The Relationship between Corporate Social Performance and Financial Performance

The Relationship between Corporate Social

Performance and Financial Performance

Section 1: Foundation of the Study

The concept of sustainability and the adoption of socially responsible principles

are two agents of change influencing recent management efforts in corporations (Perez,

Martinez, & Rodriquez-del-Bosque, 2013; Sharma & Mehta, 2012). Adopting socially

responsible principles enables leaders of organizations to develop sustainable business

entities (Ganescu, 2012). Business leaders are increasingly facing new challenges to act

socially and ethically responsible and make positive contributions towards society

(Balabanov, Balabanova, & Dudin, 2015; Dhingra & Mittal, 2014; I. Yilmaz, 2013;

Pless, Maak, & Waldman 2012); the new challenges correlate to the concept of being

socially responsible.

The importance, relevance, social impact, and financial implications of corporate

social responsibility are frequent topics of debate in the research literature (Gregory &

Whittaker, 2013; Malik, Ali, & Anwar, 2015). One primary focus of the discussion

regarding corporate social responsibility (CSR) is the examination of the relationship

between CSR and corporate financial performance (CFP) in organizations (Michelon,

Boesso, & Kumar, 2013; Pless et al., 2012). Research results confirm inconsistencies

between these two aspects of business operations (Baird, Geylani, & Roberts, 2012;

Erhemjamts, Li, & Venkateswaran, 2013; Servaes & Tamayo, 2013). For example, there

is confirmation of a positive correlation between CSR and CFP variables in some studies

(I. Yilmaz, 2013; Saxena & Kohli, 2012); other researchers identified a negative

correlation or a total absence of correlation (Barnett & Salomon, 2012; I. Yilmaz, 2013).

As leaders of organizations continue to seek to find a balance between shareholder and

stakeholder benefits (Balabanov et al., 2015; I. Yilmaz, 2013; Zimmermann, Gomez,

Probst, & Raisch, 2014), the disparities among studies’ results support the need for

further research on both monetary and nonmonetary benefits of CSR. Specifically,

continued research to improve the level of reliability in performance measurements

(PMs) and the consistency of CSR research findings is a necessity (Saxena & Kohli,

2012). Continued research is a viable means of gaining more knowledge and increased

comprehension of the complex CSR-CFP relationship (Cheng, Ioannou, & Serafeim,

2014).

Background of the Problem

Prior to leaders of business organizations incorporating CSR activities as a part of

their business strategies, the shareholders’ theory and the maximization of shareholders’

wealth were primary paradigms for implementing business strategies and measuring

corporate performance (Adeneye & Ahmed, 2015). Based on the concept of diminishing

marginal returns, the shareholders’ theory implies that there is a reduction of

shareholders’ wealth whenever managers of organizations financially invest in socially

responsible activities (Kaeokla & Jaikengkit, 2012). Scholars such as Friedman (1970)

endorsed the focus on shareholders’ wealth. However, the growth and development of

social movements among multiple groups of stakeholders such as humanitarians,and

environmentalists enhanced corporate leaders’ concerns for social responsibility (Andeu,

Casado-Diaz, & Matilla, 2015; Srivastava, 2012) in conjunction with the realignment of

business strategies by managers of organizations.

Specifically, the social movement of the early 1970s contributed to a dramatic

change in how stakeholders view and evaluate the roles of leaders of corporations. For

example, managers began to incorporate social performance audits to examine the

socially responsible performance within organizations (Perez & Rodriquez-del-Bosque,

2012). Specific areas of examination include the economic development of communities

and the business operations of suppliers while also promoting a better quality of life

standards for customers (Perez & Rodriquez-del-Bosque, 2012). Friedman (1970)

challenged the stakeholder theory through his support of the premise that managers of

organizations only had one responsibility, the pursuit of profits for shareholders (Bazillier

& Vauday, 2014; Jo & Harjoto, 2012).

The potential for the coexistence of concerns amongst both shareholders and other

stakeholders resulted in a shift in strategies endorsing social considerations while also

supporting the maximization of shareholders wealth (Mahenthiran, Terpstra-Tong,

Terpstra, & Rachagan, 2015; Ditlev-Simonsen & Wenstop, 2013). Leaders of financial

institutions within the banking industry of the United States responded favorably to the

social movement. Evidence of CSR efforts and concerns exist in organizations such as

BNY Mellon, Bank of America, and Wells Fargo and Company (Marco, 2012). Projects

include the reduction of the use of paper through renewable energy processes and

reduction in carbon emissions (Marco, 2012). However, challenges coexist with

economic considerations and ramifications from economic and noneconomic choices

made by corporate managers. For example, community members question the actions of

decision makers in the banking industry when funding questionable business transactions

that involved the trading of arms (Stephens & Skinner, 2013).

Researchers refer to CSP in CSR studies as a means of presenting more applicable

and measurable organizational achievements (Hafsi & Turgut, 2013) while considering

CSR organizational policies (Salazar, Husted, & Biehl, 2012). However, despite

increased frequency of researchers examining the relationship between CSR, CSP, and

CFP over the past 40 years, results have been positive, negative, inconsistent, or

inconclusive (Skudiene, McClatchey, & Kencleryte, 2013). The literature also provides

evidence of fragmentation (Wang, Lu, Kweh, & Lai, 2014) or poor uniformity. Frequent

factors of fragmentation include (a) inconsistency with measurements used to confirm the

relationship between CSP and CFP, (b) the use of questionable indexes to quantify social

responsibility, and (c) inaccurate or inadequate measurement of the financial performance

of organizations (Perez & Rodriguez-del-Bosque, 2013). In addition, few researchers

address the CSP-CFP relationship while focusing on considerations such as the size of

organizations or strategies applied by managers within a particular industry group

(Saxena & Kohli, 2012). The impact of CSP on CFP in the banking sector of the United

States is of interest to stakeholders as the recent economic crisis increased risk

management concerns for managers and other business leaders. Anticipated impact of

findings of this study included leaders of business organizations revisiting implemented

CSR strategies and making informed decisions regarding organizational goals and

objectives.

Problem Statement

Findings from a Union Nation Global Compact- Accenture research study

suggested that 93% of 766 Chief Executive Officers regarded corporate social

responsibility as an important consideration for the future success of their organizations

(Cheng et al., 2014). However, despite increased attention to socially responsible actions

and relative financial implications (Fu & Jia, 2012; Wang et al., 2014), the results of

research studies have been inconclusive and inconsistent (Lee, Singal, & Kang, 2013).

The general business problem facing business industry leaders is due to

conflicting results and interpretation of corporate social responsibility there is a lack of

consistent information to make and support strategic budgetary decisions (I. Yilmaz,

2013; Rodgers, Choy, & Guiral, 2013). The specific business problem is some banking

industry leaders need more conclusive evidence of the relationship between CSP and

financial returns to assist in allocating resources towards corporate performance (Mamun,

Sohog, & Akhter, 2013).

Purpose Statement

The purpose of this proposed quantitative correlational study was to examine the

relationship between CSP and CFP to assist banking industry leaders in making informed

CSR investment decisions. Single composite index score calculations from annual

surveys noted as Fortune reputation index (FRI) score ratings represented the independent

variables for CSP (Ganescu, 2012; Melo & Garrido-Morgado, 2012; Orlitzky &

Swanson, 2012). Return on assets (ROA), rate of return on equity (ROE), and earnings

per share (EPS) were dependent variables for CFP for the years 2011 to 2013 (El-

Chaarani, 2014; Hall & Lee, 2014; I. Yilmaz, 2013). Components of the study included

three separate analyses of secondary data representing independent and dependent

variables for the years 2011 to 2013. Since small firms may not be as socially active as

larger companies, the size of organizations was the applied control variables for the study

(El-Chaarani, 2014; Youn, Hua, & Lee, 2015) with total asset as the indicator of firm size

(Fu & Jia, 2012; Melo & Garrido-Morgado, 2012).

Confirmation of a positive CSP-CFP relationship support continued investments

in CSR activities while reiterating a relationship between social responsibility activities

and opportunities for sustainable economic growth (Ganescu, 2012; Gazzola & Colombo,

2014).

Nature of the Study

The two main research study methodologies are quantitative and qualitative.

Quantitative studies employ measurements including methods of statistical deductions

(Guercini, 2014; McCusker & Gunyadin, 2015) while qualitative studies explore the

collection of data through methods that are open and unstructured (Guercini, 2014).

However, around 2000, the ability to use information from various data sources using

both quantitative and qualitative methods, contributed to a third research methodology,

the mixed method (Lund, 2012).

The quantitative method is appropriate for this proposed study based on

congruency between the research design’s objective of measuring the relationship

between variables and using numerical data to make inferences from the results of the

study (Patterson & Morin, 2012; K. Yilmaz, 2013). Specifically, calculating the

correlation between variables that are representative of CSP and CFP to address stated

hypotheses is more feasible and suitable via a quantitative research design (McCusker &

Gunyadin, 2015). The scope of the study did not include any attempt to explore any

perceptions or obtain an account of an experience (Wahyuni, 2012); therefore, a

qualitative method would not sufficiently address the general questions or hypotheses of

the proposed study.

Despite advantages such as addressing complete research questions and providing

valid inferences, a mixed method study design was also not a feasible option for the

proposed study. More specifically, based on the challenges of extensive physical and

financial resources (Lund, 2012) and the ability of a quantitative design to address the

purpose of the study, the mixed methods design was not a consideration for the study.

The quantitative correlational analysis design was optimal for the study based on

the objective of the study to examine the relationship between variables representing CSP

and CFP (Pallant, 2007). In addition, the data for the study were quantitative with

quantifiable measures (K. Yilmaz, 2013). For example, the quantitative data for

independent variable CSP included scores that represent responsibility to the community

and the environment from Fortune’s reputation index. The data were from annual surveys

completed by business executives and financial professionals (Orlitzky & Swanson,

2012; Sur & Sirsly, 2013).

Since the 1990s, there have been questions about the validity of Fortune’s

reputation index (Lee & Roh, 2012). A noted shortcoming of the reputation index is the

argument that the composition of index scores involves a qualitative survey completed by

employees based on their perception of respective firms (Melo & Garrido-Morgado,

2012; Orlitzky & Swanson, 2012). Another consideration is the financial halo effect that

results in a misconception about the financial soundness measure (Hall & Lee, 2014; Sur

& Sirsly, 2013). However, findings from recent rsearches support the use of the

reputation index as a valid indicator of a firm’s overall social performance and as an

actual representation of corporate responsibility (Hall & Lee, 2014). The FRI is also an

alternate to Kinder, Lydenberg, and Domini (KLD) for research studies (Mattingly, 2015)

and Ganescu (2012) referenced the use of FRI composite scores as a tool for measuring

CSP. While the research findings of the study by Szwajkowski and Figlewicz (1999)

confirmed that the FRI provides a reasonable and credible measurement for CSP, study

recommendations mentioned the use of caution when using the index.

