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Proactive CSR: An Empirical Analysis of the Role of its Economic, Social and Environmental Dimensions on the Association between Capabilities and Performance

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Abstract

Proactive corporate social responsibility (CSR) involves business practices adopted voluntarily by firms that go beyond regulatory requirements in order to actively support sustainable economic, social and environmental development, and thereby contribute broadly and positively to society. This empirical study examines the role of the economic, social and environmental dimensions of proactive CSR on the association between three specific capabilities—shared vision, stakeholder management and strategic proactivity—and financial performance in small and medium enterprises (SMEs). Using quantitative data collected from a sample of 171 Australian SMEs in the machinery and equipment manufacturing sector and employing structural equation modelling, we find that the adoption of practices in each CSR dimension by SMEs is influenced slightly differently by each capability, and affects financial performance differentially. The study also demonstrates the importance of the interaction between the three dimensions of proactive CSR in positively moderating the deployment of each individual CSR dimension to generate financial performance. Paying primary attention to the economic dimension of proactive CSR and selectively focusing on social and environmental elements of proactive CSR that drive and support the economic dimension are of key importance to sustainable long-term financial success for SMEs.

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The authors would like to thank the two anonymous reviewers for their constructive and insightful comments which helped improve the quality of this paper.

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  1. Australian Innovation Research Centre, University of Tasmania, Private Bag 108, Hobart, TAS, 7001, Australia

    Nuttaneeya Ann Torugsa

  2. Griffith Business School, Griffith University, Gold Coast, QLD, 4222, Australia

    Wayne O’Donohue

  3. School of Management, University of Tasmania, Private Bag 16, Hobart, TAS, 7000, Australia

    Rob Hecker

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  1. Nuttaneeya Ann Torugsa
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Appendix

Appendix

See Tables 4, 5, 6, 7 and 8.

Table 4 Proactive CSR [Please indicate the extent to which your firm voluntarily engages in each responsible business practice that goes beyond regulatory requirements, as compared to ‘similar firms’ in your industry sector (1 = ‘not addressed issues at all’ to 5 = ‘we are the leaders on this issue’)]
Full size table
Table 5 Shared vision capability [Please tick the appropriate box below for the following statements as each relates to your firm (1 = ‘strongly disagree’ to 6 = ‘strongly agree’)]
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Table 5 Stakeholder management capability [Please tick the appropriate box below to indicate the level of attention your firm gives to each type of stakeholder in organisational decision-making. Then, please tick the appropriate box below to indicate the importance of each type of stakeholder in helping your firm to understand issues it is facing (1 = ‘very low’ to 5 = ‘very high’)]
Full size table
Table 7 Strategic proactivity capability [Please tick the appropriate box below for the following statements as each relates to your firm (1 = ‘strongly disagree’ to 6 = ‘strongly agree’)]
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Table 8 Financial performance [Please tick the appropriate box below to indicate your firm’s financial performance in the past six months compared to similar firms in your industry sector (1 = ‘much worse’ to 5 = ‘much better’)]
Full size table

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Torugsa, N.A., O’Donohue, W. & Hecker, R. Proactive CSR: An Empirical Analysis of the Role of its Economic, Social and Environmental Dimensions on the Association between Capabilities and Performance. J Bus Ethics 115, 383–402 (2013). https://doi.org/10.1007/s10551-012-1405-4

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