Business Strategy and Corporate Social Responsibility

Yuan Yuan, Louise Yi Lu, Gaoliang Tian, Yangxin Yu

Journal of Business Ethics · 2020 · Volume 162 · Issue 2

Abstract

This study examines the relation between a firm’s business strategy and its corporate social responsibility (CSR) performance. Using a comprehensive measure of business strategy based on the Miles and Snow (Organizational strategy, structure, and process, McGraw-Hill, New York,1978, Organizational strategy, structure, and process, Stanford University Press, Stanford2003) theoretical framework, we find that firms following an innovation-oriented strategy (prospectors) are associated with better CSR performance than those following an efficiency-oriented strategy (defenders). Specifically, compared with defenders, prospectors engage in more socially responsible activities, fewer socially irresponsible activities, and perform better in both stakeholder- and third-party-related CSR areas. Taken together, our results suggest that business strategy is an important determinant of CSR performance. Prospectors take advantage of CSR, as their innovation-oriented strategy allows them not only to benefit more from CSR, but also to have more tolerance for the uncertainty, risk, and long time-horizon associated with CSR engagement.

Keywords

Business strategy, Corporate social responsibility, Long-term investment, Innovation leadership, Cost minimization

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