Corporate Social Responsibility Doesn't Pay (Usually)

Last Updated Jan 9, 2008 5:31 PM EST

Corporate Social Responsibility Doesn't Pay (Usually)Your mama told you that good deeds will be rewarded. But in the emerging area of corporate social responsibility, or CSR, it's far from clear that socially responsible companies are rewarded financially in the marketplace, according to researchers.

"While doing good doesn't appear to destroy shareholder value, we found only a very small correlation between corporate behavior and good financial result," reports Harvard Business School's Joshua D. Margolis and and Hillary Anger Elfenbein, of U.C. Berkeley's Haas School of Business.

This is no excuse for companies not to serve the community or other interests outside their business plan, of course. Just don't expect to fatten the corporate coffers by doing so, the researchers add.

"In the end, if the promise of an economic payoff can persuade companies to clean up their questionable conduct or redress social ills, society would benefit. However, framing a societal investment in terms of shareholder interest may be misguided. Investments need to be judged solely on the merits, and leaders can and should explore their own motivations before buying into the hype. Doing good may be its own reward."

What about the company where you work? Are employee incentives in place encouraging socially responsible behavior? Does your company contribute to the community it resides in beyond providing jobs and taxes? Should it?

For another view, check out this blog piece on the death of CSR in 2008.

(Heart image by Zest-pk, CC 2.0)

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.