Study Of The Mechanism By Which The Corporate Social Responsibility Influences The Financial Performance

With the accelerated development of technology within a century, big modern enterprises and companies have been emerging in large numbers. At the beginning of last century, private enterprises and companies regarded profit maximization as their guide and goal in western society where traditional free economy theory was dominance. As the enterprises and companies were growing up, the troubles between the enterprises and companies and the environment, government and society started to hinder their further development. Pursuing profit maximization as the guide and goal for the enterprises and companies were challenged.In the middle of last century, the theory that the enterprises were meant to focus on their own benefits and meanwhile took the corporate social responsibility as well gradually replaced the theory of pursuing merely profit maximization. In1980s, the emerging of stakeholder theory firmly supported the corporate social responsibility. Besides stakeholders, there were plenty of groups related with the enterprises. On no account should the enterprises focus on their own benefits only, but on all concerning stakeholders. Neither the corporate social responsibility, nor the stakeholder theory could explain the relationship between the corporate social responsibility and financial performance, especially in terms of the mechanism.The theory of reputation capital is brought into this study based on the theories of stakeholder theory and corporate social responsibility. In order to reveal the "Black Box" this study explains the enterprises carrying out ethical managing, taking the responsibilities of environment, charity and economy would bring good reputations and improve their own images, while the reputation capital, enterprises’intangible capital-popularity and brand favorite, is gained. The enterprise’s reputation capital can create value just like knowledge capital by cutting down the transaction cost and production cost. The theoretical model of the relationship between the corporate social responsibility, reputation capital and financial performance has been set up.Before empirical test, questionnaire survey is well organized for collecting data for further study. In empirical research, factor analysis method and structural equation are used synthetically. The corporate social responsibility’s four indexes, reputation capital’s two indexes and financial performance’s two indexes are tested for validity and reliability by using SPSS19. The hypothetical model for the relationship of the corporate social responsibility, reputation capital and financial performance has been checked and tested with the help of Lisrel8.7.Through normative and empirical analysis, the results of this study are listed as follows:1. Carrying out corporate social responsibility has key effects on the creation of reputation capital, the enterprise can gain reputation capital by taking the corporate social responsibility.2. The enterprise’s reputation capital has key effects on the growth of financial performance, corporate social responsibility can be brought in by cutting down the transaction and production cost through reputation capital. Overall, the enterprise can gain reputation capital by taking the corporate.social responsibility, which decreases the cost of transaction and production, therefore improves the financial performance.This study focuses on the mechanism by which the corporate social responsibility influences the financial performance. This study includes six chapters:Introduction, review, basic theories and concepts, analyzing frame on corporate social responsibility、 reputation capital and financial performance, empirical study on the model of corporate social responsibility、 reputation capital and financial performance, conclusions and prospect.The first chapter is about the introduction. Focusing on the background and meaning for the question, theoretical and practical significance, research method and technology route, thesis structure and thesis content and so on.The second chapter is about the review. To sum up the related research results worldwide.The third chapter is about basic theories and concepts. Reviewing and analyzing the theory of the corporate social responsibility, stakeholder theory and the theory of reputation capital.The fourth chapter is analyzing frame for the relationship between corporate social responsibility、 reputation capital and financial performance. At first, the role of corporate social responsibility in the creation of reputation capital. The enterprise taking ethical environmental, commonweal and economic responsibility can bring validity and popularity which create reputation capital. Then, the role of reputation capital in the growth of financial performance. Based on stakeholder theory, stakeholders can be divided into internal and external stakeholders and can also be divided by the relationship between stakeholders and the market directly and indirectly. Theoretical analysis on reputation capital, which has influence on shareholders, employees, government, social groups, suppliers, consumers and media, can cut down the transaction and production cost. As a result, the financial performance is getting better. Finally, setting up the model on the base of hypothesis.The fifth chapter is empirical study including validity and popularity analysis for the data by using SPSS and the fitting test for theoretical model of corporate social responsibility and reputation capital and financial performance by adopting structure equation model and using Lisrel. Checking results and confirming the model.The last chapter is about conclusions and prospect. This chapter carries the main conclusions, innovations and deficiency of the thesis and it points out the direction and provides suggestion for scholars in a deep-going way.