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JMD
36,1
58
Received 18 September 2014
Revised 25 May 2015
6 April 2016
Accepted 24 October 2016
Journal of Management
Development
Vol. 36 No. 1, 2017
pp. 58-70
© Emerald Publishing Limited
0262-1711
DOI 10.1108/JMD-09-2014-0103
Should pharmaceutical
companies engage in corporate
social responsibility?
Maung Min
Department of Business, Penn State University Lehigh Valley,
Center Valley, Pennsylvania, USA
Francois Desmoulins-Lebeault
Grenoble Ecole de Management, Grenoble, France, and
Mark Esposito
Grenoble Ecole de Management, Grenoble, France and
Harvard University, Cambridge, Massachusetts, USA
Abstract
Purpose – The purpose of this paper is to investigate whether corporate social responsibility (CSR) really
adds value to corporate financial performance (CFP) in the pharmaceutical industry. Most pharmaceutical
companies currently practice CSR by taking a “triple bottom line” approach of environmental, social, and
economic strategies to manage their businesses and produce an overall positive impact.
Design/methodology/approach – A survey was developed based on professional experience, Carroll’s
construct, the study’s hypotheses, and industry studies. The survey, composed of 45 questions using a
seven-point Likert scale, was conducted among pharmaceutical professionals to evaluate whether CSR affects
performance. Responses totaling 140, including 20 companies, were coded, taking into account the
respondent’s corporate position and firm size.
Findings – Survey respondents strongly agreed that CSR adds value to CFP and should be viewed as a long-
term investment. CSR programs should be implemented regardless of company size. CSR is effective because
it invests in stakeholder management, such as with customers, government, investors, and activists, creating
positive relationships which improve reputation and profitability.
Research limitations/implications – This perception study shows the need for further quantitative
analysis of CSR and CFP metrics specific to the pharmaceutical industry.
Practical implications – CSR programs should be implemented regardless of company size, and sheer size
does not dictate whether CSR programs can be successful. This paper also sheds light on potential managerial
implications that originate from these findings that may help pharmaceutical companies manage their scarce
resources more effectively.
Social implications – In today’s competitive economic environment, where increasingly stakeholders
including investors scrutinize pharmaceutical firms’ environmental and social performance, CSR is a crucial
strategy. The findings can help corporate managers make strategic CSR decisions to optimize benefits for
their organization.
Originality/value – While numerous studies have addressed the link between CSR and corporate
performance across industries, definitive studies have not examined the pharmaceutical industry.
Keywords Responsibility, Sustainability, Corporate social responsibility, Pharmaceutical industry,
Corporate performance, Stakeholder theory
Paper type Research paper
Introduction
Our research examines whether corporate social responsibility (CSR) really adds value to
corporate performance in the pharmaceutical industry. While numerous scholars have
conducted studies on this relationship in other industries, definitive studies have not
addressed this link within the pharmaceutical industry. Concerning the impact of CSR on
performance, Beurden and Gössling (2008) state that “[…] to continue to have value for
managerial practice […] future studies should focus on segments of groups of firms […]
research in different industries may be helpful” (p. 420).
 Godfrey and Hatch (2007) likewise suggest that researchers should conduct CSR and Corporate
performance research for individual industries, and not combine data across industries as social
previous studies have done. They state that “the economic and technological diversity responsibility
between industries, and the resource and positioning differences within industries, imply
that firms, even those within the same industry, may gain unique competitive advantages
by implementing different CSRs” (p. 93). Thus, it is important for researchers to focus on
individual business sectors such as the pharmaceutical industry to examine the great 59
potential gains arising from CSR.
CSR is the manner in which companies manage their business processes to positively
impact society through economic, environmental, and social actions (IBM, 2008). Although
scholars interchange different terms, such as CSR, responsible entrepreneurship, corporate
sustainability, and corporate citizenship, CSR essentially refers to the balanced integration
of social and environmental considerations in business strategy and operations. It is about
maintaining economic success and achieving commercial advantage by building reputation
and gaining the trust of people who work with or live around the company.
According to Smith (2003), there are two schools of thought on why firms perform CSR.
One perspective purports that CSR stems from a desire to do good, which academics call the
normative case. The other view, called the business case, holds that CSR reflects enlightened
self-interest, where a firm engages in CSR purely to benefit from it. A firm’s motivation to
engage in CSR falls somewhere along this spectrum, and we evaluate in greater detail in our
paper.
