturity stage. Compared
with previous periods, CSR articles are relatively mature during the twenty-first
century. Some researchers emphasise that the analysis of firms CSR issues should be
conducted in a societal environment (Campbell 2007; Matten and Moon 2008; Scherer
and Palazzo 2007). Meanwhile, other researchers continue to show interest in the
outcomes of CSR (Hillman and Keim 2001; McWilliams and Siegel 2000). In
particular, Orlitzky et al. (2003) utilise a meta-analysis to examine 52 previous stud-ies
about the CSP-CFP link and conclude that CSP is more highly correlated with
accounting-based measurements than marketing-based instruments (see Sect. 2.3.2
CSP and CFP) in predicting CFP indicators. In the contemporary period, although
there is still no universally accepted CSR theoretical concept, the present study at least
represents an approach to the question of how to develop CSR theory. In this section,
the author has discussed the trends in CSR development, noting four sets of pivotal
articles which are considered landmarks in the evolution of CSR and using the
introduction of each pivotal article to describe the CSR development for each period.
The identification of the four stages facilitates scholars in understanding the
development process of CSR theme and highlights the important issues and arguments
in the previous research studies of CSR. Therefore, the present study strengthens the
understanding of the CSR theory evolution.

2.3.1.3 Definitions of the CSR and CSR-Related Concepts

With respect to the definition of CSR and its related concepts, the author
categorised articles that addressed the notion or construction of CSR and its
related terms into the concepts and reviews section. This contains 18 articles,
which represents approximately 18 % of the total articles from leading academic
journals. Based on those papers, Table 2.2 illustrates the main articles that discuss
CSR theory and its related terms.
Although there is no comprehensive explanation of CSR, the author has summarised this concept using the following aspects: (see Table 2.2): (a) integrative
perspective, namely, those definitions generate by a spectrum of views ranging from
stakeholder concerns to social issues. For example, some scholars believe that CSR
involves corporate activities as they relate to its perceived societal or stakeholder
obligations (Brown and Dacin 1997; Luo and Bhattacharya 2006; Sen and
Bhattacharya 2001); (b) economic perspective, namely, those researchers who believe
the aim of CSR activities is profit-maximisation, which emphasises the benefits to
shareholders and internal stakeholders. For instance, Friedman (1970) believes that the
purpose of CSR is to make as much money as possible for a firms

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2 Literature Review of Corporate Social Responsibility

Table 2.2 Summary of CSR and related concept definitions

CSR
Integrative: Brown and Dacin (1997), Carroll (1979), Davis (1973), Luo and
Bhattacharya (2006), Sen and Bhattacharya (2001), and Varadarajan and Menon (1988)
Economic: Backman (1975), Campbell (2007), and Friedman (1970)
Voluntary: Barnett (2007), Jones (1980), Mackey et al. (2007), and McWilliams and
Siegel (2000)
Public: Buchholz (1977), Sethi (1979), Smith (2003), Steiner and Richman (1971),
and Zenisek (1979)
CSP
Outcomes: Barnett (2007) and Schuler and Cording (2006)
Multi-dimensional structure: Aupperle (1991), Aupperle et al. (1985), Clarkson (1995),
Donaldson and Preston (1995), Freeman (1984), Gephart Jr (1991), Miles (1987), Turban
and Greening (1997), Wolfe and Aupperle (1991), and Wood (1991)
Corporate citizenship
Integrative: World Economic Forum (2003)
Political: Matten and Crane (2005) and Organ (1988)
Economic: Organ (1988)
Voluntary: Van Dyne et al. (1994)
Corporate philanthropy
Financial Accounting Standards Board (1993)

