“The Financial Implications of Strategic Partners’ Corpo-rate Social Responsibilities: Evidence from Two Studies” by Professor Ruby P. Lee
Professor Ruby P. Lee
Professor of Marketing
Director of International Programs
College of Business | Florida State University
Although a large body of research demonstrates a positive relationship between a focal firm’s corporate social responsibility (CSR) activities and its performance, some research suggests otherwise. Drawing on signaling theory and the reputation and knowledge spillover literature, this study attempts to offer new insights by investigating the role of CSR engagement in a strategic alliance setting using two studies. In Study 1, we test whether alliance announcements would generate higher abnormal returns when such announcements involve strategic partners with higher CSR. This study aims at testing the short-term financial gains from partnering with high CSR firms at a single alliance level. In Study 2, we test the long-term financial gains of the same concern at an alliance portfolio level. Findings largely support our hypotheses.
This study contributes to the literature by integrating the CSR and the alliances streams of research to resolve some of the previous inconsistent findings in the CSR literature. This study also contributes to practice. By simultaneously investigating the focal firm’s and its partners’ CSR engagements, the current research uncovers their substituting effects, suggesting managers taking into account not only the strategic partners’ tangible assets or technology, but also their CSR. Our findings further establish the important roles of multiple portfolio and network structural factors, helping managers understand how and when to navigate their strategic partners to enhance their firms’ financial performance.