Relationship between corporate social performance and firm financial performance

Relationship between corporate social performance and firm financial performance There have been many theoretical and empirical debates about the relationship between corporate social performance and firm financial performance. The debate on the relationship between CSP and CFP involves two important issues: direction and causality of the relationship (Preston OBannon, 1997). Based upon the literature review, the relationship between CSP and CFP could be positive, neutral, and negative. Preston and OBannon (1997) have distinguished between the direction of the CSP-FP relationship (positive, negative or neutral) and the causal sequence: does CSP in ¬Ã¢â‚¬Å¡uence FP, does FP in ¬Ã¢â‚¬Å¡uence CSP, or is there a synergistic relationship between the two? They have developed six possible causal and directional hypotheses: social impact hypothesis, slack resources hypothesis, trade-off hypothesis, managerial opportunism hypothesis, positive synergy hypothesis and negative synergy hypothesis. The social impact hypothesis is based on the stakeholder theory which suggests that meeting the needs of various corporate stakeholders will lead to favourable FP (Freeman, 1984). According to this hypothesis, serving the implicit claims of stakeholders enhances a companys reputation in a way that has a positive impact on its FP. Conversely, disappointing these groups of stakeholders may have a negative  ¬Ã‚ nancial impact (Preston and OBannon, 1997). The results also supported good management theory that states that good management practice resulting from engagement in social domains enhances the relationship with stakeholders causing better financial performance (Freeman, 1984). Preston and OBannon (1997) was one of the surveys that used the Fortune reputation index. In particular, this survey assessed CSP according to three variables: (1) rating of community and environmental responsibility, (2) ability to select and retain good people, and (3) quality of products and services. They found that a positive relationship existed between these variables and ROA. Preston, L. E. and D. P. OBannon (1997). The corporate social-financial performance relationship: a typology and analysis, Business and Society ,vol.36, no.4 419-429. The slack resource hypothesis predicts that better FP potentially results in the availability of slack resources that may increase a  ¬Ã‚ rms ability to invest in socially responsible domains such as community and society, employee relations or environment (Waddock and Graves, 1997). One of the essential aspects of CSR and financial performance is the direction of causality. Waddock and Graves (1997) studied the empirical linkage between financial and social performance and found out that CSR was positively associated with prior financial performance. The results were in line with the slack resource theory that supports that the existence of slack resources resulting from better financial performance made companies invest in areas that are related to social domains. The results also supported good management theory that states that good management practice resulting from engagement in social domains enhances the relationship with stakeholders causing better financial performance (Freeman, 1984). Waddock and Graves (1997) reported that CSP was positively associated with prior and future CFP. They concluded that these findings indicated that not only does CSP follow CFP but also CSP drives CFP. It is notable that they measured CSP by a constructed index based on five factors related to the stakeholder and three factors with responsiveness to significant external pressure. This index is provided by a rating firm-Kinder, Lydenberg, Domini Co., Inc (KLD). Waddock, S.A. and S.B. Graves (1997). The corporate social performance-financial performance link, Strategic Management Journal, vol.18, no.4. 303-319. Waddock Graves (1997) and Dean (1998) put forward two theories to answer the question: slack resource theory and good management theory. Under the slack resource theory, a company should focus on its financial position, allowing it to contribute to the CSP. Conducting good social performance requires funds that might result from the success of fi-nancial performance. According to this theory, financial performance comes first. A good management theory holds that social performance comes first. Based on this theory, a company perceived by its stakeholders as having a good reputation will result in a stronger financial position (through market mechanism). The trade-off hypothesis supposes a negative impact of CSP on FP. This hypothesis deals with the neo classical economists position which holds that socially responsible behavior will net few economic bene ¬Ã‚ ts while its numerous costs will reduce pro ¬Ã‚ ts and shareholder wealth (Waddock and Graves,1997).This hypothesis re ¬Ã¢â‚¬Å¡ects the classic Friedman position and is supported by the well-know nearly  ¬Ã‚ nding of Vance (1975) that corporations displaying strong social credentials experience declining stock prices relative to the market average(Preston and OBannon, 1997,p.421). Studies using measures of return based on the stock market also indicate diverse results. Vance (1975) refutes previous research by Moskowitz by extending the time period for analysis from 6 months to 3 years, thereby producing results which contradict Moskowitz and which indicate a negative CSP/CFP relationship. However, Alexander and Buchholz (1978) improved on Vances analysis by evaluating stock market performance of an identical group of stocks on a risk adjusted basis, yielding an inconclusive result. Alexander, G. J., and Rogene A. Buchholz (1978) Corporate social responsibility and stock market performance. Academy of Management Journal, 21 (3): 479-486. Vance, S. C.