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A systematic review of the business case for corporate social responsibility

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Article  in  Corporate Social Responsibility and Environmental Management · September 2019

DOI: 10.1002/csr.1838

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Received: 8 February 2019 Revised: 12 July 2019 Accepted: 29 July 2019
DOI: 10.1002/csr.1838

REVIEW ARTICLE

A systematic review of the business case for corporate social

responsibility and firm performance

Yusheng Kong1 | Alex Antwi‐Adjei1 | Jonas Bawuah1,2

1
School of Finance and Economics, Jiangsu
University, Zhenjiang, China Abstract
2
School of Business, Kumasi Technical The outcome of existing studies on the influence of corporate social responsibility
University, Ghana
(CSR) initiatives on firm performance remains inconclusive though several studies to
Correspondence amplify the impact of CSR activities are well documented. We conducted an exten-
Alex Antwi‐Adjei, School of Finance and
sive review to detect if there are conceivable methodological errors, societal perfor-
Economics, Jiangsu University, Zhenjiang
212013, China. mance, and corporate performance. The analysis reveals a clearer understanding of
Email: 5103170227@stmail.ujs.edu.cn
the relationship between business performance and CSR effect. Our results attest
Funding information to the inconclusiveness of CSR and firm performance shown by other scholars. An
National Natural Science Foundation of China,
objective selection criterion was used in selecting the papers reviewed as a result
Grant/Award Number: 71371087
of the inconsistencies associated with the methodologies of some previous studies.
These inconsistencies can actually affect how firms can really internalize CSR activi-
ties so as to be able to take advantage of it. The authors also recommend future stud-
ies on the study of business case for CSR and its determinants.

K E Y W OR D S

business case, CSR, literature review, social performance

1 | I N T RO D U CT I O N of CSR concepts of corporations without specific directives. The study

The reason for the continuous evolution and the significance of corpo-
rate social responsibility (CSR) is due to the fact that it cuts across all
social sciences and its importance can never be underestimated
(Claire, 2017; Heald, 2018). Louche and Idowu (2017) posit that CSR
has gone through a step‐by‐step rationalization over decades, and this
can be divided into two main reorganizations. These two main divi-
sions can be viewed from an analytical concept and theoretical orien-
tation. The analysis of CSR has moved to examining the impact CSR
on its financial importance to an organization instead of discussing
its impact on the wider society. The first aspect has also had effect
on the theoretical aspect of CSR in the sense that it has caused
researchers to also move from an overtly routine and ethics‐oriented
research to an equivocal routine and performance‐oriented analysis
(Golob et al., 2017). According to Campa and Zijlmans (2019), litera-
ture have shown how CSR activities in corporate institutions in mod-
ern times has shifted to supporting clear verifiable data and
communication (CSR activities or agenda) unlike the general agenda
of the relationship between corporate financial performance (CFP) and
corporate social performance (CSP) is as a result of the reorganization
of CSR, as these attributes explain the agenda behind CSR. Vukusic
and Peronja (2018) posited that though several studies have been
undertaken to understand the relationship between financial perfor-
mance and societal responsive agendas, there is still an inconclusive
definition or opinion on CSR programs. Arevalo and Aravind (2017)
argued that a conclusive outcome has not been achieved while study-
ing the link between CSR and turnover due to the error associated
with such studies. However, they accepted the fact on how such stud-
ies helps organizations in renewing their best practices, ethics, and
sustainable output (production). Pedersen and Neergaard (2016) also
talked about how empirical inconsistencies through research method-
ology have also culminated in CSR inconclusiveness. Literature in
recent times have come to explain the relationship among business,
society, and the changing trends in CSR (Jamali, Karam, & Blowfield,
2017). According to the argument of (Hawn & Ioannou, 2016), the
changing dynamism in CSR is not adequately explored. It is as a result

Corp Soc Resp Env Ma. 2019;1–11. wileyonlinelibrary.com/journal/csr © 2019 John Wiley & Sons, Ltd and ERP Environment 1
2 KONG
of these inadequacies that this author hopes to introduce/contribute
new methodological approach in defining CSR. The new approach
was arrived at after reviewing other scholarly papers on both CSR
and determinants of CSR. This was made possible after the methodol-
ogies used in measuring CSR and firm performance were scrutinized.
For researcher to achieve credible outcomes on CSR, its concept must
be understood.
The next thing the author looks at is the theoretical background of
CSR (the business case of CSR). The second part of this study will look
at the systematic review of CSR methodologies. The final aspect will
involve discussions and conclusion. The shortcomings of the study as
well as recommendations will be made available for future studies.
