The CSR-Firm Performance Missing Link: Complementarity between Environmental, Social and Business Behavior Criteria?

Posted: 11 Jul 2010

See all articles by Sandra Cavaco

Sandra Cavaco

University of Angers - Institute of Economic Theory and Analysis (GATE); Aarhus School of Business; University of Lyon 2

Patricia Crifo

Ecole Polytechnique, Paris - Laboratoire d'Econometrie; Université Paris X Nanterre - Department of Economics; Center for Interuniversity Research and Analysis on Organization (CIRANO)

Date Written: July 9, 2010

Abstract

This article analyzes the relationship between corporate social responsibility (CSR) and firm performance by proposing a theoretical model and by testing empirically its main predictions on a matched panel database for the biggest European listed firms over the 2002-2007 period. Our dataset gathers two sources of information: environmental, social and governance (ESG) ratings from the Vigeo database, and economic and financial performance data from the Orbis database. Using the System GMM estimator for dynamic panel data model, we test the complementarity and substitutability, that is the super- and sub-modularity between various corporate social responsibility practices, along with its impact on firm performance. We do observe that a complementarity premium on specific CSR dimensions (human resources and business behavior towards customers and suppliers) exists but also that some practices are relative substitutes (environment and business behaviors).

Keywords: Corporate social responsibility, supermodularity, panel data

JEL Classification: M14 , L21, C33

Suggested Citation

Cavaco, Sandra and Crifo, Patricia, The CSR-Firm Performance Missing Link: Complementarity between Environmental, Social and Business Behavior Criteria? (July 9, 2010). Available at SSRN: https://ssrn.com/abstract=1636868

Sandra Cavaco

University of Angers - Institute of Economic Theory and Analysis (GATE) ( email )

93, chemin des Mouilles
Monnaie et Finance at Lyon
69130 Ecully cedex
France

Aarhus School of Business

Nordre Ringgade 1
Aarhus C, DK-8000
Denmark

University of Lyon 2

93 Chemin des Mouilles
69676 Bron Cedex
France

Patricia Crifo (Contact Author)

Ecole Polytechnique, Paris - Laboratoire d'Econometrie ( email )

Route de Saclay
Palaiseau, 91128
France

Université Paris X Nanterre - Department of Economics

Nanterre Cedex, 92001
France

Center for Interuniversity Research and Analysis on Organization (CIRANO)

2020 rue University, 25th floor
Montreal H3C 3J7, Quebec
Canada

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