shareholders; (c) voluntary perspective, namely, researchers who believe that firms
should take some philanthropic actions in accordance with local laws to improve
social welfare; and (d) public perspective, these scholars argue that a CSR strategy
should be designed to fit the social system.
CSR-Related Concepts
Though some earlier studies imply that CSR is an intrinsic part of CSP (Wood 1991),
the view in this study is consistent with most CSR scholars, who contend that CSR is a
broader concept. CSP is only used to provide a description of CSR actions (Barnett
2007; Schuler and Cording 2006). The concept of CSP is perceived to be a multidimensional structure (see Table 2.2): from the perspective of outcomes, researchers
believe that CSP is a result of CSR activities. From the viewpoint of a multidimensional structure, CSP is defined as having corporate responsibilities to different
types of stakeholders (Wood 1991). Thus, CSP might represent a snapshot of a firms
CSR activities and reflect the dimensions of its CSR strategy.
Regarding corporate citizenship, the term has been introduced into CSR reports in
recent years, as more and more firms promote their positions as citizens in a global
business community (Matten and Crane 2005). With the framework of CSR, the
concept of corporate citizenship is both based on CSR and is likely to be derivative of
CSR. There are four perspectives of corporate citizenship: integrative, political,

2.3 Results and Discussion

economic, and voluntary (see Table 2.2). Matten and Crane (2005) have indicated
that corporate citizenship involves a broader view that goes beyond the current
discussion about CSR.
With respect to corporate philanthropy, the financial accounting standards board
(FASB) (1993, p. 2) defines philanthropy as an unconditional transfer of cash or other
assets to an entity or a settlement or cancellation of its liabilities in a voluntary
nonreciprocal transfer by another entity acting other than as an owner. Thus, the
apparent discrepancy between CSR and corporate philanthropy is that philanthropy
only represents a voluntary dimension of CSR. CSR differs in that it not only involves
a voluntary dimension but also includes Carrolls (1979) other three CSR dimensions
(i.e., economic, legal, and ethical dimensions) (Godfrey 2005).

In short, developments of CSP, corporate citizenship and corporate

philanthropy are underpinned by principles found in CSR theory. This relationship
can be summarised as follows: (a) CSP is an inevitable consequence of CSR; (b)
corporate citizenship is a related term of CSR in the global community; and (c)
corporate philanthropy is the top level of CSR.

2.3.2 Major Themes in CSR

Total

number

of

articles

As can be seen in Fig. 2.2, the results of the analysis (the Frequency counts of
articles based on themes for leading academic journals in Appendix C) illustrate
60 years of CSR studies, involving five broad themes. With respect to the method
of categorisation in this chapter, the author categorised the CSR articles based on
their topical areas, regardless of their publication time. As the distribution for each
over time shown in Fig. 2.2, it is obvious that based on the number of published
articles, the top five themes can be ranked as follows: concepts and reviews (see
Definition of CSR and CSR-related Concepts of Sect. 2.3.1); corporate context;
strategic management; corporate reputation; and CSP-CFP relationship. These five
themes are further explained in the following sections.

Corporate Reputation
Conception and Review

CSP-CFP link

Fig. 2.2 Dominant themes by period

CSR-related Strategy
Corporate Context

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2.3.2.1 Corporate Context

Noda and Bower (1996) noted that corporate context is a reinforcement or modification of corporate strategic initiatives. Using this as a starting point for a proper
classification of corporate context themes in CSR articles, this study examined each
article in the database and categorised them using the key word corporate context.
Then, related articles were found which focused on one of the three levels and they
were termed as follows: individual, organisation, and society (see Table 2.3).