(1975) Are socially responsible corporations good investment risks? Management Review, 64: 18-24. According to the managerial opportunism hypothesis, corporate managers may pursue their own private objectives to the detriment of both shareholders and other stakeholders ( Weidenbaum and Sheldon, 1987;Williamson, 1967, 1985).In fact, when FP is strong, managers may reduce social expenditures in order to maximize their own short-term private gains. Conversely, when FP weakens, managers may engage in conspicuous social programs in order to offset their disappointing results (Preston and OBannon, 1997). The positive synergy hypothesis supposes that higher levels of CSP lead to an improvement of FP, which offers the possibility of reinvestment in socially responsible actions (Allouche and Laroche, 2005a). Indeed, favourable CSP leads to a surplus of available funds (social impact hypothesis) which is reallocated, in part, to the different stakeholders (slack resources hypothesis). There may then be a simultaneous and interactive positive relation between CSP and FP, forming a virtuous circle (Waddock and Graves, 1997). However, according to the negative synergy hypothesis, higher levels of CSP lead to decreased FP, which in turn limits the socially responsible investments. There may then be a simultaneous and interactive negative relation between CSP and FP, forming a vicious circle. While empirical results concerning the nature of the relationship between CSP and FP continue to be mixed, the largest number of investigations found a positive relationship. This tendency towards the positivism of the CSP-FP link is supported by subsequent Meta analysis (Allouche and Laroche, 2005b; Orlitzky et al., 2003; Wu, 2006). Another study was conducted by Orlitzky HYPERLINK http://www.emeraldinsight.com/journals.htm?issn=1741-0401volume=59issue=3articleid=1846089show=html#idb45et al.HYPERLINK http://www.emeraldinsight.com/journals.htm?issn=1741-0401volume=59issue=3articleid=1846089show=html#idb45 (2003) who found a strong correlation between corporate financial performance and corporate social/environmental performance. This relationship is more strongly pronounced for theaccounting based measures of performance than the market-based measures of performance (Orlitzky HYPERLINK http://www.emeraldinsight.com/journals.htm?issn=1741-0401volume=59issue=3articleid=1846089show=html#idb45et al.HYPERLINK http://www.emeraldinsight.com/journals.htm?issn=1741-0401volume=59issue=3articleid=1846089show=html#idb45, 2003). Another vein of research focused on the causal relationship between CSP and FP. For instance, using traditional statistical techniques, Waddock and Graves (1997) and Hillman and Keim (2001)  ¬Ã‚ nd a positive synergistic relationship between CSP and FP showing the existence of a virtuous circle between the two constructs .McGuire et al.(1988)  ¬Ã‚ nd that lagged FP measures lead to improved current CSP measures, but the latter does not affect FP. In a more recent study, Nelling and Webb (2006) examine the causal relationship between CSP and FP by introducing a new econometric technique, the Granger causality approach. Their  ¬Ã‚ ndings suggest that, using ordinary least square (OLS) regression models, CSP and FP are related. In disagreement with prior empirical research, they  ¬Ã‚ nd a lower relationship between CSP and FP when employing a time series  ¬Ã‚ xed effects approach. The same result is found when introducing Granger causality models. Furthermore, by focusing on individual measures of CSP, they  ¬Ã‚ nd causality running from stock market performance to CSP ratings regarding employees relationships. In addition to those large-scale American empirical studies, Mahoney and Roberts (2007) have examined the relationship between CSP and FP in the Canadian context. This study has examined the relationship between these constructs using the CSID measure of CSP.1 Contrary to Waddock and Graves (1997), Mahoney and Roberts (2007) found no signi ¬Ã‚ cant relationship between a composite measure of a  ¬Ã‚ rms CSP and FP. However, using a one-year lag, their  ¬Ã‚ ndings indicate as igni ¬Ã‚ cant positive relationship between individual measures of a  ¬Ã‚ rms CSP regarding environmental and international activities and FP. This study has examined only one direction of causality: from CSP to FP. The latest study of corporate social and financial performance was done by Mahoney and Roberts (2007). They performed empirical analyses on a large-sample of publicly held Canadian companies. Based on tests utilizing four years of panel data they found no significant relationship between a composite measure of companies social and financial performance. However, they found significant relationships between individual measures of companies social performance regarding environmental and international activities and financial performance. Mahoney, L., Roberts, R.W., 2007. Corporate social performance, and financial performance and institutional ownership in Canadian firms. Accounting Forum 31, 233- 253. Rim Makni, Claude Francoeur Franà §ois Bellavance (2009). Causality Between Corporate Social Performance and Financial Performance: Evidence From Canadian Firms. Journal of Business Ethics 89 (3). This study assesses the causal relationship between corporate social performance (CSP) and financial performance (FP). We