Analysis of the Relationship between Corporate Financial Outcome/Performance and their Degree of Social Responsibility

This research examines the impact of corporate social responsibility on the corporate social performance of organizations. The study evaluates the association between corporate financial outcome/performance and their degree of social responsibility. The research objective is to investigate the link between CSR activities and financial performance of the organizations.

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Executive Summary
This research had examined the impact of corporate social responsibility on the corporate
social performance of organization. This research had developed the research objective and
question effectively. The critical analysis of the literature shows that there is argument among
various authors where some opined that there is no significant relation between both the
variables while others had opposite opinion on it. The research methodology had used a
mono method where data has been collected from different websites to collect data on
Tobin’s q, profit margin, revenue growth, R&D expenditure, Beta and CSR ratings. These
variables had been collected for 32 companies and their statistical analysis had shown that
there is moderate relationship between the variables. However, as there is no significant
relationship between B and CSR rating, it may not have significant impact on the return on
assets.

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Table of Contents
Chapter 1: Introduction..............................................................................................................4
1.1. Background.....................................................................................................................4
1.2. Research Problem............................................................................................................5
1.3. Research Significance.....................................................................................................6
1.4. Aim and Objectives of Research.....................................................................................7
2.0 Literature review..................................................................................................................8
2.4 Corporate social responsibility.........................................................................................8
2.1.1 Social dimension.......................................................................................................9
2.1.2 Environmental dimension.......................................................................................10
2.1.3 Financial dimensions...............................................................................................10
2.2 Factors increasing financial performance......................................................................11
2.3 Relationship between CSR and financial orientation.....................................................14
2.3.1 Factors affecting CSR and financial performance..................................................14
Chapter 3: Research methodology...........................................................................................16
3.0 Introduction....................................................................................................................16
3.1 Research onion...............................................................................................................16
3.2 Research philosophy......................................................................................................16
3.3 Research approach.........................................................................................................17
3.4 Research design..............................................................................................................17
3.5 Data sources...................................................................................................................18

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3.6 Data analysis..................................................................................................................19
3.7 Sampling techniques......................................................................................................19
3.8 Ethical consideration......................................................................................................20
3.8 Research limitation.........................................................................................................20
3.10 Summary......................................................................................................................20
Chapter 4: Findings and Analysis............................................................................................21
4.1 Introduction....................................................................................................................21
4.2 CSR and Financial Data.................................................................................................21
4.2 Descriptive statistics.......................................................................................................22
4.3 Correlation matrix..........................................................................................................23
4.4 Regression analysis........................................................................................................25
Chapter 5: Conclusion..............................................................................................................26
References................................................................................................................................29

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Topic: ''Analysis of the relationship between corporate financial outcome/performance and
their degree of social responsibility".
Chapter 1: Introduction
1.1. Background
The concept of “corporate social responsibility” can be described as the
responsibilities of stakeholders to create such policies that facilities in making few decisions
those are advantageous in terms of values and objectives to the society. The focus of CSR is
observed to move the stances of various firms from acknowledgement of social interest to
becoming a key aspect of strategic approach in several firms (Misani and Pogutz 2015).
There has been significant increase in the concept of CSR in all the global organizations
which made the firms change their approach to this management. The number of
organizations implementing these strategies are increase in numbers to minimize the harmful
impact on the society and the environment. It can be seen that among the top 250 well
established organizations, more than 90% have published their sustainability report in the
financial year of 2017. The majority of the organizations have not implemented these
strategies as they wanted to develop an altruistic business model but these companies have
been under immense pressure from the stakeholders to fulfil the sustainability responsibility
and become a socially responsible corporate citizen (Pardis, Sofian and Abdullah 2016).
Even though, there has been significance increase in regulatory and legislative
guidelines regarding the implementation of CSR, it has been observed that it is not dominant
all the world. However, there have been several nations and unions that are trying to
implement strategies to promote CSR and enhance the sustainability and performance of
these firms. There has been significant modification in the meaning of social responsibility
and ethics which has led to the change in the role of ethics and social responsibility in

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enhancing the performance of business entities (Sun et al. 2018). On the other hand,
corporate social responsibility is a subjective topic and its implementation by adhering to all
ethical guidelines varies depending upon the size and nature of the company. Therefore, it is
observed to be not possible to simplify the extent to which companies evaluate one another or
a general framework and with the responsibility scope in improving company’s financial
performance.
1.2. Research Problem
The increase in acceptability of the CSR concept has led to several viewpoints which
have been gathered regarding the processes used by the companies in implementing the social
responsibilities conducted by companies in United Kingdom. These processes have led to the
observation that financial performance is enhanced by social responsibility (Cook, Romi,
Sanchez and Sanchez 2017). This also indicates that the social responsibility of the
companies is obliged to be at a level which is acceptable to the shareholders. Moreover, the
increase in companies’ profits should remain within the boundaries of business laws and
ethics. Along with that, it is also been identified that the new mandate on corporate social
responsibility requires the companies in UK to follow the new guidelines where they need to
upsurge their CSR reporting that can have an increased impact on the financial situation of
organizations (Cheng, Ioannou and Serafeim 2014). Social responsibility measures have
increased the complexity which has impact of the financial performance of firms due to the
cost incurred and the value that is being generated. However, it is evident that there has been
significant increase in competition in the United Kingdom market and the incorporation of
corporate social responsibility may be appealing to the ethical consumers which may result in
enhancement of financial and organizational performance. This means that it is essential to
report on the social responsibility activities that portray a good image in the market (Wang,
Dou and Jia 2016). It has been identified that companies not paying heed to their social and