Individual Perspective
Previous studies briefly discuss the effects of personal characteristics of top man-agers
on corporate CSR activities or CSP. For instance, Deckop et al. (2006) find that the
more a corporation used a long-term focus in CEO payment, the higher the firms CSP
is ranked. Swanson (1999) believes that CSP should be organised according to values
and suggests an ideal type of CSR responsiveness framework with value attunement.
Furthermore, Agle et al. (1999) state that there are significantly positive relationships
between stakeholder attributions, CEO values and a firms
Table 2.3 Main themes of CSR
Corporate context (study 23): Theoretical study: 6; Empirical study: 17
Individual level
Organisational level

Societal level

CSR-related strategy (study 36): Theoretical study: 14; Empirical study: 22

Risk management: Godfrey et al. (2009) (E) and Luo and Bhattacharya (2009) (E)
Environment: Menon and Menon (1997) (T) and McGee et al. (1998) (T)
Marketing: Handelman and Arnold (1999) (E), Lev et al. (2010) (E), Ellen et al. (2006)
(E), Simmons and Becker-Olsen (2006) (E), and Caruana and Crane (2008) (T)
Stakeholder relation: Choi and Wang (2009) (E), Kacperczyk (2009) (E), Sen et al. (2006)
(E), Brammer and Pavelin (2006) (E), Basu and Palazzo (2008) (T), and Barnett (2007) (T)
Corporate reputation (study 11): Theoretical study: 1; Empirical study: 10
Employees attractiveness: Carmeli (2005) (E), Hunt et al. (1989) (E), and Turban
and Greening (1997) (E)
Consumers attractiveness: Brown and Dacin (1997) (E), Sen and Bhattacharya (2001)
(E), Lichtenstein et al. (2004) (E), Berens et al. (2005) (E), and Vlachos et al. (2009) (E)
2.3 Results and Discussion

CSP. In sum, a leaders personal values shape managerial perceptions through his or
her interpretation of external information, and is reflected in a firms strategy, and thus
in overall corporate performance (Hambrick and Mason 1984). Furthermore, from the
perspective of the individual in CSR, these scholars contribute the multi-level theory in
the development of CSR theory (Klein et al. 1999).

Organisational Perspective
This level involves institutional investors and owners, which includes pension
funds, mutual funds, investment bankers, insurance companies, and investment
firms (Chaganti and Damanpour 1991). The starting point in this area is Graves
and Waddocks (1994) work, where they find that the larger the number of
institutions that hold a companys shares the more positive is the impact on the
firms CSP. Johnson and Greening (1999) analyse the effects of different types of
institutional investors on CSP and advance the idea that pension fund equity as
well as outside director representation are positively correlated with the people and
product quality dimensions of CSP. Further, they argue that top management
equity also has a positive impact on the product quality dimension, but has no
correlation with the people dimension of CSP. Furthermore, Neubaum and Zahra
(2006) state that long-term institutional ownership has a positive impact on CSP
and financial returns from CSR activities would be seen 3 years later. David et al.
(2007) articulate a perspective that shareholder proposal activism has a negative
impact on CSP and that managers are more likely to focus on the proposals put
forward by those stakeholders which are perceived to be relatively more important
to the company. Institutional investors and owners not only have interests in the
corporate financial returns, but also pay attention to strategies, activities,
relationships with other stakeholders and the corporate sustainable development.
As a result, they have a great deal of influence on corporate CSR strategy and CSP
(Holderness and Sheehan 1988; Pound 1992).

Societal Perspective
Social issues can lead to external pressures unless firms are aware of them and incorporate this into their CSR strategy. There are a number of CSR researchers who have
written articles about the societal perspective. Their studies can be categorised along
the three dimensions of: distinct countries, industries, and institutions. Maignan and
Ralston (2002) state that firms in different countries display different levels of CSR
engagement. Furthermore, Matten and Moon (2008) provide an exploration of why
CSR activities differ among countries and how firms should adapt to the local
environment. From an industrial perspective, Bhambri and Sonnenfeld (1988) compare
the insurance and forestry industries and suggest that the differences in their
institutional environments contribute to various components of the public issues
structure in a companys CSR strategy, and thus influences their CSP. Another

