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Business and Politics

Editor-in-Chief: Aggarwal, Vinod K.

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SCImago Journal Rank (SJR): 0.507
Source Normalized Impact per Paper (SNIP): 0.807

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The Economics and Politics of Corporate Social Performance

David P Baron1 / Maretno Agus Harjoto2 / Hoje Jo3

1Stanford University

2Pepperdine University

3Santa Clara University

Citation Information: Business and Politics. Volume 13, Issue 2, ISSN (Online) 1469-3569, DOI: 10.2202/1469-3569.1374, August 2011

Publication History

Published Online:
2011-08-23

Firms operate in a capital market, a product market, and a market for social pressure directed at them by social activists, NGOs, and governments. An equilibrium in these three markets yields a three-equation structural model that relates corporate financial performance (CFP), corporate social performance (CSP), and social pressure. This paper estimates the simultaneous equation model for a panel of over 1,600 firms and finds that CFP is uncorrelated with CSP and negatively correlated with social pressure. CSP is decreasing in CFP and increasing in social pressure. Social pressure is increasing in CSP and decreasing in CFP, which is consistent with social pressure being directed to soft targets. Disaggregating the panel indicates that CFP is positively correlated with CSP for firms in consumer markets and negatively correlated for industrial markets. For consumer markets, CSP is increasing in CFP, which is consistent with a perquisites hypothesis that managers spend on CSR when they can afford it. For industrial markets CSP is decreasing in CFP, which is consistent with a moral management hypothesis. For both consumer and industrial markets, CSP is responsive to social pressure.

Keywords: corporate social performance; markets; politics

Citing Articles

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[1]
Hoje Jo and Maretno A. Harjoto
Journal of Business Ethics, 2012, Volume 106, Number 1, Page 53
[2]
Li Cai, Jinhua Cui, and Hoje Jo
Journal of Business Ethics, 2015
[4]
Fayez A. Elayan, Jingyu Li, Zhefeng Frank Liu, Thomas O. Meyer, and Sandra Felton
Journal of Business Ethics, 2014
[5]
Witold J. Henisz, Sinziana Dorobantu, and Lite J. Nartey
Strategic Management Journal, 2014, Volume 35, Number 12, Page 1727
[6]
Thomas J. Walker, Kerstin Lopatta, and Thomas Kaspereit
Financial Markets and Portfolio Management, 2014, Volume 28, Number 4, Page 363
[7]
Wolfgang Drobetz, Andreas Merikas, Anna Merika, and Mike G. Tsionas
Transportation Research Part E: Logistics and Transportation Review, 2014, Volume 71, Page 18
[8]
Maretno Harjoto, Indrarini Laksmana, and Robert Lee
Journal of Business Ethics, 2014
[9]
Pratima Bansal, Guoliang F. Jiang, and Jae C. Jung
Long Range Planning, 2015, Volume 48, Number 2, Page 69
[11]
Jinhua Cui, Hoje Jo, and Manuel G. Velasquez
Journal of Business Ethics, 2014
[12]
Jinhua Cui, Hoje Jo, and Yan Li
Journal of Business Ethics, 2014
[13]
Hoje Jo and Maretno Harjoto
Business Ethics: A European Review, 2014, Volume 23, Number 3, Page 272
[14]
[15]
Patricia Crifo and Vanina D. Forget
Journal of Business Ethics, 2013, Volume 116, Number 1, Page 21
[16]
Agni Kalfagianni and Philipp Pattberg
Innovation: The European Journal of Social Science Research, 2013, Volume 26, Number 3, Page 231
[17]
Kais Bouslah, Lawrence Kryzanowski, and Bouchra M’Zali
Journal of Banking & Finance, 2013, Volume 37, Number 4, Page 1258
[18]
Hoje Jo and Haejung Na
Journal of Business Ethics, 2012, Volume 110, Number 4, Page 441

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