A Study Of The Relationship Between Corporate Social Responsibility And Business Performance

As public concern about corporate social responsibility (CSR) are continuously improving, a company's social responsibility is no longer a simple duty to fulfill, but will be inevitably related closely to its corporate image and long-term business performance. Some questions about this issue have become the focus of attention, such as how many social responsibilities a company should take in order to satisfy its self development and public expectation, whether there exists relationship between CSR and business performance in China and how to balance between CSR and profit. A good understanding of these questions is not only related to whether CSR can be evaluated by the principle of the equality of capability and obligation, but also helpful for a company to develop its principle of business ethics, which is essential for healthy development of economic construction of the Chinese socialism.It is not conclusive whether there exists a positive or negative relationship between CSR and business performance in literature. The main reason is that most of the researches adopt the same business model to investigate corporations at different stages of development. Therefore, we introduce a theory of corporate life cycle in this study in order to investigate the relationship between CSR and business performance at different stage of corporate development.In order to demonstrate the influence of business performance on CSR, we develop a model using multi-variable regression method. In particular, we first identify the current stage of corporate life cycle of the sample company through the hierarchical cluster method in statistical analysis software. Then we build the model by using the business performance as independent variable in terms of Return on Assets, Rate of Return on Common Stockholders' Equity and Earnings per share while a general score of CSR as the depend variable which is calculated by using the method of Factor Analysis. Finally, we provide corresponding suggestions basing upon our studies.It is found that good business performance in maturity stage would facilitate a company with better implementation of its social responsibility, while a negative effect in its declining stage. However, this relationship is ambiguous for corporation in growing stage. Moreover, the business performance in previous stage has positive effects on the social responsibility in present stage. And such influence will increase as time elapses. Therefore, a company should take social responsibilities correspondingly translated from its capability on the premise of its business development in order to promote its development.