Revisiting the financial performance – corporate social performance link

Serin Choi, Seoki Lee

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

Purpose: The existing literature has focused heavily on investigating the effect of corporate social performance (CSP) on financial performance (FP) but has not paid sufficient attention to an inverse causation of the relationship. Moreover, while some of the literature argues that FP positively affects CSP, based on the slack resources theory, others have found negative effects of FP on CSP, supporting the managerial opportunism perspective. Thus, this paper aims to address the impact of FP on CSP. Further, this study examines the moderating role of franchising to better understand the relationship. Design/methodology/approach: This study uses and expands the models derived from the CSP literature to confirm the effects of FP on CSP with the moderating role of franchising within the restaurant industry. Using two-way fixed effects models, it effectively addresses important problems embedded in the panel data. Findings: The findings show a positive effect of FP on CSP, which is inconsistent with Park and Lee’s (2009) findings and supports the slack resources theory. Further, the interesting results show that the impact of FP on CSP diminishes as a firm franchises more, supporting the double-sided moral hazard framework of the agency theory. Originality/value: This paper fills the lacuna in both the existing literature on the relationship between CSP and FP and the franchising. This study contributes to enhancing restaurant practitioners’ understanding of the double-sided moral hazard of agency theory unique to franchising context.

Original languageEnglish (US)
Pages (from-to)2586-2602
Number of pages17
JournalInternational Journal of Contemporary Hospitality Management
Volume30
Issue number7
DOIs
StatePublished - Jul 9 2018

All Science Journal Classification (ASJC) codes

  • Tourism, Leisure and Hospitality Management

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