Using the FRI composite scores enables researchers to utilize a combination of

CSR characteristics for diversification in employing multiple measurements in evaluating

the CSP-CFP relationship. The multifaceted constructs and conditions affiliated with the

CSR concept (I. Yilmaz, 2013) warrant the evaluation of the CSP-CFP relationship

relative to CSR concerns such as employees’ well-being (Rodgers et al., 2013) and

philanthropic community programs (Taran & Betts, 2015). Moreover, the use of FRI

composite scores for this study supports earlier scholastic recommendation of

Szwajkowski and Figlewicz (1999) for further CSP-CFP testing with the reputation

index.

The dependent variables in this study were accounting data that represent ROA,

ROE, and EPS (El-Chaarani, 2014; Hall & Lee, 2014; I. Yilmaz, 2013). The data for the

variables were from the electronic financial reports of the banks that comprise the census

population of the study and from ycharts.com. Through reforms and acts such as the

Dodd-Frank Wall Street Reform and Consumer Protection Act, the United States

Securities and Exchange Commission (SEC) enforces consistency in the calculations of

ROA, ROE, and EPS as well as reporting in the banking industry (Peterson, 2013;

Stevens, 2013). The expectation was that there would be minimal disparity in the

calculations of the dependent variables for the proposed study. The advent of the Internet

provides new means for banking leaders to present their annual reports and financial

information online (Botti, Boubaker, Hamrouni, & Solonandrasana, 2014). Secondary

data for the dependent variables for CFP for the banks comprising the census population

of the study were available and easily accessed on the Internet. The design materials in

Section 2 of the study provide a detailed explanation of the calculation formulas for the

dependent variables.

Research Question

The examination of the relationship between CSP and CFP involved analyzing the

relationship using FRI composite score ratings as independent variables representing CSP

and ROA, ROE, and EPS as dependent variables representing the financial data for CFP,

while controlling for firm size using total asset. The examination of the relationship

focused on the banking institutions in the banking industry in the United States. The

overall question for the specific business problem of the study was: In the banking sector

of the United States, what is the relationship between CSP, represented by FRI composite

scores and CFP, represented by ROA, ROE, and EPS while controlling for firm size?

The central research questions for the proposed study were:

RQ1: While controlling for firm size, what is the relationship between Fortune

reputation index composite scores and ROA, ROE, and EPS for banks located in the

United States?

RQ2: While controlling for firm size, what is the relationship between Fortune

reputation index composite scores and return on assets for banks located in the United

States?

RQ3: While controlling for firm size, what is the relationship between Fortune

reputation index composite scores and return on equity for banks located in the United

States?

RQ4: While controlling for firm size, what is the relationship between Fortune

reputation index composite scores and earnings per share for banks located in the United

States?

Hypotheses

Hypotheses or informed research study predictions align with the central purpose

of a research study, and the testing of hypotheses involves the calculation of test statistics

from sample data (van Helden, 2013). The hypotheses for the study were:

H10: While controlling for firm size, there is no relationship between Fortune

reputation index composite scores and return on assets for banks in the United States.

H1a: While controlling for firm size, there is a relationship between Fortune

reputation index composite scores and return on assets for banks in the United States.

H20: While controlling for firm size, there is no relationship between Fortune reputation

index composite scores and return on equity for banks in the United States.

H2a: While controlling for firm size, there is a relationship between Fortune

reputation index composite scores and return on equity for banks in the United States.

H3o: While controlling for firm size, there is no relationship between Fortune

reputation index composite scores and earnings per share for banks in the United States.

H3a: While controlling for firm size, there is a relationship between Fortune

reputation index composite scores and earnings per share for banks in the United States.

Theoretical Framework

Based on the economic and social framework involving agents, principles, and

outcomes, the contract theory is relevant to the concept of CSR (Abdallah, Darayseh, &

Waples, 2013). Contract theory supports the establishment and existence of a link

between organizations and stakeholders applicable to the core premise of CSR that

corporate leaders have social obligations to societies (Fontaine, 2013). There are

interrelationships of responsibilities among all parties. Examples within the domain of

contract theory include (a) development of employee loyalty based on the social contract

between managers and employees, (b) engaging in philanthropic activities, and (c) the

innovation and development of socially responsible brands and services (Agudo-Valiente,

Garcés-Ayerbe, & Salvador-Figueras, 2015; Baumgartner, 2014; Smith, 2012). The

deployment of sustainable corporate cultures that support CSR concerns is also within the

domain of the contract theory. An examination of the relationship between CSP and CFP

in the banking industry entails reviewing and confirming the success rate of CSR

considerations meeting the needs of stakeholder groups; the contract theory is, therefore,

relevant to this study.

The second theory related to the study is the stakeholders’ theory. The concept of

the stakeholders’ theory suggests and supports the need for leaders of organizations to be

accountable for their actions while simultaneously seeking to maximize shareholders’

wealth (Harrison & Wicks, 2013; Minoja, 2012). Stakeholders hold managers responsible

for their actions (Benedek, Takacs, & Takacs-Gyorgy, 2013). Being socially responsible

incurs operational costs, as CSR strategies and activities require investments; the

assumption is that it is prudent for the members of management teams of organizations to

justify, identify, and evaluate CSR activities (Kaeokla & Jaikengkit, 2012). Based on the

impact of changes in trends in communities, ongoing reviews of CSR-CFP relationship

are necessary for making related required adjustments in strategic implementations in

organizations.

Specifically, examining the CSP-CFP relationship correlates to the reviewing of

business strategies to ensure the realization of meeting the needs of stakeholders

including shareholders. In addition, an examination of the relationship between meeting

the needs of stakeholders and addressing the financial needs of shareholders relates to the

stakeholders’ theory and accountability of business leaders to all stakeholders (Benedek

et al., 2013). The recent economic crisis reinforced the need for leaders of organizations

to include societal stakeholders concerns in strategic management efforts. While

considering elements of CSR that can impact the survival of organizations such as

customer attraction and retention and community outreach programs (Brower & Mahajan,

2013; Muthuri, Moon,& Idemudia, 2012), quantifying CSP promotes accountability

while providing evidence of organizations’ contributions towards communities. These

efforts coexist with strategies applied by business leaders to meet and exceed meeting

financial goals. If the realization of sustainability goals is a central managerial concern,

the analysis of the link between CSP and CFP is a managerial requirement.

Operational Definitions

Based on the multiple facets of social responsibility, some of the terms in this

study could convey varied meaning. Therefore, I provide the following definitions:

Corporate financial performance (CFP): How an organization performs

financially. Categories of measurements include accounting financial ratios such as ROA,

the rate of ROE, the rate of return on income, and EPS (Baird et al., 2012; I. Yilmaz,

2013). Operational definition for the study is the measurement of financial results within

the banking industry of the United States using financial ratios of ROA, ROE, and EPS.

Corporate social performance (CSP): The operationalization of socially

responsible activities (Blanco, Guillamon-Saovon, & Guiral 2013); the observable

outcome of the concept that involves the integration of social and environmental concerns

into business practices (Skudiene et al., 2013; Weshah, Dahiyat, Awwad, & Hajjat,

2012). FRI composite scores are the unit of measurement for CSP in this study. For the

purpose of this study, the terms CSR and CSP are interchangeable.

Corporate social responsibility (CSR): A voluntary business principle that

incorporates social agendas while being considerate of the impact of business activities

on communities and the environment (Abels & Martelli, 2012). Accountability by

members of business organizations for the impact of their actions on multiple

stakeholders, communities, and the environment (Agudo-Valiente et al., 2015; Chin,

Hambrick, & Trevino, 2013). For the purpose of this study, the terms CSR and CSP are

interchangeable.

Stakeholder: Anyone who has a stake or vested interest in the functioning of an

organization. This group includes consumers of products and services, nongovernment

and government entities, suppliers, distributors, shareholders, and employees

(Heikkurinen, & Ketola, 2012).

Sustainability: Economic innovations, development, and improvements that

incorporate voluntary corporate social responsible activities (Sharma & Mehta, 2012)

while making a positive contribution towards society (Rowe, Nowak, Quaddus, & Naude,

2014). Making a positive contribution towards society without compromising the

potential for members of future generations to meet and satisfy their needs (Baden &

Harwood, 2013).

Assumptions, Limitations, and Delimitations

The study proposal included five assumptions considered true, but not necessarily

verified. There was also consideration of limitations that could contribute to weaknesses,

scopes, and boundaries that could delimit the parameters of the study. The identification

of the assumptions, limitations, and delimitations preceded the significance of the

research.

Assumptions

Based on the scope and design of this study, there were five primary identifiable

assumptions. The first assumption was stakeholders of organizations are either socially

responsible or noncontributors to positive social changes (Mujtaba & Cavico, 2013), and

this reflects the core of the stakeholders’ and shareholders’ theories discussed previously.

The second assumption was since leaders of banks in the United States operate under the

same federal regulations for legal and ethical governance, leaders of the banks in the

census population of the study adhere to the same federal regulations. In addition, since

the same general governing rules and regulations are relevant to business leaders in the

banking industry, similarities in operation processes and procedures reduce the odds of

conducting a biased study.

The fourth assumption of the study was financial data of the banks included in the

proposed study were accurate and met the same financial records requirements as

legislated by the SOX Act (Kim, Lee, & Lee, 2015; Peterson, 2013) and the guidelines of

the Federal Deposit Insurance Corporation (FDIC). The fifth assumption was that there is

uniformity in the calculation of the reputation scores reported by Fortune because of (a)

consistency in the background of survey participants, (b) the specific frequency, and

timing of conducting surveys and (c) the standardized calculation of composite scores.

This assumption also supports the reputation index scores as valid indexes in measuring

the relationship between CSP and CFP. In addition, since CSP reputations reflect CSP

values, and, organizational reputational indices are a popular approach to measuring CSP,

previous researchers used FRI composite scores as a valid proxy for social performance

(Cheng et al., 2014).

Limitations

Reliance on secondary financial data from the websites of the banks included in

the study was the first limitation of the research. However, the legal implications of the

SOX Act regarding financial reports from banks in the United States (Peterson, 2013) and

FDIC guidelines are sufficient and substantial to nullify the need for recalculation or

verification of reported data. A second limitation of the proposed study was the use of

secondary data from Fortune for the independent variable. There was no reassessment of

the reputation index score to confirm the accuracy of polled results. The third limitation

of the proposed study was there were no special considerations regarding any external or

internal factors such as social or economic pressures (Fransen, 2013) and management

styles or organizational characteristics (Du, Swaen, Lindgreen, & Sen, 2013) that could

impact the examination of the CSP-CFP relationship. The study focus was only on the

reputation scores as the independent variable and ROA, ROE, and EPS as the dependent

variables.

A fourth limitation of the proposed study was data collection for the period of

2011 to 2013 as the scope of the study limited reporting findings for a direct timeframe.

However, the results provide a baseline for comparison with future projections based on

the accuracy from confirming the validity of the relationship between CSP on CFP for US

banks. Positive findings of the research support banks leaders’ decisions to incorporate

CSR principles in strategic plans.

