A Meta-analytical investigation of the relationship between corporate social and financial performance

The growing number of academic studies on the impact of Corporate Social Performance (CSP) on Corporate Financial Performance (CFP) and the mixed findings they report complicate efforts among managers and academics to identify the outcomes of corporate social responsibility. These mixed findings and the growing interest of managers on having satisfied corporate social policy point to the value of empirically synthesizing the evidence on the relationship between CSP and CFP. Although many reviews of these studies have been published (Ullman, 1985 ; Griffin & Mahon, 1997 ; Roman, Haybor & Agle, 1999 ; Margolis & Walsh, 2003), there have been little attempts to use formal statistical tools to synthesize the results (Orlitky & Benjamin, 2001 ; Orlitky, Schmidt & Rynes, 2003). Orlitsky et al. (2003) obviously made valuable contributions, presenting the first meta-analysis of the empirical evidence on the impact of CSP on firm financial performance. However, since this last meta-analytic review, dozens of studies examining the link between CSP and CFP have been published in academic journals and recent studies have also focused on the effect of CSP on CFP in a broader international context. To this end, we conduct a new meta-analysis of the reported findings on the CSP/CFP relationship. We document that CSP is strongly related to CFP on average. We also find that measurement and method that characterize the research often moderate relationship strength between CSP and CFP. Finally, we discuss the implications surrounding these effects and offer several directions for future research