Duarte (2010) and Hemingway and Maclagan (2004) discussed that managers’ personal
values are one factor that influence formulating, adopting, and implementing CSR programs
in companies. CSR has often resulted in the efforts of a few managers championing the
cause due to their personal beliefs (Duarte, 2010). Managerial perspectives on CSR policy are
crucial to its effective deployment and efficiency (Freeman, 2010). Managers’ perceptions are
important to study, for it is at the management level where such programs may succeed or
fail. If management thinks that CSR will add value to their firm, they will practice it. Using a
perception survey, we analyze this issue in greater depth for the pharmaceutical industry.

Literature review
While different conceptions of CSR have common elements, the definition continues to
evolve. Carroll (1999) has referenced 25 different conceptual definitions. Guthey and
Morsing (2014) explain that “CSR is best understood not as a clear or consistent agenda, but
rather as a forum for sensemaking, diversity of opinion, and debate over the conflicting
social norms and expectations attached to corporate activity” (p. 555). This lack of a
common definition for CSR has encouraged the likes of The Economist to call it “one of the
biggest corporate fads” for its “hard earned reputation for flakiness” (The Economist, 2012).
This broad scope of CSR definitions also exists within the pharmaceutical industry
today. However, one proxy definitional framework the pharmaceutical industry has
accepted and practices is “sustainability.” The United Nations defines sustainability as
business practices that “meet present needs without compromising the ability of future
generations to meet their needs” (WCED, 1987). Sustainability covers three pillars, namely,
environment, economic, and social. As Start-up Nation (https://startupnation.com) explains:
“Environmental Sustainability” refers to maintaining the quality and longevity of environmental
resources used by the business. This can include energy, water, waste management, and emissions.
“Economic Sustainability” includes the overall financial model and productivity of a company. The
income and expenses must provide for a financially sustainable business. “Social Responsibility”
refers to the social impact of a business. It includes ethical principles, giving back to society, health
& safety, respect for human rights, equal opportunities, fair compensation, ensuring a high quality
of life, and eliminating unethical and corrupt behavior.
JMD The term “sustainability” appears to be gaining favor over CSR, especially in the
36,1 pharmaceutical industry, as the term sustainability is more acceptable to managers (as they
desire more formally rational language) than the language of CSR, which is more normative.
This makes the language of sustainability more “CFO friendly” than CSR (Strand et al., 2015).
Pharmaceutical companies define and pledge sustainability in various manners that
illustrate the spectrum of definitions. Bristol-Myers Squibb defines sustainability as
60 “conducting our business to help patients prevail over serious diseases in a manner that
contributes to economic growth, social responsibility and a healthy environment now and in
the future” (www.bms.com/). GSK defines it as a program “to transform how we do business
to align ourselves with the natural cycle, in which we use renewable resources and convert
wastes to by-products that become inputs to other processes” (www.gsk.com/). Baxter
considers sustainability as “[…] a long-term approach to including our social, economic and
environmental responsibilities among our business priorities” (www.baxter.com/). This
concept is also shared by Novo Nordisk (www.novonordisk-us.com/), who states “[…] we
believe that a healthy economy, environment and society are fundamental to long-term
business success. This is why we build our business on the Triple Bottom Line principle,
and make significant contributions to address global challenges such as the diabetes
pandemic, climate change, natural resource constraints and imbalances of social
development and economic prosperity.”
The intent of our research is to use these three pillars of environmental, social, and
economic concerns as the definitional framework to study the relationship between CSR and
corporate performance in the pharmaceutical industry. A succinct definition that covers this
research framework is one adopted by Industry Canada:
CSR is understood to be the way firms integrate social, environmental, and economic concerns into
their values, culture, decision making, strategy, and operations in a transparent and accountable
manner and thereby establish better practices within the firm, create wealth, and improve society
(Berger et al., 2007, p. 133).

Smith (2003) states that CSR theories stem from a range of motives: from the desire to do
good (the “normative case”), to enlightened self-interest (the “business case”). A firm decides
to engage in CSR for reasons along this spectrum.