The fifth limitation of the study was the sample size. The analysis of the

relationship between CSP and CFP initially incorporated the census population sample of

25 banks in the United States from Fortune’s ranking of Most Admired Companies

(MACs). However, to avoid bias, firm size based on total assets was a control variable

(Fu & Jia, 2012). The commonality of inclusion in Fortune’s ranking and a focus on a

census population from the same industry with similar corporate governance contributed

to the census population being highly representative of the population of banks in the

United States. Section 2 of the study notes additional support for the sample size.

Delimitations

The primary delimitation of the proposed study was the focus on the US banking

industry. A primary reason for selecting the banking industry is that banks play a key role

in our local and global economies. In the financial sector, banks are the main business

entities that provide financing for business ventures including socially responsible

investments (Hu & Scholtens, 2014; Paulet, Parnaudeau, & Relano, 2015; Weber, Diaz,

& Schwegler, 2014). Bank leaders provide services that offer customers an efficient

payment system and products and services for the management of assets and liabilities.

Therfore, examining the CSP-CFP relationship in the banking industry received special

consideration due to perceived financial impact and implications.

The second delimitation was focusing on the census population of banks operating

within the United States. The globalization of the CSP concept and financial

ramifications demand research from a more global perspective however, that is not within

the scope of this study. Recommendations for future research include expanding the study

scope to include banks outside of the United States.

Significance of the Study

The business case for CSR incorporates the fulfillment of four expectations: (a)

the fulfillment of economic, (b) ethical, (c) legal, and (d) philanthropic responsibilities

(Carroll, 1991). In addition, the declaration of members of management teams to be

accountable to stakeholders through ethical actions while making a profit further supports

the business case for CSR (Wilburn & Wilburn, 2014). The next two headings present

more details as to the significance of this study.

Contribution to Business Practice

The concept of socially responsible banking continues to be a highly established

concept in the financial industry; this may coincide with the assumption by financiers and

other stakeholders that investments involve more than a confirmation of financial returns

(Hu, & Scholtens, 2014; Sasaka, Namusonge, & Sakwa, 2014). However, measuring

results and linking results to organizational goals and objectives assist in confirming a

more precise level of all areas of performance. In addition, increased transparency and

accountability demands from stakeholders require improved and objective reporting.

Findings and conclusions from this study add to the existing literature by providing

valued information to Board of Directors members, managers of organizations, and other

stakeholders about the impact of CSR ventures relative to the shareholders and

stakeholders theories.

By focusing on the banking industry, this research addressed industry specific

relationship confirmation for CSP-CFP relationships while confirming awareness of

efforts to promote sustainability through socially responsible efforts (Baird et al., 2012 ;

Orlitzky & Shen, 2013). The time series of the proposed study also addressed a gap in the

existing literature. The years of the research study include a period in the history of the

United States when leaders of some organizations hesitated to invest in or get involve in

CSP efforts as a means to be cost effective after the global financial crisis that ended in

2009 (Antonia Garcia-Benau, Sierra-Garcia, & Zorio, 2013; Yelkikalan & Kose, 2012).

The study findings are also a contribution to the expansion of existing literature on

CSRCFP considerations after events of economic crisis.

Stakeholder groups hold managers of organizations accountable for their actions,

and efficient feedback is essential to maintain an amicable relationship. In the

examination of the CSR-CFP relationship, previous researchers provided stakeholders

with contradictory and conflicting results (Ducassy, 2013; Izzo, 2014; Salazar et al.,

2012). The findings of this research provide managers with additional information

regarding CSP-CFP business venture results and can assist in confirming or refuting the

values of social investments as well as the financial impact on the bottom-line of

organizations.

Implications for Social Change

In the 1990’s, a strong focus on sustainability through CSR concerns in numerous

business industries increased awareness of environmental issues (Wong, 2014). This

awareness extended into 2012 and revolutionized how managers view the role of

companies in our societies. The findings of this study add to the accumulation of

knowledge regarding the CSP-CFP relationship (Aguinis & Glavas, 2012) and efforts to

confirm the far reaching impact of socially responsible strategies and activities on

stakeholders. If marketing and industrial leaders promote positive values from CSP

activities, the potential for leaders continuing to incorporate CSR endeavors in

organizations may increase (Gregory & Whittaker, 2013). The findings of this study also

provide leaders of organizations with a confirmation of the effectiveness of their CSR

strategies on the sustainability of their organizations.

If business activities support a healthy and prosperous society while meeting the

financial goals of organizations, then conditions for a win-win situation exist. However, if

research studies confirm that corporate activities are not meeting the needs of one or more

group of stakeholder, the responsibility of management teams would be to reorganize and

strategize to maintain a balance. In addition, there could be a potential need for future

studies to include additional independent variables to enhance construct validity and for

reliable findings to stakeholders.

A Review of the Professional and Academic Literature

The literature review provides a synopsis of previous concepts and recent studies

that relate to CSR, CSP, CFP, and the examination of the relationships between CSR,

CSP, and CFP. The literature review incorporates (a) a focus on the primary

considerations and concepts of CSR and CSP, (b) an examination of the relationship

between CSP and CFP, and (c) CSR-CFP in the banking industry of the United States.

Specifically, the major themes of the review cover (a) an introduction to concept of CSR,

(b) definitions of CSR, (c) an examination of the scope of corporate performance, and (d)

a review and analysis of CSR and CFP. An examination of the history of the CSP and

CFP relationship, applicable CSP-CFP theories, a confirmation of rating systems

applicable to the CSP-CFP relationship evaluation, and a review of the CSP-CFP

connection in the banking industry of the United States concludes the review.

Strategy for Searching Literature

Primary sources for the literature review included journal articles, dissertations,

scholarly texts, business magazines, and relevant websites. The online library databases at

Walden University and the University of Phoenix were primary online sources for

locating and selecting journal articles. Access to the Walden Library was feasible based

on enrollment status at the institution while access to the library at the University of

Phoenix was as a result of faculty relationship.

The primary databases used for keywords searches in the noted online libraries

included: Thoreau, Academic Search Complete, Expanded Academic ASAP, ProQuest

Central, SAGE Premier, Science Direct, AIB/INFORM Complete, Business Source

Complete, Google Scholar, Expanded Academic ASAP. In addition, the Social Science

Research Network at http://www.ssrn.com/ was resourceful. During the initial stage of

selecting literature, keywords and phrases queried in Thoreau included: corporate social

responsibility, corporate financial performance, corporate social performance,

measuring corporate social performance, measuring corporate financial performance,

CSP CFP relationship, reputation score, Fortune reputation score, KLD score, CSR,

agency theory, slack resource theory, socially responsible, philanthropy, and United

States banking. Other keywords and phrases included altruistic motives, egoistic motives,

sustainability, social responsibility, correlation, and quantitative research. Book reviews

and research articles noted in the reference listings of reviewed journal articles were

additional sources of information for the proposed study and as well as Google Scholar

email alerts set up for the phrases corporate social responsibility, fortune reputation, and

social performance.

Database queries resulted in locating over 300 articles and other resource material.

Reviews of the abstracts, introductions, and conclusions of the articles provided

evidence of the appropriateness of retrieved literature to the study. The study proposal

includes approximately 287 references including textbooks with 271 references dating

from 2012 through 2016. Through Ulrich verification process, I identified 281references

as peer reviewed, and 271 of the 281references are current as of 2012. Therefore,

approximately 94.4% of the total references in this proposal are peer-reviewed

references as of 2012. The literature review contains approximately 182 intext citations

with 181 citations from peer-reviewed references. Approximately 176 peer-reviewed

references in the literature review are current as of 2012; therefore, 96.7% of the intext

citations for the literature review are peer-reviewed.

The Concept of Social Responsibility

When Smith published a review of the relationship between business and

communities, the underlying premise was that people desired businesses to be socially

responsible (Brown & Foster, 2013; Turcsanyi & Sisaye, 2013). While Smith did not

directly defend the concept of profit maximization, he supported the concept of profit

seeking (Schwartz & Saiia, 2012). After explaining that the moral sentiments of

individuals temper their selfinterest behaviors, Smith further posited that obtaning profit

should serve to motivate owners of capital to contribute to society and it was based on

this thought that he advanced the market system as being an ethichal system that could

work to serve the common good (Northrop, 2013).

Contrary to Smith’s view, Friedman (1970) argued that corporations only had the

social responsibility of increasing profit and creating shareholders’ wealth (Mansell,

2013). Smith’s and Friedman’s concepts evolved in an era when there was no separation

of management and ownership within organizations. As larger organizations became the

norm rather than the exception, separation of duties was evident and proponents of the

shareholders’ theory employed diverse means to champion their cause (Andres,

RomeroMerino, Santamaria, & Vallelado, 2012). For example, separation of duties

resulted in the appointment of Board of Directors to advise and monitor members of

executive management teams (Andres et al., 2012; Filatotcher & Nakajima, 2014) with

members of the board holding team members accountable for meeting business goals and

objectives.

The separation of management duties concurrent with the broadening of the scope

of social responsibility (Filatotchev & Nakajima, 2014), and more active display of

concerns for the social impact of the actions of organizations corresponded with increased

humanistic concerns by multiple stakeholders (Melee, 2013). For example,

demonstrations against environmental violations and for the improvement of human

rights confirmed greater concern for the environment, safety of products, and the general

welfare of employees (Turcsanyi & Sisaye, 2013). An increase in budgets and operating

expenses for CSR activates further confirm the extension of humanistic and social

concerns.

Results of a joint survey of 388 fund manager and financial analysts conducted by

CSR Europe, Deloitte, and Euronext confirmed 50% of the managers surveyed valued

corporate information regarding social and environment performance (Luo, Wang,

Raithel, & Zheng, 2015). In addition, 51% of the fund managers and 37% of the financial

analysts favored granting a stock price premium to companies that are socially

responsible (Luo et al., 2015) and 56% of the survey participants noted that investors

requested information on nonfinancial goals such as CSR metrics (Luo et al., 2015). In

their research, Helmig, Spraul, and Ingenhoff (2016) also provided statistics on CSR.

They noted that the management team of 90% of Fortune 500 companies initiated

initiatives involving CSR concerns.

The preceding statistics confirm the magnitude of social concerns and the desire

of organizations to focus on meeting the needs of all stakeholders. The statistics also

support the increased interest of business leaders to act in a responsible manner as well as

diversification in definitions and undertakings of CSR (Balabanov et al., 2015; Chin et

al., 2013). When business leaders engage in socially responsible activities and act in a

more responsible manner (Balabanov et al., 2015; Chin et al., 2013), there is greater

potential for the extension of the socpe of CSR.

Business practices of CSR that extend beyond legal, ethical, philanthropic, and

economic societal considerations (Melee, 2013) in conjunction with changing trends in

the business environment typically result in ongoing extension of the scope of social

responsible to include CSP, social issues, and social responsiveness (Rath & Gurtoo,

2012 ;Wilburn & Wilburn, 2014). The concept entails social responsibility orientation

(SRO) and an individual’s beliefs and tendencies regarding the concept of quality that

typically conform to their beliefs in acting in a socially responsible manner (Rath &

Gurtoo, 2012).

