Corporate Social Responsibility Across Industries : When Can Who Do Well by Doing Good?

While much of the previous literature considers whether corporate social responsibility (CSR) pays, we take a more nuanced perspective, theoretically and empirically, by investigating when CSR pays and for whomlsquo; Theoretically, we develop two contingency perspectives. First, we extend previous work to argue that CSR's impacts on corporate financial performance (CFP) are moderated by five factors: CSR form, firm characteristics, time, national framework and industrial characteristics. Focusing on industrial characteristics, we theorise that differences in industries' dependency on certain stakeholder groups, their proximity to the end consumer, their potential for social and environmental damages and their level of product/service differentiation moderate CSR's value relevance. Our second contingency perspective considers for whom CSR might pay. While previous research has almost exclusively viewed CSR's value from a corporate perspective, we argue that stakeholders, government, and investor perspective are also relevant. Empirically, we analyse CSR's value across ten industry sectors from a corporate and investor aspect, respectively. We find that CSR has substantial value for corporations in the health care, industrials, and consumer discretionary sectors but not elsewhere. Publicly informed investors can exploit this positive CSR effect in the former two industries, which yields significantly abnormal excess returns of more than 6% and 8.5% per annum, respectively. Hence, we consider our results strong evidence to reject the implicit hypothesis which underpins much of the previous work that explores the homogeneous CSR-CFP relationship across industries. Our results suggest to academics that many previous studies on CSR value, which controlled for the industrial drivers of CFP but not for the industrial drivers of the CSR-CFP link, might need to be reestimated. Furthermore, for practitioners, our study implies that CSR value should be assessed in the context of the industrial business processes