However, some scholars and practitioners have not always considered CSR an
appropriate strategy for firms to pursue. Under Friedman’s stockholder theory, “the purpose
of the firm is to maximize the welfare of the stockholders, perhaps subject to some moral or
social constraints, either because such maximization leads to the greatest good or because of
property rights” (Friedman, 1970). Managers, according to Friedman, have responsibility
only to the stockholder. After all, stockholders own shares in the firm and they have certain
rights and privileges. Managers are employees of the owners, the stockholders. Managers’
responsibility is to their owners, and to conduct business to make as much money as
possible while abiding by the basic rules of society, both legally and ethically. By including
social responsibility, Friedman argues, the manager is not acting in the interest of the
owners (i.e. stockholders). He would essentially be spending someone else’s money for
general social interest, which would reduce stockholders’ returns. Investments relating to
social activities that do not create shareholder value or that only impose a cost on the
company need to be rejected.
Key thinkers have challenged Friedman’s position. Porter and Kramer (2002) disagree
with Friedman’s argument, seeing flaws in his two implicit assumptions: social and
economic objectives are separate and distinct; and corporations provide no greater benefit
than individual contributors when they address social objectives. We also disagree with
Friedman’s notion, and accept Freeman’s concept that managers bear fiduciary
responsibility to “stakeholders,” not just to stockholders. The stakeholders are those
groups who have a stake in or claim on the firm, according to Freeman (2008). Freeman Corporate
includes as stakeholders, “suppliers, customers, employees, stockholders, and the local social
community, as well as management in its role as agent for these groups” (p. 39). Each of responsibility
these stakeholder groups has a right not to be treated as a means to an end, and they need to
participate in determining the firm’s future direction in which they have a stake.
Millon (2011) explains that the stakeholder approach to CSR “requires management to
balance shareholder and non-shareholder interests” (p. 525). He rejects strict shareholder 61
primacy – “the idea that shareholder interests should enjoy priority over those of non-
shareholders – because of the costs it can inflict on non-shareholders. […] Socially responsible
leadership therefore necessitates that management temper its pursuit of profit with regard for
such considerations” (p. 525). Millon (2011) explains the sustainability approach to CSR “as
simply the realization that the corporation’s long-run prosperity depends on the wellbeing of
its various stakeholders, including workers, suppliers, and customers.”
Porter and Kramer (2011) created a buzz with the recent introduction of the concept of
creating shared value (CSV). They define CSV as “[…] policies and operating practices that
enhance the competitiveness of a company while simultaneously advancing the economic
and social conditions in the communities in which it operates” (p. 66). Shared value creation
aims to identify and expand the connections between societal and economic progress. The
shared value model is based on the idea that corporations and society are interdependent.
A business needs a healthy, educated workforce, sustainable resources, and adept government
to compete effectively. For society to thrive, it must develop and support profitable and
competitive businesses to create income, wealth, tax revenues, and opportunities for
philanthropy. There may be nuanced differences between CSV and CSR, but both strongly
adhere to our anchor theory.
While shareholders clearly expect profit maximization and leave the fiduciary
responsibility to the pharmaceutical companies, CSR practices need to align with
corporate strategy and must also satisfy the ever growing list of stakeholders, thus adding
value to the corporation. We agree with Porter and Kramer (2006) who believe that business
and society cannot be separated.
In accordance with stakeholder theory, pharmaceutical companies proactively engage in
stakeholder management. Sanofi-Aventis (www.sanofi.us/) simply defines a stakeholder as
“any person or organization that has an interest in the company’s operations.” Their list
includes: patients (consumers), physicians/prescribers (customers), competitors and
industry, trade associations, communities, non-government organizations, academic
institutions/researchers, educators, regulatory agencies, legislators, payers, seminar and
conference organizers, suppliers, stockholders and investors, employees, candidates for
employment, and news media. This exhaustive list is not unique to Sanofi-Aventis, but
rather the norm for the major pharmaceutical companies.
To define CSR within the context of the pharmaceutical industry, we stated earlier the intent
to use the three pillars of environmental, social, and economic factors as the framework to study
the relationship between CSR and corporate performance. Stakeholder theory supports this
approach, in that it holds that a company performs its environmental and social deeds to meet
stakeholder needs and demands, thus meeting their expectations to increase economic value.
In examining the right CSR approach for the pharmaceutical industry, given its unique
challenges, decision makers must figure out the best strategies to add value and meet
stakeholders’ needs. The pharmaceutical industry is changing rapidly, with mergers and
divestitures resulting in fewer big companies. The industry faces a highly complex
stakeholder universe of patients, health professionals, scientific and patient associations, the
media, regulators, and various forms of NGOs – many with differing views of the industry.