At the corporate level, there are three P’s of performance considered as essential

elements in establishing socially responsible practices in organizations: purpose, process,

and people (Mosgaller, 2012). The clearly defined purpose of social responsible actions

promotes and encourages stakeholders’ commitment while the process underscores

methodologies that guide the processes into employed strategies (Mosgaller, 2012). The

purpose of social responsible actions and processes are factors that enhance the

engagement of the people or members of an organization (Mosgaller, 2012) and

according to the principles of the stakeholders’ theory, people should include more than

shareholders (Lombard & Joubert, 2014).

Stakeholders of corporate organizations frequently witness and experience

employed voluntary value-added strategies as a result of efforts aimed at doing good

(Lin-Hi & Muller, 2013). For members of organizations, the implied duties and

obligations have implications at two levels: the internal and external levels. The internal

level relates to stakeholders affected by the actions of an organization and who can

influence results within an organization or in communities level (Lin-Hi & Muller, 2013).

The results of actions that impact business partners, societies, communities, and general

environment relate to the external level (Lin-Hi & Muller, 2013). Actions may include

managers promoting employee volunteering or other social projects without with pay

(Lin-Hi & Muller, 2013).

Through the concept of ethical commitment, the philosophy of social

responsibility has provided the foundation for establishing and enforcing practices that

enhance the responsible management of organizations. Other key considerations include

legitimacy through principles (Zheng, Luo, & Maksimov, 2015) and an implied social

contract between organizations and their environmental surroundings (Byerly, 2013;

Turcsanyi & Sisaye, 2013). An analysis of social trends and changes confirm social

responsibility will be playing a significant role in the future of organizations (Nwagbara

& Reid, 2013). The anticipation is that there will be higher correlation between the value

of leaders of business organizations and related stakeholder groups and consumers will

expect more from business leaders from an ethical, philanthropic, and legal perspective

(Nwagbara & Reid, 2013). There is also the anticipation that leaders of business

organizations will continue to provide more solutions to social and environmental

problems through principles such as the Equator Principles (EP) whereby the

management of credit risk relates to the assessment and management of social and

environmental risks on projects financed , for example, by the World Bank (Matei &

Voica, 2013).

The arguments regarding the social responsibility of organizations and the

financial performance are as diverse as the definitions of the concept. Some definitions

generally focus on the welfare of societies. Others define the concept based on limited

scopes such as community well-being (Ghasemi, Nazemi, & Hajirahimian, 2014)) or

philanthropic endeavors such as contribution of monetary gifts and volunteering (Smith,

2012). While some research findings have confirmed positive relationships (Galbreath &

Shum, 2012), others have confirmed no relationship or a negative relationship (Skudiene

et al., 2013). Another noted area of disagreement is the financial implications of CSR.

Proponents of CSR claim that organizations have no tradeoff between increasing or

improving their social responsibility and meeting their financial goals (Kim & Statman,

2012). This trend of thought implies that the initiation of CSR corporate strategies and

procedures has no opportunity costs or financial loss. However, other research findings

support an association between high corporate social responsibility and low financial

performance (Arsoy, Arabaci, & Ciftcioglu, 2012). The next section of the study presents

a review of the literature on the concept of corporate social responsibility.

Corporate Social Responsibility

Over the past decade, CSR has greatly influenced corporate life through

stakeholders’ continued quest to increase the alignment of processes and procedures with

social values (Cai, Jo, & Pan, 2012) and expand business strategies and operations with

the integration of social and environmental concerns (Brower & Mahajan, 2013; Costa &

Menichini, 2013; Izzo, 2014). Traditionally, the general premise was that strategies of

organizations focus only on creating economic wealth while producing consumer

products and services (Ferrero, Hoffman, & McNulty, 2014; Mansell, 2013). However,

social values and greater concern for the common good of communities became

important considerations after the mid 1970s, and by the early 1990s, greater demands

from stakeholders for transparency and accountability in organizations increased the

importance of CSR around the globe (Balachandram & Saranya, 2014; Perez &

Rodriguez-del-Bosque, 2012; Srivastava, 2012 ). The increased CSR concerns of

stakeholders in corporations support the growing expectations of societies that a

relationship between communities and business organizations is vital to addressing social

concerns (Deswal & Raghav, 2014) and three types of motivation related to the

partnership are altruistic, egoistic, and strategic motivation (Elving, 2013; Garay & Font,

2012; Kassel, 2012) .

The concept of altruistic motivation and the focus on the benefit of others over

self directly relates to CSR (Garay & Font, 2012). From a business case perceptive,

altruistic motives for CSR considerations correlate to the objective of stakeholders of

organizations to act in a socially acceptable manner based on perceived moral obligations

to society (Kassel, 2012). Managers who embrace CSR concerns for the good of all

stakeholders versus the financial rewards self-promote CSR concerns for altruistic

motives; this selfless level of concern is the foundation of CSR (Garay & Font, 2012).

Egoistic motives, the opposite of altruistic motives, focus on self and view self as

the primary beneficiary of any action (Elving, 2013). Managers and shareholders with

little or no concern for the impact of their business decisions on other stakeholders have

egoistic motives, and contribute to increased episodes of consumers questioning the

validity of CSR activities (Skarmeas & Leonidou, 2013). This motive is contrary to the

CSR principle of being considerate of others and can promote actions that have negative

repercussions for societies while increasing the economic rewards for a narrow group of

stakeholders such as managers and shareholders.

Strategic motives guide the business decisions made by the management teams of

organizations and, based on moral concerns and other factors such as the building up of

reputation by doing good, managers frequently separate CSR concerns from other

strategic initiatives (Andreu, Casdo-Diaz, & Mattila, 2015). The altruistic and egoistic

motives of managers play a role in implemented business strategies aimed at achieving

organizational goals; concerns now include both intangible and tangible assets (Deswal

& Raghav, 2014).

As previously mentioned, CSR considerations are voluntary (Abels & Martelli,

2012; Costa & Menichini, 2013; Fontaine, 2013; Ofari, Nyuur, & S-Darko, 2014) and one

primary strategy supported by research studies is socially responsible investments (SRI).

Monetary and nonmonetary investments in CSR activities include (a) conservation of

natural resources, (b) renewal, and recycling to preserve the ecosystem, and (c) the well-

being of employees in the workforce (Rodgers et al., 2013). Investments and strategies

may include (a) philanthropic programs in communities (Bravo, Matute, & Pina, 2012),

(b) exhibiting the promotion of moral motives and duties, (c) fair treatment of employees,

(d) being concerned about the general well-being of employees, and (e) transparency and

honesty in organizations (Cheng et al, 2014).

The effective balancing of economic and social benefits is a CSR concern, and,

with the global growth and promotion of social concerns such as global warming,

sustainability, and human right protection, the impact and influence of CSR has increased

since the 1970s (Baumgartner, 2014; Bravo et al., 2012; Cheng et al., 2014; Fifka &

Berg, 2014; Lozano, 2015). Even though the CSR concept is synonymous with crisis

events (Ducarry, 2013; Lariscy, 2014; Shim & Sohn, 2015), based on a social contract

that requires a commitment by members of stakeholder groups to mutually address ethical

and social issues (Turcsanyi & Sisaye, 2013), CSR is recognized for providing

sustainable benefits for stakeholder groups through effective strategies aimed at

protecting and benefiting society. The social contract supports integration of the

selfregulating attributes of CSR into the business models of organizations to enhance

embracing responsibilities that frequently result in confirmed benefits (Pérez, Martínez,

& Rodríguez-del-Bosque, 2013). Examples of confirmed CSR benefits include (a)

reduction in operating costs through strategies aimed at reducing waste, (b) conservation,

and eco-friendly efforts aimed at environmental control, and (c) the attraction of socially

conscious consumers (Eabrasu, 2012; Khojastehpour & Johns, 2014; Tyagi & Gupta,

2012). Other examples include adding value to the recruitment, motivation, and retention

of quality and qualified employees, and implementing risk management controls

(Eabrasu, 2012; Khojastehpour & Johns, 2014; Tyagi & Gupta, 2012)

The CSR concept promotes (a) stakeholders of organizations as being morally

responsible towards communities, (b) CSR as a contributing factor to sustainability, and

in employing CSR processes and procedures. CSR indicators also assist business leaders

to identify the strengths and weaknesses of organizations, and predict future value and

performance from investments and improvements (Cohen, Holder-Webb, Nath, & Wood,

2012). CSR indicators are primary means for confirming accountability to stakeholders

through corporate social reporting since it is not enough for stakeholders of organizations

to practice CSR. Communication of actions to all stakeholders enforces effective

information exchange within and between stakeholder groups. Communication of actions

also positively influences trust, accountability, and commitment of stakeholders

(Amaladoss & Manohar, 2013; Guziana & Dobers, 2013) while refuting arguments of

opponents of CSR that being socially responsible is contrary to profit maximization.

Opponents of CSR argue that drivers of CSR concerns reduce the fundamental

role of businesses to increase economic benefits. However, there is evidence to support

CSR concerns making a contribution to an increase in the alignment of business strategies

and processes with CSR activities (Amaladoss & Manohar, 2013; Guziana & Dobers,

2013), increased efforts in reducing negative environmental impacts on communities, and

supporting donations to charities and social organizations (Adrian, Phelps, & Gatte,

2013). The implementation of CSR strategies that relate to each driver involves incurring

costs that may include (a) cost of purchasing equipment, (b) the cost of implementing

new processes and procedures, or (c) the cost of investments in communities (Barnett &

Salomon, 2012). However, supporters of the concept and positive relationship between

CSR and CFP have argued that benefits of CSR to stakeholders that include higher

employee morale, higher productivity, increased market share, improved reputation, and

increased effective operation of organizations offset the costs of CSR strategies

(Gazzola, 2012). Another focal point of ongoing CSR debates is the disparities in

successfully measuring CSR initiatives.

Measuring CSR is as complex as defining the concept and researchers use various

indicators and methods such as content analysis and reputational measures to test and

examine the relationship between CSR or CSP and CFP (Dam & Scholtens, 2013).

Subjective indicators such as the KLD rating system are also evident in the literature as

CSP indicators (Dam & Scholtens, 2012; Jayachandran, Kalaignanam, & Eilert, 2013).

The measurement of CSR is an area of concern as study findings have presented mixed

results. Another area of concern is the use of disaggregated CSP measures to analyze the

individual components of CSP (Aggarwal, 2013; Humphrey, Lee, & Shen, 2012;

Jayachandran et al., 2013). While some reseachers use disaggregated CSP measures in

their analysis of individual components of the construct versus analyzing it as a whole,

the disaggregated approach can assist researchers in arriving at concise and concrete

research results ( Aggarwal, 2013; Humphrey et al., 2012; Jayachandran et al., 2013).

Measuring nonfinancial performance provides leaders of organizations with valid

information concerning intangible assets that relate to financial performance reports

(Alexandra, Virginia, & Valentin, 2012). Relative to this study, an examination of the

CSP-CFP relationship was to provide insights as to whether or not CSR strategies

compliment and promote the financial growth and performance of organizations.