1.1 | Theoretical background of the business
justification for CSR
Several corporate institutions have undertaken responsible initiatives
for the betterment of the wider society, though there were no legal
requirements placed on them (Carroll, 2016). Carroll (2016) stated that
corporate philanthropy was how CSR was known or seen in the early
development of CSP. Kholis, Fatma, Maksum, and Bukit (2016) and
observed that early definitions of CSR were known as CSP in the
sense that its measurement were based on the outcomes of the phil-
anthropic activity. The model of Sharif, Mir, Qureshi, and Yaseen
(2017) posited CSR as an aspect of CSP in the sense that they came
up with two dimensions and defined institutional societal activities
as actions that goes outside legal requirements and economic out-
comes. Issues tied to CSR but are bound to change among industries
as the first dimension are listed, whereas the second classification
has to do with the classification of the philosophy of outcomes (also
termed as social responsive; Van Beurden & Gössling, 2008). The
1970s was seen as the decade in which CSR really caught attention
(KALVA, 2016). The outlining of an organization's policies, programs,
and the processes of a firm's societal activities in line with social
responsibility is seen as CSP (Andriof & Waddock, 2017). Though
the 1980s experienced a somewhat closer economic and organiza-
tional interest towards social activities, not much could be done
because there was not any frame work or theoretical mechanisms
for CSR movement (Tsoi, 2010). According to Crane, Matten, and
Spence (2019), CSR activities gained much needed recognition in the
1990s, in the sense that organizations saw the need to add it to their
business strategy as way of gaining market recognition, and this has
become more known as the development of positive association
between firm performance and CSR (Lee, 2008; Orlitzky, Schmidt, &
Rynes, 2003). An empirical review of 127 papers by Margolis and
Walsh (2003) suggested a positive link between financial performance
and societal activities. Similarly, Van Beurden and Gössling (2008)
argued in favor of CSR financial performance because their study
showed a 68% positivity in support of CSR but had only 6% of their
review showing negativity towards CSR and organizational perfor-
mance. Nevertheless, many empirical studies on the business case
for CSR have shown drawbacks that can affect results (Cui, Ding,
ET AL.
Liu, & Wu, 2018). Still, CSP activities do have evaluation difficulties,
though the model of Cui et al. (2018) on CSR showed effective rela-
tionship between CSP and performance when measured (Maas,
2018). Epstein (2018) posited that its quite challenging to measure
CSR activities of corporations, especially when it comes to analyzing
issues related to behaviors. Currently, there is a request for the devel-
opment of a multidimensional approach for the purpose of measuring
social performance (El Akremi, Gond, Swaen, De Roeck, & Igalens,
2018; Schneider, Zollo, & Manocha, 2010), and this is a result of sev-
eral authors believe that CSR is a multidimensional act (Rasche,
Morsing, Moon, & Moon, 2017). CSR programs encompass voluntary
partnership on the environment, marketing activities to protect the
environment, promoting basic welfare to mitigating environmental
effects of industrial equipment and method of production, and the
development of green sourcing in procurement for environmental
benefit and sanitation (Chaudhri, 2016). Business organizations have
multiple societal initiatives to choose from because there is not a com-
plete single guide for CSR (Sethi, Martell, & Demir, 2017). Though the
variety of CSR indicators makes measuring CSR initiatives a bit diffi-
cult in relation to financial performance, its multidimensional nature
makes it even easier to facilitate a comprehensive (factual and percep-
tual) evaluation on CSR outcomes (Crane et al., 2019). Margolis and
Walsh (2003) study on CSR showed that financial performance can
be measured in seventy different forms: Accounting measures have
been used on 49 different times, five measured mix accounting and
market indicators, market can be measured in 12 different forms,
and the other four measured the outcomes of performance. It must
also be mentioned that other authors have also questioned the meth-
odologies used by some authors in arriving at the relationship firm
performance and CSR (Rawhouser, Cummings, & Newbert, 2019).
Some models and methods used can be influenced by the varied fac-
tors that impact on relationship between CFP and CSR performance.
The identification of these effects is quite difficult as it is dependent
on a given CSR situation, company, or industry‐specific and plant‐spe-
cific features (Sethi, Rovenpor, & Demir, 2017). However, these fea-
tures are the same factors that determine drive and implementation
of CSR in some corporations. Advancing future works in CSR as a busi-
ness strategy through the systematic review and also to develop a
deeper understanding into CSR initiatives is the aim of this study.