Several general suspicions by society are that the industry overcharges for its products, that
it carries out irresponsible animal testing, and that it does not provide affordable access to
JMD its products to the world, especially to developing nations. With the imminent patent
36,1 expirations of key products and increased scrutiny on product safety, the industry is under
immense pressure to cut costs.
CSR within the pharmaceutical industry faces pressing challenges. Finegold et al. (2005)
identify these as integrating ethics and business strategy, and leading by example; shifting
from secrecy to communication and dialogue, thus offering transparency; viewing CSR as
an opportunity, not an obstacle; extending CSR to the extended stakeholder (in support of
62 stakeholder theory); and overcoming insufficient regulatory guidelines to distinguish
compliance (doing what is legal) from ethics (doing what is right).
While there are a variety of material issues for the pharmaceutical industry, some are
common across companies. For example, Bristol-Myers Squibb has worked with internal and
external stakeholders to identify the following sustainability issues as most significant for the
company: commitment to corporate governance; compliance and transparency; focus on
serious diseases with significant medical needs; enabling research and development through
protecting intellectual property rights and pricing; expanding access to medicines and health
care; compassion for patients; and conserving resources to protect the global environment.
A review of pharmaceutical companies’ CSR reports reveals goals in key common areas
that involve material issues, namely, environmental footprint reduction (greenhouse gas,
energy, water), employee safety, safe handling of unused medicines, supplier management,
material reduction, sustainable workforce, employee and community involvement, and
access to medicine.

Research hypotheses
Based on the foundational ideas from the literature review, we tested a set of hypotheses
that address practices in the pharmaceutical industry and stakeholder theory. As discussed
earlier regarding stakeholder theory, the role of management includes ensuring that in the
interest of the firm, the organization conducts CSR activities in a prioritized fashion to
ensure the proper management of various stakeholders (Freeman, 2010). We considered this
managerial aspect in developing our hypotheses:
H1. CSR contributes to corporate profitability.
As mentioned earlier, more studies have shown a positive correlation between CSR and
profitability (Beurden and Gössling, 2008). From our experience in the area of CSR, both as
pharmaceutical executives and academic researchers, H1 is worth testing. H1a and H1b are
subsections of the key H1:
H1a. The social dimension of CSR positively impacts corporate profitability.
In assessing H1a, initiatives supporting social causes in alignment with corporate strategy
will add value to the company, supporting the sustainability definition. This notion
supports stakeholder theory proponents (Freeman, 2010; Porter and Kramer, 2002) that
social and economic objectives are not separate and distinct:
H1b. The environmental dimension of CSR may not impact corporate profitability.
Environmental initiatives and programs are a pre-requisite to doing business. These are
required to fulfill compliance and regulatory requirements, and give the company its
“license to operate” (Porter and Kramer, 2006). However, these programs typically fall under
the environment, health, and safety function within the company and are deemed a cost
center. Hence, the probability of environmental factors having a positive correlation with
corporate performance is low (H1b):
H2. CSR serves as an investment for the firm and improves a company’s long-term
profitability.
Management should view CSR programs as an investment, although the return on Corporate
investment may not be immediate. Management needs to treat CSR as a capital investment social
with the understanding that the company will reap handsome returns in due time. Hillman responsibility
and Keim (2001) chose to model a lagged effect between independent and dependent
variables in assessing the relationship between CSR and CFP because they did not expect
the effect to be immediate. H2 tests this argument:
H3. Firm size does not impact the CSR relationship with corporate profitability. 63
CSR activities fall under “license to operate” (Porter and Kramer, 2006) as a pre-requisite to
do business for all big pharmaceutical companies. However, given external stakeholder
pressures (IBM, 2008), even small (annual revenue of $1 billion or less) and mid-size
pharmaceutical companies (annual revenue of $1-$10 billion) see the necessity of CSR
programs. H3 will test whether or not firm size has an impact on the relationship of CSR to
corporate performance:
H4. Pharmaceutical companies take the triple bottom line approach to addressing CSR.
Based on our review of large pharmaceutical companies from publically available
information (primarily their websites), they tend to use the triple bottom line approach to
CSR, both implicitly and explicitly (as discussed earlier). We will test companies’ views of
the triple bottom line approach using our survey instrument.

