Journal of Business Ethics

, Volume 136, Issue 1, pp 101–117 | Cite as

Identifying the Determinants of the Decision to Create Socially Responsible Funds: An Empirical Investigation

  • Jonathan Peillex
  • Loredana Ureche-Rangau


This paper proposes an empirical assessment of the main factors behind the decision of a corporate sponsor to launch a socially responsible (SR) fund. Our analysis is performed on a database that encompasses 414 SR fund creations by 46 corporate sponsors between 1990 and 2012. We provide evidence that economic and human resources slack, leverage, low media coverage and high extra-financial performance of the corporate sponsor contribute to an increase of the probability to propose SR funds. These results lead us to argue that the introduction of such funds goes beyond the economic objective of enlarging the market share of the corporate sponsor. It may thus be seen as a particular strategy in terms of communication and signaling, due to the specific characteristics of SR funds.


Corporate sponsor Ethical finance SR funds Slack resources theory Resource-based perspectives 



Corporate social responsibility


Dow Jones Sustainability Index


Environmental, social and governance


Principles for responsible investment


Resource-based perspectives


Socially responsible


  1. Arjaliès, D.-L. (2010). A social movement perspective on finance: How socially responsible investment mattered. Journal of Business Ethics, 92(1), 57–78.CrossRefGoogle Scholar
  2. Audretsch, D. B. (1995). Firm profitability, growth, and innovation. Review of Industrial Organization, 10, 579–588.CrossRefGoogle Scholar
  3. Autore, D. M., & Kovacs, T. (2010). Equity issues and temporal variation in information asymmetry. Journal of Banking & Finance, 34(1), 12–23.CrossRefGoogle Scholar
  4. Bansal, P., & Hunter, T. (2003). Strategic explanations for the early adoption of ISO 14001. Journal of Business Ethics, 46(3), 289–299.CrossRefGoogle Scholar
  5. Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99–120.CrossRefGoogle Scholar
  6. Battacharya, M., & Bloch, H. (2004). Determinants of innovation. Small Business Economics, 22, 155–162.CrossRefGoogle Scholar
  7. Bharath, S. T., Pasquariello, P., & Wu, G. (2009). Does asymmetric information drive capital structure decisions? Review of Financial Studies, 22(8), 3211–3243.CrossRefGoogle Scholar
  8. Bourgeois, L. J. (1981). On the measurement of organizational slack. Academy of Management Review, 6(1), 29–39.Google Scholar
  9. Branco, M. C., & Rodrigues, L. L. (2006). Corporate social responsibility and resource based perspectives. Journal of Business Ethics, 69(2), 111–132.CrossRefGoogle Scholar
  10. Branco, M. C., & Rodrigues, L. L. (2008). Social responsibility disclosure: A study of proxies for the public visibility of Portuguese banks. The British Accounting Review, 40(2), 161–181.CrossRefGoogle Scholar
  11. Brunnermeier, S. B., & Cohen, M. A. (2003). Determinants of environmental innovation in US manufacturing industries. Journal of Environmental Economics and Management, 45, 278–293.CrossRefGoogle Scholar
  12. Cheng, B., Ioannou, I., & Serafeim, G. (2014). Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), 1–23.CrossRefGoogle Scholar
  13. Cumming, D. J., & Macintosh, J. G. (2000). The Determinants of R&D expenditures: A study of the canadian biotechnology industry. Review of Industrial Organization, 17, 357–370.CrossRefGoogle Scholar
  14. Curran, M., & Moran, D. (2006). Impact of the FTSE4 good index on firm price: An event study. Journal of Environmental Management, 82(4), 529–537.CrossRefGoogle Scholar
  15. Cyert, R. M., & March, J. G. (1963). A behavioral theory of the firm. Englewood Cliffs: Prentice-Hall.Google Scholar
  16. El Ghoul, S., Guedhami, O., Kwok, C. Y., & Mishra, D. R. (2011). Does corporate social responsibility affect the cost of capital ? Journal of Banking & Finance, 35(9), 2388–2406.CrossRefGoogle Scholar
  17. Frambach, R. T., Barkema, H. G., Nooteboom, B., & Wedel, M. (1998). Adoption of a service innovation in the business market: An empirical test of supply-side variables. Journal of Business Research, 41, 161–174.CrossRefGoogle Scholar
  18. Galbreath, J. (2005). Which resources matter the most to firm success? An exploratory study of resource-based theory. Technovation, 25(9), 979–987.CrossRefGoogle Scholar
  19. Gauvin, S., & Sinha, R. K. (1993). Innovativeness in industrial organizations: A two-stage model of adoption. International Journal of Research in Marketing, 10(2), 165–183.CrossRefGoogle Scholar
  20. Girerd-Potin, I., Garcès-Jimenez, S., & Louvet, P. (2011). The link between social rating and financial capital structure. Finance, 32(2), 9–52.Google Scholar
  21. Gregory, A., & Whittaker, J. (2007). Performance and performance persistence of ethical unit trusts in the UK. Journal of Business, Finance and Accounting, 34(7–8), 1327–1344.CrossRefGoogle Scholar
  22. Heinkel, R., Kraus, A., & Zechner, J. (2001). The effect of green investment on corporate behaviour. Journal of Financial and Quantitative Analysis, 36(4), 431–449.CrossRefGoogle Scholar
  23. Jeucken, M. H. A., & Bouma, J. J. (1999). The changing environment of banks. Greener Management International, 27, 21–35.Google Scholar
