The Robustness of the Corporate Social and Financial Performance Relation: A Second‐Order Meta‐Analysis

By Timo Busch, G. Friede. 2018

282 citations recorded by the source corpus.

For many decades, there has been a debate about the relation between corporate social/environmental performance (CSP) and corporate financial performance (CFP). Our study presents a review of academic research on this topic by applying a second-order meta-analysis. The data sample combines 25 previous meta-analyses yielding a sample size of one million observations. Our results demonstrate a highly significant, positive, robust, and bilateral CSP-CFP relation. The relation is positive regardless of whether firms focus on ecological or social aspects, though corporate reputation turns out to be a key CSP determinant. We find a particularly strong CSP-CFP relation for operational CFP. Furthermore, we add a new perspective on potential biases resulting from the studies’ publishing source: social issues-oriented journals and methodological weaker papers do not distort the positive CSP-CFP relation. Our conclusion is: Based on the extant literature, the business case for being a good firm is undeniable. © 2018 The Authors. Corporate Social Responsibility and Environmental Management published by ERP Environment and John Wiley & Sons Ltd. Received 24 April 2017; revised 22 October 2017; accepted 3 November 2017

Subfields: Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/d176ede34f4f4a0c3265ec7465006dadb4f850cc

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Citations in the corpus

ESG Ratings and Stock Performance during the COVID-19 Crisis (2021, background): “In this respect, several studies have highlighted a positive relationship between a firm’s CSR performance and its financial performance [1,2,22,26,34,35].”
Corporate Social Performance and Firm Performance: Comparative Study among Developed and Emerging Market Firms (2019, background): “The study by [53] based on the replicative study of [46] indicated that CSP may not positively influence CFP. Busch and Friede [54] demonstrated a highly significant, positive and bilateral CSP–CFP relationship.”
Resiliency of Environmental and Social Stocks: An Analysis of the Exogenous COVID-19 Market Crash (2020, background): “2 See, for example, the meta-analyses of ESG activities and financial performance by Orlitzky, Schmidt, and Rynes (2003), Margolis, Elfenbein, and Walsh (2010), and Busch and Friede (2018).”
Composition and Activity of the Board of Directors: Impact on ESG Performance in the Banking System (2018, background): “A great number of studies have investigated the link between sustainability performance (expressed by an ESG score or other measures of CSR) and CFP by showing, in most cases, a highly signiﬁcant, positive and robust relationship, which holds across the countries and industries investigated [14].”