Doing-well by doing-good?

Profit-seeking is the fundamental goal a traditional corporation aims to achieve.  Corporate social responsibility (CSR), however, holds that corporations should be responsible to more than just profit-seeking. Nevertheless, if corporations can align the incentive of profit-making (or better financial performance) with beneficial outcomes on a wider CSR level, so called “doing-well” by “doing-good”, conflict ceases between the two aims. The issue is, will “doing-good” (CSR practices that are good for society) lead corporations to “doing-well” (profit-seeking)? Utilising data from travel and tourism industries (airlines, hotels, and restaurants) across different economic regions over the period 2003–2014, two of our recent studies observed the following:

Our first study focuses on three environmental dimensions of CSR, namely emission reduction (ER), resource reduction (RR) and product innovation (PI). The findings revealed that while the “environmentally responsible” activities do not improve the corporate performance immediately, their positive influence is quite prevalent in the longer term. Specifically, RR practices by the hotel industry, engagement of PI and ER by the restaurants, and ER strategies by the airline industry, are shown to have positive influences on the corporate financial performance. 

Our second study considers the corporate donation (CD), another dimension of CSR. Here, we observed an “inverted-U shape” relation between CD and financial performance. The “inverted-U shape” supports the view that, below a certain CD level, corporations which engage in CD are able to generate more differentiation competitiveness and subsequently create higher financial profits. However, excessive allocation of CD, especially beyond the certain limit, will breed additional costs to corporation and, in consequence, deteriorate financial performance. 

Our studies hence conclude that it is the “doing-good in a right way” lead corporations to “doing-well”, and the “doing-good in a right way” depends on the industrial characteristics, dimensions of CSR, and duration.

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