The Dimensions of Social Responsibility and the Consequences for Corporate Financial Performance

The Dimensions of Social Responsibility and the Consequences for Corporate Financial Performancelikely to renew the interest in identifying the dimensions and consequences of corporate social responsibilities.Cameron has suggested that multiple perspectives of organizational effectiveness exist and that "consensus regarding the best, or sufficient, set of indicators of effectiveness is impossible to obtain".The same arguments can be made regarding social performance as a specific aspect of overall corporate performance. Social responsibility continues to be a poorly defined as well as difficult to measure concept. There appears to be no real agreement as to what constitutes social performance. What is indicated is the need to apply measures which address multiple criteria of social performance. This study attempts to specify the underlying dimensions of a multiple measure of corporate social responsibility and investigate the relationship between corporate social performance and multiple measures of financial performance. For the purposes of this study, corporate social performance represents a measure of a firms attentiveness to multiple stakeholder groups. We employ previously unavailable objective measures of social responsibility which overcome some of the methodological problems which have stalled prior research efforts, and propose a working model of social responsibility and its relationship to financial performance.Historically, the responsibility of firms was defined purely in economic terms. For example, Friedman (1990) considered maximization of shareholder wealth as the sole objective and responsibility of the well managed firm. This perspective generally cast corporate activity as a zero-sum game. Whatever resources were expended in the interests of social responsibility came at the expense