Doing Good, Doing Bad, and Doing Well: Investigating the Dynamic Effectiveness of Sustainability Strategy
Open Access
- Author:
- Kang, Charles A
- Graduate Program:
- Business Administration
- Degree:
- Doctor of Philosophy
- Document Type:
- Dissertation
- Date of Defense:
- June 18, 2014
- Committee Members:
- Rajdeep Grewal, Dissertation Advisor/Co-Advisor
Rajdeep Grewal, Committee Chair/Co-Chair
Duncan Fong, Committee Member
Shrihari Sridhar, Committee Member
Saurabh Bansal, Committee Member - Keywords:
- sustainability
CSR
marketing
CSO
portfolio management
structural panel VAR - Abstract:
- In my dissertation, I investigate the dynamic effectiveness in sustainability strategy. In essay 1, I examine the dynamic relationship among corporate social responsibility (CSR), corporate social irresponsibility (CSI), and firm performance. Specifically, I address the questions of whether and how CSR relates to firm value, and, in so doing identify four mechanisms pertaining to this relationship that have been proposed in the literature: (1) slack resources lead to CSR, (2) CSR improves performance, (3) CSR makes amends for past CSI, and (4) CSR insures against subsequent CSI. I propose an economic theory model to demonstrate the complex interplay among CSR, CSI, and firm value, and empirically test aforementioned four mechanisms by using a structural panel vector autoregression specification. The results suggest that firms benefit financially from CSR and that CSI antecedes CSR. In essay 2, I study the effective sustainability practice management in the lens of portfolio theory. In particular, I seek to address what types of sustainability portfolios strategy promise the greatest return in terms of its breadth, depth, and the ratio of philanthropic vs. business related practices. The findings suggest that the effect of a firm’s CSI breadth is negative. Yet, this effect is mitigated by philanthropic/business ratio of CSI. Further, the findings suggest that this mitigation effect of philanthropic / business ratio on the breadth of CSI – firm performance link become less strong when the firm’s sustainability portfolio depth increases. In addition, the results show that the effect of a firm’s CSR breadth on firm performance is negatively moderated by the depth of CSI practices. Both essays contribute to the extant CSR / Sustainability literature and the marketing-finance interface literature by investigating the roles of CSR, CSI on firm performance and suggest guidelines to develop effective sustainability strategy to the practitioners.