1.Introduction
1.1 Research Background and Overview
In recent times, academic, researchers, managers, and industry professionals have shown significant interest in the concept and theory of corporate social responsibility (CSR) (Wang et al, 2016, Schrempf-Stirling, Palazzo & Phillips, 2016, Dyck et al, 2019). This increasing interest owes its existences to variety of factors including stakeholders’ interests, improvement of corporate image, and contributing towards society. The conception of corporate social responsibility as well as sustainability is responsible for bringing changes within the business role in context to stakeholder’s management has reinforced the conception of the organization’s role in society and environment (Lins, Servaes & Tamayo, 2017). Globalization, economic recession, and changing market conditions are responsible for fostering change within the business and organizations. In competitive and fluctuating conditions, success for long-term is sustainable through shard value. At the same time, it is essential to sustain economic and social value. This approach significantly alters the company’s attitude towards shareholders since it focuses on improving economic performance as a long term goal rather than short term one.
Issues pertaining to the environment have also led to the adoption of CSR. For instance, energy efficiency, sustainability, environmental protection, protection of workers, waste management, water conservation, and management of depleted resources have contributed to its popularity (Martin, Petty & Wallace, 2009, Gennari & Salvioni, 2017, Becchetti et al, 2012, Crane, Matten & Spence, 2019). Increasingly, firms are in the dilemma to publish their data associated with CSR to support transparency and to ensure that they are accordance to the governmental rules and regulations. According to Crane, Matten & Spence (2019), 95% of the valuable brands have adopted CSR.
At the same time, widely scandalized financial scandals such as Enron and Worldcom have influenced the organizations to think beyond the concept of wealth maximization of the shareholders (Becchetti et al, 2012). The reputation of the organization and to manage stakeholder’s relations is considered to be a major theme for sustaining long-term survival. In such event, investors themselves are interested in incorporating ethics to increase their profits (Becchetti et al, 2012). As a result, trend of adopting corporate social responsibility (CSR) has been increasing globally. This trend is prevalent in both developed and developing countries including United States, United Kingdom, Australia, Belgium, China, France, India, Brazil and Iran.
The concept of maximizing shareholder value is the central theme of finance. According to Martin, Petty and Wallace (2009) assert that the fundamental objective of the firm is to increase the equity related to the shareholders. Gennari and Salvioni (2017) assert that the concept of CSR concepts with globalization and changes in financial markets is responsible for creating value for both organizations and potential investors. Stability is a central theme in maintaining long-term relations with investors in context to corporate decision making since it increases the shareholders’ value, increases profitability and improves overall performance of the firm. Furthermore, CSR and sustainability adoption helps in reducing both business and investment risks for both organizations and shareholders.