Corporate Performance

Accountability and consideration of the impact of actions of management teams

on employees, consumers, communities, and the general environment have gained

corporate attention along with maximizing the wealth of shareholders (Effiong, Akpan,

& Oti, 2012). However, recent business scandals and breach of the contract between

stakeholders and members of management teams at companies such as Enron, Tyco, and

World Com (Peterson, 2013; Schwartz, 2013) support the need for managers of

organizations to establish and maintain a balance between their markets, regulations, and

ethics (Lawal, 2012; Schwartz, 2013). Another recent scandal involved rate-rigging

concerning the London Interbank Offered Rate or Libor that resulted in the suspension of

a senior member of staff at the Bank of England (Cohn, Fehr, & Maréchal, 2014; Fields,

2014). In addition, consumers are demanding, and governments are supporting products

and services that support social and environmental responsibility to solidify partnerships

between long-term business success and good relationships with multiple stakeholder

groups (Revathy, 2012).

Social and governmental pressures that address climatic change and other

environmental issues along with increasing confirmation of limited resources to meet the

needs of future generations are both endorsements that short-term goals that focus

entirely on profitability are not an effective strategy for sustainability (Lombardo &

D’Orio, 2012). More specifically, a limited focus on shareholders’ maximum returns is

not sufficient and can have a negative impact on the sustainability of organizations.

Therefore, the effective management of the financial and social performance of an

organization is a critical factor consideration for organizations (Kahreh, Mirmehdi, &

Eram, 2013).

Business leaders who incorporate CSR concerns into corporate strategies have to

focus on the achievement of mutual benefits for all stakeholders and strategize to meet

the needs of a larger audience that include more than just shareholders (Revathy, 2012).

Sustainability and CSR concerns intertwine and require a change in corporate culture to

promote a more social-conscious environment while minimizing resistance to change.

Training and development programs are effective means of promoting a sustainable

corporate culture and the attainment of organizational goals and objectives while

monitoring and evaluation promote accountability (Perez, 2015). The alignment of

business and CSR strategies with the goals and objectives of organizations in conjunction

with business monitoring and evaluation confirm the accountability of the action of

business leaders to stakeholders. The availability of public reports to enrich transparency

also confirms accountability and reporting is essential to present information to

stakeholders (Itotenaan, Samy, & Bampton, 2014; Perez, 2015).

The scope of CSR reporting may vary among organizations; however, the basic

components include financial, ethical, social, and environmental results (Chaarlas &

Noorunnisha, 2012). Public reports present confirmation of expenditures and profits or

loss relative to the operations of organizations and the assessment of tangible and

nontangible assets (Itotenaan, Samy, & Bampton, 2014; Perez, 2015); financial and social

performances are key considerations in assessing the sustainability of organizations. The

results from monitoring and evaluation align with the central theme of the study, an

examination of the CSP-CFP relationship in banking. While there are standard

measurements to confirm financial results, there are inconsistencies and variances in

assessing social performance (Cho, Lee, & Park, 2012; Skudiene et al., 2013). The

inconsistencies and variances of study results support the need for continued research

regarding CSR and specifically a confirmation of the CSP-CFP relationship.

The scholarly debates on CSR and the financial performance of organizations

reflect how managers and other stakeholders conceptualize success. Traditionally,

economic profitability determined the success of organizations (Humphrey et al., 2012;

Revathy, 2012; Sakarya, Bodur, Yildirim-Öktem, & Selekler-Göksen, 2012). However,

changes in the conceptualization of organizational success no longer focus primarily on

profit and financial management (Humphrey et al., 2012; Sakarya et al., 2012); additional

considerations include greater concern for societies and communities, consideration for

the welfare of all stakeholders of an organization, and nonfinancial results, risk

management, and transparency (Humphrey et al., 2012; Revanthy, 2012). The success

stories of organizations no longer entail purely economic concerns; moral and social

attribute are now a part of those stories and accountability to multiple stakeholders is now

the norm.

The planning, implementation, and results from strategic plans are at the core of

corporate performance (CP) measurement. Previously, the general definition and concept

of CP focused on financial attributes; however, with the advent of CSR, there is an

acknowledgement of social affiliation and the ability of an organization to attain its goals

and objectives while effectively and efficiently using scarce resources. Enhanced

strategic planning with CSR concerns for people and our planet are important and

relevant aspects of the performance of organizations (Epstein, Buhovac, & Yuthas, 2012;

Gallear, Ghobadian, & Chen, 2012; Singal, 2014) and underscores the CSP concept. The

growth of the CSP concept, the relevance of measurement as an important managerial

consideration in the assessment of corporate strategies, and reporting findings to diverse

stakeholder groups is now collective business considerations for members of management

teams.

Corporate Social Performance. The accountability of corporate managers to

multiple stakeholders correlates with ongoing analysis of the impact of CSR strategies on

economic, social, and environmental concerns and strategies aimed at doing good (Lin-Hi

& Muller, 2013). Increased social awareness and responsibility, greater concern for the

common good of all stakeholders, and greater concern for the environment are added

considerations in the pursuit of maximizing the wealth of stockholders (Dorasamy, 2013;

Flammer, 2013; Kolk, 2016). Increased social concerns did not evolve instantaneously,

and the history of CSP confirms a steady growth of socially responsible actions from as

early as the 1950s (Bravo et al., 2012).

In the 1950s, CSR concept was an extension of the duties of organizations and

included ethical, legal, and philanthropic considerations (Bravo et al., 2012). One scholar

who confirmed early support for the CSR concept of organizations and obligation to

society is Bowen (1953), and in his arguments he noted that managers of organizations

should care about people and the environment in which they operate. Bowen’s arguments

support the concept that positive contributions by business leaders to societies indicate

consideration of people and the environments in which organizations operate (Bravo et

al., 2012; Humphrey et al., 2012; Revanthy, 2012).

Since the early 1970s, the integration of business strategies with ethical concerns

and stakeholders’ demands for more transparency increased (Cai et al., 2012; Kahreh et

al., 2013; Siltaoja, 2014). In the 1990s, the CSR concept evolved from social obligations

to the stakeholder approach; managers of organizations became more considerate of their

actions on the public and societies (Bravo et al., 2012). Currently, socially responsible

organizations are societal norms and CSP principles that include (a) improved community

relations, (b) empowerment, (c) positive employee-employer relationships, and (d) a

higher level of concern for the social issues (Arsoy et al., 2012; Beauchamp & O’Connor,

2012; Quazi & Richardson, 2012 ) are evident in numerous organizations and industries.

Recent literature on CSR links CSP to moral ethics (Quazi & Richardson, 2012)

and the configuration of socially responsible principles into processes and policies that

support social relationships between organizations and societies (Weshah et al., 2012). In

addition, CSP is the outcome of the implementation of CSR activities while confirming

the extent to which managers of organizations achieve the objectives of its stakeholders.

(Hafsi & Turgut, 2013). The term is an early attempt to define the responsibility of

management teams in both legal and economic terms (Hafsi & Turgut, 2013) and a

distinction between CSP and CSR by Salazar et al. (2012) views CSP as the results of

CSR policies whereby CSR relates to socially responsible activities and CSP correlating

to an actual outcome. However, regardless of the inferences from the multiple definitions

of CSP, the multidimensional concept of CSP has evasive qualities that add some degree

of difficulty when measuring CSP (Mahon & Wartick, 2012).

The literature notes a well-defined link between social responsibility applicable to

multiple stakeholders and communities (Font, Guix, & Bonilla-Priego, 2016) and

consistency with the concept of sustainability (Calabrese, Costa, Menichini, & Rosati,

2013). In addition, corporate social responsive behavior correlates to high regards for

business ethics, corporate citizenship, and a holistic view of the social role of

organizations in communities (Lipunga, 2015). However, notable disagreements

regarding CSP include but are not limited to what and how to measure CSP (Salazar et

al., 2012) and measuring CSP is a major issue in evaluations of CSR.

Confirmed CSP methods of measurements include (a) Dow Jones Sustainability

Index (DJSI), (b) KLD index, (c) FRI, and (d) content analysis (Ahamed, Almsafir, &

AlSmadi, 2014). Measurements for financial performance include ROA, ROE, and

liquidity

(Rakotomavo, 2012; Skudiene et al., 2013). Conflicting findings and inconsistencies

regarding the relationship between CSP and CFP have contributed to ongoing debates and

increased CSP-CFP relationship research efforts. In addition, there are variations in

CSP measurements and CFP measurements (Rakotomavo, 2012; Skudiene et al., 2013).

The questionable validity of existing study results and the degree of uncertainty

of study results support the need for further research to examine the CSP and CFP

relationship. The last decade has witnessed the creation of social analysis or evaluation

measurements (Cellier & Chollet, 2016). In this study, established evaluation

measurement of a reputation index explored the strength of the CSP-CFP relationship in

the banking industry of the United States.

Corporate Financial Performance. Not all scholars embraced the new age

expansion of obligations of organizations, and Friedman was a strong opponent of CSR

due to perceived negative financial implications for businesses. In 1970, based on the

assumption that organizations would adhere to laws and act in an ethical manner

(Schwartz, 2013), Friedman posited that the chief focus of corporate and managerial

responsibility was the maximization of shareholders wealth (Ferrero et al., 2014; Kruger,

2015; Schwartz & Saiia, 2012; Youssef & Hamza, 2014). In 1994, Freeman rebutted the

statement made by Friedman with arguments referring to the influential position of

managers of organizations and their fiduciary responsibility to multiple stakeholders

while endorsing social performance as a necessary feature to enhance the business

legitimacy of organization (Ferrero et al., 2014; Przychodzen & Przychodzen, 2013;

Youssef & Hamza, 2014).

Public reactions such as boycotts against organizations like Walmart for engaging

in unethical labor practices (Elsakit & Worthington, 2012) are indicators that stakeholders

of organizations no longer accept that the sole purpose of organizations is meeting the

economic expectations and needs of shareholders (Nwaneri, 2015). Current research

studies on CSR refer to shareholder view expressed by Friedman or the stakeholder

theory argument expressed by Freeman whereby the success of an organization is relative

to the management of relationships with all groups of stakeholders who have legitimate

rights within business organizations (Brower & Mahajan, 2013; Izzo, 2013). However, it

is the financial implications of CSR that is frequently the topic of scholarly debates

concerning organizations and the social obligations of managers (Kim & Statman, 2012).

The financial implications of CSR continue to be a vibrant debate topic, and the

literature confirms the fraction between proponents and opponents. For example, in 2012

Kim and Statman referred to the ongoing conflict in examining the CSR-CFP relationship

in a study. Their argument against CSR noted that corporate managers shortchange

shareholders when they invest in CSR endeavors (Kim & Statman, 2012). In addition, the

researchers suggested that improved financial performance is highly feasible when there

are reductions in spending for environmental reasons (Kim & Statman, 2012). While both

arguments are valid, the primary reason for the existence of businesses as well as the

accountability of organization leaders to stakeholders are two considerations that should

underscore business strategies and processes. Based on the premise that the primary

business goal of an organization is to make a profit (Ferrero et al., 2014; Kruger, 2015;

Schwartz & Saiia, 2012), accountability to shareholders is a business requirement.

