CORPORATE SOCIAL RESPONSIBILITY AND FIRM REPUTATION

Abstract

Identifying tools for improving financial performance and other dimensions of competitiveness has become increasingly important in our current turbulent global economy. Many studies have shown that corporate social responsibility (CSR) activities can be used as a tool to improve financial performance. Based on a review of this work, Vilanova et al. (2009) develop a recent model of how CSR affects financial performance and other dimensions of competitiveness. Specifically, they posit that CSR positively affects reputation which then improves performance. The purpose of our study is to empirically examine Vilanova et al.‟s (2009) hypothesized positive association between CSR and corporate reputation. We use a sample of highly reputable firms from Fortune‟s 2006 Most Admired Companies list along with a sample of matched firms in our empirical analyses. Our analyses consistently support the positive relationship between CSR and reputation in Vilanova et al.‟s (2009) developed model relating CSR and dimensions of performance competitiveness.