Does It Pay to be Both Responsible and Irresponsible? A Longitudinal Configurational Analysis on the Largest US Firms

ABSTRACT A fundamental concern in management research is whether, how, and when corporate social responsibility (CSR) leads to corporate financial performance (CFP). Despite countless research efforts, answers to these questions are still lacking. We address this gap by suggesting a fresh viewpoint: the existence of corporate social irresponsibility (CSI) and the dynamic relationship between CSR and CSI. Specifically, we draw on the signaling perspective and the optimal distinctiveness lens to explore the financial implications of both responsibility‐ and irresponsibility‐related signals in their relational mechanisms. Using a sample of the largest firms in the United States and a constructed longitudinal configuration framework, we show that firms tend to move away from pure CSR or CSI strategies and use specific combinations of both to support high levels of financial performance. In these configurations, firms that persist in their irresponsible activities can thus engage in a few responsible actions to maintain their financial performance over the years. By leveraging these findings to develop a typology of strategic CSR trajectories toward high financial performance, we make several theoretical contributions to CSR and CSI research and offer practical implications for firm managers in dealing with the tensions between social responsibility and irresponsibility.