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Building on the theoretical argument that a firm's ability to profit from social responsibility depends upon its stakeholder influence capacity (SIC), we bring together contrasting literatures on the relationship between corporate social performance (CSP) and corporate financial performance (CFP) to hypothesize that the CSP-CFP relationship is U-shaped. Our results support this hypothesis. We find that firms with low CSP have higher CFP than firms with moderate CSP, but firms with high CSP have the highest CFP. This supports the theoretical argument that SIC underlies the ability to transform social responsibility into profit.

Research summary: In this study, we revisit the relationship between corporate social performance (CSP) and corporate financial performance (CFP) by conducting a replication of Waddock and Graves (1997). Using 1990 KLD ratings as the CSP measure, the original study reports a positive bidirectional relationship between CSP and CFP. However, our replication analyses with a larger sample over a longer time period indicate that the findings of the original study may not be generalizable to different samples. We argue that our replication casts doubt on the original study and can serve as a starting point to reconsider the CSP-CFP relationship. Based on the findings of our replication, we discuss the differences between the replication results and the original findings, and then suggest several approaches to revise and extend the original study. Managerial summary: Advocates of corporate social performance (CSP) have long argued that \"doing good leads to doing well.\" However, the evidence to support this argument is not strongly convincing, and managers hence doubt whether better CSP leads to improved corporate financial performance (CFP). In this article, we directly examine the relationship between CSP and CFP. Our article reports that CSP may not have a positive influence on CFP. Instead, our article shows the complexity of the relationship between CSP and CFP. Therefore, we cannot simply argue that doing good will necessarily lead to doing well.

In this paper, we review the literature on moderators and mediators in the corporate sustainability (CS)-corporate financial performance (CFP) relationship. We provide some clarity on what has been learned so far by taking a contingency perspective on this much-researched relationship. Overall, we find that this research has made some progress in the past. However, we also find this research stream to be characterized by three major shortcomings, namely low degree of novelty, missing investment in theory building, and a lack of research design and measurement options. To address these shortcomings, we suggest avenues for future research. Beyond that we also argue for a stronger emphasis on the strategic perspective of CS. In particular, we propose future research to take a step back and aim for an integration of the CS-CFP relationship into the strategic management literature.

In the current dynamic environment, organizations are exposed to many risks from different directions. Therefore, this study using the theoretical lens explored the effect of enterprise risk management (ERM) on both financial and non-financial firm performance and the moderating role of intellectual capital (IC) and its dimensions on the relationship between ERM and firm performance. To test the study hypotheses, a questionnaire survey was distributed to 84 Iranian financial institutions. Structural equation modeling (PLS software) was used to analyze the data statistically. The findings revealed that ERM had a positive relationship with firms' performance. The results also showed that the overall IC had a moderating effect on ERM-firm financial performance. However, regarding components of IC, knowledge, and information technology (IT) had a positive and significant moderating effect while training, organizational culture, and trust did not affect. This study provides an insight into the impact of ERM in recent years on non-financial performance and the influence of intangible assets on ERM and its function. The model developed in the current study and result can be extended and implemented to other organizations in developing countries.

We examine the effect of a firm's relations with its nonfinancial stakeholders, including its employees, suppliers, customers, and communities, on the persistence of both superior and inferior financial performance. In particular, integrating and extending the resource-based view of the firm and stakeholder management literatures, we develop the arguments that good stakeholder relations not only enable a firm with superior financial performance to sustain its competitive advantage for a longer period of time, but more importantly, also help poorly performing firms to recover from disadvantageous positions more quickly. The arguments are supported by the analysis of a series of first-order autoregressive models. Our findings further suggest that the positive effect of good stakeholder relations on the persistence of superior performance is not as strong as that of some other firm resources, such as technological knowledge, but it is the only factor examined that promises to help a firm recover from inferior performance. Therefore, the role of positive stakeholder relations in helping poorly performing firms recover is found to be more critical than its role in helping superior firms sustain their performance advantage.

This study treats firm productivity as an accumulation of productive intangibles and posits that stakeholder engagement associated with better corporate social performance helps develop such intangibles. We hypothesize that because shareholders factor improved productive efficiency into stock price, productivity mediates the relationship between corporate social and financial performance. Furthermore, we argue that key stakeholders' social considerations are more valuable for firms with higher levels of discretionary cash and income stream uncertainty. Therefore, we hypothesize that those two contingencies moderate the mediated process of corporate social performance with financial performance. Our analysis, based on a comprehensive longitudinal dataset of the U.S. manufacturing firms from 1992 to 2009, lends strong support for these hypotheses. In short, this paper uncovers a productivity-based, context-dependent mechanism underlying the relationship between corporate social performance and financial performance.

