Informing About CSR Initiatives on the Corporate Website or Staying Invisible?

This paper studies the communication of the corporate social responsibility (CSR) behaviour of 1,054 Italian small and medium-sized enterprises (SMEs). Manufacturing companies in controversial industries have a greater propensity to communicate corporate CSR practices, and CSR information increases with firm size, but only slightly. At the same time, the empirical analysis shows that companies in controversial industries have a lower probability of having a website. This raises issues regarding the propensity of controversial firms to set up a website, since it could expose them to public scrutiny and criticism.

Corporate social responsibility, job pursuit intention, quality of work life and employee performance: case study from Indonesia controversial industry

PurposeThis paper aims to examine whether companies in Indonesian controversial industries can rely on their corporate social responsibility (CSR) practices to improve potential employees' job pursuit intention, which lead to a higher quality of work life (QWL) and a better performance from their employees.Design/methodology/approachThe target respondents are interns, staff and supervisors of 42 Indonesian listed companies in controversial industries. The data collection method is performed by distributing questionnaires using a seven-point Likert scale. Collected data using partial least squares (PLS) analysis are conducted and tested.FindingsConsistent with the existing result, the authors find out that potential employees have a higher intention to join and accept a job offer from companies with a higher level of CSR practices. Regarding the corporate social responsibility, it is further proven to have a positive effect on employee's quality of work life. More interestingly, the findings of the current study reveal that CSR also affects employee performance (EP), both directly and indirectly, through QWL.Research limitations/implicationsFindings demonstrate that CSR in Indonesian controversial industry represents an important factor for recruiting top employees that lead to the improvement of the employee's quality of work life and performance.Practical implicationsThe findings indicate that enterprises should be more concerned about CSR engagement in attracting new talents, enhancing the quality of work life and cultivating the employee's performance.Originality/valueThis study enhances previous supports and studies on the concept of CSR and human resource management by analyzing the relationship between CSR and employee performance. Previous researches have concentrated their objectives in finding the link between CSR and the financial performance of a company. However, it must be understood that a company's success actually hinges on the performance of one of their greatest assets, the human resources. Additionally, due to the change in generations that will be the job seekers, recruitment strategy to attract job applicants and improve the job pursuit intention (JPI) is now needed more than ever. One of the strategies that Indonesian companies can use to do so is by practicing CSR. Hence, this is the first study in an attempt to observe the overall relationship of the CSR with the job pursuit intention, QWL and EP, especially in the controversial industries. The study will drive companies to intensify their efforts in maintaining good employee performance.

Corporate philanthropic giving and sustainable development

PurposeThis paper aims to use the social impact hypothesis and the shift of focus hypothesis to examine what drives controversial industries to make philanthropic donations: sustainable development, which can in turn lead to higher firm performance or a better corporate image.Design/methodology/approachThis study employed a sample of Chinese firms from 2008–2015 and conducted regression analysis to explore the motivations behind corporate philanthropy.FindingsPhilanthropic giving is positively and significantly related to all indicators of firm performance; the interaction term of controversial industries and philanthropic giving is also positively and significantly related to firm performance. The empirical evidence supports the social impact hypothesis.Practical implicationsThe empirical evidence shows that firms engage in philanthropic giving, mainly in pursuit of their own interests. Hence, managers should consider the inherent characteristics of the company and then combine social interests with their economic interests to design a philanthropic strategy of their own, which can in turn contribute to sustainable development.Originality/valueThis paper empirically confirms that the social impact hypothesis holds for the philanthropic activities of Chinese firms. This is a rare finding in related studies.

Robo-investment aversion

In five experiments (N = 3,828), we investigate whether people prefer investment decisions to be made by human investment managers rather than by algorithms (“robos”). In all of the studies we investigate morally controversial companies, as it is plausible that a preference for humans as investment managers becomes exacerbated in areas where machines are less competent, such as morality. In Study 1, participants rated the permissibility of an algorithm to autonomously exclude morally controversial stocks from investment portfolios as lower than if a human fund manager did the same; this finding was not different if participants were informed that such exclusions might be financially disadvantageous for them. In Study 2, we show that this robo-investment aversion manifests itself both when considering investment in controversial and non-controversial industries. In Study 3, our findings show that robo-investment aversion is also present when algorithms are given the autonomy to increase investment in controversial stocks. In Studies 4 and 5, we investigate choices between actual humans and an algorithm. In Study 4 – which was incentivized – participants show no robo-investment aversion, but are significantly less likely to choose machines as investment managers for controversial stocks. In contrast, in Study 5 robo-investment aversion is present, but it is not different across controversial and non-controversial stocks. Overall, our findings show a considerable mean effect size for robo-investment aversion (d = –0.39 [–0.45, –0.32]). This suggests that algorithm aversion extends to the financial realm, supporting the existence of a barrier for the adoption of innovative financial technologies (FinTech).

Does corporate social responsibility affect the cost of equity in controversial industry sectors?

Purpose This paper aims to examine whether corporate social responsibility influences the cost of equity capital of firms operating in controversial industry sectors. Design/methodology/approach This paper computes the ex-ante cost of equity capital implied in analyst earnings forecasts and stock prices for a sample of 2,006 US firm-year observations belonging to controversial industry sectors (alcohol, tobacco, gambling, military, firearms, nuclear power, oil and gas, cement and biotechnology) during the period 1991-2012. The baseline regression model links CSR score to the implied cost of equity capital (ICC) and controls for firm-specific characteristics, industry factors and economic or market-wide factors. This model enables to capture the differential effect of CSR on ICC when the firm belongs to a specific sector of the controversial industries by adding an interaction term between CSR and the dummy variable representing this belonging. Findings The findings show two main results. First, CSR engagement significantly reduces the implied cost of equity capital (ICC) in all controversial industry sectors, taken as a group, as well as in each one of these sectors individually. Second, this effect is more pronounced when the firm belongs to the alcohol and tobacco industry sectors. Practical implications The findings have two important practical implications. First, they should increase managers’ confidence and incentives, in controversial industry sectors, to pursue CSR activities. Second, policymakers can encourage managers to undertake CSR initiatives in controversial industry sectors through tax incentives (e.g. reduce taxes for CSR related investment projects). Originality/value This paper extends prior studies that investigate the perceptions of capital market participants of firm’s CSR commitment (Sharfman and Fernando, 2008; Goss and Roberts, 2011; El Ghoul et al., 2011; Jo and Na, 2012; Bouslah et al., 2013) by examining the effect of CSR on ICC in the controversial industry sectors. It contributes to the debate around the relevance of CSR in controversial sectors by providing evidence of the reduction effect of CSR activities on ICC in controversial industries and by showing that this reduction impact is more pronounced when the firm belongs to alcohol, tobacco industry sectors.