perform our empirical analyses on a sample of 179 publicly held Canadian firms and use the measures of CSP provided by Canadian Social Investment Database for the years 2004 and 2005. Using the Granger causality approach, we find no significant relationship between a composite measure of a firms CSP and FP, except for market returns. However, using individual measures of CSP, we find a robust significant negative impact of the environmental dimension of CSP and three measures of FP, namely return on assets, return on equity, and market returns. This latter finding is consistent, at least in the short run, with the trade-off hypothesis and, in part, with the negative synergy hypothesis which states that socially responsible firms experience lower profits and reduced shareholder wealth, which in turn limits the socially responsible investments

Native Americans in “The Pearl” by John Steinbeck Essay

Steinbeck’s The Pearl is one of his most intriguing pieces. Steinbeck manages to fit many different ideas into a short novella that is under a hundred pages. However, what makes The Pearl truly a great book is his critique of colonial society, and the interaction of Native Americans and colonists. Steinbeck emphasizes the differences between the colonists and the native Indians by using such symbols as the relationship between town and village, education, and instinct. Steinbeck also shows that he views changing one’s station, or attempting to, as foolish and impossible, but that trying to is needed to provide an example for others. Steinbeck uses the differences between town and village as a metaphor for the differences between the colonists and the Native Americans. Steinbeck shows how he uses the stark differences between the huts of the Native Americans and the grand villas of the colonists in the following quote:†They came to the place where the brush houses stopped and the city of stone and plaster began, the city of harsh outer walls and inner cool gardens where a little water played and the bougainvillea crusted where walls with purple and brick-red and white.† (Steinbeck, pg. 8) In this quote, Steinbeck emphasizes the stark difference between the village, made of simple materials, and the town, made of expensive materials. Steinbeck also uses the town’s buildings as a metaphor for the people within, as Steinbeck describes the buildings as having â€Å"harsh outer walls,† but having â€Å"inner cool gardens.† This could be a metaphor for the people within the building, portraying the people inside them as, at once, very kind and nice, but only once those walls had been let down. This shows the colonists as being very xenophobic, and being kind to their own race but â€Å"harsh† to other races. Steinbeck reinforces the idea that the colonists were living better than the Native Americans in the following quote:†The procession left the brush houses and entered the stone and plaster city where the streets were a little wider and there was a narrow pavement beside the buildings.† (Steinbeck, pg. 47)Steinbeck shows that the Native Americans saw the colonists’ living conditions as better than theirs, and that the streets were â€Å"a little wider,† which could be seen as a commentary for most things, and that in most things, what the colonists lived â€Å"a little† better.  Steinbeck here tells us, and when combined with the quote above, the colonists are living better than the Native Americans. Because the colonists have plenty of resources, and the Native Americans are not living in the luxury of the colonists, it indicates an unfair share of wealth, which is oddly skewed in the favor of the colonists. This reinforces the already presented ide a that the colonists are, overall, living better than the Native Americans. Steinbeck’s next way to differentiate between the colonists and the Native Americans is using their instinctual actions. Steinbeck shows that the colonists and Native Americans are instinctively different, thus he attempts to give an excuse, or perhaps a reason, for the differences between them, and their outcomes. Steinbeck explores into the instinctual differences between the Native Americans and the colonists in the following quotes:†There was sorrow in Kino’s rage, but this last thing had tightened him beyond breaking. He was an animal now, for hiding, for attacking, and he lived only to protect himself and his family†¦ [despite his need for a canoe,]†¦never once did it occur to him to take one of the canoes of his neighbor.† (Steinbeck, pg. 42) â€Å"He could kill the doctor more easily than he could talk to him, for all of the doctor’s race spoke to all of Kino’s race as though they were simple animals.† (Steinbeck, pg. 9)Once again, we can see the recurring theme that the Native Americans have become whatever the colonists mold them to be, and as seen in the second quote, Steinbeck says that â€Å"the doctor’s race spoke to all of Kino’s race as though they were simple animals†¦,† and Steinbeck says in the first quote that Kino â€Å"was an animal now†¦.† This shows that Kino, and his people as a whole, have become what the colonists have made them, and that they have become whatever the colonists wished them to be. This shows that the colonists control every facet of Native American life, and that anything that they want to be done will be done. Steinbeck shows that the colonists have been raised with the instinctive belief that they were above the Native Americans, and that they were better than the Native Americans:†Have I got nothing better to do than cure insect bites for ‘little Indians’? I am a doctor, not a veterinary.