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2 Literature Review of Corporate Social Responsibility

example is in the retail food industry. Marcus and Anderson (2006), for instance,
note that a firms corporate image and use of green technology promotes its
reputation for social responsibility.
Regarding the institutional perspective, based on 10 years field work, Arya and
Zhang (2009) reveal that institutional reforms increasingly bring about awareness
of CSR theory and support for CSR activities, while such reforms also promote
changes in corporate social actions. In another empirical study, based on institutional theory, some scholars attempt to elaborate on the determinations (e.g. firm
size, managerial discretion, and institutional pressures) (Greening and Gray 1994;
Husted and Allen 2006), mediators (Campbell 2007), and strategic investment of
CSR (Gardberg and Fombrun 2006).
In summary, societal issues are important components that should be taken into
account by strategic decision makers. Furthermore, external social pressures and
top management commitments have significant influences on corporate ethics
programs (Weaver et al. 1999). To provide an explanation for the motivation of an
increasing level of corporate engagement in CSR activities, Aguilera et al. (2007)
suggest that corporate social behaviour is driven by instrumental, relational, and
moral motives. Furthermore, partly based on organisational justice literature,
Aguilera et al. (2007) provide an actors mechanisms to influence social change
framework to explain the different CSR judgments and how employees reciprocate
socially responsible or irresponsible behaviour.
2.3.2.2 CSR-Related Strategy
The resource-based view (RBV) is a meaningful perspective for CSR strategy
researchers and helps researchers to transfer actionable prescriptions to
practitioners (Priem and Butler 2001). There is a large number of CSR studies
primarily based on RBV (McWilliams and Siegel 2001; McWilliams et al. 2006;
Russo and Fouts 1997). RBV is used to account for the intangible assets which are
created by CSR strategy, such as good corporate image (Gardberg and Fombrun
2006), corporate reputation (Hall 1992), and customer satisfaction (Luo and
Bhattacharya 2006). Based on the analysis of CSR articles, this study noted four
perspectives of CSR-related strategy: risk management, environment management,
marketing management, and stakeholder relations management (see Table 2.3).
Risk Management
Using secondary data, Luo and Bhattacharya (2009) note that CSP can improve
shareholders value by lowering undesirable firm-idiosyncratic risk and suggest that
CSP is a type of investment, similar to advertising and R&D. In the same year,
Godfrey et al. (2009) find that CSR investment aim at the secondary stakeholder and
society will protect firms from potential risk (e.g., negative judgment and sanctions).
In addition, CSR activities concerning corporate trading partner show that these CSR
initiatives have no benefit for firm performance (Godfrey et al. 2009).
2.3 Results and Discussion

Environment Management
Recently there has been an increasing awareness of environmental regulations and
green management (McGee et al. 1998; Starkey and Crane 2003). Menon and
Menon (1997) put forward a strategic framework to evaluate the importance of the
congruence of environmental concerns, social performance goals and marketing
strategy. Furthermore, Russo and Fouts (1997) provide statistical evidence from
243 firms to demonstrate that environmental performance is positively correlated
with CFP.
Marketing Management
The starting point for CSR in the marketing field is at the very beginning of the 1970s,
when researchers argue that CSR is a way of survival (Gelb and Brien 1971). Several
years later, the concept of business ethics promotes the combination of social
responsibility and marketing strategy (Murray and Montanari 1986; Robin and
Reidenbach 1987), leading to the emergence of cause-related marketing (Varadarajan
and Menon 1988). Afterwards, studies in this area emphasise two aspects: corporate
context and consumer orientation. Insofar as corporate context is concerned, CSR
scholars suggest that there is a minimum threshold acceptance of CSR involvement in
society, below which the firms profit-maximising actions will be hindered
(Handelman and Arnold 1999). Consumers may be a significantly important
component in the corporate context, since consumers satisfaction medi-ates the
association of CSR actions with market value (Luo and Bhattacharya 2006). Later
findings show that consumers responses to a firms CSR activities is positive when
they find those actions are strategic or value driven (Ellen et al. 2006). Conse-quently,
CSR researchers have interests in questions about how a firm communicates with
consumers, how it disseminates product information, and the manner in which it builds
corporate brand dominance through CSR efforts (Berens et al. 2005; Biehal and
Sheinin 2007; Brown and Dacin 1997; Simmons and Becker-Olsen 2006).