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environmental responsibility have been struggling to achieve a good financial performance.
On top of that, mediocre corporate social responsibility performances increase the risk level
of these companies when compared to other companies having good CSR activities.
1.3. Research Significance
The significance of the present research is to assess the association amid the financial
performance and the CSR intensity processes and policies followed by the organizations. The
study will correspondingly analyse the role of responsibility and ethics in improving the
financial performance of the companies. This is due to present change the approaches to
sustainability and ethical practices with global organizations. As the nature of social
responsibility is subjective by nature, its implementation varies depending upon the size and
nature of the business entity (Saeidi et al. 2015). This research will explain few critical
theoretical framework and significant concepts on social responsibility as well as financial
performance of organizations focused on dimensions and stakeholder theory.
Moreover, the study examines the ways in which corporate social responsibility has affected
the financial performance of various companies in the global market by comparing the
financial aspect and the CSR activities. This is because of the fact that there are different
ways in which companies operate in respect to their CSR activities so it will determine the
way the relationship varies based on these activities (Lins, Servaes and Tamayo 2017). The
present research will develop findings that will add to the existing literature by evaluating the
market valuation and CSR activities used by the organizations. The findings of this research
will be as per the literature developed based on the past studies that might not be in
accordance to the relationship already established by the previous researches. The results
will also facilitate the organizations and practitioners in realizing the CSR and financial
performance association in consideration to publicly traded global organizations. This can

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also impact the degree to which organisations decide to make investment within CSR
conducts in case such financial measures are considered important.
1.4. Aim and Objectives of Research
The research objective to examine the association between corporate financial
outcome/performance and their degree of social responsibility. The research has explained in
brief the objectives and they are as follows:
 To investigate the link between CSR activities and financial performance of the
organizations
 To evaluate the ways in which CSR ratings of companies impacts their financial
performance
1.5. Research Questions
The research questions which will be addressed through completion of the current study are
elaborated below:
 How different CSR activities affect the financial performance of different global
organizations?
 What are the ways in which CSR ratings of companies impacts their financial
performance?

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2.0 Literature review
2.4 Corporate social responsibility
In this context, the concept of Corporate Social Responsibility is highly significant
and relevant. According to Cavaco and Crifo (2014), the CSR is associated with not only the
social and environmental activities but associated with the sustainability of the business. On
the other hand, Waworuntu, Wantah and Rusmanto (2014) proclaimed that the CSR is a form
of corporate self-regulation that is associated with the business model. In this regard, the
objective and use of the CSR policy is to create, self-regulating processes whereby a
company oversees and ensures its vigorous obedience with the spirit of law, international
norms and ethical standards. From that perspective it can be argued that the CSR aims to take
up responsibility of the company and inspire positively so that the business entity can develop
better knowledge of the stakeholders of the company which includes consumers,
environment, employees, communities and shareholders along with other members identified
as stakeholders. Organizations can develop better competitive advantage by implementing
effective CSR policies which results in generation of long-term profits. On the other hand, the
purpose of developing effective CSR strategies is to address the vision and mission of the
organization which adds value to the brand image. These policies also coincide with the
customer satisfaction as it improves the operational efficiency of all the organizational
processes and it also fulfils the ethical requirements. In light of this context, Qiu, Shaukat and
Tharyan (2016) claimed that CSR can be considered as a management concept that focuses
on the incorporation of social and environmental activities in business operations and create a
healthy interaction with the stakeholders. In this regard, Saeidiet al. (2015) stated that the
implementation of triple bottom line is relevant to the context of CSR. As per the research it
can be stated that CSR plays a significant role in developing suitable environment, social and
economic activities that are aligned to the needs of the stakeholders.