† (Steinbeck,  pg. 11)This shows that the doctor thought that the Indians were â€Å"animals,† and because of the fact that the colonists have been molding the Indians beliefs, the Indians thought that they were animals, perhaps resulting in the instinctive animal behavior. Steinbeck says in the previous quote that the colonists treated â€Å"Kino’s race† like that, so perhaps it has become an instinctual reaction to the oppression of the colonists. Steinbeck says that Kino was an animal who â€Å"lived only to protect himself and his family,† showing that he did it as an instinctive defense, and that he only becomes an animal to protect his family. Steinbeck also emphasizes that Kino becomes his animal alias only when he needs to hide or protect himself. This shows that Kino’s people have developed this as a natural defense, and its use is only for defense. This also shows that his people developed it for need of defense, and that continual need of protection is the only reason such a protection would be needed, and there is only one source for this continuous onslaught, and that is the colonists. Steinbeck also goes so far as to say that the instinctive animal that Kino becomes retains all of the qualities that Kino retains, even so far as his lack of will to steal from his own kind. This shows that Kino’s alias does not seek survival of Kino as a person, but Kino’s race as a whole. He is unwilling to take from his people, as his alias is unwilling to damage itself. If his alias is for the protection of a whole group of people, then they must be under attack from a large group of people, giving us the structure of the assumption that the colonist society persecutes the Native Americans and the Native Americans have developed instincts for their protection. â€Å"†¦the strangers came with argument and authority and gunpowder to back up both. And in the four hundred years [since,] Kino’s people had learned only one defense- a slight slitting of the eyes and a slight tightening of the lips and a retirement. Nothing could break down this wall, and they could remain whole within the wall.† (Steinbeck, pg. 17)In this quote Steinbeck shows another instinct, reclusion behind an inner shell, the creation of which has been directly linked to the coming of colonist society. However,  this reaction shows more of the actual standpoint of the Native American society, as reactive, and unable to be proactive. This reactivity means that the situation will remain the same, and if this was the way that Kino’s ancestors were and will be, then this situation will remain the same until stopped by outside intervention. This also shows that the Native American society has chosen to preserve itself within their shell, and to submit outside of it. Whenever attacked outside of the shell, they shelter inside their shell of refusal to change, as shown in the above quote. This results in the situation remaining a perfect clone of the situation that it was when it started, resulting in continuing colonist oppression. If the only place that they can take refuge is within personal shell, then they cannot control anything outside their shell, and they are therefore powerless outside their shell. The colonist society, as a whole, exerts their control over the Native American population using the yoke of education. â€Å"This is our one chance†¦ [our son] must break out of the pot that holds us in.† (Steinbeck, pg. 103)Steinbeck here shows what that the Native Americans see lack of education as a â€Å"pot that holds us in.† This also shows that they do not get any chances to learn, for if they did, then they would have more than â€Å"one chance.† As the only way they can learn is to be taught by an educated person, and the only educated people are the colonists, the colonists must be withholding education. This shows that the colonists might be intentionally trying to keep the Native Americans in their â€Å"pot.† It is also interesting that this â€Å"pot† is probably the same as the â€Å"shell† that the Native Americans hide in. â€Å"He did not know, and perhaps this doctor did. And he could not take the chance of pitting his certain ignorance against this man’s possible knowledge. He was trapped as his people were always trapped, and would be until†¦ they could be sure that the things in the books were really in the books.† (Steinbeck, pg. 76)This shows an example of how the colonists use education to control the Native American population. â€Å"He was trapped as his  people were always trapped, and would be until†¦they could be sure that the things in the books were really in the books.† This specific sub-phrase shows how his people trusted the books as reliable sources, information that the colonists must have planted. If the colonists planted the knowledge that the books were reliable, being the only people who could read the books, anything and everything that they said about the books, if not a lie, was true. And as the Native Americans did not know when people were lying, anything that a colonist said could be definitely accurate, or a lie. The risk seemed too much and the Native Americans usually did as they said, as Kino does, because they are afraid of matching their â€Å"certain ignorance against [the colonists’] possible knowledge.†Steinbeck also continually shows that the colonists use their control of religion, through their knowledge of education, as another way of controlling the Native American populace. â€Å"It was a good idea, but it was against religion†¦The loss of the pearl[s] was a punishment visited on those who tried to leave their station. And the father made it clear that each man and woman is†¦a soldier sent by god to guard some part†¦of the Universe†¦.But each one must remain faithful to his post and must not go running about, else the castle is in danger from the assaults of Hell†¦.