Evaluation of business activities promotes accountability to shareholders and

other stakeholders of organizations. More specifically, the examination of financial

statements provides valuable information regarding the financial status of an organization

(Kotane, 2012). The evaluation process includes the recording of financial data

confirming the extent to which economic goals are being achieved and results presented

in the form of financial statements (Abernethy, Bouwens, & van Lent, 2013; Bushman,

2014 ). The presentation of statements has varied implications for multi groups of

stakeholders of organizations. Financial statements (a) indicate the financial strength of

an organization to potential investors, (b) confirms indicators such as EPS, market value

(MV), and dividends per share to existing stockholders, and (c) confirms financial

strength of an organization to creditors (Popa, Bogdan, & Balaciu, 2012). Moreover, the

assessment of financial statements data is valuable in reviewing the goals and objectives

of organizations for future planning including sustainability.

The alignment of financial goals with the use of assets and resources to generate

profits and financial measures include the use of market-based measurements such as

price per share and market return (Albertini, 2013; Huang & Yang, 2014; Melo &

Garrido-Morgado, 2012 ). Other measurements include (a) accounting financial PMs such

as ROA, ROE, and (b) EPS (Albertini, 2013; Barnett & Salomon, 2012; Huang & Yang,

2014; Melo & Garrido-Morgado, 2012; Pan, Sha, Zhang, & Wenlan, 2014). Due to

variations in instruments, data, and methodologies used to measure CFP, there are

ongoing debates concerning the evaluation of CFP and a definitive confirmation of the

CSP-CFP relationship (Baird et al., 2012; Huang & Yang, 2014; Skudiene et al., 2013).

This study addressed the need for additional evaluation of CFP and other findings for the

CSP-CFP relationship.

Corporate Social Performance and Corporate Financial Performance

From a corporate perspective, elements of CSR are extensions of the ethical

considerations of managerial stakeholders. The conceptual framework relative to the

perspective includes focusing on (a) the perceived value orientations of corporate

financial professionals, (b) the attitude of financial professionals about business ethics

issues, (c) attitudes and perceptions of financial professionals regarding CSR issues and

(d) CFP results (Jin, Drozdenko, & DeLoughy, 2013). However, the concept of CSR

addresses meeting the social and financial needs of multiple stakeholders (Michelon et

al., 2013; Mulyadi & Anwar, 2012; Torres, Bijmolt, Tribo, & Verhoef, 2012) and hence

is multifaceted. Studies that examine CSR concerns in relation to the triple bottom line

concept-profit, people, and the planet-focus on meeting the needs of multiple

stakeholders (Mulyadi & Anwar, 2012). This proposed study is an extension of the

ongoing investigation into the complexities of CSR through an examination of the

CSPCFP relationship within the banking industry of the United States.

An examination of the literature confirmed a strong interest in the examination of

the relationship between the social responsibilities of organizations and their financial

performance for more than three decades (Chung & Pyo, 2013; Erhemjamts et al., 2013;

Michelon et al., 2013). For example, Fu and Jia (2012) referred to a review of 63 studies

on the CSP-CFP relationship. Mention is also made of the lack of consensus on the

conceptualization and definition of CSP and CFP in general (Endrikat, Guenther, &

Hoppe, 2014). Based on (a) a lack of consensus (b) inconsistencies with CSP and CFP

measurements (c) issues with the identification of applicable variables for both CSP and

CFP, and (d) conflicting research results, it is justifiable to conduct further research into

the CSP-CFP relationship (Endrikat et al., 2014).

Early concerns with the examination of the CSP-CFP relationship highlighted 4

major areas of considerations (Baden & Harwood, 2013; Huang & Yang, 2014). The first

area is the impact of the mode and level of values of research relative to the general and

specific assumptions, employed, methodologies, and analysis and interpretation of

research results. The other areas include (a) the inconsistency of results, (b) the impact of

the varied research assumptions, and (c) the opposing interpretation of theoretical

viewpoints and applied research methods (Baden & Harwood, 2013; Huang & Yang,

2014; Skudiene et al., 2013; Tang, Hull, & Rothenberg, 2012). Recent recommended

characteristics include considering the size of an organization and the financial risk level

(Jo & Na, 2012; Lee, Park, & Lee, 2013; Reimann, Rauer, & Kaufmann, 2015) in order

to enhance a holistic evaluation of the CSP-CFP relationship and could contribute to a

reduction in the level of inconsistency in study results.

Inconsistencies in study findings have been a primary focus of numerous CSPCFP

empirical studies (de Campos & Santos, 2013; Ni, Egri, Lo, & Lin, 2015; Shahzad

& Sharfman, 2015). Some results have confirmed a positive relationship (Shahzad &

Sharfman, 2015; Sun, 2013; Waddock & Graves, 1997); others a negative (Sun,

2013;Youn et al., 2015; Waddock & Graves, 1997); and others a mixed relationship (Fu

& Jia, 2012;Youn et al., 2015). Researchers with arguments that confirm a negative

CSPCFP relationship negative (Sun, 2013;Youn et al., 2015; Waddock & Graves, 1997)

support the viewpoint that social responsibility involves (a) incurring additional operating

costs (b) the additional costs results in profit reduction, and (c) additional costs reduce

shareholders’ wealth (Skudiene et al., 2013; Sun, 2012). This is the consensus of

supporters of the shareholders’ theory who support the argument that the primary

objective of businesses is improving the economic wealth of shareholders. Research

findings by Aguinis and Glaves (2012) and the confirmations of positive, negative, and

mixed CSP-CFP relationships in the literature ( Fu & Jia, 2012; Ni et al., 2015; Shahzad

& Sharfman, 2015; Sun, 2013; Youn et al., 2015), support the need for further research to

arrive at a consensus regarding the relationship.

Multiple diverse methods of measurements and variables are contributors to

mixed research results and findings (Ahamed et al., 2014; Izzo, 2012; Ni et al., 2015). In

addition, focusing on only one aspect of CSR such as just the environment or a particular

stakeholder group, impacts study findings (Ni et al., 2015). While diverse operationism

can be advantageous in determining if there is a valid relationship between CSP and CFP,

the wide scope of inconsistency and differences in operationalism in studies diminish

opportunities for scholars to arrive at precise and definitive conclusions (Ahamed et al.,

2014; Izzo, 2012; Ni et al., 2015; Wang, Dou, & Jia, 2015).

Applied research methods on the CSP-CFP relationship include quantitative,

qualitative, and mixed methods. Each of the methods has incorporated varied PM systems

based on the value orientation of researchers, research problem statements and research

purpose statements. The varying research assumptions, opposing interpretations,

diversification in performance measurement systems, and variations in value orientation

are all factors that support continued debate on the ramifications of the CSP-CFP

relationship. In addition, greater validity and accuracy in studies by focusing on a single

industry (Al-Shubiri, Al-abedallet, & Orabi, 2012; Font, Walmsley, Cogotti, McCombes

& Hausler, 2012; Soana, 2011) can have a positive impact on the sustainability

implications of social responsible strategies and gain additional support for CSR

strategies being employed by leaders of organizations. This proposed study is a response

to support greater validity and accuracy in the CSP-CFP relationship while focusing on a

single industry (Al-Shubiri et al.,2012).

Theoretical framework for CSP and CFP. Theoretical frameworks relevant to

examining the CSP-CFP relationship include (a) contractual agreement, (b) shareholders

and stakeholders’ considerations, and (c) the use of resources. The related theories

present a unique perspective on the impact of CSP on CFP from a theoretical point of

view. Specifically, there is confirmation in the literature that research studies on CSPCFP

relate to the contract theory, the integrative social contract theory, the shareholder theory,

the stakeholder theory, and the slack resources theory (Byerly, 2013; Dorasamy, 2013;

Fassin, 2012; Izzo, 2014; Melo, 2012; Peters & Caro, 2013).

The concept of interrelationship underlines the contract theory and supports the

establishment and existence of a reciprocal exchange between leaders of organizations

and multiple groups of stakeholders. A social contract exists between the multiple groups

of stakeholders and leaders of organizations that promote CSR concerns for the

communities in which organizations operate and service (Byerly, 2013; Dorasamy, 2013).

The interrelationship between the leaders of organizations and stakeholder groups

reinforce the relevance and applicability of the contract theory to this study as the focus

of this study is the impact of the social actions of one group of stakeholders

(management) on the financial bottom line of organizations. The leaders of management

teams have a contract with other stakeholders based on their business positions, and the

anticipation of stakeholders is a consideration for the scope of the impact of leaders’

actions on all stakeholder groups.

Leaders of organizations consider the integrative social contract theory as an

extension of the implications and considerations of the contract theory. Concerns for

corporate obligations and responsibilities to communities and societies are relevant

through the social contractual agreement and the reinforcement of the existence of a

social relationship between organizations and stakeholders (Byerly, 2013, Melo, 2012).

For example, (a) leaders of organizations are accountable to vested powers in a society,

(b) leaders of organizations should create value for their organizations as well as the

society, and (c) there should be compensation for the use of natural resources in the form

of returned benefits to communities (Peters & Caro, 2013; Van Rekom, Berens, & Van

Halderen, 2013). The implied contractual agreement and considerations of meeting the

social needs of multiple stakeholders are the platform for CSP and a confirmation of the

relevance of the integrative social contact theory to this proposed study. Focusing only on

shareholders’ wealth and disregarding the impact of actions on other stakeholder groups

would be contrary to the theory.

Friedman’s support and focus on shareholders’ wealth as documented in the

literature confirms his expressed views that increasing shareholders’ wealth was the only

responsibility of managers (Clacher & Hagendorff, 2012). The concept of the

shareholders’ theory affirms that investments in CSR activities reduce shareholders’

value, and supporters of the theory argue that CSR actions are not economically

advantageous (Izzo, 2014). Therefore, the consideration of business and operational

strategies should only support profit maximization. However, based on the arguments of

the stakeholders’ theory, businesses have social obligations beyond economic returns

(Baumgartner, 2014; Fontaine, 2013; Smith, 2012).

Specifically, the stakeholders’ theory has confirmed the need for leaders in

organizations to be accountable for the impact of their actions on societies and all levels

of shareholders in conjunction with the maximization of shareholders’ wealth as indicated

by Friedman (Brower & Mahajan, 2013; Rakotomavo, 2012). Implications of the theory

include (a) ethical, (b) discretionary, (c) altruistic responsibilities, (d) concern for ethical,

environmental, and social issues or causes, and (e) concern for all groups of stakeholders

(Fassin, 2012; Garay & Font, 2012). In addition, the stakeholders’ theory underlines the

assumption that leaders of organizations need to be cognizance of their stakeholders and

implement CSR strategies that support them while also making a positive contribution to

the financial performance of business ventures (Krumwiede,

Hackert, Tokle, & Vokurka, 2012).

Supporters of the stakeholders’ theory argue that organizations have a moral duty

and social responsibility beyond maximization of profit (Izzo, 2014; Smith 2012) and it is

the perception and assumptions of stakeholders that legitimize the stakeholders’ theory

(Dawkins, 2014; Kouhy, 2015; Minoja, 2012). Therefore, implementation of CSR

initiatives that improve employees’ morale, increase productivity in operations, and

promote creativity and innovation in product development are financially beneficial to

organizations (Benavides-Velasco, Quintana-Garcia, & Marchante-Lara, 2014).

