When does it pay to stand out as stand-up? Competitive contingencies in the corporate social performance–corporate financial performance relationship

Abstract

We develop a competitive contingency model of the relationship between corporate social performance and corporate financial performance, focusing on the moderating effects of industry-based factors. We conceptualize corporate social performance as a form of strategic differentiation and predict that the positive link between corporate social performance and corporate financial performance is strongest when a firm competes in an environment that is not conducive to corporate social performance. Analyses of data from roughly 2500 publicly traded firms between 2002 and 2009 support the moderating effects of industry munificence and social orientation. We discuss the implications of our contingency model for firms seeking a competitive advantage through corporate social performance.