CSR Correlation with Financial Performance of UKOG & Cuadrilla plc

This case study critically analyzes the correlation between Corporate Social Responsibility (CSR) performance and the financial performance of UK Oil and Gas plc (UKOG) and Cuadrilla Resources, two UK-based Oil and Gas firms. It evaluates the strategic allocation of scarce resources towards social expectations like environmental conservation and stakeholder satisfaction. The study explores the non-monetary interests of stakeholders and reviews the business models of the firms, focusing on how CSR programs influence sales and profit margins. It also contrasts the financial theory with the practical implementation of CSR, addressing the debate on whether CSR directly increases shareholder wealth. The research employs a deductive approach, using data from surveys, articles, and journals to compare results and offer innovative approaches towards systems change in the Oil and Gas sector.

Running head: CSR correlation with financial performance of UKOG and Cuadrilla plc. 1
The correlation between the corporate social responsibility performance of the UK Oil
and Gas plc and Cuadrilla Resources Oil and Gas companies with their financial performance in
the UK.
Institution affiliation.
Name.

CSR correlation with financial performance of UKOG and Cuadrilla plc. 2
Financial performance of the oil and gas sector in relation to the corporate social
responsibility.
INTRODUCTION.
1.1 Research rationale.
It is important to critically evaluate how the corporate social responsibility performance
of the UK based Oil and Gas firms, UK Oil and Gas plc (UKOG) and Cuadrilla Resources
companies affects and relates to the firm’s’ financial responsibilities. The Capstone project
focuses on analysis of the strategic management of the firms’ scarce resources to allocation in
the social expectations of the firm such as environmental; conservation and protection of human
biodiversity. Corporate social responsibilities is a private business self-regulation directed
towards business sustainability and corporate citizenship. This responsibility is considered by the
firms as their business policy. The corporate social responsibility is therefore aligned with the
firm’s business model to sustain their financial performance while maintaining a sustainable
business environment in the business social setting. This study objectively will critically
analyze the associations between the corporate financial performance and corporate social
responsibilities with a direct focus on evaluating the advantages of implementing a corporate
responsibility program within the firm’s business model and how the specified CSR program
influences the sales and profit margins of the business in the long-term.
In the recent years, there has been a rising trend with the implementation of the CSR
programs within business models across the entire business community such as hotel and
tourism, real estate, transport sector and health care. This case study therefore will have

CSR correlation with financial performance of UKOG and Cuadrilla plc. 3
implications to the beneficiaries of the corporate social responsibility program such as managers,
company executives and the community in the Oil and Gas firms in the UK with benefits such as
greater profit margins, environmental conservation, minimization of health risks and corporate
governance with the proper framework of practices, guidelines and rules that ensure fairness,
transparency and accountability in the relationship with the stakeholders.
Contrasting with the financial theory, the true definition and purpose of the CSR
programs in business models is not clear to objectively increase the firms’ shareholders’ wealth.
However, since the corporation’s financial performance is impacted upon by the stakeholder’s
interests such as the company’s responsibilities into environmental conservation, community
development and social skills, such non-monetary interests affect the business model and create a
need for the executives to create a business model with a fully functional CSR program.
Therefore, for the aims of this case study, the CSR is defined as the non-monetary actions
required by written or social law that guides the UKOG and Cuadrilla Resources Oil and Gas
firms in the UK to further their interests beyond financial performance for the social good. The
CSR, as per the definition, increase the requirements of the firms to not only abide by the laws
but also implementation of policies that impact positively to the society through the stakeholders
such as employees, consumers and community in which the business firm is located.
In this case-study, the relationship between the financial performances of the two (UKOG
and Cuadrilla) Oil and Gas firms in the UK with stakeholders’ frustration and dissatisfaction are
critically reviewed and evaluated with comparison to the companies’ corporate social
responsibility performance following implemented CSR programs. The research will incorporate
solutions and innovative approaches targeted towards systems change.

CSR correlation with financial performance of UKOG and Cuadrilla plc. 4
1.2 Research Question.
The research question is: To critically analyze the relationship between Corporate Social
Responsibilities and Financial Performance of Oil and Gas firms in the UK with a focus on the
UK Oil and Gas plc and Cuadrilla Resources plc?
1.3 Objectives.
To critically evaluate the non-monetary interests of the UKOG and Cuadrilla Resources
firms’ stakeholders in the company’s business Corporate Social Responsibility program.
To analytically describe the relationship between the Corporate Social Responsibility
performance and Financial Performance of the UKOG and Cuadrilla Resources Oil and Gas
companies.
To critically review the business model for the UKOG and Cuadrilla Resources Oil and
Gas firms offering stakeholders satisfaction through an elaborate CSR program.
1.4 Hypothesis.
The Corporate Social Responsibility performance is directly proportional to an Oil and
Gas Firm’s Financial Performance in the UK leading to fulfillment of the financial theory and
stakeholder satisfaction.