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There are various organization that have issues in dealing with their operations in
respect to developing sustainability measures. For example, environmental management and
eco-efficiency has been recognized as key elements of corporate social responsibility both in
local and global operations of business and have been dealing with the communities,
employees and social equality. In respect to this, CSR has a key role in reducing operational
cost, increasing sales volumes and provide competitive advantage to the companies in the
market. Therefore, it has become a better measure to improve the CSR practices that
improves the loyalty of the consumers and better decision-making strategies and reduces the
overall risk probabilities. CSR is a dynamic approach that is associated with the concept of
Triple Bottom Line (TBL). In this TBL framework, there are three different entities in terms
of the environmental dimension, social dimension and the financial dimension.
2.1.1 Social dimension
The advent of globalisation has made the business competition so intense that the
companies are looking for an alternative approach in order to bring more stability in the
organisational practice. Henceforth, the social sustainability is considered to be one of the
major aspects that not only create effective business effectiveness but also helps the
organisation to re-establish their images and brand values with the help of social concerns.
Hussain, Rigoni and Orij (2018) opined that the role of the organisation is also transcended
rapidly due to the change in consumer behaviours. Therefore, pressure pounding on the
companies to take responsibility in the social problem solving like charity donations,
environmental protection and so on. On the other hand, McWilliams et al. (2016) articulated
that the role of the consumer purchasing behaviour influenced the vision of the companies as
well. The technological advancement pushes the global corporate farms to use social media
as a tool for their promotion and attracting more customers digitally.

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2.1.2 Environmental dimension
Negative impact on the environment and carelessness damage the business
opportunities for the companies profoundly. It becomes a term of public interest that brings
the business organisations under the radar of international environmental organisation and
alleged to create deliberate exploitation of Earth. This consequence has a great deal of impact
on both the international and domestic level as most of the countries seek legal help to
formulate an eco-friendly business practice (Alhaddi 2015). Therefore, the big business
companies feel the need to incorporate the stakeholders more intricately in order to refurbish
its image in the international and domestic level. According to Hammer and Pivo (2017)
environment-oriented measures and eradicating the negative impact on ecology are going to
be the primary concern for most of the corporate entities for maintaining their sustainability
effectively.
2.1.3 Financial dimensions
From the financial perspective, Wilson (2015) found out that the initiation of the
financial practice paved the way for putting great emphasis on the stakeholders. As a result of
that the business organisations were more focused to keep a better financial performance
through CRM techniques. In fact, Miemczyk and Luzzini (2016) claimed that the
stakeholders were also looking for companies that had good and stable financial performance.
Therefore, it can be stated that financial performance has a close relation with the
development of CSR. The connection between CRM and financial experience has also been
proved in the form of maximising the customers. From the research of Muñoz-Pascual,
Curado and Galende (2019) it can be derived that a good CSR score of a company makes the
customers reliable on its financial practices and it can help the organisation to get the trust of
its stakeholders.

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2.2 Factors increasing financial performance
In order to improve the monetary performance of business entities, there are both
external and internal factors that facilitates in developing a better framework for executing
the processes within the global organizations. Leverage, liquidity asset utilization, market
share position and firm size have been identified as the internal factors. While considering
liquidity, Aininet al. (2015) opined that liquidity is the significant element that can identify
the ability of the company to meet the debt obligations through cash inflow and current
assets. In order to develop better understanding, it can be stated that the current ratio is
defined as a general assessment of liquidity. Soto-Acosta, Popa and Palacios-Marqués (2016)
displays that current assets and liabilities share a strong degree of correlation between them.
In order to maintain a healthy liquidity ratio, the ratio between the current liabilities and
current assets should be 2:1. It implies that the ability of the business entity can be proved in
order to en-cash the assets which is similar as managing the business wealth. Moreover, Qiu,
Shaukat and Tharyan (2016) supported the concept of having high liquidity that provides
options for developing contingency plan while conducting business. Moreover, it is critical to
be prepared for the future uncertainties, and in this regard, high liquidity can be used as an
option to mitigate the short-term obligations and address the situation of crisis.
On the other hand, leverage is recognised as a central feature, represented in ratio
form and measures total liabilities to total assets. Bazhair and Sandhu (2015) opined that in
case of a debt-ridden business the finance assets are very effective to deal with the objective
of the company to achieve financial performance that is favourable. In this respect, the equity
holders use leverage as an alternative in order to boost the financial performance. In the
words of Wu, Straub and Liang (2015) it can be determined that the role of financial leverage
is to create a positive equity return on the basis of the ration between total debt and total
assets. By using the understanding on this concept, empirical analysis has been performed

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which clearly identified the connection between the effective utilization of debt repairing and
total assets. However, the research carried out by Ahammadet al. (2016) pointed out that
there is negative correlation between the investment decisions and financial leverage in
smaller economic sectors within countries. As stated by Almazari (2014) investment
decisions can be defined as an important aspect for the organization in order to maximize the
financial performance. In this context, the assessment of the financial leverage will prevent
any kind of investment in the capital assets while the rate of total debts and total assets are in
hike for the company.
The utilization of asset in any organization is also in harmony with the increase in
financial performance, which relies on analysing the assets that can be identified as important
for both the production and service process to boost financial performance of an organization.
On the contrary, it can be argued that there is resemblance between the role of the asset
utilization with targeting and assessing the various activities and capability of a corporation
that assists in obtaining financial returns. In respect to this context, Ahammadet al. (2016)
emphasised that asset utilization has a highly crucial role to play in modern organizations
because companies to properly make use of asset capabilities are not able to generate good
financial performance which results is reduction in liquidity of a company. According to
Bazhair and Sandhu (2015) various agencies have high costs which resulst in ineffectiveness
and inefficiency of organizational processes. On the other hand, Aininet al. (2015) opined
that the relationship between profitability and the fixed assets of a company leads to build a
constructive communication between both the variables. Thus, it can be argued that asset
utilization has a significant role to play in developing strategic measure as it can develop
severe consequences on the company’s financial performance. However, through the
researches of Almazari (2014) it was argued that there is some asset utilization which does
not have significant impact on financial performance and cannot be considered as an effective

