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Slack‐resources hypothesis: a critical analysis under a multidimensional approach to corporate social performance

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  • Tiago Melo

Abstract

Purpose - The purpose of the paper is to test the slack‐resources hypothesis in corporate social performance (CSP). Design/methodology/approach - The paper uses the technique of panel data in a sample of 624 American listed companies from 2001 to 2007. The literature review builds on the contradictions between the instrumental stakeholder theory and the slack‐resources hypothesis to argue that both concepts are not fully compatible. Findings - The results indicate that prior financial performance, measured as market value added, positively affects CSP. The results further confirm that slack resources are assigned to specific areas of involvement of CSP (product issues, community relations, environmental issues, employee relations and diversity of the work force), rather than to a unified conception of CSP. Research limitations/implications - The current trend in social responsibility regards Friedman's arguments as old‐fashioned and assumes the instrumental stakeholder to be true. The results presented here indicate that part of Friedman's claims may be occurring in reality, so further investigation is needed before they are disregarded. Practical implications - The multidimensional nature of CSP, here proposed and confirmed by the exploratory models, indicates that each dimension of social performance may be impacted by the availability of funds different intensities; and according to the instrumental view (assuming the virtuous circle is true), investment in each particular dimension may provide a different level of return to the firm. Originality/value - The slack resources hypothesis has been the least researched of the two hypotheses relating to the corporate social and financial performance (CSP and CFP) links. Although the slack resources hypothesis may explain the relation as well as the good management hypothesis, most studies tend to focus on the first one, basing their argumentation on the assumption that superior CFP comes as a result of a strategic CSP.

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  • Tiago Melo, 2012. "Slack‐resources hypothesis: a critical analysis under a multidimensional approach to corporate social performance," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 8(2), pages 257-269, June.
    • Handle: RePEc:eme:srjpps:v:8:y:2012:i:2:p:257-269
    DOI: 10.1108/17471111211234879
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    References listed on IDEAS

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    3. Markus Hang & Jerome Geyer‐Klingeberg & Andreas W. Rathgeber, 2019. "It is merely a matter of time: A meta‐analysis of the causality between environmental performance and financial performance," Business Strategy and the Environment, Wiley Blackwell, vol. 28(2), pages 257-273, February.
    4. Muhammad Bilal Zafar & Ahmad Azam Sulaiman, 2019. "Corporate social responsibility and Islamic banks: a systematic literature review," Management Review Quarterly, Springer, vol. 69(2), pages 159-206, June.
    5. Claude Francoeur & Faten Lakhal & Safa Gaaya & Itidel Ben Saad, 2021. "How do powerful CEOs influence corporate environmental performance?," Post-Print hal-02976839, HAL.
    6. Shahzad, Ali M. & Mousa, Fariss T. & Sharfman, Mark P., 2016. "The implications of slack heterogeneity for the slack-resources and corporate social performance relationship," Journal of Business Research, Elsevier, vol. 69(12), pages 5964-5971.
    7. Milind Kumar Jha & K. Rangarajan, 2020. "Analysis of corporate sustainability performance and corporate financial performance causal linkage in the Indian context," Asian Journal of Sustainability and Social Responsibility, Springer, vol. 5(1), pages 1-30, December.
    8. María del Mar Miras‐Rodríguez & Amalia Carrasco‐Gallego & Bernabé Escobar‐Pérez, 2015. "Are Socially Responsible Behaviors Paid Off Equally? A Cross‐cultural Analysis," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 22(4), pages 237-256, July.
    9. Myeongju Lee & Hyunok Kim, 2017. "Exploring the Organizational Culture’s Moderating Role of Effects of Corporate Social Responsibility (CSR) on Firm Performance: Focused on Corporate Contributions in Korea," Sustainability, MDPI, vol. 9(10), pages 1-18, October.
    10. Juan Pineiro-Chousa & Noelia Romero-Castro & Marcos Vizcaíno-González, 2019. "Inclusions in and Exclusions from the S&P 500 Environmental and Socially Responsible Index: A Fuzzy-Set Qualitative Comparative Analysis," Sustainability, MDPI, vol. 11(4), pages 1-31, February.
    11. Saridakis, Charalampos & Angelidou, Sofia & Woodside, Arch G., 2023. "How historical and social aspirations reshape the relationship between corporate financial performance and corporate social responsibility," Journal of Business Research, Elsevier, vol. 157(C).

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