The purpose of the chapter is to study what effect CSR has on firms' overall performance in a developing country context. While most of the previous empirical researches focused on the relationship between CSR and financial performance, the present study suggests exploring the impact of CSR on overall performance which encompasses economic, environmental, and social dimensions as well as stakeholders. The empirical study aims to analyze and measure the social and environmental involvement of large Moroccan firms operating in the main sectors of activity and located in different geographical areas. Using multiple linear regression analysis, the authors empirically test the impact of CSR on overall performance on a sample of 44 companies. The main findings reveal that CSR is a driver for improving image and reputation, enabling the firm to achieve overall corporate performance. On the basis of the main results, they set out some managerial implications and further directions for CSR research in developing countries.
TopIntroduction
Over the last decades, the interest in Corporate Social Responsibility (CSR) has steadily growing in developed and developing countries. CSR has gained in prominence on the part of both practitioners and researchers, becoming an integral part of the business and an indispensable concern in the contemporary corporate world in a broad spectrum. Moreover, CSR is seen as a real strategic necessity (Falkenberg and Brunsael, 2011; Kammoun et al., 2020a; 2020b). To engage in CSR means that a firm is taking into account environmental issues, integrating them into the scope of the firm's strategic decisions and operating in ways that improve society and the environment. As outlined by Pesqueux (2002), CSR is concretized through economic prosperity, respect for the environment and respect and improvement of social cohesion, which are the main dimensions of sustainable development at the firm level. To put it briefly, companies are called to adopt a strategic approach to CSR, with the aim of reconciling the need for competitiveness and social responsibility (European Commission, 2011). In this framework, the work of Porter and Kramer (2006, 2011) on strategic social responsibility is of key importance for the analysis of CSR practices. Their work brings out a new paradigm showing that when CSR is strategic, it becomes a tool for gaining sustainable competitive advantage (Kammoun et al., 2020a).
The adoption of social responsibility strategies leads us to assess their impacts in terms of firms' performance. When CSR becomes an important component of a firm's overall strategy, it can increase firm performance as well as generating positive social impact. In this line of thinking, companies that approach CSR strategically can leverage CSR to benefit both the firm and society (Vallaster et al., 2012). Predominantly, the commitment to a CSR strategy has an influence on firm performance that has long been reduced to its financial and economic dimensions. Within the current economic context, it makes more sense to move from a financial representation of performance to more global approaches by including the social and environmental dimensions. Therefore, performance is not long reduced to its financial dimension, but performance encompasses the economic, social and environmental dimensions. The aggregation of economic, social and environmental performance represents firm’s overall performance (Renauld, 2003). In other words, overall performance encompasses the following dimensions: economic, environmental, social and stakeholders. Herein, overall performance would be the apparent face of the implementation of sustainable development strategies by companies (Capron & Quairel, 2005). Within this context, firm's responsibility is no longer limited only to direct shareholders, but incorporates other stakeholders (associations, NGOs, trade unions, customers, suppliers, etc.). Henceforth, to be socially responsible, companies need to be accountable to themselves and their shareholders.
The underlying purpose of the present paper is to study what effect CSR has on the firm's overall performance in large companies in a developing country context. The choice of large companies is justified by two reasons. Firstly, the majority of large firms are engaged in CSR and today, many of them voluntarily provide reports on their CSR practices, risks, and activities. Secondly, the implementation of CSR approach and its integration into all aspects of the businesses become mainly effective for large companies subject to intense competitive pressures and image risks. While most of the previous empirical researches focused on the relationship between CSR and financial performance, the present study suggests exploring the impact of CSR on overall performance.
This research adds to the empirical literature on the impact of corporate social behaviour on firm-level performance and provides practical insights into how firms might improve their overall performance by integrating CSR into all aspects of business and performing financial, environmental, social responsibilities and dialogue with stakeholders. Focusing on four dimensions of CSR, we contribute to understanding how the overall performance encompasses the following dimensions: economic, environmental, social and the consideration of stakeholders. To our knowledge, the present study is among the first attempts to investigate the impact of CSR commitment on firm’s overall performance in a developing country such as Morocco.