Methodology
Hemingway and Maclagan (2004) address managers’ personal values as factors that explain
how companies formulate, adopt, and implement CSR programs. They contend that a
commercial imperative is not the sole driver of CSR decision making, but when corporations
formally adopt and implement CSR, it relates to and is influenced by the personal values of
individual managers. Duarte (2010) finds that successful development of CSR cultures in
companies was the result of “championing by a few managers, due to their personal values
and beliefs.” We have seen that the managerial perspective on CSR policy is crucial to its
effective deployment and efficiency (Freeman, 2010).
Understanding managers’ subjective perceptions of these policies means understanding
the way the firm will actually interact with various stakeholders (who are in contact with the
firm’s managers and/or their employees) and the environment.
Moreover, actual measurements of dimensions such as relations with the “outside
stakeholders” (clients, suppliers, creditors, and governments), environmental management,
or employee satisfaction are very difficult to obtain and might not even be as relevant as the
perception of such matters. The little available data are mostly the self-declared values that
companies provide, often with a tendency to exaggerate or green wash. As Newell (2008)
points out, there is often a large difference between the “talk” and the “walk” (companies use
CSR as a communication ploy when they make no real effort), even if, as Christensen et al.
(2013) argue, eventually the talk could lead to the walk. The subjectivity of the
measurements seems therefore unavoidable, and management perception obtained via a
(largely anonymous) survey seems to us to be the least biased.
The sampling strategy we have deployed to collect these perception data has been
twofold. First, we identified the firms that we wanted to study, then we defined our method
to reach the type of respondents that we wanted to query.
In our research, we targeted pharmaceutical and/or pharmaceutical-related businesses
that were listed as the top 50 companies for 2009 by the magazine, Pharm Exec, as well as
smaller pharmaceutical companies (annual sales from below $1 billion to less than
$10 billion). The Pharm Exec 50 ranks the world’s largest pharmaceutical companies by
global sales of prescription drugs annually. Companies in the 2009 list include Abbott,
JMD Amgen, Astra Zeneca, Baxter International, Bayer, Bristol-Myers Squibb, Eli Lilly,
36,1 Genentech, GSK, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer, and
Sanofi-Aventis. We also considered smaller companies (under $5 billion annual sales) such
as SunPharma, The Medicines Company, and King Pharma.
In order to carry out our survey, we needed to target a specific population from these
companies. As previously discussed, we targeted members of the management for this
64 research as prior studies have indicated that they are both the “motor of CSR” and also the
targets of such policies. To sample this population, we first developed a list of pharmaceutical
professionals and executives using our network, as well as industry groups (such as
Pharmaceutical Supply Chain Initiative and Pharmaceutical Packaging Group)
to send our survey. In order to reach as many respondents as possible, we created two
files of the same survey. We sent one to pharmaceutical representatives we knew.
We encouraged them to forward the survey link to their associates. We sent another version to
an online industry group in a popular professional website. Responses were mostly blind,
although some respondents agreed to share their name and firm. We received responses from
representatives from at least 20 companies for a total of 140 responses, although some were
incomplete. We collected the survey over a two-month period (December 2011-January 2012).
We used the survey tool, Qualtrics, which we administered online. Academics have used
Qualtrics to conduct research, and it is easy to use. The Qualtrics Research Suite builds
the database and records the completed responses as they are submitted. The tool
has the functionality to aggregate the responses by questions and create Excel or
SPSS-compatible data files. We exported the responses to Microsoft Excel, where we
further coded the questions and grouped them by tested hypotheses, for ease of statistical
analysis using SPSS.
Our survey questionnaire consisted of 45 questions and a seven-unit Likert scale (1 – totally
disagree, 2 – disagree, 3 – slightly disagree, 4 – neither agree nor disagree, 5 – slightly agree,
6 – agree, and 7 – totally agree). We developed the tool based on our professional experience,
Carroll’s (1979) construct, the hypotheses to test, and industry studies.

Results
We grouped responses of 1, 2, and 3 as negative, and 5, 6, and 7 as positive. If a negative
response is 20 percent, this implies that the aggregate of 1, 2, and 3 responses totals
20 percent. Conversely, a positive response of 80 percent implies the aggregate of 5, 6, and 7
responses totals 80 percent.
Table I summarizes the responses that we collected (between 113 and 140 answers for
each individual question).
H1: for the question about whether CSR contributes to the profitability of my company,
we received 126 complete responses (of the overall 140). Of these, 74 percent of respondents
scored 5 or better, with 60 percent in the agree to totally agree categories. Only 7 percent
were in the disagree categories (3, 2, and 1). The mean value of the responses was 5.37.