Stakeholder Relations Management

Stakeholder management is invariably associated with a CSR programme and
corporate performance (Harrison and Freeman 1999). In addition, the stakeholder
environment determines the extent of a corporate CSR initiative (Doh and Guay 2006).
Researchers also place emphasis on communications with stakeholders (Basu and
Palazzo 2008), and some scholars indicate that CSR awareness among stake-holders
has positive effects on a firms sales income as well as an influence on the investment
and employment domains (Sen et al. 2006). In particular, Choi and Wang (2009) offer
significant evidence that high levels of stakeholder awareness facilitates corporate
ability to both sustain a superior financial performance and recover from substandard
financial performance more quickly. Furthermore, Kacperczyks (2009)

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2 Literature Review of Corporate Social Responsibility

long-term, large-scale empirical study shows that exogenous increases in takeover

protection measures cause firms to pay more attention to their community and the
natural environment.
CSR involvement is a crucial element of business strategy and CSR activities
can benefit corporate competitive advantage and sustainable development
(Werther and Chandler 2006). CSR integration as a part of corporate strategy
currently consists of the risk, environment, marketing, and stakeholder relations
management areas. The extent of a firms CSR efforts is dependent on firm size,
level of diversification, R&D, advertising, consumer conditions, labour market,
and industrial requirements (McWilliams and Siegel 2001).
2.3.2.3 Corporate Reputation
Roberts and Dowling (2002) argue that an important aspect of CSR-related strategy is
to sustain or improve corporate reputation, because a growing body of research studies
argues that a good corporate reputation has the potential to create value. An excellent
corporate reputation is a type of intangible asset, something which cannot be replicated
easily by other corporations (Roberts and Dowling 2002). Previous empirical studies
demonstrate that a good corporate reputation has a positive impact on CFP (this link
will be discussed further in the CSP-CFP relationship section). In the following
sections, the author focused on a corporations reputation and its attractiveness to
employees and consumers (see Table 2.3).

With regards to a companys attractiveness to employees, corporate reputation,

and perceived external prestige are positively correlated with employees commitment to their firms (Carmeli 2005; Hunt et al. 1989; Turban and Greening
1997). Furthermore, Hunt et al. (1989) state that organisational commitment has a
positive impact on other valuable outcomes, like employee satisfaction, employee
performance, corporate loyalty, and adaptability.
Regarding a firms attractiveness to consumers, whether CSR activities
improve consumers response or not, a firms characteristics and consumers
characteristics mediate the relationship between CSR actions and consumers
response (Sen and Bhattacharya 2001). Further, evidence suggests that the impact
of negative CSR actions may be very damaging to a company image (Vlachos et
al. 2009). In addi-tion, corporate association, which is consumers overall
perception of a company (Brown and Dacin 1997), has been shown to play a role
in consumers attitudes towards corporate products (Berens et al. 2005).
Additionally, there is a trend seen in the communication of a corporations CSR
values to their consumers that positive consumer attitudes contributes to sales of a
firms products (Lichtenstein et al. 2004; Wagner et al. 2009).
Based on the discussion in this section, the following conclusion can be drawn.
Corporate reputation is an intangible asset of firms because it promotes corporate
performance and marketing returns through value creation. The authors study
contends that corporate reputation deserves more attention in future studies
because it offers a unique competitive advantage for firms.
2.3 Results and Discussion