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measure to generate a greater financial performance. The role of the organization is to
develop a strategic plan that is aligned with the gaols and objectives so that it can generate
better results that will facilitate in future growth of the enterprises.
In course of the discussion, Bazhair and Sandhu (2015) also predicts the clear
perception of the dependency of financial performance on the size of a firm. In this context,
firm size determines the amount of assets occupied by a firm along with its the role in
financial performance. As per the study conducted by Almazari (2014), the role of services
and products is responsible for delivering a better environment for upgradation of business in
the global market. In addition to this, Ahammadet al. (2016) advocated that high profitability
of the organization is an outcome of the good negotiation and healthy relationship between
the company and the suppliers. As a result of that as per the empirical evidences it can be
stated that there is a strong correlation between the size of the firm and its financial
background. From this understanding, it can be stated that the possibility and analysis of the
strategic elements of profitability was related to the size of the firm.
Furthermore, the position of the market share is also taken to be a major factor that
examines the performances of the firm both financially and operationally to effective use of
resources. This position develops long-term strategy but is not related to the theoretical
structure. In this context, it can be described as that efficient usage of resources is essential to
provide a strategic competitive advantage to different companies and has been considered as
a primary concern for the company. The market share position in higher than the rivalries has
the ability to develop sustainable competition advantage in highly competitive markets. Sales
performance can also be determined by effectively using the market share position to directly
enhance the financial performance of all global organization. In respect to this context,
Bazhair and Sandhu (2015) asserted that there is a significant direct relationship between
market position of business entities and the overall business processes.

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2.3 Relationship between CSR and financial orientation
According to Bohlin and Wiebe (2016) there is a possible linkage between CSR and
the financial performance of the business organizations. In this context, there are two
different standpoints in terms of the socially aware management that is responsible to control
a superior company with the purpose to get better financial results. On the other hand, it is
important to evaluate the cost of the CSR expenditure that is identified as a competitive
disadvantage. From this understanding, it can be stated that a reputation index is the
fundamental of assessing CSR performances that is resembled with the analysis and
evaluation of identifying the actual CSR performance. As a matter of fact, CSR is also
responsible factor to increase the customers by enhancing the value of the brand image.
Moreover, different consumers appreciate the holistic and benevolent approach taken by
various companies while implementing CSR. This consists of ethical consumers, that prefer
purchasing products from companies that have contributed socially. As a result of that the
CSR practices also maximize the customers and it brings a better financial performance
coupled with the development of the organization.
2.3.1 Factors affecting CSR and financial performance
From the empirical evidence it is found that there are several factors that are
responsible for affecting the relationship between CSR and financial performances such as
the company size, industry environment and business culture. From the research of Rhou,
Singal and Koh (2016) the company size plays a crucial part in order to get clear perceptions
regarding the depth of CSR practice that can contribute to the organisational performance.
Different corporate farms have different approach and propensity to follow a CSR approach.
As per the argument of Saeidi et al. (2015) the difference in CSR approach is basically
formulated by the company size. Corporate giants are always exhibited more social
responsibility in compare to the small and medium business organisations. The expectation of

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the stakeholders is also played significantly in terms of developing the expectation of the
company on the basis of its business dimension.
On the other hand, Flammer (2015) advocated that the industry environment was a
major factor that facilitated the intensity of the CSR program. It means if the industrial
practice is more intrigued by the social responsibility practice then it will push the
organisations to follow the same measure of CSR approach for their own sustainability. In
course of investigating a correlation between CSR and financial performance Qiu, Shaukat
and Tharyan (2016) opined that the power of buyers and the existence of rivalry led to a high
competition in the market where all the actors are tried to expand its market profoundly by
procuring unique business strategies. In this regard, the CSR approach helps a lot to get a
strategic advantage by implementing different types of CSR practices.
In response to this, the business culture can influence the CSR practice within the
organisation. The culture of an organisation is the reflection of its motive and perception to
do business. Galbreath (2018) asserted that the purposes of the business organisations always
differed from each other and it shaped the practice of establishing an effective CSR practice.
Moreover, Jain, Vyas and Roy (2017) also mentioned that the more the organisation was
concerned about the society the more it would reflect in its sustainability measures. The
culture of the business organisations thus involves into the CSR practices and also resulted to
bring financial profitability on the basis of the mode of CSR strategies.