We performed a one-sample t-test and compared it against a mean value of 5. It gave a
significance of 0.004. This, along with the responses on the other questions relating to H1,
allowed us to reject the null hypothesis (H0) and accept the hypothesis that CSR positively
contributes to a company’s profitability.
H1a: does the social dimension of CSR positively impact corporate profitability?
As Table I indicates, the responses were significantly above 5 and we could reject the
hypothesis that responses differed according to position.
H1b: we tested this hypothesis by asking in three ways the following: environmental
initiatives in my company are important but do not contribute to company profitability.
Responses were mixed and most were in the slightly disagree range (scale averages of 3.47,
3.82, 3.7). The average of these three questions was 3.66. In t-tests against a value of
 Percent “positive” Percent “negative” Mean scores Total mean SD ANOVA p-value
Corporate
social
H1 Between 58 and 96% From 1 to 13% 4.88-6.39 5.78 0.87-1.39 0.291 responsibility
0.000
H1a Between 79 and 96% From 1 to 7% 5.71-6.1 5.79 0.81-1.23 0.292
0.000
H1b Between 86 and 33% From 5 to 55% 3.47-5.67 4.23 1.13-1.77 0.048
0.000-0.260 65
H2 Between 79 and 92% From 0 to 4% 5.52-5.81 5.71 0.81-1.30 0.392
0.000
H3 Between 11 and 86% From 6 to 82% 2.25-5.83 4.41 1.3-1.5 0.065
0.000-0.58
H4 75% 13% 5.47 na 1.51
0.000
Notes: The table describes the responses that we obtained to the questions relating to our four hypotheses
and two sub-hypotheses. The values presented below the mean scores are the results of the t-test, comparing
these mean scores to 5. We obtained the total mean by averaging the mean scores across all questions related
to the hypothesis. The ANOVA p-value is the probability that respondents holding different positions Table I.
respond differently Summary
Source: Authors’ data of the results

4 (neutral), the significance values were 0.001, 0.258, and 0.059. The significance values
against the average score was 0.007. As a result, it is not conclusive that we can reject this
hypothesis outright.
However, 86 percent of the respondents feel that companies should be required to
perform environmental initiatives and that it is a cost of doing business. Additionally, when
asked “Reducing the environmental footprint (e.g. energy, greenhouse gas) may not improve
the profitability of my company,” 43 percent responded negatively, 40 percent positively,
and 17 percent were neutral. Hence, it is inconclusive if environmental CSR impacts
profitability.
H2: CSR serves as an investment for the firm and improves a company’s long-term
profitability. As Table I indicates, responses to the questions related to this hypothesis are
significantly positive, and ANOVA could not reject that all positions had the same view.
Therefore, we can reject the H0 and accept that CSR improves a company’s long-term
profitability.
H3: The size of a firm does not have an impact on the CSR relationship with corporate
profitability. Our position here is that regardless of firm size, CSR adds value to corporate
performance. Our first observation comes from the analysis for H1. When comparing the
mean of answers from employees of smaller companies to that of employees of larger
companies, we could not detect any significant difference.
When asked if “CSR should be a company program regardless of company size,”
86 percent of responses were positive, with only 6 percent negative, while 83 percent
disagreed with “Only large companies should engage in CSR.” Therefore, we rejected the H0.
In response to whether “CSR efforts of larger companies have greater probability than
those of smaller companies to improve company profitability,” the response was
inconclusive: 29 percent responded negatively, 35 percent positively, and 36 percent were
neutral. The mean response value was 4.08, and means testing against a score of 4 (neutral)
yielded a non-significance value of 0.076. Hence, we can infer that regardless of size, a
company undertakes a CSR program that will contribute to corporate performance.
H4: we asked whether respondents thought, “My company’s policies on profitability,
legal compliance, ethical, moral, and societal issues are not mutually exclusive,” the results
were significantly positive (see Table I). This was a proxy question for the triple bottom line
JMD definition of CSR. Also, 75 percent of respondents said the triple bottom line is the CSR
36,1 definition that their company embraced. Only 8 percent agreed their companies conduct
CSR initiatives only if there is financial benefit.
Performing an independent t-test between companies in the $10-25 billion vs the
over-$25 billion range, we found a significance value of 0.425, which means we cannot reject
the H0. This implies that statistically, the responses of survey takers from large companies
66 are similar. The same was not the case for those from the under $10 billion range, as
significance values were below 0.05.
