The strategic planning of corporate social responsibility: An endogenous perspective

Abstract This study addresses endogenous factors related to the strategic planning of corporate social responsibility (CSR). Our findings help explain the paradox: If better CSR always leads to better firm performance, why do so many companies either choose not to engage in CSR or act irresponsibly? Managers may make decisions regarding CSR based on the environment. Some companies may be better served through a proactive CSR strategy; however, others may be unable to achieve better performance through this strategy for a variety of endogenous causes. Our sample included 594 U.S. publicly traded companies with 2,019 firm-year observations. We empirically simulated scenarios where companies selected inappropriate CSR strategies and found that the companies were unable to achieve better firm performance if they did not select appropriate CSR strategies based on their internal and external environment. Practical and theoretical implications are discussed.