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Chapter 3: Research methodology
3.0 Introduction
Research methodology is the methodical method of collecting data and analyzing it
effectively to achieve the outcome in the research. Research methodology consists of the
philosophical framework for developing knowledge. This chapter has defined the different
research methods and instruments chosen for collecting and analyzing data along with the
disadvantages and advantages of using it. The methods are chosen based on the goals in the
research. In this research, descriptive of behaviour and establishing causal relationship
between the corporate social responsibility and financial performance is the main aim. This is
the reason that the research has used a quasi-experimental design to evaluate the relationship.
3.1 Research onion
This research has followed the Saunders research onion where the six layers of the
onion has been used to describe the different instruments, research methods and frameworks
used to generate significant research results. The Saunders research onion has explained the
research philosophy, design, sampling, approach, data collection, analysis, ethical
consideration, validity and reliability in the research. These layers have facilitated in
progressing with the research logically and derive significant results. The research onion has
also facilitated in addressing the disadvantages and advantages of using each method and
suitability of the methods as per the current research.
3.2 Research philosophy
As stated by Vaioleti (2016), research philosophy includes various assumptions and
beliefs which is responsible for shaping the main research question. It facilitates in making
different types of assumptions in all the stages of the research. This makes the analysis of the
method more critical. There are four classifications of research philosophy and they are

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positivism, interpretivism, realism and pragmatism. The research has chosen positivism as the
approach in the research which facilitates in performing quantitative analysis of data.
Positivism is based on factual knowledge gained through observations. The purpose of
positivism is to conduct an objective study which is limited to data collection and
interpretation of data. This facilitates in developing research findings that are quantifiable and
observable. It uses an atomistic ontological view consisting of elements that are discrete and
observable. Moreover, positivism has no provision for human interest in the research so the
predictive model has higher accuracy.
3.3 Research approach
As opined by Mackey and Gass (2015), Research approach consists of two aspects
reasoning and collecting relevant data. It promotes effective selection and analysis of data in
logical manner. It is used for interpreting the collected data by using specified approaches.
Alvesson and Sköldberg (2017) states that selecting of suitable approach results in easier
ways and methods of analysing a situation. There are two classifications of research
approaches, inductive and deductive approach. The distinction between the different
approaches in the study depends on the use of theories and hypothesis. Inductive approach is
a method of developing new theories, paradigms and new generalisations from the data
gathered. On the contrary, the purpose of using deductive approach is testing the theories and
theoretical frameworks addressed in the literature review section with the assistance of
statistical tools and techniques. Deductive approach is the method chosen in this study,
because it has assisted in evaluating the causal relationship between financial performance
and corporate social responsibility of organizations.
3.4 Research design
Research design is defined as the effective way of collecting and arranging research
variables. On the contrary, it can also be portrayed as the method of selecting between a

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qualitative approach and a quantitative approach (Vaioleti 2016). The subtypes and types in
the research are highlighted by using the research design. In order to determine the degree,
nature and direction of relationship among variables, it is crucial to develop an effective
research design. There are three classifications of research design and they are descriptive,
exploratory and explanatory research designs. As stated by Mackey and Gass (2015),
descriptive research provides adequate description of the research problem and facilitates in
performing statistical analysis to generation predictions. Descriptive research design is a
scientific method of measuring the behavioural characteristics without any external influence.
The exploratory research design has the purpose of defining the research problem
more effectively than before and as the name suggests is used for exploring data without any
specific conclusion. The exploratory research design has the purpose of conducting studies in
cases of new topics with few researches. The explanatory research design evaluates the causal
relationship among variables where the premises are known. This design focuses of testing of
theories proposed by past literature reviews. The main objective of the research in this case is
evaluating the cause and effect relationship between corporate financial performance and
corporate social responsibility. Explanatory research design has been selected because it
facilitates in provide valid explanation of the research question. It also assist in
understanding the nature and extent of relationship between corporate financial performance
and corporate social responsibility. It focuses on the analysis of a specific problem. However,
in this research secondary data collection has been used instead collecting data through
surveys.
3.5 Data sources
The data collected initially, be it primary or secondary is the unrefined data.
According to Taylor, Bogdan and DeVault (2015), primary data are collected through the
survey and interviews by directly being in contact with the respondents. On the contrary,