CSR correlation with financial performance of UKOG and Cuadrilla plc. 5
LITERATURE REVIEW.
There is a direct link between the financial performance of a firm and its corporate social
responsibilities performance program. Therefore, forces the company’s top management to
make tough decisions on the allocation of the scarce corporate resources. This is in order to
fulfill the financial theory and increase the shareholders’ wealth or allocate the resources towards
fulfillment of the stakeholders non-monetary interests and increase the CSR performance.
Pressures associated with social issues and demands, Robert Ackerman (1974) in management
complicates the decision making process of the executives hence forcing the managers to drop
the traditional components of strategic management that conform to the financial theory. As
described by Waddock & Graves (1998), corporate social performance is positively related to the
financial performance. This leads to theory that resource availability and CSP are directly
related, John Wiley & Sons (1997) supporting the concept that good management and CSR
performance are related and positively impact on the future Financial performance.
Brought up by D’Arcimoles & Trebucq (2002), the authors argue that the corporate social
responsibility is a marketing strategy and thus is increasing gaining more recognition in the
marketing literature. The authors de-link the CSR performance as a direct association to the
firm’s financial performance. The research paper argues that there is a positive, negative or
neutral association between the social performance and financial performance. The study further
describes the need for the development of control models in research and development
investments.
According to Garriga & Mele (2004), the CSR field tries to explain theories of corporate
management through mapping the territories of the CSR performances and trying to associate

CSR correlation with financial performance of UKOG and Cuadrilla plc. 6
them with the different theories of business management. The CSR theories try to explain four
dimensions of strategic business management in terms of profits, social demands, political
performance and ethical values. The authors suggest the development of a new theory that links
and associates the Corporate Social Responsibility performance and the Financial Performance
as a business and society theory that integrates the four dimensions of the CSR and Financial
Performance. The theories outlines, the instrumental theory that explains the firm as an
instrument for wealth creation, political theory that explain the power of the corporations,
integrative theory that focuses on the satisfaction of social demands and the ethical theory that is
based on the ethic responsibilities of the corporations to the society.
Depicted as a key ingredient in the financial development of a company, influencing the
profit making growth of firm, CSR is considered instrumental in the business success, Servaes &
Tamayo (2013). The researchers sought to find out the connection between the CSR and the
business values of a company from a group of conscious consumers. From their set of results in
the different studies conducted, the poor social responsibility negatively influenced a company’s
success.
Attempting to provide a senior and business oriented relationship between CSR and firm
financial performance, Kwang-Ho, MinChung & Cuili use a competitive-action perspective to
table their argument. The authors determined that competition in business is an important
element that determined the effects and influence of the CSR on the financial performance of the
business. Using data from a public software companies, the researchers concluded that in a very
competitive environment, the financial performance of the company was enhanced by a positive
CSR relationship. In their research, Kwang-Ho, MinChung & Cuili(2015) determined that in a

CSR correlation with financial performance of UKOG and Cuadrilla plc. 7
very low competitive market, socially irresponsible and unethical activities of a firm resulted in a
negative CSR that enhanced financial performance of the company in question.
Contrasting with the financial theory, the true definition and purpose of the CSR
programs in business models is not clear to objectively increase the firms’ shareholders’ wealth,
Brammer (2012). However, since the corporation’s financial performance is impacted upon by
the stakeholder’s interests such as the company’s responsibilities into environmental
conservation, community development and social skills, such non-monetary interests affect the
business model and create a need for the executives to create a business model with a fully
functional CSR program, Barik (2017). Therefore, for the purpose of the study, the CSR is
defined as the non-monetary actions required by written or social law that guides the Oil and Gas
firms in the UK to further their interests beyond financial performance for the social good. The
CSR, as per the definition of Herzig, 2010, increase the requirements of the firms to not only
abide by the laws but also implementation of policies that impact positively to the society
through the stakeholders such as employees, consumers and community in which the business
firm is located.
One of the more seasoned inquiries in the discussion about Corporate Social
Responsibility (CSR) is whether it is advantageous for associations to focus on societal
expectations. This discussion has always been inwardly, normatively, and ideologically stacked
being a vital trigger for experimental research in CSR. This evident indecision and mal-
information in CSR relationship with financial performance warranted this research to illuminate
the discussion and consider the making of determinations. The consequences of the researches
performed uncover that there is undoubtedly clear experimental confirmation for a positive

