When doing good for society is good for shareholders : importance of alignment between strategy and CSR performance

Rajiv D. BANKER, Xinjie MA, Carol POMARE*, Yue ZHANG

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

14 Citations (Scopus)


We investigate the association between firms’ strategy and their corporate social responsibility (CSR) performance and whether the alignment between strategy and CSR activities affects firms’ financial performance. We describe firms’ strategies as innovation differentiation, marketing differentiation, and cost leadership Miller, (1986). We expect a higher benefit from CSR for firms that rely more on innovation differentiation and a lower benefit for firms that rely more on marketing differentiation and cost leadership. We measure firms’ strategy through a textual analysis of 10-K filings and collect CSR data from KLD Ratings. We find that innovation differentiation strategy is positively associated with CSR performance, while cost leadership (marketing differentiation) is negatively (insignificantly) associated with CSR performance. Moreover, we find that innovating differentiators with higher CSR performance achieve higher financial performance. Finally, we provide additional evidence that information asymmetry and financial constraints moderate the alignment between firms’ strategy and CSR performance.
Original languageEnglish
Pages (from-to)1074–1106
Number of pages33
JournalReview of Accounting Studies
Issue number2
Early online date21 Apr 2022
Publication statusPublished - Jun 2023

Bibliographical note

Funding Information:
We would like to thank Stephen H. Penman, Jim Cannon, Tim Gray, Temi Oshadiya, Matthew McNaughton, anonymous reviewers, conferences participants at the 2019 CFMAR Annual Conference, the 2019 AAA Annual Conference, the 2020 CAAA Annual Conference, the 2020 AFAANZ Conference, and workshop participants at the Hong Kong Baptist University, for useful comments on earlier versions of the manuscript. We would like to thank Professor Yuan Liao for help at an early stage of the project.

Publisher Copyright:
© 2022, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.


  • Strategy
  • Corporate social responsibility
  • Social license to operate
  • Textual analysis
  • 10-K filings
  • M14
  • M4
  • L10
  • Corporate social responsibility (CSR)


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