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secondary consist of journals, articles, web articles and data sets already available on online
platforms. This research has collected secondary data from various peer reviewed journals,
articles and web articles. The data for analysis has been collected from online websites
consisting of data on profit margin, Tobin’s q, CSR rating, Beta, revenue and R&D data. This
data has been collected from Cengage website and consists of data from 32 companies. This
data has been evaluated to develop significant findings.
3.6 Data analysis
As stated byLedford and Gast (2018), quantitative analysis and qualitative analysis
are the two types of data analysis techniques. This research has used the quantitative data
analysis techniques where the data collected from different websites have been statistically
analysed. Inferential statistics has been used as a tool for analysing the causal relationship
between the collected data. SPSS (statistical tool for social sciences) has been castoff as the
tool for evaluating the collected data where Pearson’s correlation and Regression analysis has
been conducted to establish the relationship between the variables. The Pearson’s correlation
and regression has measured the extent of relationship between the variables. Linear
regression model has been used to evaluate the relationship. Tobin’s q has been used to
evaluate the market based financial performance of organizations. It explains the
effectiveness of a firm’s exploitation of resources and the need for further investment.
3.7 Sampling techniques
Sampling is the method of choosing elements from the whole population in the
research. Sampling is used when the target population is large and sampling is used to reduce
the complexity, cost and time of the dissertation. In this research, data has been collected 32
multinational large scale companies using simple random sampling so that it provides equal
opportunity to all the elements. In the above research, probabilistic sampling has been used as
it facilitates in using choosing smaller samples more effectively.

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3.8 Ethical consideration
Research has adhered to all the specific guidelines prescribed by the university (Lewis
2015). In order to maintain the authenticity of the study paper, the Data protection Act 1998
has been followed by the researcher. All the information have been collected from the
authentic sources and have been properly in texted. The data collected has been taken from
the authentic journals and articles. None of the data collected has been falsified and
manipulated to attain the objective in the research.
3.8 Research limitation
The main limitation of the research is the fact that the study has used a single research
design and is based on secondary data sources. The use of mixed method analysis would have
facilitated in overcoming the limitation of a mono method. On the other hand, the use of
primary data analysis would have facilitated in gathering both quantitative and qualitative to
develop more reliable and valid results.
3.10 Summary
This chapter has described all the methods, instruments and frameworks needed for
successfully collecting data and analysing it. The six layers of the Saunders onion has been
addressed which provides a valid justification of the different method chosen and their
suitability to this research. The next chapter has implemented this methods to collect data sets
and evaluate them based on the objectives in the research.

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Chapter 4: Findings and Analysis
4.1 Introduction
This chapter has evaluated the data collected using statistical techniques such as
regression and correlation to understand the relationship between corporate social
responsibility and financial performance of a company. The data has been collected from 32
companies which consists of Tobin’s q, profit margin, revenue growth, CSR rating, R&D
intensity and beta. This data set has been developed by collecting information from different
websites.
4.2 CSR and Financial Data
Company Name Industry Name Tobi
n's q
ratio
Prof
it
Mar
gin
(%)
5-
Year
Reve
nue
Gro
wth
(%)
Bet
a
R&D
Inten
sity
(R&
D/S,
%)
CSR
rating
(%)
Alcoa Inc. Aluminium 1.47
9
5.18
%
5.63
% 1.6
8
0.88
%
54
Altria Group, Inc. Cigarettes 1.78
7
10.9
3%
1.48
% 0.3
3
0.90
%
76
American Express
Company
Credit Services 1.37
4
11.8
6%
4.78
% 1.1
6
0.00
%
85
American International
Group, Inc
Property & Casualty
Insurance
1.13
6
11.8
0%
20.25
% 0.8
7
0.00
%
66
Boeing Company Aerospace/Defence 1.61
7
3.55
%
-
2.10
%
0.7
1
3.23
%
87
Caterpillar Inc. Farm & Construction
Machinery
1.57
5
5.66
%
2.07
% 0.9
3
2.74
%
76
Citigroup Inc. Money Center Banks 1.14
8
19.5
1%
1.90
% 1.3
5
0.00
%
93
Coca-Cola Company Beverages (Soft
Drinks)
5.17
7
21.4
5%
1.53
% 0.2
6
0.00
%
88
Disney (Walt) Company Entertainment
(Diversified)
1.43
8
7.17
%
3.22
% 1.1
0.00
%
81

22
PROJECT DISSERTATION
0
DuPont (E. I.) de
Nemours
Chemicals
(Diversified)
1.84
0
3.94
%
-
1.90
%
0.8
7
4.81
%
92
Exxon Mobil
Corporation
Major Integrated Oil
& Gas
2.16
2
9.11
%
10.25
% 0.3
6
0.28
%
75
General Electric
Company
Conglomerate 1.34
6
11.5
1%
4.80
% 1.0
9
1.55
%
86
General Motors
Corporation
Auto Manufacturer 1.00
1
1.97
%
3.01
% 1.1
8
3.10
%
87
Hewlett-Packard
Company
Diversified
Computer Systems
1.40
4
3.88
%
10.84
% 1.6
9
4.75
%
99
Home Depot, Inc. Home Improvement
Stores
2.61
0
6.68
%
14.23
% 1.4
3
0.00
%
84
Honeywell International Conglomerate 1.64
0
5.72
%
4.15
% 1.3
4
3.14
%
67
Intel Corporation Semiconductors
(Broad Line)
4.30
5
20.5
1%
0.06
% 2.0
5
13.87
%
97
International Business
Machines Corp.
Diversified
Computer Systems
2.21
2
8.54
%
0.23
% 1.4
6
5.56
%
94
J.P. Morgan Chase &
Co.
Money Center Bank 1.07
3
16.2
8%
5.02
% 1.7
8
0.00
%
88
Johnson & Johnson Drug Manufacturer 4.22
4
17.4
8%
10.78
% 0.2
2
12.85
%
98
McDonald's Corporation Restaurants 1.84
1
9.33
%
5.92
% 0.8
0
0.00
%
89
Merck & Co., Inc. Drug Manufacturer 3.10
2
22.2
4%
-
0.56
%
0.3
8
10.82
%
95
Microsoft Corporation Application Software 3.41
3
20.7
8%
12.56
% 1.6
2
13.08
%
99
3M Company Conglomerate 4.44
6
13.9
1%
3.15
% 0.4
8
5.85
%
95
Pfizer Inc. Drug Manufacturer 3.52
6
3.21
%
23.87
% 0.4
4
24.79
%
81
Procter & Gamble Co. Cleaning Products 3.52
7
12.2
8%
4.03
% (0.1
7)
3.37
%
90
SBC Communications
Inc.
Telecom Services 1.40
1
13.4
5%
1.57
% 0.8
0.00
%
82

