Doing Well by Doing Good, Uniquely : Materiality and the Market Value of Unique CSR Strategies

CSR has become a strategic decision for organizations. The capacity to invest in several distinct CSR categories at varying levels (e.g., environmental innovation, diversity, community) leaves firms with a multitude of patterns from which to choose. However, the question of whether market returns to CSR are defined by individual-level positioning choices or by industry-level conditions––particularly the materiality of distinct categories of CSR investment––remains unresolved. Drawing from literature on the uniqueness of strategic choices, we theorize that unique CSR strategies are likely to be more effective in helping firms explore complementarities and gain access to valuable resources provided by key stakeholders. Using a novel measure of uniqueness of CSR strategies and a database containing environmental, social, and financial information of 2,093 firms between 2002 and 2017, we find a strong positive association between the uniqueness of a firm's CSR position and market value. Yet we also show that uniqueness is constrained by materiality: market returns to unique CSR positioning are negatively associated with the number of CSR categories that comprise material issues to a given industry. To shed further light on the mechanisms driving the role of materiality, we examine the 2010 BP Deepwater Horizon oil spill