Research examining firm and industry effects on performance has primarily focused on the financial aspects of firm performance. Corporate social performance (CSP) is a major aspect of firm performance that has been under-examined empirically in the literature to date. Adding to the fundamental debate regarding firm versus industry effects on performance, this study uses data drawn from the Kinder, Lydenberg and Domini Co. (KLD) database to examine the degree to which CSP is related to firm, industry, and temporal factors. The results of these analyses suggest that CSP tends to change in a linear manner over time; however, the slope of this line varies across firms and industries. These findings are supported by several robustness checks accounting for autocorrelation, alternative measures of industry, different samples commonly used when using KLD data to measure CSP, and alternative measures of CSP when using the KLD database. The authors also directly compare firm, industry, and temporal effects between CSP and financial performance.

The relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) has long been a central and contentious debate in the literature. However, prior empirical studies provide indefinite conclusions. The purpose of this study is to review systematically and quantify the CSR–CFP link in a meta-analytic framework. Based on 119 effect sizes from 42 studies, this study estimates that the overall effect size of the CSR–CFP relationship is positive and significant, thus endorsing the argument that CSR does enhance financial performance. Furthermore, this work sheds light on the causal relationship between CSR and CFP. Subsequent financial performance is associated with prior social responsibility, while the reverse direction is not supported. This finding supports the instrumental stakeholder theory. As predicted, the meta-analysis results indicate that the measurement strategies of the two key constructs of CSR and CFP explain some variations of the CSR–CFP relationship. Last, this study examines the moderating effect of the environmental context on the CSR–CFP link. This work proposes that CSR in the developed world, with a relatively mature institutional system and efficient market mechanism, will be more visible than CSR in the developing world. The results show that the CSR–CFP relationship is stronger for firms from advanced economies than for firms from developing economies.