23
PROJECT DISSERTATION
0
United Technologies
Corporation
Conglomerate 2.01
5
7.52
%
4.85
% 1.0
5
3.17
%
84
Verizon Communications Telecom Services 1.37
8
2.73
%
16.49
% 0.9
8
0.00
%
82
Wal-Mart Stores, Inc. Discount Variety
Stores
2.99
2
3.54
%
12.09
% 0.8
0
0.00
%
82
Averages 2.27
3
10.3
9%
6.14
% 0.9
7
3.96
%
Table 1: Financial Performance and CSR
4.2 Descriptive statistics
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
V3 31 1.001 5.177 2.27300 1.151690
V4 31 1.967510751
170
22.24044722
1002
10.39047502
681454
6.166849389
453398
V5 31 -2.1000 23.8700 6.140000 6.3598029
V6 31 -.17 2.05 .9680 .52635
V7 31 .0000000000
00
24.78738497
3447
3.958124541
69242
5.668033457
853321
V8 30 54.00 99.00 85.0667 10.39872
Valid N (listwise) 30
Table 2: Descriptive Statistics
Source: (As created by author)
Descriptive Statistics
Variance
V3 1.326
V4 38.030
V5 40.447
V6 .277
V7 32.127
V8 108.133
Valid N (listwise)
Table 3: Descriptive Statistics

24
PROJECT DISSERTATION
Source: (As created by author)
4.3 Correlation matrix
The Pearson’s correlation model has been used to measure the inter item relationships
where it can be seen that there is positive relationship between V3 and V8. In this table, V3
represents the Tobin’s q and V8 represents the CSR rating of all the companies. The value of
R is .415 which means that there is moderate correlation between the variables. Moreover,
the value is significant at 95% confidence interval at two tail. This means that there is
bidirectional relationship between corporate social responsibility and financial performance
of companies. Similarly, if we evaluate the relationship between V4 and V8, it shows
moderate positive correlation at 95% confidence interval. Here, V4 denotes profit margin
which shows that there profit margin of the companies has increased for thecompanieshaving
highest rating among the companies having highest CSR ratings. This means that the
companies contributing effectively to the society and the environment by developing
sustainability measures have been able to improve their profit margin and market valuation
significantly. This is true for all the companies and if we check the raw data, it can be seen
that Coca Cola has a CSR rating of 88 which is reflected on the market valuation of the
company. In case of Johnson and Johnson, it can be seen that the CSR rating of the company
is 98 which when compared to the market valuation it can be seen that the value is 5.17%.
This clearly indicates that a company having highly effective CSR activities results in
improvement in the financial performance.
Correlations
V3 V4 V5 V6 V7 V8
V3 Pearson Correlation 1 .488** .049 -.373* .537** .415*
Sig. (2-tailed) .005 .794 .039 .002 .023
N 31 31 31 31 31 30
V4 Pearson Correlation .488** 1 -.234 -.055 .176 .429*

25
PROJECT DISSERTATION
Sig. (2-tailed) .005 .205 .767 .344 .018
N 31 31 31 31 31 30
V5 Pearson Correlation .049 -.234 1 -.030 .267 -.221
Sig. (2-tailed) .794 .205 .871 .146 .242
N 31 31 31 31 31 30
V6 Pearson Correlation -.373* -.055 -.030 1 -.059 -.001
Sig. (2-tailed) .039 .767 .871 .751 .994
N 31 31 31 31 31 30
V7 Pearson Correlation .537** .176 .267 -.059 1 .365*
Sig. (2-tailed) .002 .344 .146 .751 .047
N 31 31 31 31 31 30
V8 Pearson Correlation .415* .429* -.221 -.001 .365* 1
Sig. (2-tailed) .023 .018 .242 .994 .047
N 30 30 30 30 30 30
Table 4: Correlation matrix
Source: (As created by author)
4.4 Regression analysis
Regression analysis is the technique of formulating a predictive model which
establishes the association between corporate financial performance and corporate social
responsibility of organizations. The value of Durbin Watson in the model is 2.017 which lies
within 1.7 and 2.5 and this implies that there is no first order autocorrelation between the
variables. The value of Multiple R defines the degree and nature of correlation between the
predictive element and the dependent variable. The value of multiple R in the research is .415
which means that there is moderate positive relationship between both the variables.
Moreover, the predictive ability of the model is moderate. R square is the coefficient of
determination which measures the explaining capability of the independent variable. It also
measures the goodness of fit of the regression line and measures the proportion of variation.
The value of R square is .172 which is less than 0.7 but it does not mean the result is not