2 | M E TH OD O LO GY
Over the period, many researches/reviews have been done in advanc-
ing CSR as a business case. Whereas some applied different quantita-
tive methods on the basis of the data available Maqbool and Zameer
(2018), others also analyzed theirs with qualitative methods (Kraus,
Ribeiro‐Soriano, & Schüssler, 2018; White, Nielsen, & Valentini,
2017; Wolniak & Hąbek, 2016). Q. Wang, Dou, and Jia (2016) are
one of the few to have used a statistical method in achieving correct
results when a further examination of a prior empirical studies was
crosschecked (sampling and measurement errors were some of the
defects found); meta‐analysis can also be used in measuring CSR
KONG ET AL.
activities. By using these methods, many authors have been able to
measure the relationship between CSP and corporate financial perfor-
mance. Modelling and measurement errors that affect the business
strategy of CSR has been proven (Khan, 2018). In the works of Aras,
Tezcan, and Kutlu Furtuna (2018), they proved how a multidimen-
sional method can be applied correctly in analyzing CSP. Factors
influencing the association between CFP and CSP have also been
made known (Q. Wang et al., 2016).
The aim of this study is to fill the void in CSR through systematic
review by searching for modeling and measurement errors, CSR deter-
minants, and exigency factors in order to be able to build business
strategy on CSR. A commonly applied techniques used in the social sci-
ences will be used systematically in reviewing existing literature. Again,
an adapted but improved technique has also been developed in
reviewing selected papers. A typical example of a modified technique
is the one developed by Alvarado‐Herrera, Bigne, Aldas‐Manzano,
and Curras‐Perez (2017) and Hart (2018) and then integrated with that
of Fink (2019) as applied on selected articles. Besides the one men-
tioned earlier on, there is also a resultant method that gives more accu-
rate outcomes though its similar to others used previously. This review
will involve a systematic and explicit methodology. First, identified pri-
mary keywords and strings will be searched in Emerald, JSTOR, Web of
Science, Business Source Complete (EBSCOhost), and SciVerse data-
bases (Scopus and ScienceDirect) for collecting relevant data on CSR
activities. To ensure relevance, the authors explicitly chose primary
keywords, sequence (i.e., CSR, or “corporate social responsibility,” or
“business ethics”), and abstracts. A total of 14,000 were selected
because only accepted peer‐reviewed journals and with similar pur-
pose were chosen. The next phase involved searching further to iden-
tify articles with business case on CSR—constricted view and syncretic
model—through which a string of keywords is applied. “Business case”
and “competitive advantage” are the two strings of words searched.
Again, “profitability” and “performance” are the two keywords
searched within abstracts or as a topic (for the Science database
Web) by using “OR” as a logical operator.
Of the 14,000 articles that were initially realized, only 2,350 articles
became part of the sample after strictly using the keywords and strings
in the second phase of the computer search. The third computer
search, which happens to be the last search, was strictly used to test
the relationship between firm performance and social responsibility
performance. After the five truncating keywords—empiric*, evidence*,
result*, test*, and investigate*—were searched for within the abstracts
and as topics, the sample was further reduced to 1,390 papers.
The authors again manually scanned all the remaining items just to
prune irrelevant articles out. Duplicated and other articles such as
macroeconomic were some of the pruned documents. However, of
the 533 papers that was left, only 454 were accessible. The authors
had to read all the 454 abstracts before arriving at empirical papers
that analyzed business case for CSR through both quantitative and
qualitative methods. The remaining papers were grouped into 10 clus-
ters after a further screening. The groupings were objective centered.
Papers that spoke about the relationship between societal initia-
tives and general firm performance were summed under business case
3
for CSR; for “determinants of CSR,” the categorization was based on
papers on factors that influence/drive CSR; CSR models contain arti-
cles that show best practices for integrating CSR activities by firm,
with positive returns for the latter; CSR perception and awareness
cover all studies on the perception of CSR by customers and civil soci-
ety representatives and for both managers and board directors; con-
ceptual frameworks have to do with articles that want to introduce
new perspective in CSR studies. Disclosure—papers that analyze social
or sustainability or the disclosure level of firms. CSP measurement—
articles on different methods to assess CSR performance. Descrip-
tive—papers that describe the context of CSR, such as country, region,
and industry. Literature review—articles that are written on specific
subset on CSR business case (cover papers are quite less systematic
analysis on the CSR literature, and they are made up of both narrative
contributions and quantitative analysis).
Subsequently, the authors first scanned business case for CSR and
determinants of CSR for the purpose of ensuring substantive and
empirical relevance and also to ensure an in‐depth study. The cluster
for business case tested the association between firm performance
and CSP, which used both quantitative and qualitative methods. Of
the studies undertaken, 25 of them did use financial indicators, rather,
a qualitative construct that relates with noneconomic results of orga-
nizations. These papers were discarded by the authors because these
did not form part of the research area. The business case cluster of
articles was purposely analyzed to enable crosschecking with the
results of other related studies. Of the 51 papers, 34 were on business
case for CSR and the remaining 17 that represented determinants of
CSR were again discarded because their abstracts were not relevant
to the goals of this very research. One hundred seventy‐eight papers
became the final sample that was analyzed. This very group of articles
was further divided into three clusters, namely, the batch that only
examined the narrow view of business case for CSR (the study of
the relationship between CSR and financial performance). The second
category is for articles on financial performance as a precursor for
CSR. CSR influence on both financial and nonfinancial results forms
the third cluster of papers, and this happens to give a broader view
on business case for CSR. The contents of these papers were further
examined through two unique matrices. Research objectives, research
questions, hypotheses, methodology, control variables, country, indus-
try, CSP measures, financial and nonfinancial performance measures,
achieved summary results, limitations, and recommendations for
future research were the areas analyzed for business case for CSR.
