Shareholder Value vs. Corporate Social Responsibility

The publication “Capitalism and Freedom” in 1962 by Milton Friedman has sparked one of the majordisputes in economic theory: Is shareholder value and profit maximisation at all costs legitimate, asclaimed by Friedman? Or do companies have to conduct their business considering the needs of allwho are impacted by or impact on their business activity? Nearly fifty years into this debate havebrought the acceptance that shareholder interests need to be balanced against the environmental andsocial needs of society (Porter & Kramer, 2006). However, the major challenge for most companies isto find the right balance between economic, environmental and social performance.The aim of this paper is to show possible ways of how companies can align the seemingly presentconflict of creating shareholder value and achieving Corporate Social Responsibility (CSR). In order toachieve this overall aim, two research objectives have been defined:1. How do companies align the concept of shareholder value and CSR in practice?2. Does the way how companies achieve this alignment positively affect the long termshareholder value?Both research objectives have been assessed by conducting a thorough and critical examination ofexisting literature and research body. Additionally, in order to provide real case evidence a casecompany (BASF) was selected and assessed on both research objectives.Findings revealed that the case company pursued a triple bottom line approach.Furthermore, this approach seemed to lead to long-term shareholder value creation. This is supportedby the analysis findings that were obtained by assessing the company’s corporate social (CSP) andcorporate financial performance (CFP) and matching both figures against each other.Conclusions, as well as recommendations for future research have been provided. Although theobtained results support former evidence of a synergetic relationship between CSP and CFP, we arestill far away from being able to give a definite answer. The complexity of external and internalbusiness factors makes

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Alternative title:	How to align the conflict of being Shareholder Valueoriented and acting socially responsible at the sametime – An analytical approach
Year of publication:	2010-02-01
Authors:	Ucha Placke, Jennifer ; Arnsfeld, Torsten ; Zhang, Jane ; Henschel, Thomas
Institutions:	Fachhochschule <Osnabrück> / Fakultät Wirtschafts- und Sozialwissenschaften
Subject:	Shareholder-value-Analyse \| Agency-Theorie \| Risikomanagement \| risk management \| Corporate Social Responsibility

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Chapter 1 - Introduction
1.1 Introduction
1.2 Overall aim of this paper
1.3 Research Obejctives
1.4 Research Method
1.5 Limitations
1.6 Summary of Chapters
Chapter 2 - Literature Review
2.1 Introduction
2.2 Setting the background
2.3.Corporate Social Responsibility – The idea in brief
2.4 Why CSR? – Insights on motivational factors
2.5 Corporate Social Performance and Corporate Financial Performance–Does it pay to be good?
2.6 Conceptual Frameworks - How to align Shareholder Value and CSR
2.7 Conclusion
Chapter 3 – Methodology and Research Design
3.1 Introduction
3.2 Research aim and rationale
3.3 Research Methodology for the assessment of Research objectives
3.4 Conclusion
Chapter 4 - Analysis: Major findings and contributions to solving the research objectives
4.1 Introduction
4.2 Analysis of Research Objective 1: How does BASF align shareholder Value and CSR?
4.3 Analysis of Research Objective 2: Is there a relationship between the CSP and CFP of BASF
4.4 Assessing the relationship between BASF’s CSP and CFP
4.5 Analysis: Linking both research objectives
4.6 Summary
Chapter 5 - Conclusion
5.1 Introduction
5.2 Review: Aim and research objectives
5.3 Research Findings and Research Conclusion
5.4 Recommendations for Future Research and BASF
5.5 Final Outlook
References
Bibliography
Appendix
Appendix I
Appendix II
Appendix III
Appendix IV

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