Analyzing the Impact of Corporate Social Responsibility on the Profitability of Multinational Companies: A Descriptive Study

Dr. R.  Dhaneesh; Iswarya  V.S; Sanjay Nakharu  Prasad Kumar

Dr. R. Dhaneesh Assistant Professor, Department of Management Studies Amrita College of Engineering and Technology, Nagercoil, Tamilnadu, India
Iswarya V.S Department of Business Administration Nanjil Catholic College of Arts and Science, Kaliyakkavilai
Sanjay Nakharu Prasad Kumar School of Engineering and Applied Science, Data Scientist, San Francisco, CA, USA

Keywords: Corporate Social Responsibility (CSR);, Corporate Profitability;, CSR-profitability relationship;, Corporate Reputation; Customer Satisfaction;, Customer Loyalty

Abstract

In today's business environment, corporate social responsibility (CSR) is becoming more and more significant. Companies should be concerned about the interests of their stakeholders, but they should also focus greater attention on areas other than just profit-making. Most individuals used to believe that firms exploited customers. This research work intends to find the impact of corporate social responsibility on the profitability of the selected Multinational Companies in India. Five multinational companies were randomly selected and relevant information was collected from the higher officials (n=263) of the selected companies. The study employed techniques including frequency analysis, f-test analysis, and correlation analysis. The results revealed that corporate social responsibility influences corporate reputation and corporate financial satisfaction. In addition, CSR impacts customer satisfaction and customer loyalty. Accordingly, the study suggested that multinational corporations step up their commitment to giving back to society by developing a framework for CSR spending to raise Indians' standards of living to the point where their good reputation will result in a positive and significant increase in profitability, as this is necessary for their continued operation in the nation.

References

Awaysheh, A., Heron, R.A., Perry, T. and Wilson, J.I., 2020. On the relation between corporate social responsibility and financial performance. Strategic Management Journal, 41(6), pp.965-987.
Ben Brik, A., Rettab, B. and Mellahi, K., 2011. Market orientation, corporate social responsibility, and business performance. Journal of Business Ethics, 99(3), pp.307-324.
Boesso, G., Favotto, F. and Michelon, G., 2015. Stakeholder prioritization, strategic corporate social responsibility and company performance: further evidence. Corporate Social Responsibility and Environmental Management, 22(6), pp.424-440.
Chan, L.Y., 2014. Corporate social responsibility of multinational corporations.
Davis, G.F., Whitman, M.V. and Zald, M.N., 2006. The responsibility paradox: Multinational firms and global corporate social responsibility. Ross School of Business Paper, (1031).
Edwards, T., Marginson, P., Edwards, P., Ferner, A. and Tregaskis, O., 2007. Corporate social responsibility in multinational companies: Management initiatives or negotiated agreements? Internat. Inst. for Labour Studies.
Gonzalez-Perez, M.A., 2013. Corporate social responsibility and international business: A conceptual overview. International business, sustainability and corporate social responsibility.
Gürlek, M., Düzgün, E. and Uygur, S.M., 2017. How does corporate social responsibility create customer loyalty? The role of corporate image. Social Responsibility Journal.
Islam, T., Islam, R., Pitafi, A.H., Xiaobei, L., Rehmani, M., Irfan, M. and Mubarak, M.S., 2021. The impact of corporate social responsibility on customer loyalty: The mediating role of corporate reputation, customer satisfaction, and trust. Sustainable Production and Consumption, 25, pp.123-135.
Kuo, T.C., Chen, H.M. and Meng, H.M., 2021. Do corporate social responsibility practices improve financial performance? A case study of airline companies. Journal of Cleaner Production, 310, p.127380.
Lins, K.V., Servaes, H. and Tamayo, A., 2017. Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. the Journal of Finance, 72(4), pp.1785-1824.
Liu, Y., Saleem, S., Shabbir, R., Shabbir, M.S., Irshad, A. and Khan, S., 2021. The relationship between corporate social responsibility and financial performance: A moderate role of fintech technology. Environmental Science and Pollution Research, 28(16), pp.20174-20187.
McWilliams, A. and Siegel, D., 2000. Corporate social responsibility and financial performance: correlation or misspecification?. Strategic management journal, 21(5), pp.603-609.
Michelon, G., Boesso, G. and Kumar, K., 2013. Examining the link between strategic corporate social responsibility and company performance: An analysis of the best corporate citizens. Corporate social responsibility and environmental management, 20(2), pp.81-94.
Mishra, S. and Suar, D., 2010. Does corporate social responsibility influence firm performance of Indian companies?. Journal of business ethics, 95(4), pp.571-601.
Pava, M.L. and Krausz, J., 1996. The association between corporate social-responsibility and financial performance: The paradox of social cost. Journal of business Ethics, 15(3), pp.321-357.
Patnaik, S., Temouri, Y., Tuffour, J., Tarba, S. and Singh, S.K., 2018. Corporate social responsibility and multinational enterprise identity: insights from a mining company's attempt to localise in Ghana. Social Identities, 24(5), pp.604-623.
Peloza, J. and Papania, L., 2008. The missing link between corporate social responsibility and financial performance: Stakeholder salience and identification. Corporate Reputation Review, 11(2), pp.169-181.
Petrenko, O.V., Aime, F., Ridge, J. and Hill, A., 2016. Corporate social responsibility or CEO narcissism? CSR motivations and organizational performance. Strategic Management Journal, 37(2), pp.262-279.
Siyal, S., Ahmad, R., Riaz, S., Xin, C. and Fangcheng, T., 2022. The impact of corporate culture on corporate social responsibility: Role of reputation and corporate sustainability. Sustainability, 14(16), p.10105.
Wang, C.C., 2020. Corporate social responsibility on customer behaviour: the mediating role of corporate image and customer satisfaction. Total Quality Management & Business Excellence, 31(7-8), pp.742-760.
Yin, J. and Jamali, D., 2016. Strategic corporate social responsibility of multinational companies subsidiaries in emerging markets: Evidence from China. Long Range Planning, 49(5), pp.541-558.
Zhang, Q., Cao, M., Zhang, F., Liu, J. and Li, X., 2020. Effects of corporate social responsibility on customer satisfaction and organizational attractiveness: A signaling perspective. Business ethics: A European review, 29(1), pp.20-34.
Zhao, Y., Abbas, M., Samma, M., Ozkut, T., Munir, M. and Rasool, S.F., 2021. Exploring the relationship between corporate social responsibility, trust, corporate reputation, and brand equity. Frontiers in Psychology, 12, p.766422.
Zhou, G., Sun, Y., Luo, S. and Liao, J., 2021. Corporate social responsibility and bank financial performance in China: The moderating role of green credit. Energy Economics, 97, p.105190.