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- Title
CORPORATE SOCIAL RESPONSIBILITY AND ADDED FIRM VALUE IN TIMES OF UNCERTAINTY.
- Authors
Teodora, ILLE Casiana
- Abstract
Economic uncertainty lowers firm's ability to create value and the question arises whether corporate social responsibility (CSR) investments pay off in times of crisis? The purpose of the paper is to map the relationship between CSR activities and firm value in times of crisis and uncertainty from a stakeholder perspective. CSR incentives should operate as a provision of social capital, providing "insurance bonds" under uncertainty. During a global crisis, customers will be more inclined to maintain the relationship with the reputable companies rather than the questionable ones. Therefore CSR investment can actually be a strategic resource that companies need to grow in times of economic growth in order to prepare for times of crisis. Reputational capital might be the core strategic resource that adds value to a firm during periods of crisis and uncertainty due to the fact that a good reputation is associated with iower firm risk. Another dimension is whether companies can start generating reputational capital in times of crisis or stakeholders are more inclined towards companies that have a history of reputable accomplishments. It is presumed that during a crisis, companies are more inclined towards a conservative and defensive behavior (Cheney et al, 1990), choosing mostly to retain resources inside the company rather than trying to balance the interest of the stakeholders. Therefore, firms might choose not to engage in CSR related activities. Evidence suggests that usually companies significantly drop their number of CSR projects in times of financial and economic challenges (Karaibrahimoglu, 2010) but not sufficient research is conducted in this area. In times of crisis, companies experience shifts in strategy and the question is whether they should choose to keep CSR on the agenda or under uncertainty companies would better shift focus to other areas. The current study contributes to the academic literature by extending the theoretical discussion regarding CSR activities role and relevancy in times of crisis. This research also challenges corporate and entrepreneurial commitment to CSR and provides insight to the business environment by answering the question regarding the necessity of gathering white reputational resources for the black days to follow.
- Subjects
SOCIAL responsibility of business; ECONOMIC expansion; SOCIAL capital; BOND insurance; UNCERTAINTY
- Publication
Annals of the University of Oradea, Economic Science Series, 2020, Vol 29, p21
- ISSN
1222-569X
- Publication type
Article