Risk management Research Paper Example | Topics and Well Written Essays - 2000 words

Risk management - Research Paper Example Demand for transparency has increased and expectations are rising for companies to evaluate report and improve their environmental, social, and economic performance. Corporate Social Responsibility (CSR) does not have intricate definition. According to McWilliams and Siegel (2001) â€Å"actions that appear to further some social good, beyond the interest of the firm and that which is required by law† (McWilliams and Siegel, 2001, p. 117). CSR is more than compliance with the law. Frooman (1997) exemplifies CSR as â€Å"An action by a firm, which the firm chooses to take, that substantially affects an identifiable social stakeholder’s welfare† (Frooman, 1997 p.227). In the light of these definitions, CSR can be viewed as a comprehensive set of rules, practices, programs, and policies that are incorporated into supply chain, business operations, and decision-making processes of the company. CSR usually include community investment, business ethics, governance, envi ronmental concerns, human rights, workplace, as well as the market place. When it comes to Business performance, this is an area where companies pay great deal of attention since it provides integral information about the success and position of the company as well as development and future standpoint. All business operations, in one way or other, revolve around the targeted goal of an organization that is contributing to the success of the business. Business performance provides a neutral description of the efficiency and effectiveness of the company’s action. It can be characterized with attributes such as poor or well. Business performance is considered as vital area of interest for the top management of firm. Several elements contribute to the success or failure of the company. CSR is one such variable that contributes to the well-being, reputation, and financial performance of the company. This paper seeks to investigate the impact of CSR practices on firm’s perfo rmance. A critical analysis of prior literature conducted in the same field will be provided in order to evaluate the causal relationship between the two variables. Impact of Corporate Social Responsibility (CSR) on Financial Performance Ways in which companies implement practices of corporate social responsibility differs from one another. These differences are based on factors such as respective industry involved, size of company, demands of stakeholders, business culture of the firm, and historical progress of company while dealing with CSR. Numbers of studies have been conducted in order to test the relationship between ethical and social performance of corporation and its impact on financial performance. Erhemjamts, Li, and Venkateswaran, (2012) conducted a study to investigate the determinants of CSR and its implications on the organizational strategy, investment policy, and performance of the business. Erhemjamts, Li, and Venkateswaran, (2012) found that firms having higher R &D intensity, better performance and financial health are more likely to engage in Corporate Social Responsibilities (CSR) activities, whereas riskers firms are less likely to involve in such activities (Erhemjamts, Li, and Venkateswaran, 2012). Stanwick, and Stanwick, (1998) conducted a study to investigate the relationship between corporate social responsibility of a business with financial perform