Three assumptions of the stakeholders’ theory noted in the literature that

researchers’ reference to support the importance of the theory in CSP-CFP relationships

relate to (a) the concept of open systems, (b) intrinsic value and ethical considerations,

and, (c) the relevance of stakeholders’ relationships. The first assumption it that

organizations are open systems where there is interaction with the wider external

environment in which they exist (Benavides-Velasco et al., 2014; Dawkins, 2014). The

second assumption is that all groups of stakeholders have interests with equal intrinsic

value and ethical considerations being a priority (Benavides-Velasco et al., 2014;

Dawkins, 2014), and the third assumption is that stakeholders’ relationships are relevant

to organizational strategies and anticipated results (Benavides-Velasco et al., 2014;

Dawkins, 2014). All three assumptions support the need to consider the impact of

managerial strategies on the use of slack resources and ultimately the financial

performance of an organization.

Supporters of the slack theory imply that there is the availability of resources to

contribute to CSP due to the existence of surplus financial resources; the surplus financial

resources are a source of funding for investing in socially responsible projects (Melo,

2012; Tang et al., 2012; Waddock & Graves, 1997). Since greater CFP can have a

positive impact on the amount of financial slack resources available to leaders of

organizations, there are increased options to implement CSR initiatives (Garay & Font,

2012). In contrast, Lee et al. (2013) referred to less stable and efficient economic

conditions as well as the possibility of having limited funds to invest in CSR concerns in

comparison to other organizations that have more stable and efficient conditions.

However, the slack resources theory endorses the concept that all things being equal;

there should be sufficient resources to continue to support CSR practices. If organizations

need to validate the use of slack resources, further investigation and confirmation of the

CSP-CFP relationship is a requirement to account for resource allocations.

CSP-CFP Relationship in Banking

The growth of CSR concerns in organizations is evident in global banking

industries and the focus of numerous studies by researchers such as Jo, Kim, and Park

(2015), Fatma, Rahman, & Khan (2014), Najjar (2013), and Soana (2011). An

examination of the CSP-CFP relationship in banking is important for three primary

reasons. Banking systems are the lifeline of market economies, and banks play a vital

financial role in an economy (Fatma et al., 2014; Matei & Voica, 2013) by providing

products and services that address customer needs. In their role as financial

intermediaries that organize and support the payment systems of societies, and enhance

the economic development of societies (Fatma et al., 2014; Matei & Voica, 2013), banks

relate to more diversified and complex stakeholder groups than most other sectors of the

economy (Dorasamy, 2013; Ofari et al., 2014).

CSR requires accountability for the usage of financial funding and considerations

for the economic and non-economic consequences of banking operations (Filatotchev &

Nakajima, 2014). For example, the accountability and legitimacy of the European and

other global financial industries have been areas of concern for stakeholders, especially

within the framework of the recent global financial crisis (Andrikopoulos, Samitas, &

Bekiaris, 2014; Stephens & Skinner, 2013). Funding of projects and business activities

extend from major investments in the building and expansion of roads and highways to

housing development projects and investments in alternate sources of energy

(Madrakhimova, 2013). Other investments and funding include sponsorships, donation of

employees’ time to charity events and social organizations, and the provision of

employment (Madrakhimova, 2013).

While the lending of funds and financial support for business projects and

investments allows banks to earn income and meet financial goals, banks thrive best

when members of the organizations are trustworthy and adhere to the business code of

conduct to confirm integrity (Hillenbrand, Money, & Pavelin, 2012). However, bad

judgment and poor managerial decisions have negatively affected trustworthiness and

ethics in the business industry including banks (Bereskin & Smith, 2014; Stevens, 2013).

For example, the action of traders Jerome Kerviel and Kweku Adoboli that resulted in a

loss of approximately US $10 billion tarnished the reputation and trustworthiness of the

banks involved as well as the financial sector (Cohn et al., 2014). There are now

increasing questions regarding the scope of the responsibility of management of banks,

and the strength of the relationship between internal and external stakeholders is facing

challenges (Hillenbrand et al., 2012) with demands for better accountability.

Recent corporate scandals at financial institutions such as Citibank and JP

Morgan Chase and Company contributed to a further decrease in the level of trust

shareholders have in banks (Heikkurinen & Ketola, 2012). Further evidence includes a

$19 billion lawsuit involving trustees in the Madoff fraud and the management of JP

Morgan Chase and Company (Simser, 2013). The implications of the decrease in trust

(Hurley, Gong, & Waqar, 2014; Nienaber, Hofeditz, & Searle, 2014) include the need for

more leaders of banking organizations to reconsider the noneconomic impact of their

operations (Erhemjamts et al, 2013) as a means to rebuild their reputation in the

communities they serve. However, managers of organizations must justify corporate

social activities based on their contribution to financial goals and objectives, and it is the

justification of being socially responsible that relates to the study.

The SOX Act of 2002 is a formal legislation that promotes transparency and

accountability of organizations in the United States including the banking industry

(Peterson, 2013; Stevens, 2013). The legislation became law July 30, 2002 and required

the official signatures of executive officers of banks on financial records to confirm

accountability for the records (Stevens, 2013). While the SOX Act assists in regulating

the reporting of financial performance of banks by requiring the filing of annual financial

reports (Stevens, 2013), there is still a high level of inconsistency in the assessment of the

CSP-CFP relationship for gathering social performance information (Tang, Tian, & Yan,

2015). Due to the voluntary nature of reporting social actions (Casey & Grenier, 2015;

Patten & Zhao, 2014) some banks do not provide CSR report .The absence of regulations

also negatively affects the scrutiny of financial records or reports by increasing exposure

to biases and inconsistency. In addition, reports are frequently from the perspectives of

senior managers of organizations. With no enforced standardized CSP reporting and

limited monitoring of social reports, the odds for inconclusive results in CSP-CFP

research studies increases.

Existing studies in the CSP-CFP relationship in banking, presented mixed

inconclusive results. For example, Ahamed et al. (2014) used regression analysis to

examine the CSP-CFP relationship in Malaysia and their findings confirmed a positive

relationship. Soana, (2011), verified the CSP-CFP relationship using a sample of 21

international and findings confirmed no statistically significant relationship in the

analysis of global ethical ratings and accounting ratios and policies and accounting ratios.

The researcher’s findings supported no evidence of a significant CSP-CFP relationship.

Iqbal, Ahmad, and Kanwal (2013) in their study on CSP-CFP from an Islamic and

conventional banking perspective confirmed a lack of CSR in Pakistan. However,

findings of the research confirmed a strong positive relationship between CSR practices

and (a) donation in Islamic and conventional banking, (b) CSR practices and education

(b) health, (c) health, (d) earnings per share, (e) ROE, and (f) ROA in Islamic and

conventional banking.

Saxena and Kohli (2012) conducted another research on CSR in the Indian

banking industry. The researchers specifically studied the impact of CSR on corporate

sustainability. The study findings supported a weak positive relationship between CSR

and financial performance and an insignificant impact of CSR on profit after taxes (PAT)

and EPS. In addition, Weshah et al. (2012) examined the impact of CSR on CFP in the

Jordanian banking industry. Study findings suggested a significant relationship between

the levels of bank’s CSR and CFP, a significant relationship between a bank’s size, level

of risk, level of advertising expenses and CFP, and that CSR is relevant to the needs of

society.

Another CSP-CFP relationship issue in banking, as documented in the literature,

is the diversified measures used to assess the relationship. For example, Islam, Ahmed,

and Hasan (2012) used survey instruments in their study and a reputation index to

measure CSP and EPS; price earnings ratio (P/E Ratio) represented CSP. Based on the

ttests results, the findings of the study suggested that CSR banks outperformed non-CSR

banks in comparisons between ROA, ROE, and P/E ratio. More recently, Iqbal et al.

(2013) verified the relationship between CSR and EPS and, ROA, and ROE using the

regression model.

Diversified units of measurements and conflicting results negatively affect the

assessment of the CSP-CFP relationship. There is also continued debate regarding how to

measure CSP effectively. Conflicting results and continued debate as to best practices to

measure the CSR-CFP relationship confirm the need for ongoing evaluation and support

the need for this study.

Measuring Corporate Social Performance

Researchers such as Font et al. (2012) confirmed the problem of measuring CSP

in their recent studies. Confirmed elements of PMs for social activities include content

analysis (Islam et al., 2012; Soana, 2011), Other methods include questionnaire surveys,

reputational measures, one-dimensional indicators that relate to individual elements of

CSR such as the environment (Ahamed et al., 2014; Islam et al., 2012; Peretti, Autissier,

& Lahouel, 2013), and ethical ratings calculated by agencies based on the selection of

indicators that relate to CSR (I. Yilmaz, 2013; Soana, 2011).

The identified measurements and metrics confirm diversification of CSP and the

task of selecting appropriate measures in examining the CSP-CFP relationship. While

viable approaches to measuring CSR include reputation indices and ethics scores

(Calabrese et al., 2013; Costa & Menichini, 2013; Fatma et al., 2014; Islam et al., 2012),

there are disagreements regarding the usage of the wide variety of indicators and scales

for CSR performance ( Font et al., 2012). Researchers continue to voice their support for

standardized indicators (Chaarlas & Noorunnisha, 2012). Given the opposing views on

measuring CSR, there is a need to continue to promote studies that will have an impact on

establishing consistent measurement practices through additional confirmation about the

impact of the CSP-CFP relationship on organizations.

An analysis of metrics and units of measurement for CSP confirm strong support

for the use of the Dow Jones Sustainability Index (DJSI) with a focus on sustainability

and corporate economic value (Oh, Park, & Ghauri, 2013). The index relates to firms that

are successful in passing investigative examinations that incorporate industry-specific

measures and long-term performance measures (Oh et al., 2013). The assessment

involves an external audit, and general measurements include performance measures,

standard management practices, risk and crisis management, environmental management,

and changes in socio-cultural influences, economic-trends, and environmental challenges

and concerns (Oh et al., 2013).

The employment of the KLD social ratings is another CSP unit of measurement

recorded in studies (Jo & Harjoto, 2012; Oh et al., 2013; Sun, 2012). The ratings include

a focus on the social performance and actions of organizations in community efforts,

diversity, environment, product quality and safety, employee relations (Jo & Harjoto,

2012); and the inclusion of exclusionary screens-nuclear power, tobacco, alcohol,

military, and gambling (Jo & Harjoto, 2012). The literature notes strong support for the

use of KLD in studies examining the CSP-CFP relationship and the general measurement

of CSP (Andersen, Hong, & Olsen, 2012; Brower & Mahajan, 2013). However, the use of

FRI is a less costly feasible option referenced by Melo and Garrido-Morgado (2012) for

examining the relationship between CSP and CFP.