For the second matrix on the determinants of CSR, the authors con-
sidered papers on factors that drive CSR implementation of corpora-
tions. As a result, determinants of CSR were classified and examined
by their origin. Codes and strings were used to determine the two
matrices. Words such as “defined” or “undetected” were used by the
authors to denote research questions and hypotheses. Because CSR
adversely affects a firm's performance, codes were used in denoting
it because results of codes do not include negative outcomes and
due to the fact that no selected study provides a complete negative
outcome. In reality, no study provides a definite dimension, because
the same study will provide both negative and positive dimensions
4 KONG
at the same time. As a result, outcomes have been termed as inconclu-
sive results (partially positive and negative).
3 | RESULTS AND DISCUSSION
3.1 | Business case analysis for CSR
The initial examination was to compare articles on the business case
for CSR with earlier publications so as to ensure consistency. Only
few articles were reviewed after explicitly analyzing only the empirical
papers. Particularly, some of the reviewed literature were found to
lack systematic methodology as they were mainly narrative, though
they had made valuable addition to theory (Aras et al., 2018; Campa
& Zijlmans, 2019; Carroll, 2016; Epstein, 2018; Fink, 2019).
As such, there will be an integration of two systematic reviews
with Margolis and Walsh's (2003) extensive study on business case
for CSR. One hundred twenty‐seven articles (between 1972 and
2002) were empirically analyzed by the latter, which tested the asso-
ciation between societal responsibility of corporations and their finan-
cial performance (Alvarado‐Herrera et al., 2017). Whereas Orlitzky
et al. (2003) reviewed 62 papers, Van Beurden and Gössling (2008)
also investigated 34 articles published after 1990. Of the 127 articles
worked on, 21 of them were analyzed by Margolis and Walsh in the
area of business case for CSR and financial performance was
discarded. Respectively, 49 and 16 papers reviewed by Orlitzky
et al. (2003) and Van Beurden and Gössling (2008) were also
discarded due to the fact that they were already part of the works
of Margolis and Walsh work (2003). As such, 13 papers were added
to the sample of 127 articles. The 13 papers also showed that four
papers represented different interpretation, though the remaining
nine showed the same outcome. Two of the papers that were
reviewed by Van Beurden and Gössling (2008) were indifferent. Thus,
their work neither showed a mixed cluster nor partial findings. Even
though Chen, Lin, Tian, and Yang (2017) and Chomvilailuk and
Butcher (2016) found a positive association between CSR and perfor-
mance, the study of the former demonstrated that through customer
satisfaction and returns as a mediator, CSR influences the perfor-
mance of firms moderately. It means that an organization's market
value in relation to CSR, either positive or negative, is dependent on
an institution's ability towards the society. As such, it can be said that
the partial outcome for business case on CSR in terms of performance
can be said to be moderated by a manager's ability towards CSR and
customer satisfaction.
Societal‐related activities are known to increase the financial per-
formance of organizations, as compared with corporate relations
towards employees (Zhu, Liu, & Lai, K.‐h., 2016). Different aspects of
CSR initiatives give different firm performance (K. Y. Lo & Kwan,
2017). Reviews by Bashtovaya (2014) and Pérez and Rodriguez del
Bosque (2016) have also shown indifference in findings of CSR and
financial performance (Tingchi Liu et al., 2014). Bashtovaya and Pérez
et al. actually noted the marginal significance of CSR in terms of finan-
cial performance (it was moderated with asset age and industry‐
ET AL.
specific control groups). Katsikeas, Morgan, Leonidou, and Hult
(2016) also claimed that prior financial performance by firms is a good
predictor of societal performance initiative than expecting subsequent
performance, which stands to mean that firm performance and CSR
relationship have statistical significance. Over 60% of the work stud-
ied for this research had already been used by Beurden and Gössling
in their study.
Having selected 96 papers, it came to light that 34% of the litera-
ture showed the existence of positive relationship. Whereas almost
34% of the articles depicted partial influence of CSR initiatives, 38%
or more papers also showed no significant relationship with corporate
performance. This goes to prove that the business case for CSR is
slightly demonstratable, though no negative impact of SCR has not
been found yet. Even if the latter exist, it is joined with some level
of positivity and this further supports the works of Katsikeas et al.
