The Relationship between Corporate Social and Financial Performance

The Relationship between Corporate Social and Financial Performance With scholars contributing volumes of literature on the topic of corporate social performance, the relationship posted between corporate social performance (CSP) and corporate financial performance (CFP) has been known to differ greatly.Advertising We will write a custom report sample on The Relationship between Corporate Social and Financial Performance specifically for you for only $16.05 $11/page Learn More The differences have resulted to confusion in the process of identifying the contributions of CSP in determining the CFP. The differences between the two attributes have given varying results; with some studies suggesting that CSP has high correlation with CFP, while other studies reporting lower or even negative correlations between the two. A closer analysis of the correlation trends posits that research results carried in social issues in management journals, journals of business ethics among other social science journals reports higher correlations compared to studies carried in accounting, finance or economics journals. In this regard, the hypothesis of this article seeks to show that the differences in these studies have been shaped by institutional logics that affect the cognitions of researchers rather than methodological and factual reasons. In advancing his hypothesis, Orlitzky, (2011), states that research results are socially constructed and thus the social constructions are responsible for the varying scores as far as the correlations of CSP and CFP is concerned. Researchers in varying disciplines have specified institutional logics that affect the quality of the results that they post after the research findings. To unravel the contributions of the institutional logics in determination of the research findings, the article uses a meta-analysis approach whereby various inputs from varying research findings are pooled together and analyzed analytically. In the meta-analysis process, the concept of data input in the ar ticle has been given preeminence to ensure that the variance in the correlation posted does not originate from data quality. At the end of the study, Orlitzky, (2011) proves that researchers enter into a research field with a mindset shaped by the institutional logics. Therefore, the social constructs are responsible for the varying result as far as the correlations of the CSP and CFP is concerned. Researchers in financial, economic and accounting fields have approached the topic with a mind set that the social responsibility has no significant effects to the financial performance of an institution.Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More However, researchers in the business ethics and related fields approach the same topic with a mindset that explains the importance of the corporate social responsibility in the overall performance of the organization. The institutional m indsets, therefore, are responsible for the varying correlations of the concept of CSP and CFP when examined by different schools of thought. In conclusion, the acceptance of Orlitzky’s hypothesis can have tremendous effects to researchers in the field of CSP and its correlations to CFP. This is because Orlitzky, (2011), manages to prove that social constructs are responsible for the differences of the correlation figures posted by different researchers. The result can also have a significant effect to researchers as their objectivity and elimination of research bias is concerned. What Orlitzky, (2011) proves to researchers is that the concept of bias is yet to be overcome by the numerous researchers and thus the result of some of the research conducted may be in doubt. The study has also managed to show the extent to which individual inputs have on the results of a study. The results also has some implications for future research as it offers insights that may be helpful to researchers in order to minimize the effects of institutional logic in the process conducting research Reference Orlitzky, M. (2011). Institutional Logics in the Study of Organizations: The Social Construction of the Relationship between Corporate Social and Financial Performance. Business Ethics Quarterly 21 (3). Pp 409-444