26
PROJECT DISSERTATION
acceptable. In practical research, 17.2% explaining may have significant impact on the
financial performance of a company.
The F value in the model is 0.023 which is less than 0.05 which means that null
hypothesis can be rejected and the alternative hypothesis can be accepted. This shows that
there positive relationship between CSR and financial outcome of companies. The predictive
model shows a straight line but as the coefficient value is not significant, it follows a straight
line equation. The model is,
FP= .047 CSR, where FP= financial performance, CSR= corporate social responsibility.
This shows that with 1 unit increase in the value of CSR, then the value of FP
increases by .047. This means that financial performance and corporate social responsibility
are positively related to each other.
Model Summaryb
Mode
l
R R Square Adjusted R
Square
Std. Error of
the Estimate
Durbin-
Watson
1 .415a .172 .143 1.084514 2.017
a. Predictors: (Constant), V8
b. Dependent Variable: V3
ANOVAa
Model Sum of
Squares
df Mean Square F Sig.
1 Regression 6.859 1 6.859 5.832 .023b
Residual 32.933 28 1.176
Total 39.792 29
a. Dependent Variable: V3
b. Predictors: (Constant), V8
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta

27
PROJECT DISSERTATION
1 (Constant) -1.705 1.659 -1.028 .313
V8 .047 .019 .415 2.415 .023
a. Dependent Variable: V3
Residuals Statisticsa
Minimum Maximu
m
Mean Std.
Deviation
N
Predicted Value .82008 2.92463 2.27300 .486326 30
Residual -1.520139 2.767215 .000000 1.065652 30
Std. Predicted Value -2.988 1.340 .000 1.000 30
Std. Residual -1.402 2.552 .000 .983 30
a. Dependent Variable: V3
Chapter 5: Conclusion
The conclusion chapter has linked the results generated and discussed in the chapter
four to the research objectives specified in the chapter one of the study to formulate
conclusions that are significant. This research has chosen data on various companies
consisting of growth rate, profit margin, Tobin’s q and CSR rating. This data set has been
used to analyse the significant relationship between corporate social responsibility and
corporate financial performance in the global context. The research has performed statistical
quantitative analysis on the data collected through websites to address the research
objectives.
Objective 1: To investigate the link between CSR activities and financial performance of the
organizations
The analysis of the study has highlighted that there is significant positive relationship
between corporate social responsibility and corporate financial performance of the global
organizations. The results show that global business entities having effective and efficiency
CSR strategies enhances the growth rate of the firms by 4.7%. On the other hand, ethical
consumerism has increased significantly where customers are attracted by companies having

28
PROJECT DISSERTATION
ethical moral grounds and contribution. The successful brands are the ones having significant
CSR strategies and their growth rate is much higher to other companies. Commitment,
morale, fulfilment and motivation of the overall workforce. The F value in the model is 0.023
which is less than 0.05 which means that null hypothesis can be rejected and the alternative
hypothesis can be accepted. This shows that there positive relationship between CSR and
financial outcome of companies. The predictive model shows a straight line but as the
coefficient value is not significant, it follows a straight line equation. However, it can be
considered a major contributor to financial performance of Return of investment as there is
no significant relationship beta value and CSR ratings.
Objective 2:To evaluate the ways in which CSR ratings of companies impacts their financial
performance
The Pearson’s correlation model has been used to measure the inter item relationships
where it can be seen that there is positive relationship between V3 and V8. In this table, V3
represents the Tobin’s q and V8 represents the CSR rating of all the companies. The value of
R is .415 which means that there is moderate correlation between the variables. Moreover,
the value is significant at 95% confidence interval at two tail.The Pearson’s correlation model
has been used to measure the inter item relationships where it can be seen that there is
positive relationship between V3 and V8. In this table, V3 represents the Tobin’s q and V8
represents the CSR rating of all the companies. The value of R is .415 which means that there
is moderate correlation between the variables. Moreover, the value is significant at 95%
confidence interval at two tail. This clearly shows that CSR rating of a company can have
positive impact on performance as the companies are focused on using innovation to develop
sustainability measures. However, even though there is relationship, it’s still moderate in
nature.

29
PROJECT DISSERTATION

30
PROJECT DISSERTATION
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