2.3.2.4 CSP and CFP

The author noted earlier that ranking corporate reputation is an effective approach to
measure CSR outcomes. Similarly, some systematic measurements of CSP dis-cussed
in this section indicate the results of CSR actions. There is an ongoing debate about the
linkage between CSP and CFP as theoretical and empirical studies support a number of
positions that are often contradictory (Aupperle et al. 1985; Barnett and Salomon
2006; Cochran and Wood 1984; Godfrey 2005; Hillman and Keim 2001; McWilliams
and Siegel 2000; Russo and Fouts 1997; Waddock and Graves 1997). To summarise
the conclusions reached by previous studies and reveal the underlying link between
CSP and CFP, Orlitzky et al. (2003) conduct a meta-analysis of 52 studies and
conclude that CSP has a positive relationship with CFP across all industries and within
all corporate contexts (Margolis and Walsh 2003). Regarding measurements, Orlitzky
et al. (2003) argue that the correlation between CSP and CFP is more obvious if
accounting-based firm performance data is utilised, rather than marketing-based firm
performance data. Further, Orlitzky et al. state (2003) that corporate reputation is more
likely to correlate with CFP than other measures of CSP. However, Barnett and
Salomon (2006) caution that Orlitzky et al.s (2003) statement is only based on a
compilation of existing evidence, and thus cannot yield persuasive conclusions, since
those previous works are flawed in various ways. Furthermore, Peloza (2009)
summarises previous studies concerning CSP and CFP relationship and explores the
mediation process between CSP and CFP, which has been overlooked by other
scholars. In Pelozas (2009) review, he examines 159 studies in the CSP-CFP link area
and proposes a figure of stages of financial impact from corporate social
performance to illustrate the manner in which CSP influences CFP. In their field
study, Barnett and Salomon (2006) develop the concept of social screening, which is
used by social responsible investing managers to measure the level of companys CSP.
Based on their analysis using social screening, they indicate that at the early stage,
financial returns declined initially, but there is a rebound when the firm improves its
level of social screening (Barnett and Salomon 2006). Subsequently, Brammer and
Millington (2008) conduct an investigation into the CSP-CFP link and conclude that it
is curvilinear, that firms with unusually high or low CSP may have a higher CFP, but
firms with unusually low CSP only promise short-term financial returns, while firms
with unusually high CSP promote more long-term financial returns. Recent studies of
the U.S. corporations show that charitable contributions stimulate revenue growth,
especially after controlling for sales growth (Lev et al. 2010). Overall, despite all the
attention paid to the link between CSP and CFP, the nature of this linkage is still not
universally accepted and remains contested.
Another fierce debate is about the causal link between CSP and CFP: Orlitzky et al.
(2003) state that CSP and CFP are more likely to be mutually influenced by each other,
because firms with good CFP can afford more CSR activities, which lead to higher
CSP. Meanwhile, good CSP helps companies achieve better financial returns. Although
Orlitzky et al.s (2003) data show that a virtuous cycle with quick cycle times or
concurrent bidirectionality (p. 417) occurs, Barnett and

