CORPORATE SOCIAL RESPONSIBILITY AND ITS IMPLICATIONS ON FIRM PERFORMANCE
Corporate social responsibility is a widely discussed concept in today’s business, with different perceptions as well as explanations regarding the meaning and impact of the concept. Organizations are becoming more aware of the concept as well as their responsibilities to the society, which in turn results in organizations devoting more resources into CSR related activities. Nowadays, it is significant to establish a proper CSR performance while also having a solid financial foundation in order to reach a long-term sustainable success.
The purpose of this study is to describe how CSR is connected to firm performance, in terms of market share and market growth. While a growing number of studies have been made regarding investigating CSR and its various dimensions, it is still unclear what the underlying factors that tie the relationship together are. This purpose was tested on a company in southern Sweden; this company Emballator Lagan Plast (ELP) produces plastic packaging solutions for a number of industries. Alongside the literature research, a case study with semi-structured interviews was conducted at ELP in order to collect data needed to answer the purpose and research questions.
One of the essential findings of the study revealed from the literature, which was also proven in the case study, was that CSR is a fundamental element in an organization and it should be implemented throughout the entire organization to gain maximum effect. Moreover, the findings indicate that CSR has a positive impact on ELP’s performance. Even though the relationship is not direct, it still exists through mediating roles, and it has played an important role in the company’s growth and success
Because of the fact that CSR is based on legal, economic, ethical and philanthropic opinions, the perception of the subject itself varies significantly because of the perceived value different approaches foster (Hack, et al., 2014). Due to these factors, opinions run the risk of being biased depending on which corporations people identify themselves with. CSR is designed to work as a win-win scenario, meaning that the companies make profits whilst the society benefits as well (Porter, 2011).
However, there has been tension when analyzing the link between gathering profits and contributing to society. Companies focus on attaining profits and may therefore carefully select the CSR approaches in which they believe will give the highest return on investment (Aguilera, et al., 2007). This is because when looking at CSR through a solely financial perspective, it is considered an ill-advised course of action because it does not give any incentive to gather profits (Hack, et al., 2014). This has proven to create scenarios where people feel that the companies are only focusing on profits when they instead should focus on improving the society for the greater good (Ibid).
Researchers have proven that if consumers like what companies are offering, they will put more resources into that company, not only in terms of money but time as well (Rosenbaum-Elliot, et al., 2011). Since CSR is based on legal, ethical, economical and philanthropic aspects, it can influence corporations’ image. In other words, how they are perceived by for instance stakeholders. For example, promoting or communicating a vision, companies can generate in an emotional response from consumers. As mentioned earlier, if consumers know that environmental issues are at a company’s focus, this can mediate emotions to a consumer that can eventually impact their buying decision (Jurišová & Ďurková, 2012). Companies initiatives influences consumer’s vision, in addition, organizations can guide consumers towards different directions based on their actions, since it is shown that emotion mediates behaviors (RosenbaumElliot, et al., 2011).
The purpose of this study is to describe how CSR is connected to firm performance within Emballator Lagan Plast.