† (Steinbeck, pg. 42)This shows that the colonists use their knowledge of religion, due to their reading ability, to keep the Native Americans thinking that they are doing God’s will, or, if they believe otherwise, do so out of fear of being incorrect. The colonists tell the Native Americans that they have to stay in their current position in life, living as poor peasants who treat the colonists as royalty, because that that is God’s will. Because the Native Americans are unsure of what is correct, they take what is, to them, the safer approach, b y doing as the colonists say. The colonists also bring in faith, by saying that if they are not faithful to their post, and thus not faithful to their religion, which would be considered blasphemy by the religious Native Americans, then they would be in danger of the attack from the â€Å"assaults of hell,† which could be  interpreted as going to hell, which the religious Native Americans would be very afraid of. â€Å"†¦I heard him make that sermon†¦he makes it every year.†This shows that the colonists try to keep the Native Americans in line, and that it is, again, a group effort and that the entire colonist community works as one in achieving their goal, the exploitation of the Native American society. This also shows that they do this repeatedly, and probably have for been using the same methods for centuries. This also shows that this oppression is not a one-time thing, and that it is a continuous, calculated, malicious oppression of a race. Steinbeck has shown throughout The Pearl his opinions on the differences between the colonists and the Native Americans by showing their relationship, as the type of relationship is based upon the differences of its members. Steinbeck shows this through the differences between town and village, instinct, and education. Steinbeck portrays the colonists as aggressive, abusive, and manipulative throughout the book, especially towards the Native Americans. The Native Americans are portrayed as obedient, acknowledgeable, and living as underlings for the colonist society. The Pearl by John Steinbeck. The Viking Press & William Heinemann, 1947. ISBN: 0-14-017737-X

Macbeth Essay and Rennassance Period

The Renaissance Period The renaissance period started between the 14th and the 17th centuries ,and it? s associated to the rediscovery of the ancient Roman and Greek classics, geographical and astrological discoveries and the religious reformation, characterizes itself as a movement of thinking. Basically the Renaissance period the humanists try to make the feudalists and the ideas of the middle ages get extinct,and like this way ,introduce many new ideas of the rising bourgeoisie,and also to reconsider the purity of the Christian Church.Also there are many ways in which we can see that the Renaissance was a time of light for many thinkers, writers, etc. : as it sought to introduce blizzard poetic forms such as: the sonnet, free verse, these adapted to new topics with great interest communicating targets and new objectives humanists.The Renaissance was based on models of Greek and Roman classics, and precedents from Italy and Spain, the Spanish drama has evolved since the interludes and morality plays and became a complex art form, thus taking considered as the best known as dramatists, Christopher Marlowe, William Shakespeare and Ben Jonson, who wrote plays with such universal qualities of greatness, and that is why this drama becomes extraordinary and leaves a monument of the Renaissance in the history of English literature. The Renaissance, tend to emphasize the dignity of man and his earthly happiness was reflected in the work carried out in the period.Macbeth One of the most shocking things in Macbeth is the continued clash between the spirit of Macbeth and Lady Macbeth. While the former starts out good and faithful and is corrupted by his wife to the point of disappearing remorse from the beginning, the second starts completely cold and perverse but will decline in the course of the work into a freaking bag of remorse so that is continually hands stained with blood and suicide. I was struck by the fact that Macbeth is killed in battle trying to end their action while his wife, initially strong, committed suicide.Just how dies each compared with its initial intention is enough to see the exchange of roles: the weak just being strong and vice versa. A very striking point in the work is the continuous appearance of remorse in the protagonists. As Lady Macbeth says that their actions have destroyed his happiness and the evil they have done makes them suffer. Some allusions to remorse are the dagger that Macbeth sees before killing the king, the specter of Banquo, the blood on Lady Macbeth's hands are not going, etc. ..I do not know how Shakespeare is a failure or is that I misunderstood something, but there is a mistake in the plot: the witches in his second appearance predict that Banquo will father a line of kings and later appears again this idea in the third appearance of the witches. However, once dead Macbeth, the successor to the throne is not Fleance, son of Banquo, as would be expected if the prophecies were fulfilled, but Malc olm, Duncan's natural successor. The prophecy and reality are incompatible in this case, and only in this case, the rest of all prophecies are fulfilled.

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