CSR correlation with financial performance of UKOG and Cuadrilla plc. 8
connection between corporate social and money related interests. Voices that express the inverse
allude to outdated material. Since the beginnings of the CSR banter, social orders have changed.
We can along these lines plainly express that, for the present Western culture, "Great Ethics is
Good Business", Beurden & Gossling, (2018).
RESEARCH METHODOLOGY.
Data collection will involve a mail survey protocol with structured questionnaires. The
data will be collected from UKOG and Cuadrilla Resources Oil and Gas companies in the United
Kingdom.
The oil companies were selected using two different criteria: majorly, the firms had been
in operation in the UK for at least 8 years, secondly, the firm’s organizational size were big
enough with at least ten thousand employees, serving a large geographical area and having
registered a minimum of 1 billion Euros in revenues.
The criteria used will base on the assumption that the UKOG and Cuadrilla Resources
companies have been in the market long enough to understand and have adopted reliable and
efficacious CSR and financial performances (Pagell et al, 2004). By selection of UKOG and
Cuadrilla, firms inclined towards social sustainability, the research would be more appropriate.
From the firms, key data sources would be primary data from previous researches, articles and
journals with informants from the community around the exploration sites.
The aim of the research is to critically analyze how the adoption of the CSR program in
UKOG and Cuadrilla in the UK as listed on the oil and gas UK government portal affects the

CSR correlation with financial performance of UKOG and Cuadrilla plc. 9
financial performance of these companies (Gjolberg, 2009). In the sampling method, the
assumption made will be that CSR leads to higher financial performance.
In order to determine the relationship, this research will employ a case study approach
regarding a statistical approach to the companies. Hence, secondary sources of data will be
analyzed regarding the financial performance and corporate social responsibilities from online
journals, research papers, articles and books. In the research, according to Hyde, 2000, a
deductive approach study will be conducted in order to compare results with the previous data.
Ethical Considerations
5.1 Informed Consent and Assent
5.2 Confidentiality
5.3 Risks to Participants
5.4 Benefits to Participants
5.5 Compensation and Incentives
Sample and data collection methods.
Primarily, the sample population will include be UKOG and Cuadrilla Resources
companies in the UK listed on the government portal. The secondary data will be collected from

CSR correlation with financial performance of UKOG and Cuadrilla plc. 10
the online databases on CORE, Google Scholar, OpenDOAR, Science Open, ABI/INFORM
Global and DOAJ databases.
Measuring CSR.
The CSR will be defined as the social responsibility of the firms to the environment,
community and stakeholders. However, due to the absence of a baseline framework (Rapti &
Medda,2012), the research will utilize the reputation index and the content analysis, developed
by (Fasanya & Onakoy, 2013). The research will analyze content relating to the firms from their
web pages, code of ethics and annual reports. As a multidimensional aspect, the CSR data will
also be collected from the stakeholders of the firms through structured questionnaires.
Measuring financial performance.
The most important benefit of CSR is the financial success of the company. The financial
performance will be analyzed through examination of the financial records for information about
growth, earnings, expenditure, investments and costs (Walsh, 2006). The data collected from the
financial records will be categorized into market-based and accounting-based (Van Horne &
Wachowicz, 2012). The ultimate measure of the companies will through analysis of the profit
books in relation to sells and investments, the return on assets and return on equity profitability
ratios.
Research results.
The data finding of the research will be analyzed, processed and presented in this section.
Primarily, to meet the objective of the study, a simple linear regression ad factor analysis method

CSR correlation with financial performance of UKOG and Cuadrilla plc. 11
will be used to determine the dependence between the financial indicators of financial
performance and CSR performance. To generate a regression analysis, the Statistica tool will be
applied to determine the dependence.
Conclusion.
The objective of this research will be to evaluate and critically appraise the relationship
between the corporate social responsibility and financial performance of the UKOG and
Cuadrilla Oil and Gas companies in the UK. Moreover, the research will also estimate the four
dimensions, ethics, finance, power and social demands correlation with the financial
performance.
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