The Relationship Between CSR, Corporate Governance, and Firm Performance: Evidence From Moroccan Listed Firms

The Relationship Between CSR, Corporate Governance, and Firm Performance: Evidence From Moroccan Listed Firms

Souhaila Kammoun (IHEC, CODECI, University of Sfax, Tunisia), Sahar Loukil (University of Sfax, Tunisia), Youssra Ben Romdhane (University of Sfax, Tunisia) and Abdelmajid Ibenrissoul (ENCG, University Hassen II, Casablanca, Morocco)
DOI: 10.4018/978-1-7998-2128-1.ch015


Research has been conducted to extend our understanding of CSR by revealing CG mechanism antecedent effects on firm social engagements. In spite of this, few studies aimed to understand the impact of the performance of those mechanisms on CSR. To our knowledge, our study is the first to measure CG performance and its role in the expansion of CSR in an emerging country. We also analyze some component of firm performance that could potentially affect a firm's social commitment. Using a data survey questionnaire consisting of 37 items assessing CSR engagement measured by a self- constructed index and firm level data of 76 listed Moroccan firms, empirical results underline the impact of corporate governance performance and firm's performance on CSR. These results suggest that governance mechanism performance and firm performance are principal drivers of CSR particularly for big business. Debts have shown a reducing effect. Thus, our study of CSR commitment index allows for a clearer and more robust assessment of CG on Moroccan firm CSR activities.
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Corporate Social Responsibility (CSR) has generated great interest for many practitioners and researchers in the last two or three decades and has become a widespread movement in both developed and developing countries. Undoubtedly, there is a large body of theoretical and empirical research on the topic, especially now that the term of CSR has expanded to entail social, environmental and economic interests at both macro and micro levels (Rok, 2019).

From a theoretical standpoint, we have witnessed a growing interest in this area and various definitions for CSR have been proposed. Some sociologists speak of an elastic concept and thus by nature is easy to transpose in different intellectual, social or institutional contexts and therefore easy to disseminate in all developed countries. The OECD sees that CSR can mean different things to different groups, sectors and stakeholders and is always evolving. In this context, the study of Dahlsrud (2008) identified 37 definitions from 27 authors. According to the author, ‘confusion is not so much about how CSR is defined, as about how CSR is socially constructed in a specific context’. If, there is no clear consensus on a universal definition of CSR, it should be noted that all definitions relate to how business takes into account the economic, social and environmental dimensions in the way it acts up, maximising the economic benefits and minimising the downsides. For our framework, we focus on definitions of CSR that included more description of the nature of the practice. In this line of thinking, Carroll (1979) placed CSR within a framework of corporate social performance; including four types of CSR: economic, legal, ethical and discretionary. Similarly, Drucker (1984) defined CSR as a way of tackling social problem(s) to realise positive ‘economic benefit(s)’ and wealth’. In 2002, the European Commission defines CSR as ‘the voluntary integration by companies of social and environmental concerns into their business activities and their relations with their stakeholders’. Additionally, Jamali and Mirshak (2007) characterised CSR as a set of management practices that extend beyond the normal legal, ethical, commercial and public demands. They outlined that a firm can create economic growth and therefore should have moral duty to undertake practices which may increase both opportunity and economic growth in a fair and sustainable way. In a similar vein, Frimousse and Peretti (2017) recognised that CSR can create value by taking into account the broader conception of performance, the development of partnership between companies.

From an empirical standpoint, the notion of CSR expresses an awareness of the negative impacts that the activities of industrial companies can have on human communities and the environment (Ibenrissoul and Alami, 2016). Nowadays, a growing number of firms acknowledge the relevance of implementing CSR practices and many firms have re-branded their fundamental values to integrate social responsibility. Furthermore, several companies dedicate a part of their websites to communicate the CSR commitment (Coupland, 2005). Within the Moroccan context, listed firms started considering the social responsibility aspect in their annual reports till the end of 2006 (Tahri and El Khamlichi, 2019). Compared to unlisted firms, it is important to notice the greater interest to CSR of listed firms.

In this chapter, neither do we review the full repertoire of research on CSR literature. Rather, building on the previous theoretical and empirical underpinnings of the corporate social responsibility (CSR), we intend to discuss how governance mechanisms performance and firm’s performance are principal drivers of CSR particularly for big business.

Key Terms in this Chapter

Corporate Social Responsibility: To be socially responsible, a firm has to operate in ways that uphold the principles of sustainable development. Corporate social responsibility can take many forms depending on the firm and industry. It’s a broad concept that encompasses all the practices put in place by a firm in order to be economically viable, to enhance society and preserve the environment.

Moroccan listed firms: Moroccan companies whose shares can be traded on a The Casablanca Stock Exchange (CSE, Morocco).

Correlation Coefficient: A coefficient used to measure the strength of the connection or the relationship between two variables.

GLS Regression: Generalized least squares regression allows the OLS approach to be generalized to give the maximum likelihood estimate ß when the noise is of unequal variance (heteroscedasticity).

Firm Performance: A measure of a firm efficiency considered though several financial aggregates reflecting the firm’s financing structure like total equity and total liabilities and the firm’s operating cycle like firm’s turnover and operational profit.

Corporate Governance: It refers to the way a corporation is governed. More precisely, it is the system of rules, practices, and processes by which companies are directed, managed and controlled.

Multicollinearity: A state of very high inter-correlations or inter-associations among the independent variables. It is therefore a type of disturbance in the data, and if present in the data the statistical inferences made about the data may not be reliable.

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