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Salomon (2006) argue that this compilation of data does not represent a definitive
conclusion. Lev et al.s (2009) empirical data demonstrate that the growth of CFP
has a significant association with future charitable contributions. Though a causal
relationship is proposed by Lev et al. (2010), there are no empirical measurements
that strongly support this causality, which means this is still a contested topic for
future research.
Methodologies of CSP and CFP are vital instruments in evaluating the CSP-CFP
link. Based on CSP construction, CSP measurements can be classified in the following
way (Orlitzky et al. 2003): (a) CSP reputation indexes, such as the Fortune magazine
ratings and the Moskowitz list (Cochran and Wood 1984), (b) social judgments, which
is a CSR management assessment of observable outcomes such as the one used by the
Council on Economic Priorities (CEP) (Fogler and Nutt 1975) and Kinder, Lydenberg,
Domini (KLD) (Barnett and Salomon 2006; Graves and Waddock 1994; McWilliams
and Siegel 2000; Turban and Greening 1997; Waddock and Graves 1997), (c) leaders
CSR principles and values, such as Aupperles forced-choice survey (Aupperle et al.
1985), as well as some other scholars individual academic surveys (Hansen and
Wernerfelt 1989; Reimann 1975), and (d) CSP disclosures, like the social involvement
disclosure scale (Abbott and Monsen 1979). Using the summary by Orlitzky et al.
(2003), these CFP measurements can be classified as market-based measures (e.g.,
share price appreciation) (Alexander and Buchholz 1978; Cochran and Wood 1984),
accounting-based measures (i.e., return on assets, return on equity, and earnings per
share) (Abbott and Monsen 1979; Aupperle et al. 1985; Barnett and Salomon 2006;
Fogler and Nutt 1975; Graves and Waddock 1994; Hansen and Wernerfelt 1989;
McWilliams and Siegel 2000; Russo and Fouts 1997; Turban and Greening 1997;
Waddock and Graves 1997), and managers perceptions of CFP (e.g., managers
perception their firms financial position) (Reimann 1975). The author compared these
measurements of CSP (see Fig. 2.3) and CFP (see Fig. 2.4) used in the database of
articles and found that the measurement of social judgments applies to a majority of
them (55 % of the total articles which discussed the relationship between CSP and
CFP). The other types of perception measurement used in this article are leaders CSR
principles and values (22 %), CSP reputation indices (17 %), and CSP disclosures (6
%). Within the CFP measures dimension, accounting-based measures are the most
prevalent (75 %), while market-based measures (20 %) and managerial perceptions
measures (5 %) are the other most frequently used CFP measures.

There is a growing body of research interest in the linkage between CSP and
CFP which emphasises the different effective factors. For instance, building a
CSP-CFP model which examines consumers purchase behaviour (Schuler and
Cording 2006), investor preferences (Mackey et al. 2007), and corporate
responsiveness to employees (De la Cruz Deniz-Deniz and Saa-Perez 2003). There
are a large number of studies concerning the CSP-CFP link (20 % of the total
number), and that research reflects the fact that the pursuit of a high CFP is a vital
motivation for firms CSR participation.
2.3 Results and Discussion

Fig. 2.3

Corporate social

performance measures

Fig. 2.4

Corporate financial

performance measures

2.3.2.5 Questions for Future Study

In this final section, the author summarises some of the representative questions
for future conceptual, empirical and methodological research study. Generally
speak-ing, future studies should continue to explore the underlying motivations for
CSR participation (Ruf et al. 1998) and explain how to communicate with
stakeholders in order to achieve a better corporate image (Maignan and Ferrell
2004). Previous research studies put forward questions as follows: in a corporate
context, to what extent does that context influence a firms CSR involvement
(Matten and Moon 2008) and how should firms adapt to social changes (Aguilera
et al. 2007). Second, with respect to the CSR-related strategy dimension, the
discourse about current CSR concerns can help to develop the CSR-based
leadership concept (Basu and Palazzo 2008) and should consider what a good
CSR strategy is (Handelman and Arnold 1999) as well as how this can enhance a
firms sustainable competitive advantage (Lev et al. 2010). Also in relation to
corporate reputation, how can firms influence consumers response (Berens et al.
2005) and manage their attractiveness to employees? Finally, the association

between CSP and CFP needs to be further validated and the causal link between
the two fundamental elements should continue as an important discussion topic.

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2.4 Summary
To sum up, this chapter utilises 762 selected CSR articles from published studies to
evaluate the trends in CSR theory development. In particular it analyses 110 articles
from leading academic journals to further investigate the variables, constructs, and
relationships within CSR theory. Based on these selected papers, the author attempts to
denote the milestones in CSR theory development by singling out pivotal articles
based on their average citations per year. Furthermore, the author describes the CSR
evolution by analysing the major themes (e.g. concepts and reviews and the CSP-CFP
link). Finally, the author suggested that it is crucial to examine CSR-related strategy at
the individual level of the executive, and that there is a lack of research in this area.
Hence, the current study attempts to fill this void. The next chapter thoroughly
discusses the CSR-related SDM process at the individual level and proposes the
development of a range of hypotheses.

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