We took the mean of three questions which comprise the components of the triple bottom
line: to all, the responses were very positive (82, 92 and 97 percent). We then ran a means test
against a value of 5; the significance value was 0.000. Hence, we can reject the H0.

Discussion
With many survey questions related to various types of stakeholders, our results have
shown positive responses to all questions about whether engaging with stakeholders results
in improved corporate performance. CSR has a positive influence in improving relationships
with customers and suppliers, government, investors, and activists (e.g. NGOs). In turn,
these positive relationships improve company profitability. Partnering with the local
communities where companies conduct business enhances company reputation.
Godfrey et al. (2009) suggest that participating in CSR activities yields insurance-like
protection to a number of firms. They found that following integrity-centered events, firms
not engaged in CSR activities lost more than those who were active in CSR. In analyzing
FDA product recalls from 1998 to 2004, Cheah et al. (2007) found that US investors punished
non-CSR active firms that performed recalls. It is another way of looking at how CSR adds
value to a firm’s performance by providing a positive insurance effect. Our survey results
also show that a better reputation, which CSR provides, reduces a firm’s risks and liabilities.
Hamel and Prahalad (1994) suggest that good labor relations may result in an
enthusiastic and effective workforce. Our survey results support the above that CSR has a
positive influence on employee relations, and that better engaged employees enhance
company profitability. Additionally, CSR has a positive influence on company reputation,
which in turn improves profitability.
Environmental initiatives and programs are critical for a firm’s operations but typically
tend to stay in the background as part of compliance requirements. Many companies go
above and beyond the regulatory requirements and meet international standards such as
ISO 14000 or OHSAS 18001. However, employees may not see a direct link between these
activities and corporate performance. This perception, perhaps, is not too dissimilar to
perceptions toward other functional groups such as quality, finance, and human resources.
Hence, it is not surprising that the response to our questions testing the hypothesis
“The environmental dimension of CSR may not impact Corporate Profitability” is, at best,
inconclusive. Responders agreed that environmental initiatives in their company are
important but do not contribute to company profitability, that environmental initiatives are
required as a cost of doing business, and that environmental initiatives are necessary to
conduct business (e.g. for compliance and reputation).
Ullman’s (1985) research suggested that firm size was a factor that affects both firm
performance and the larger CSP construct. Many other studies have identified a positive
size-CSP relationship (Gulati, 1995; Wu, 2006). They support that larger firms may have
more resources to devote to social programs and a larger asset base over which to spread
the cost of social responsibility. However, studies have also shown negative or no
relationship (Graves and Waddock, 1994), implying that larger companies may also have
various responsibilities and this may translate into pressures for financial goals at the
expense of social goals. Our survey results suggest that regardless of company size,
companies do embark on a CSR effort. Further, CSR has a positive influence on company Corporate
profitability, regardless of its size. The survey results also rejected that only large social
companies engage in CSR and have greater probability than smaller companies to improve responsibility
profitability.
Studies have shown, though, that positive corporate performance lags behind the impact
of CSR activities. Godfrey et al. (2009) illustrated that prior years’ CSR activities serve as
goodwill for these companies such that in the future, investors are more sympathetic to their 67
misfortunes (e.g. product recall), and firms who invest in CSR are impacted less than those
that did not make such investment. This finding seems reasonable, as we can view CSR as
an investment with the firm gaining returns sometime in the future. We addressed this
concept regarding whether management can view CSR as a long-term investment
(implementing CSR in my company should be seen as an investment for long-term
shareholder value creation; CSR efforts may be seen as an investment where benefits are not
reaped immediately, but in the future). Responses were favorable.
Our survey results and research also confirm that pharmaceutical companies follow the
triple bottom line approach. As discussed earlier, such companies explicitly and implicitly
have defined and practiced CSR/sustainability along those lines. Studies have shown that a
firm’s participation in CSR is “positively associated with its performance” (Godfrey et al.,
2009; Udayasankar, 2008). Beurden and Gössling (2008) find the majority of the included
studies found a positive relationship between CSP and CFP (68 percent). Our research
supports this finding as applicable to the pharmaceutical industry.
One limitation of this study is that it focused on the perceptions of pharmaceutical
company managers. In order to triangulate and further refine our findings, we intend to
compare the survey results against secondary data. We will be conducting this comparison
and intend to present the findings at future conferences and in journal articles. We want to
examine how companies measure CSR and CFP. A number of studies (Beurden and
Gössling, 2008; Maron, 2006) utilize surrogate/proxy measures for both CSR and CFP to
analyze the relationship quantitatively (Orlitzky et al., 2003; Wu, 2006), and we will draw
upon this methodology in our future study.

