Corporate social responsibility and financial performance of companies: The puzzle of concepts, definitions and assessment methods

Abstract

The definition of corporate social responsibility (CSR) states that companies must not only pursue their main goal—to maximize profits, but also contribute to the well‐being of society through voluntary efforts. The importance of CSR in today's global world is growing. It is becoming mandatory for companies to engage in socially responsible activities to support the growth of their business. It is argued that companies pursuing CSR initiatives can gain a competitive advantage over other competitors due to creation of a good public image or reputation and generate higher profits and a return on investment however some authors disagree with this. The aim of this article is to analyse the benefits and drawbacks of CSR based on systematic literature review and to develop the conceptual framework for linking CSR with the financial performance of companies. The conducted analysis revealed that in most studies the positive or neutral relationship between CSR and financial results were claimed. Though the negative and alternative connections between these issues are less frequently identified in scientific articles, they cannot be excluded from the analysis and require certain attention and further consideration.