Doing Good and Doing Well. Creating Value through Corporate Social Responsibility.

Abstract

The dissertation contributes to the CSR and customer satisfaction literature by studying the short- and long-term relationships between CSR and financial performance through customer satisfaction. Chapter 2 contributes to the existing literature in three ways. First, we contribute to the literature by revealing how customers’ perceptions of firms’ CSR and innovativeness influence firms’ financial performance. Second, we replicate and extend previous findings on the effect of PCSR and PFI on customer satisfaction using a panel dataset, which enables firm-level analysis over time. Performing panel data analysis helps us obtain reliable results, as it controls for time and unobserved firm heterogeneity aspects (Wagner 2010), providing a better understanding of the influences of PCSR and PFI on performance over time (Bahadir et al. 2009). Finally, we contribute to the customer satisfaction literature by empirically demonstrating the cumulative nature of customer satisfaction. Although customer satisfaction is believed to be a consequence of customers’ previous experiences with a firm, no empirical evidence has shown this effect because of the limited existence of customer-perceived measures over time. By testing our predictions in Chapter 3, we clarify some relevant contextual effects involving products versus services and B2B versus B2C organizations. We posit that the greater ability of product firms to differentiate their offerings and stand out in the market results in a greater impact of their CSR activities on customer satisfaction and firm value. Product firms possess more innovative capabilities (Chauvin and Hirschey 1993; Damanpour 1996; Sridhar et al. 2014), greater reliability (Johnson and Nilsson 2003), and more tangible forms of differentiation than do service firms (Fornell and Johnson 1993; Johnson et al. 2002). We also note the need for greater alignment, adaptation, and relationship-specific investments in B2B contexts (Anderson and Weitz 1992; Dwyer et al. 1987; Wathne et al. 2018), which should increase the impact of CSR activities on customer satisfaction and firm value. Understanding these fundamental contextual differences is important for helping practitioners effectively engage in CSR activities according to their operational setting. In addition, in contrast to previous research, which mainly studies short-term relationships (Kang et al. 2016), we empirically demonstrate the long-term effects of CSR as a competitive advantage resource on CFP and highlight the contextual differences in the long-term horizon. Our findings also contribute to practice because financial resources and time are critically important to executives when they make strategic decisions. Recent reports indicated that some practitioners are not confident in generating financial returns by engaging in CSR (Au-Yeung 2022). However, the current dissertation shows that CSR activities generate return in the long term, which indicates that practitioners with long-term minds and goals can indeed benefit from CSR. In addition, we offer insights to managers by demonstrating the nuances of contexts. This is expected to help managers in effective strategy making.