(2016). Of studies undertaken previously, 53% have all raised limita-
tion concerns with methodologies, which ends up impacting on the
final outcomes of studies.
Of the many studies undertaken, 80% of these papers are known
to have equation or regression models (econometric models). Linear
programming or data envelopment analysis was used by both S. F.
Lo (2010) and Bowlin (1998). Researchers such as Kraus et al. (2018)
are also noted to have applied fuzzy logic mathematical models as well
as artificial neural networks. Also, about 20% of literature have mea-
sured financial performance of firms by comparing both socially
responsible initiatives and irresponsible ones. Data used by these
studies (three quarters of studies) as variables are known to have
come from secondary sources, and these data are collected through
qualitative surveys. Much attention for the authors of this research
was based on articles that applied econometric models. About 88%
of articles are also known to regression (econometric model) and a
10% structural equation model and just 1% stochastic model. About
30% of authors or more fail to state the type of regression they apply
in their studies. However, 27% of authors stated that they used ordi-
nary least square. A regression model is advised for testing causality,
for testing the relationship between dependent and independent var-
iables, and for checking relative direction for its ability in revealing
problems in relation to statistical significance and model specification.
Model specification refers to the verification of hypothesis underlying
an explanatory variable and the residuals of regression. Multiple
regression model can also be used for complex issues—where there
are several independent variables to be tested.
It can also be used to test the normality, autocorrelation,
multicollinearity, and lastly, the significance of parameters and homo-
scedasticity of the regression residuals (errors) because it enables
researchers to verify the mathematical importance of econometric
model. In spite of the above, less than 50% of authors made use of
most of the regression model mentioned, though seven studies are
known to have used all the above‐mentioned regression models.
McWilliams and Siegel (2000) noted that for a type of regression
being used to be mentioned is also dependent on the relationship
being measured and the control variables being applied. Again, one
fourth of papers are known to be bias against the influence of CSR
KONG ET AL.
initiatives. In order to evaluate CSP, authors have used different var-
iables such as social responsibility (Oosterhuis, 2007), pollution
(Nwankwo, 2016), third‐party social and environmental assessment
(Elad, 2015), and the level of corporate voluntary disclosure (Font,
Walmsley, Cogotti, McCombes, & Häusler, 2012). Particularly, CSR
indexes and its attendant ranking lists are thought to be the most
applied for CSP measures (Anderson, 2019). Anderson (2019) further
enumerated quite a number of aspects that relate to CSR and envi-
ronmental management and also indicated both direct and indirect
benefits of CSP Kullback–Leibler divergence (KLD). Some scholars
have also criticized the use of the KLD‐based methods, which
involves giving the same weighted binary point to different CSR
activities that may have different levels of influences over different
industries or markets (Arevalo & Aravind, 2017). As a matter of fact,
different CSR activities have different impacts and as such do not
have the same level of importance (social, environmental, and eco-
nomic issues do not have the same relevance; Deschênes, 2019).
For example, environmental issues play very important role in energy
and chemical industry, whereas social matters come first in food and
beverage industries; again, labor issues are of prime importance when
it comes to the agricultural industry (e.g., child labor). The KLD data-
base cannot sufficiently assess every aspect of CSR initiative. By fact,
the KLD method was built with much more input from an American
perspective in terms of data (the database is from American corpora-
tions; Menz, 2010). Eabrasu (2015) argued that applying CSR perfor-
mance data from subjective methods is already a limitation to the
final outcome of a given study, especially where the KLD method is
made up of opinions and values of managers in various industries.
In a very competitive markets that various businesses find them-
selves in, other managers can easily give a negative comment about
another corporation's CSR activity just to have an urge over the
other. Giuliani (2016) defined CSP as the perceivable outcome of a
relationship between business and the society. Per this definition, it
is unclear how a manager would be explicitly evaluating a relation
on their own because they only represent one part of the
relationship.
Of the 96 articles, only 24 articles exclusively explored the busi-
ness case for CSR by evaluating managers point of view. As a result,
CSR activities should be planned in such a way that it addresses
multistakeholders (for both internal and external stakeholder issues).
It is noteworthy to mention that, though CSR indexes and ratings
are made of opinions based on manager's perspective, their unilateral
focus on stakeholder group can never be enough for measuring CSR
initiatives, because the initiative is aimed at handling issues of several
groups or stakeholders (Sharif et al., 2017). Current CSP definitions
have been given deliberations on the above‐mentioned issues and
have been better explained (Crane et al., 2019). Baumgartner and
Rauter (2017) defined outcome as both internal and external effects
on institution(s). Unerman, Bebbington, and O'dwyer (2018) also
argued about how a market‐derived and accounting measures may
focus differently on performance and CSR depending on the industry
that one wants to measure performance. Thus, there is likely to be
some biases if one decides to measure the market performance of a
5
market‐derived performance in relation to CSR in purely accounting/
financial industry and vice versa. The latter‐mentioned challenge came
up in recent publications when earlier studies that had found no signif-
icance and inconclusive outcomes were found to have employed sub-
jective/perceptional methods while measuring financial performance
and business case for CSR, such as accounting‐based or market‐ori-
ented ones rather than objective methods. It must be said that, when
these biases are done away with, most negative associations will
reduce in a large extent.
