Strategic Management Quarterly

Corporate Social Responsibility and Firm Reputation Risk: Bettering Firm Reputational Risk through Socially Responsible Activities
Dr. Jamey A. Darnell

Abstract
Studies on the relationship between CSR and firm performance have primarily focused on the investment aspects and have produced mixed results. This study uses a Stakeholder theoretical lens, to examine the insurance like aspects of CSR as it relates to firm performance, in an attempt to fill both a conceptual and empirical gap in the literature on CSR. The analysis combines approaches from the strategy and finance traditions, incorporates two relatively new global data sets, and employs a non-traditional multilevel longitudinal model with CSR as the dependent variable. Socially responsible activities may provide insurance against reputational crises for firms, resulting is reduced losses. Specifically, this study finds a positive relationship between CSR and reputational risk demonstrating an additional reason why pursuing socially responsible activities makes fundamental sense for managers. The more reputational risk a firm has, the more its managers should implement CSR as part of firm strategy.

Full Text: PDF     DOI: 10.15640/smq.v9n1a1