  24. Kandampully, J. (2002). Innovation as the core competency of a service organization: The role of technology, knowledge and networks. European Journal of Innovation Management, 5(1), 18–26.CrossRefGoogle Scholar
  25. Kempf, A., & Osthoff, P. (2008). SRI funds: Nomen Est Omen. Journal of Business, Finance and Accounting, 35(9–10), 1276–1294.CrossRefGoogle Scholar
  26. Kennedy, A. M. (1983). The adoption and diffusion of new industrial products: A literature review. European Journal of Marketing, 17(3), 31–88.CrossRefGoogle Scholar
  27. Khorana, A., & Servaes, H. (1999). The determinants of mutual fund starts. The Review of Financial Studies, 12(5), 1043–1074.CrossRefGoogle Scholar
  28. Lewis, A., & MacKenzie, C. (2000). Morals, money, ethical investing and economic psychology. Human Relations, 53, 179–191.Google Scholar
  29. McGuire, J. B., Sundgren, A., & Schneeweis, T. (1988). Corporate social responsibility and firm financial performance. Academy of Management Journal, 31(4), 854–872.CrossRefGoogle Scholar
  30. McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and financial performance: Correlation or misspecification. Strategic Management Journal, 21(5), 603–609.CrossRefGoogle Scholar
  31. McWilliams, A., Siegel, D., & Wright, P. M. (2006). Corporate social responsibility: Strategic implications. Journal of Management Studies, 43(1), 1–18.CrossRefGoogle Scholar
  32. Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221.CrossRefGoogle Scholar
  33. Nakamura, M., Takahashi, T., & Vertinsky, I. (2001). Why Japanese firms choose to certify: A study of managerial responses to environmental issues. Journal of Environmental Economics and Management, 42(1), 23–52.CrossRefGoogle Scholar
  34. Nijssen, E. J., & Frambach, R. T. (2000). Determinants of the adoption of new product development tools by industrial firms. Industrial Marketing Management, 29, 121–131.CrossRefGoogle Scholar
  35. Nilsson, J. (2009). Segmenting socially responsible mutual fund investors. International Journal of Bank Marketing, 27(1), 5–31.CrossRefGoogle Scholar
  36. Nishitani, K. (2009). An empirical study of the initial adoption of ISO 14001 in Japanese manufacturing firms. Ecological Economics, 68(3), 669–679.CrossRefGoogle Scholar
  37. Renneboog, L., Horst, J. T., & Zhang, C. (2008). The price of ethics and stakeholder governance: The performance of socially responsible mutual funds. Journal of Corporate Finance, 14(3), 302–322.CrossRefGoogle Scholar
  38. Reverte, C. (2009). Determinants of corporate social responsibility disclosure ratings by Spanish listed firms. Journal of Business Ethics, 88(2), 351–366.CrossRefGoogle Scholar
  39. Roberts, R. W. (1992). Determinants of corporate social responsibility disclosure: An application of stakeholder theory. Accounting, Organizations and Society, 17(6), 595–612.CrossRefGoogle Scholar
  40. Roberts, P. W., & Dowling, G. R. (2002). Corporate reputation and sustained superior financial performance. Strategic Management Journal, 23(12), 1077–1093.CrossRefGoogle Scholar
  41. Rogers, E. M. (1995). Diffusion of innovations (4th ed.). New-York: The Free Press.Google Scholar
  42. Sandor, R., & Flatz, A. (2002). The DJSI—A story of financial innovation. Environmental Finance, December 2011–January 2012, 21–22. Google Scholar
  43. Social Investment Forum (SIF). (2012). Report on sustainable and responsible investing trends in the United States. London: Social Investment Forum (SIF).Google Scholar
  44. Ullmann, A. (1985). Data in search of a theory: A critical examination of the relationships among social performance, social disclosure, and economic performance. Academy of Management Review, 10(3), 540–577.Google Scholar
  45. Vigéo. (2012). Green, social and ethical funds in Europe. 2012 Review, December 2012.Google Scholar
  46. Waddock, S. A., & Graves, S. B. (1997). The corporate social performance—Financial performance link. Strategic Management Journal, 18(4), 303–319.CrossRefGoogle Scholar
  47. Webley, P., Lewis, A., & MacKenzie, C. (2001). Commitment among ethical investors: An experimental approach. Journal of Economic Psychology, 22, 27–42.CrossRefGoogle Scholar
  48. Welch, E. W., Mori, Y., & Aoyagi-Usui, M. (2002). Voluntary adoption of ISO 14001 in Japan: Mechanisms, stages and effects. Business Strategy and the Environment, 11, 43–62.CrossRefGoogle Scholar
  49. Wernerfelt, B. (1984). A resource based view of the firm. Strategic Management Journal, 5(2), 171–180.CrossRefGoogle Scholar
  50. Wu, S. Y., Chu, P. Y., & Liu, T. Y. (2007). Determinants of a firm’s ISO 14001 certification: An empirical study of Taiwan. Pacific Economic Review, 12(4), 467–487.CrossRefGoogle Scholar
  51. Zajac, E. J., Golden, B. R., & Shortell, S. M. (1991). New organizational forms for enhancing innovation: The case of internal corporate joint ventures. Management Science, 37(2), 170–184.CrossRefGoogle Scholar
  52. Zaltman, G., Duncan, R., & Holbek, J. (1973). Innovations and Organizations. New York: Wiley.Google Scholar
  53. Ziegler, A., & Schröder, M. (2010). What determines the inclusion in a sustainability stock index? A panel data analysis for European firms. Ecological Economics, 69(4), 848–856.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  1. 1.CRIISEAUniversity of Picardie Jules VerneAmiens Cedex 1France

Personalised recommendations