As a matter of fact, these negative biases have been disapproved
since the 1980s, because they do not encourage long‐term decision
making and quite inappropriate for modern day production methods.
The 1990s brought a period of developing more balanced perfor-
mance evaluation methods just to do away with financially based
accounting systems (Marano, Tashman, & Kostova, 2017). As a result,
other intangible satisfaction that stakeholders enjoy must also be mea-
sured while evaluating the overall firm performance. According to
Marano et al. (2017), most papers have failed to use control variables
that help in eliminating bias‐based results, especially when perceptual
methods are applied to measuring nonfinancial performances related
to CSR. These variables can greatly influence the shape or results of
societal responsive strategies. Of the articles reviewed for this study,
the authors realized that one third did not have control variables.
Rodriguez‐Fernandez (2016) posited that the reason for diversity in
theoretical outcome in SP (CSP) and FP (CSP) may have association
with a change in circumstance, which may not be understood early
enough to be added to control variables. The internal features of a
firm, contextual influences, and the market‐driven/industry factors
are derivatives of control and mediating variables, after they were
carefully studied. The most measured control variables include firm
size, total assets, employees, and sales records. These variables give
the opportunity to measure the internal dimension of a company.
The second cluster is divided into market‐driven factors and context
dimension. The market‐driven factor is much connected to the busi-
ness than the contextual factors. Minniti and Venturini (2017) also
maintained how important R&D expenditures are to the long‐term
economic performance and profitability. The third cluster that is asso-
ciated with R&D does have impact on CSR initiatives, because such
activities either create product innovation or process innovation or
both. As such, the business case for CSR and performance should
not be evaluated without the impact of R&D expenses, because this
can lead to overestimated performance of CSR initiatives
(Schnippering, 2019). As a matter of fact, this study also found the
continuous usage of such expenses since year 2000. Data challenges
are widespread, and the authors of this article also realized a 32% data
issue out of the total sample. Most of these data challenges are asso-
ciated with industries and country (Lund‐Thomsen & Pillay, 2012).
Such other issue can be found within relationships between long‐term
and short‐term CSR performances, especially when it comes to cross‐
sectional analysis that applies to analysis of a long period of time
(Garcia‐Castro, Ariño, & Canela, 2010).
The authors recommend that more future studies should be under-
taken on factors that influences both CSR and corporate performance
6 KONG
(Kiessling, Isaksson, & Yasar, 2016), the impact of CSR (Hur, Kim, &
Jang, 2016) and motives (Pedersen & Neergaard, 2016), and the
impact of context on CSR initiatives and their findings (Windell,
2016). Other authors have also asked the need to expand the scope
of CSR initiatives on stakeholders François, Bayle, and Gond (2019)
and a clearer interpretation of CSR business case (Acquier, Valiorgue,
& Daudigeos, 2017). Besides the multifaceted dimensions of CSR
Schönherr, Findler, and Martinuzzi (2017) and the industry features
of CSR (Risi & Wickert, 2017), there are other two areas that must
be well researched in order to give much insight on measuring it; also,
there is an increasing demand for further qualitative studies. For
researchers to really understand the strategies and reasons behind
CSR, and also to be able to develop CSP measuring methods, more
business cases for CSR should be studied (Lodsgård & Aagaard,
2017). Yu and Choi (2016) suggested a study of the ideal level of
CSR implementation and the study of a new frontier of CSR. It is vital
for organizations to understand or study the explicit challenges affect-
ing the environment or society if they will be able to sufficiently plan
and implement socially responsive programs (Story & Neves, 2015). As
this will ensure equity and proper resolution of societal challenges.
Generally, the call for further research into CSR programs is meant
to have an in‐depth knowledge and more efficient initiatives for CSR
(Carroll, 2016). Summarily, the works of Margolis and Walsh (2003)
called for further studies on the relationship between social outcome
and firm performance, also supports authors of this study.
3.2 | Determinants of CSR
The very factors that can explain the relationship between the society
and firms and its effect on CSR can only be arrived at when determi-
nants of CSP activities are well analyzed. These factors can lead to the
implementation of more effective econometric methods explicitly
applied for specific CSR business case. Of the articles used for this
study, 74% are known to have been published after the year 2006.
