Unpacking Social Responsibility: The Curvilinear Relationship between Social and Financial Performance

7 Pages Posted: 30 Nov 2004

See all articles by Michael L. Barnett

Michael L. Barnett

Rutgers Business School, Newark & New Brunswick

Robert M. Salomon

New York University (NYU) - Department of Management and Organizational Behavior

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Abstract

Are financial and social performance negatively associated, positively associated, or are they simply unrelated? Common sense, theory, and a growing body of empirics have supported all of the above contradictory positions. Despite the importance of this body of research and the intensity of study directed at it, in the end, the relationship between social performance and financial performance remains in dispute. In this paper, we attempt to reconcile these divergent views through an empirical study of socially responsible investing (SRI) mutual funds. Many scholars have compared the financial performance of SRI mutual funds to those of funds that do not screen their holdings based on social criteria. The results have been mixed. Rather than comparing socially screened to unscreened mutual funds, we examine differences within socially screened funds. SRI funds vary greatly in the type and intensity of social screens they choose, as well as in the financial performance they achieve. Previous research has not accounted for this heterogeneity within social screening criteria.

Keywords: Socially responsible investing, corporate social responsibility

Suggested Citation

Barnett, Michael L. and Salomon, Robert M., Unpacking Social Responsibility: The Curvilinear Relationship between Social and Financial Performance. Available at SSRN: https://ssrn.com/abstract=624124 or http://dx.doi.org/10.2139/ssrn.624124

Michael L. Barnett (Contact Author)

Rutgers Business School, Newark & New Brunswick ( email )

NJ
United States

HOME PAGE: http://www.business.rutgers.edu

Robert M. Salomon

New York University (NYU) - Department of Management and Organizational Behavior ( email )

44 West 4th Street
New York, NY 10012
United States

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