Conclusions
The findings of this research should serve as a useful starting point for corporate managers
to make strategic CSR decisions, and to focus their budget and resources in those areas that
generate benefit for their organizations. These findings will also give managers reasons to
shift the focus away from activities in which they may currently be engaged that may not
benefit their organizations.
Although our survey finds that environmental initiatives are inconclusive vis-à-vis
corporate performance, this does not mean a company should cease to engage in these
activities. To the contrary, it must engage in initiatives that are not only compliance and
regulatory related, but also those that provide social capital. These may include green
initiatives such as solar energy projects, community engagement, or country-level
involvement in the case of emerging markets.
Since our study suggests that CSR can add value to company performance, it is essential
that there be buy-in from senior management in order to make such a program sustainable.
CSR programs should not be limited to only large companies. As this research uncovered,
there is value in pursuing CSR programs in companies regardless of their size. However, if
company leaders do not embrace a CSR program, if it is not aligned with a company’s
strategy, or the company cannot integrate it into an employee’s daily activities, CSR will
likely not be as successful as in companies that do.
Management should also regard CSR activities as an investment where the company can
reap benefits over time, as this research revealed. Companies could analyze capital projects
JMD through a CSR lens. There is currently a debate on whether investments in environmental
36,1 and other sustainability projects should receive a “social discount.” One can view such
investments as having sufficient intangible benefits (such as goodwill, employee retention,
social capital) that meeting internal NPV rates becomes less of an imperative (www.ey.com/
US/en/Services/Specialty-Services/Climate-Change-and-Sustainability-Services/Six-growing-
trends-in-corporate-sustainability_overview).
68 The purpose of pharmaceutical companies is to develop drugs to extend and enhance
human lives. When reviewing their values deeper, it becomes more apparent that leading
pharmaceutical companies have, or strive to, adopt the stakeholder theory (e.g. Novo Nordisk’s
way as described previously). Hence, pharmaceutical companies should promote their
economic, social, and environmental contributions in discussing their value proposition to
the stakeholders.
Porter and Kramer (2006) contend that CSR has surfaced as an unavoidable priority for
business leaders around the globe (p.78). Corporate boardrooms now have debates and
discussions about CSR. Pharmaceutical companies now are making efforts to integrate CSR
into their corporate culture. Those companies whose programs are in their infancy should
become actively involved, and mature programs should strive to continuously improve.

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JMD About the authors
36,1 Dr Maung Min is the Director of Business Programs and Business Faculty at the Penn State
University, Lehigh Valley. He received his DBA from Grenoble Ecole de Management, an MBA from
Baruch College, City University of New York, and his MS in Chemical Engineering from Manhattan
College. Maung also has teaching experience at Baruch College, CUNY and Rutgers University. He was
recently a Corporate Director in Sustainability for a US-based global pharmaceutical company. Maung
has published on themes related to sustainability, environmental policy, environmental and
70 chemical engineering. Dr Maung Min is the corresponding author and can be contacted at:
maungkmin@hotmail.com
Dr Francois Desmoulins-Lebeault is an Associate Professor, Accounting, Law and Finance at
Grenoble Ecole de Management. Dr Desmoulins-Lebeault received his Doctorate from the Université
Paris-Dauphine. He is expert in financial markets, risk management, quantitative methods, investment
decision processes, behavioral finance and he has multiple articles in these areas.
Dr Mark Esposito is a Tenured Professor at the Grenoble School of Management in France. He also
teaches Business Government and Society and Economic Strategy and Competitiveness at the Harvard
University’s Division of Continuing Education. In addition, Mark serves as a Institutes Council Co-
Leader, for the Microeconomics of Competitiveness program (MOC) at the Institute of Strategy and
Competitiveness at the Harvard Business School, led by Professor Michael Porter. Mark consults in the
area of Corporate Sustainability, Economic Complexity, Circular Economy, and Competitiveness
Worldwide. He has advised, among others, the United Nations Global Compact, National Banks,
Governments, and NATO Executive Development Programs. In 2016, Professor Esposito was named
one of the emerging tomorrow’s thought leaders most likely to reinvent capitalism by Thinkers50,
the world’s premier ranking of management thinkers.

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