Half of these study were actually published between 2009 and
2010. During the analysis, it came to light that the factors determining
CSR could be grouped into 18 characteristics. It can further be classi-
fied into origin: internal, industrial (markets), and external (contextual)
as well. Whereas 66% of the researched articles considered only one
factor that determined CSR, 24% of papers used two determinant fac-
tors in their research, and just two publications applied four determi-
nant factors of CSR (B. I. Park & Ghauri, 2015). Mi, Chang, Lin, and
Chang (2018) also found three main factors that pushes CSR strategy.
They actually posited that beliefs and values are the basic reason that
pushes an entrepreneur's sustainable corporate strategy.
Hawn and Ioannou (2016) averred that the type of competitive
strategy that an organization will take is dependent on their awareness
of social responsive orientation of both internal and external stake-
holders. The internal features of firms are one of the most sighted rea-
sons for undertaking CSR programs. The assets of a given firm and the
type of management in place are also another reason that causes firms
to enter into social responsive acts. Other authors have also decimated
ET AL.
management type into 13 forms: management values (Jansson, Nilsson,
Modig, & Hed Vall, 2017), style of governance (Turel, Liu, & Bart, 2017),
structure of management (Eisenberg, 2017), powers of managers
(Rodríguez Bolívar, Garde Sánchez, & López Hernández, 2015), interna-
tional experience (Osagie, Wesselink, Blok, Lans, & Mulder, 2016),
dynamic capabilities of managers (Torugsa, O'Donohue, & Hecker,
2013), characteristics of chief executive officer (Faccio, Marchica, &
Mura, 2016), management beliefs (Mayo, Gomez‐Mejia, Firfiray,
Berrone, & Villena, 2016), executive attitude (Bebbington, Larrinaga,
& Moneva, 2008), type of directors, the ability of managers, and com-
mitment (Abugre & Nyuur, 2015). Public pressure (Pedersen &
Neergaard, 2016), media influence (Garcia‐Sanchez, Cuadrado‐
Ballesteros, & Sepulveda, 2014), industry/institutional pressure (Luo,
Wang, & Zhang, 2017), stakeholder's priority (Boesso, Favotto, &
Michelon, 2015), and internationalization (Amaeshi, Adi, Ogbechie, &
Amao, 2006). However, Karaibrahimoğlu (2010) argued that interna-
tional financial crisis (contextual factor) can push organizations into
undertaking societal responsive initiatives as business strategy. Besides
management and external pressures, firm size and country are the next
determinants often used by researchers. Cultural dimensions as well as
religious factors, the sensitivity of an industry, entrepreneurial value,
and shareholder activism also follow the reason organizations move
for CSR programs. Market orientation (Kiessling et al., 2016), competi-
tive strategy (total quality management; O'brien, 2001), product differ-
entiation (Mukhopadhyay & Ye, 2016), consumer trust (J. Park, Lee, &
Kim, 2014), executive compensation (Hong, Li, & Minor, 2016), quality
code of conduct (Leipziger, 2017), and many others are part of the fac-
tors that influence CSR decisions. Also, the self‐regulation of the finan-
cial industry and by the liberal market is linked to the economic model
(Jackson et al., 2010) has been cited twice. Godos‐Díez, Cabeza‐García,
Alonso‐Martínez, and Fernández‐Gago (2018) also noted the passage
of time as a determinant factor for CSR.
These CSR determinant factors have shown a large connection with
control variables. Indeed, authors of this study also noted several of
these determinant factors being used as control variables, with the help
of econometric models to correctly explain business case for CSR,
though it may have challenge with collinearity. This challenge may occur
when a variable affects an independent variable. When CSP becomes a
control variable, a collinearity will arise. As such, a CSR determinant that
correlates directly with CSP cannot be applied as control variable
because the reason behind the assumption of the regression would be
impeded. Though an above‐average correlation (major of .5) is quite
common, it is not likely for a regression to be impeded. Particularly, a
justifiable collinearity happens when the evaluation of a firm's social
responsive initiative affects the association between social outcome
and corporate outcome. Such outcomes are supposed to be included
in econometric models. It is believed that there are also other business
cases for CSR that have not yet been evaluated with econometric
models. The authors of this study also believe that just as the later model
has not been used/applied on some CSR business cases, the economy
model and national law systems have also not been used. Finally, effec-
tive strategies and societal responsive tools can be used to verify the
business case of CSR better than CSR indexes.
KONG ET AL.
4 | C O N CL U S I O N
In order to advance useful reasons for future research into the busi-
ness case for CSR, the authors had to analyze the association between
CSP and business outcome through empirical literature. The associa-
tion between societal responsive initiative programs and firm perfor-
mance showed some fragment of full positive outcome in relation to
CSR by the authors of this study, though several other scholars have
also proven the business case for CSR. The systematic review has val-
idated the business case for CSR and further explained how methodol-
ogies can be applied, because the link between CSR results and that of
firm performance is quite complex because of its multifaceted nature.