PurposeThe purpose of this study is to verify whether digital transformation strategy (DTS) could improve the organizational performance and provide a comprehensive analysis for enterprises on the necessity of implementing digital transformation in the context of China and draw on the perspectives of “Skewed conflict,” “minority dissent theory” and “too-much-of-a-good-thing.” This study investigates the curvilinear moderating role of cognitive conflict between DTS and performance.Design/methodology/approachAn empirical investigation was used to collect a large sample data of Chinese enterprises’ digital transformation. A multiple linear regression analysis with SPSS was used to test the proposed hypotheses such as the inverted U-shaped moderating effect of the cognitive conflict.FindingsIn the Chinese context, DTS has a positive relationship on the short- and long-term financial performance. Moreover, this relationship was moderated by cognitive conflict such that the relationship between DTS and short-term financial performance could be further enhanced under the moderate cognitive conflict; however, the relationship between DTS and long-term financial performance was considerably influenced for higher cognitive conflict.Originality/valueBased on the co-evolution of the information technology/information system (IT/IS) and business strategy, this study clarified the relationships among DTS, digital strategy and business and information technology strategies. By focusing on corporate strategy, this study further examined the effect of digital transformation on both short- and long-term financial performance. To further reveal the micro-psychological mechanisms underlying the effect of DTS on organizational performance, this study confirmed the inverted U-shaped moderating effect of the top management team’s cognitive conflict. Therefore, this research provides a new theoretical perspective for future research in the field of IT/IS, DTS and digital strategy.

Purpose The integrated reporting framework seeks to connect a firm’s financial and non-financial performance in a single report by displaying how different forms of capital contribute to the firm’s value creation. Drawing on impression management and incremental information approaches, the purpose of this paper is to examine how the content and semantic properties of intellectual capital disclosure (ICD) found in integrated reports is associated with firms’ performance. Design/methodology/approach All reports by European listed firms from 2011 to 2016 available via the integrated reporting emerging practice examples database are analysed. Content analysis is used to assesses the quality of ICDs, whereas a regression analysis tests the variation in semantic properties of ICDs according to firms’ performance. Findings ICDs in integrated reports are mainly discursive, with a backward looking orientation and a limited focus on human capital. On average, more than half of each ICD is conveyed in a positive tone. As the optimistic tone in firms’ ICDs increases, so too does their non-financial performance measured in terms of environmental, social and governance aspects. This finding supports the incremental information approach. Originality/value This paper contributes to the current literature on ICDs by introducing new evidence on firms’ motivations for non-financial disclosures in integrated reports. By taking a more comprehensive theoretical approach, namely, testing both impression management and incremental information hypotheses, this research extends on prior studies which tested similar relationships in integrated reports but focussed only on the impression management hypothesis.

This study examines the relationship between environmental, social, and governance (ESG) factors and corporate financial performance. Specifically, we study various individual ESG categories, both ESG strengths and concerns, and aggregate ESG factor and their impact on corporate financial performance including profitability and financial risk. We find a positive effect of ESG factors on corporate profitability, and the effect is more pronounced for larger firms. Among different ESG categories, corporate governance has the most significant impact, particularly for firms with weak governance. We also find that ESG variables generally have a positive influence on credit rating. In particular, the social factor has the most significant impact on credit rating, while environmental score surprisingly has a negative effect. Overall, this research provides a rationale for ESG integration in the context of investment management and portfolio construction to maximize value and minimize risk.

Review of extant research on the corporate environmental performance (CEP) and corporate financial performance (CFP) link generally demonstrates a positive relationship. However, some arguments and empirical results have demonstrated otherwise. As a result, researchers have called for a contingency approach to this research stream, which moves beyond the basic question \"does it pay to be green?\" and instead asks \"when does it pay to be green?\" In answering this call, we provide a meta-analytic review of CEP—CFP literature in which we identify potential moderators to the CEP—CFP relationship including environmental performance type (e.g., reactive vs. proactive performance), firm characteristics (e.g., large vs. small firms), and methodological issues (e.g., self-report measures). By analyzing these contingencies, this study attempts to provide a basis on which to draw conclusions regarding some inconsistencies and debates in the CEP—CFP research. Some of the results of the moderator analysis suggest that small firms benefit from environmental performance as much or more than large firms, US firms seem to benefit more than international counterparts, and environmental performance seems to have the strongest influence on market-measures of financial performance.