Does corporate social responsibility affect companies' financial performance? A review of empirical studies

The increasing changes in environmental, social and economic trends have encouraged companies to be more involved in socially responsible initiatives. Corporate social responsibility (CSR) is the involvement of a company in addressing environmental and social challenges faced by the society. Whilst the main objective of a company is wealth creation and profit maximisation, concerns for contribution to societal development have mooted useful and mutual beneficial business practices with potential financial involvement. The study reviewed and examined CSR theories to locate the impact of these theories on a company's financial performance. The review and examination of the studies conducted from the 1970s to 2013 found a mixed pattern of the relationship between financial performance and CSR. This mixed pattern provides evidence that the relationship between companies' financial performance and social performance could be positive, negative or non-significant. This mixed pattern is part of the big ongoing debate on this topic, and such a debate is possibly inevitable, given that empirical studies test different hypotheses, use different methodologies and consider different sectors or industries at different time periods.