Meanwhile, strategies of CSR can bring about positive outcome to
business, as well as solving societal and ethical challenges. As a result,
future researchers should look at solving these challenges. Indeed,
effective application of quantitative methods can be used to evaluate
such challenges, and this can be achieved by combining industry focus
(Kraus et al., 2018; Rawhouser et al., 2019; White et al., 2017).
Indeed, for specific societal responsive programs to be applied to
specific industries, evaluate able models, as well as analyzing the rela-
tionship between industry features and CSR, should be applied to the
diverse dimensions of CSR. Finally, because the implementation of
CSR initiatives require long‐term and huge sums of investment, it is
advised that an in‐depth evaluation of the business case for CSR
should be undertaken for both short‐term and long‐term (Ni & Van
Wart, 2015). Despite the shortcomings associated with the KLD index,
some authors believe that the application of perceptual data is appro-
priate for CSP assessment because the KLD indicators (managers
opinions) do have influence on CSR strategies. It should however be
noted that manager's opinion (perceptual data) in relation to stake-
holders is more appropriate for evaluating nonfinancial performance,
because managers are usually expected to judiciously monitor and
evaluate both internal and external nonfinancial outcome. Conclu-
sively, for a better understanding of societal initiatives to be very suc-
cessful, it is much more appropriate for the business case for CSR to
be studied without recurring indices nor other forms of measure.
The effective evaluation and integration of CSR initiatives by
researchers will go a long way in understanding the CSR strategies
and decisions. Rasche et al. (2017), Rawhouser et al. (2019), and H.
Wang, Tong, Takeuchi, and George (2016) averred that if CSR pro-
grams happen to be part of business strategy, then positive benefits
will be gained by firms, irrespective of how short that advantage will
be. Again, the evaluation of stakeholders' perception is also a better
way of measuring CSP, as this enables researchers to evaluate the
diverse features of all CSR programs/initiatives.
As a matter of fact, further studies could be undertaken by inte-
grating social network analysis and business case study to measure
firm and stakeholder implementational changes. Additionally, an
increase in employee satisfaction, talent retention, employee involve-
ment in decision making, and many more are some nonfinancial out-
comes that can lead to positive outcomes in the form of CSR
(Taylor, Vithayathil, & Yim, 2018). Despite the immense and diverse
role of social network analysis, its application has been poorly used
7
when it comes to evaluating relationships. The less the level of rela-
tionship between a firm and its stakeholder, the lesser the probability
of integrating and implementing CSR strategy. Thus, in a situation
where managers and stakeholders of a given firm are divided, CSR
activities will certainly be poorly evaluated or deliberated upon due
to their varied objectives. An in‐depth understanding of the business
case for CSR and theories can also help in advancing research for
the common good of society. It should be noted that such a proposi-
tion by the authors of this study does not and will be able to bring
about a globalized perspective on CSR's business case because of each
industry and its own business case. Indeed, there can be some com-
monality in CSR features, but that cannot lead to a possible generality
in CSR across industries globally.
By fact, the ability of a given entity to undertake a CSR strategy
and implement as such is dependent on the firm's strength and ability;
again, the risks and opportunities that a firm wants to face will deter-
mine their CSR agenda (Epstein, 2018). In reality, econometric and
evaluation methods are good, but they cannot lead to a possible
development in having a common corporate perspective towards
social concerns across firm boundaries, in relation to firm performance
and CSR strategy. However, tailored made methodologies can enable
adequate verification for CSR business case, though they might be
based on circumstances.
Summarily, some limitations were found after this study. Method-
ical usage challenge was realized. Though the originality of this study
can be explicitly confirmed, the same qualitative methodology used
by other scholars was also used. To a large extent, the methodology
used in selecting and analyzing the literature is not in any way differ-
ent from vote counting (Orlitzky et al., 2003). As a matter of fact,
though previous studies have come up with limitations and recom-
mendations, none have done a much broader clarification on business
case on CSR as well its determinants. Probably, the exclusion of some
important literature and the subjective selection of certain keywords
might be the main limitation of this study. It should also be noted that
the literature review used by the author of this study is different from
that used by other previous scholars. Latest insight into CSR initiatives
has been brought fore because reviews were dependent on current
studies done by other researchers. Just as postulated by Van Beurden
and Gössling (2008), the other challenge of this study is that the
inconsistency in research design and methodology affects compared
results, though the authors ensured that articles reviewed were classi-
fied into groups on the basis of the methodology and variables used.
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How to cite this article: Kong Y, Antwi‐Adjei A, Bawuah J. A
systematic review of the business case for corporate social
responsibility and firm performance. Corp Soc Resp Env Ma.
2019;1–12. https://doi.org/10.1002/csr.1838