How does CSR influence a firm's profitability? : - A case study of Sandvik

University essay from Högskolan i Gävle/Avdelningen för Industriell utveckling, IT och Samhällsbyggnad; Högskolan i Gävle/Avdelningen för Industriell utveckling, IT och Samhällsbyggnad

Abstract:

With the increased concentration on the corporate social responsibility (CSR), firms are not only required to focus narrowly on generating profit returns for shareholders, but also asked to take responsibilities for firms’ other stakeholders, e.g. customers, employees, society etc., from social, environment and economic perspectives. Hence, nowadays, both having a decent CSR performance and adding profitability are the significant aspects for the company to achieve the sustainable success in the long term. In terms of that, this dissertation aims to explore the CSR-profitability relationship, namely, to explore how does CSR influence the firm’s profitability. After reviewing related literature, and choosing the single-case research method, collecting and handling quantitative and qualitative data analysis, findings are: (1) the CSR-profitability relationship in the case company is not clear in last five years; (2) the prior finding shows ambivalent view and inconsistency with the positive mediating process, a process used to define the CSR-profitability association, of the case company. After discussion of the findings, this study concludes that: (1) the CSR-profitability relationship cannot be clearly defined due to the complex mediating process and direct or indirect effects from tangible/intangible mediating factors; (2) generally, it is not likely to measure the financial impacts from the whole CSR performance, but, the financial impacts can be measured project by project; (3) those intangible resources that related to the CSR cannot be measured; (4) the inconsistent result from the finding may due to some other reasons, e.g. the problem of depending on accounting-based approach to measure the financial impacts from CSR, influence from specific financial crisis, lacking comprehensive measurement system of CSR etc. 

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