The Adoption of Corporate Social Responsibility and Corporate Financial Performance: Some Propositions and Research Agenda

Abstract

Purpose: This paper proposes to synthesize the relevant and empirical literature on Corporate Social Responsibility (CSR) adoption, within the context of the corporate governance and other factors which influence the adoption. This paper focuses on the role of the diversity of the board of directors within a CSR and governance systems through a research framework. The paper also examines that role of transformational leadership at the chief executive level, which helps in the implementation of a socially responsible business. This leads to improved corporate financial performance, which then increases the adoption of corporate social responsibility. Design/ Methodology: This paper uses stakeholder theory and transformational leadership theories to present cannon for examination of a number of research propositions presented in the paper. This helps to identify a future research agenda within this area. Findings: A number of research propositions and research agenda are presented on the potential adoption of CSR literature, and the association it may have with the corporate financial performance. Originality/value: As the extant literature does not provide a canon of CSR adoption, the paper's originality is its argument that a positive association between adoption of CSR and financial performance could serve as an approach to assess adoption of CSR. Furthermore, the use of the two theories in combination provides additional insights into identifying the adoption of CSR and its link with the financial performance issues.