Corporate social responsibility and operational inefficiency: A dynamic approach

Encarna Guillamon-Saorin, Magdalena Kapelko*, Spiro E. Stefanou

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

10 Citations (Scopus)

Abstract

It is yet to be determined whether the firms' operational inefficiency is reflected on the Corporate Social Responsibility (CSR) engagement approach. This paper aims to examine this association and specifically analyzes to which of the dimensions of CSR operational inefficiency is more closely related. Operational inefficiency is assessed using Data Envelopment Analysis (DEA) via dynamic inefficiency approach that accounts for the confounding role of adjustment costs related with firms' investments. Using a sample of U.S. firms in a variety of sectors from 2004 to 2015, we find that lower dynamic inefficiency occurs in firms with a higher commitment to CSR activities. We also find that dynamic inefficiency is negatively related to firms' engagement in social and corporate governance dimensions of CSR, whereas it is positively associated with the environmental dimension of CSR. In addition, dynamically inefficient companies have higher level of CSR concerns and lower of CSR strengths. The results are robust to endogeneity issues.

Original languageEnglish
Article number2277
JournalSustainability (Switzerland)
Volume10
Issue number7
DOIs
Publication statusPublished - 2 Jul 2018

Keywords

  • Corporate social responsibility
  • Data envelopment analysis
  • Dynamic technical inefficiency
  • Operational inefficiency

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