The data for FRI composite scores are from a wide cross section of approximately

15,000 senior executives and financial professionals in the United States (Ahamed et al.,

2014) and is a commonly used source of secondary data in research studies (Melo &

Garrido-Morgado, 2012). Respondents rate companies on a 10-point scale; 1 represents

poor and 10 represents excellent. The final rankings are an average of the attribute scores

divided into approximately 57 industries (Barchiesi & La Bella, 2014). The top 50 MAC

typically rank in the top 25%, and the list includes companies that finish in the top 20%

of their respective industry (Barchiesi & La Bella, 2014).

FRI was the selected measurement for CSP in this research study with the overall

reputation score relating to attributes such as quality and responsibility to communities

and responsibility to the environment (Melo & Garrido-Morgado, 2012). The first four of

eight specific attributes of the reputational index include (a) the ability to attract, develop,

and retain talented and qualified employees, (b) the quality of management of

organizations, (c) the quality of goods or services produced by organizations, and (d) the

noted innovativeness of organizations (Melo & Garrido-Morgado, 2012). The four other

attributes are (a) value as an element of long-term investments, (b) financial soundness of

organizations, (c) social responsibility, relative to the community and the environment,

and (d) the effective and efficient use of organizational assets are also attributes related to

the reputational index ((Melo & Garrido-Morgado, 2012). More recently, globalization

considerations of the Fortune index incorporate a ninth attribute, the effectiveness of the

global spread of business (Barchiesi & La Bella, 2014).

The application of the reputation index to CSR studies increased since its

inception in 1982-1983; however, since then, the numerical ranking scores have faced

some mixed reviews in research studies. For example, researchers Ahmed, Islam,

Mahtab, and Hasan (2014) referred to doubts in using the index to measure CSP in their

study. In addition, the conceptualization of the index as biased towards financial success

and performance (Ho, Wang, & Vitell, 2012) resulted in opponents arguing that there is

limited value in the information represented by the reputation data. However, supporters

of FRI data challenge the opinions of the opposition and argue that even though the

world’s MACs tend to be profitable, organizational achievements are due to passion,

diligence, and competence; financial return is not the core driving force behind the

success of organizations (Barchiesi & La Bella, 2014). Further support for the reputation

data by Szwajkowski and Figlewicz (1999) proposes that arguments against the

performance measure were unjustified and questionable.

All previously mentioned positive attributes in the literature resulted in the

selection of FRI for the proposed study. CSP is the intangible asset related to the study

(Lou et al., 2015). Sarstedt, Wilczynski, and Melewar (2013) confirmed reputation to be

an intangible asset. It is justifiable to use reputation data for the proposed study of CSR as

the quality of the data reinforces the subjective evaluations of the eight dimensions

previously mentioned. With a confirmed reliability score of α = 0.97 by Fombrun and

Shanley (1990) in the assessment of the dimensions of the FRI for past financial

performance, and, modest correlation for future performance as presented by McGuire,

Schneeweis, and Branch (1990), the use of the FRI correlates with the assessment of the

actual CSP-CFP relationship.

The quantitative format of the reputation data is relevant to the correlational

design of the study for examining the relationship between variables to prove or disprove

the hypotheses of the study. In addition, the deductive format of the proposed study with

the collection of reliable data to address the hypotheses should enable generalization of

the proposed study results for a larger sample (Arghode, 2012). Another key

consideration is that the data is a subjective measure tailored to the context of interest of

the study; the subjective quality of the data in conjunction with the research design is

within the scope and context of interest of the study.

The application of FRI composite scores data presents CSR consideration in a

quantitative format that is relevant to the study. By using the aggregated scores, the

conduction of further examination of the CSP-CFP relationship has implications for the

policies and procedures of banking organizations. A positive effect finding could be an

implication of congruency between implemented strategies and business objectives; a

negative finding could be an implication of the need for further review and evaluation of

CSP strategies. The implications for banks in the United States are of importance based

on the ongoing negative impact of the current economic conditions on the financial

performance of banking institutions.

Measuring Corporate Financial Performance

Leaders or organizations assess how their organizations are performing financially

by using accounting-based and market-based measures (Fu & Jia, 2012). Specific

categories of accounting-based measurements include (a) ROA, (b) ROE, (c) the rate of

return on income (ROI), and (d) EPS (Baird et al., 2012; Fu & Jia, 2012; Sun,

2012). Market-based measures include market return and price per share (Fu & Jia,

2012). The literature confirms diversity in the application of CFP measures used by

researchers in the CSP-CFP examination (Fu & Jia, 2012) and specifically, Fu and Jia

(2012) confirmed (a) 15 studies with ROE, (b) 4 studies with market value/book value

(MV/BV), and (c) 7 studies with return on sales (ROS) as CFP measures.

CSR concerns continue to be important aspects of evaluating the strategies

implemented by leaders of organization regardless of whichever tools of measurements

they use to evaluate the CSP-CFP relationship. For example, analyzing the CSP-CFP

relationship presents findings that may justify expenditure on nontangible assets such as

donating to charities (Smith, 2012). While the terms of CSR considerations support

expenses on nontangible assets and maybe contrary to the shareholders theory, based on

the terms of CSR considerations, leaders of organizations have to meet both financial and

social obligations of multiple stakeholder groups. A confirmation of the impact of CSP

strategies on CFP is a part of the fiduciary role of business leaders meeting the needs of

all stakeholders.

Transition

The ongoing debate surrounding the CSP-CFP relationship continues to be a

primary area for research among scholars. Research findings of Salazar et al. (2012) and

Fu and Jia (2012) confirmed areas of concerns with the methods used to measure the

relationship. Concerns include the types, and numbers of variables, and the lack of

consideration for control variables such as the size of firms or industry type (Barnett &

Salomon, 2012; Salazar et al., 2012; Waddock & Graves, 1997). In addition,

inconsistencies in study results contribute to continuing research for more valid and

general results to determine if there is a significant relationship between CSP and CFP

and if so, the type of relationship. Leaders of organizations have a fiduciary duty to

shareholders and other stakeholders to maximize profits while multiple stakeholders are

endorsing and requiring investments in CSR projects and initiatives. The evaluation of

opportunity costs and tradeoffs in analyzing the CSP-CFP relationship is effective risk

management in competitive markets where maintaining a competitive advantage can

enhance sustainability. An examination of the CSP-CFP relationship in the banking

industry of the United States could identify findings to confirm the impact of CSR

managerial strategies on the financial performance of banks and the existing literature

supports the need for further analysis of the relationship.

Section 2 of the study includes a brief introduction to the project followed by

detailed information on the methodology and design for data collection and analysis. In

addition, Section 2 includes reiteration of the purpose statement, the definition of the role

of the researcher, a confirmation of the applied research method and design, and a

definition of the population and sampling method of the study. Section 2 also includes (a)

the data collection technique, (b) the organization and analysis techniques, (c) the

reliability of the selected instruments and technique, and (d) the validity of the

instruments and techniques.

Section 3 addresses the application of the study to professional practice and

implications for change. Subsections of Section 3 include (a) an overview of the study,

(b) presentation of the findings, (c) applications of the study to professional practice, (d)

implications for social change and (e) recommendations for action that are relevant to the

conclusions of the research.

Section 2: The Project

Section 2 of this study project includes four main subsections; (a) a restatement of

the research purpose statement, (b) the role of the researcher in the collection of research

data, (c) the participants of the study, and (d) a detailed description of the research

method and design which incorporates reliability and validity factors.

Purpose Statement

The purpose of this quantitative correlational study was to examine the

relationships between CSP and CFP in the banking industry of the United States.

Components of the study included three separate analyses of secondary data representing

independent and dependent variables for the years 2011 to 2013. The variables for the

examination of the CSP-CFP relationship inlcuded reputation indices from Fortune

reputation scores as the independent variable for CSP; ROA, ROE, and EPS (Baird et a;.,

2012; Fu & Jia, 2012; Sun, 2012) represented the dependent variables for CFP. The 25

United States banks included in Fortune MACs listing from 2011 to 2013 comprised the

census population of the study. Total assets of the individual banks represented in the

census population of the study was the applied control variable (Fu & Jia, 2012; Melo &

Garrido-Morgado, 2012).

Positive relationship findings provide business leaders with evidence for the

support of investments in socially responsible activities while also maximizing

shareholders’ wealth. Negative relationship findings support the opinion that socially

responsible investments increase operational costs (Barnett & Salomon, 2012; Quazi &

Richardson, 2012) that potentially reduce shareholders’ wealth and should not be a

business consideration. More specifically, negative findings provide evidence for

shareholders to withhold their support from strategies that incorporate social concerns.

However, withholding support for social responsible strategies may be counterproductive

to the sustainability of banks and minimize the impact of a more holistic approach to

organizational management.

Role of the Researcher

This quantitative correlational analysis study required the collection of only

secondary data. My role as the researcher entailed (a) collection of the data for the

independent variable CSP and the dependent variables for CFP, (b) organizing the data

based on the time-period range of 2011-2013, (c) three separate analyses of the data, and

(d) interpreting the results from the analyses. Data collection involved retrieving

secondary data for the independent variables for CSP from FRI and data for the

dependent variables representing CFP from the corporate websites of the 25 banks that

comprise the census research population.

Based on the principles of the Belmont Report, the indirect participants of the

study are autonomous agents who provided responses to surveys conducted by the Hay’s

Group under voluntary efforts (Ahamed et al., 2014; Barchiesi & La Bella, 2014;

Greaney et al., 2012). As a result, in my role as researcher, there was no controlling

inference since the data collection is from a secondary source (Greaney et al., 2012). In

addition, my role as researcher did not require any consent process as there was no need

for informed consent to take place in collecting the secondary data (Greaney et al., 2012).

I entered variables from FRI composite scores queried from the MAC listings for the

years 2011-2013 and data for CFP from the websites of the census population into SPSS

statistic software for three separate analyses computation. An analysis of the results from

the partial correlation testing addressed the central research questions and the stated

hypotheses.

Participants

There were no actual participants in the study; however, the study included a

population census of 25 banks in the United States with a Fortune’s reputation index

score listing during the time series of 2011-2013. As noted by Gay, Mills, and Airasian,

(2009), if the population of a research study has fewer than 100 people or units, it is best

to sample the entire population. All banks listed by Fortune with a reputation index score

comprised the census population sample for the study.

The population of banks in the United States includes active organizations

classified based on size, assets, and primary products or services. For example, the

population includes domestic operating banks such as (a) insurance branches of foreign

banks, (b) commercial banks, (c) saving institutions, (d) asset concentration groups above

and below $1 billion, and (e) bank charter classes such as members and nonmembers of

the Federal Reserve System (“Find an Institution,” n.d.). There were no delimitations

based on factors such as total assets, classification based on primary functions, amount or

capital, nor the size of the census. However, the firms size was an applicable control

variable and represented by total assets (Fu & Jia, 2012; Melo & Garrido-Morgado,

2012).

Research Method and Design

Research methodologies are the models applicable to conducting researches and

the underlying sets of beliefs that guide researchers in their selection of a specific

research method instead of an alternate method (Wahyuni, 2012). Two primary

approaches with three perspectives used in research studies are the primary methods of

quantitative and qualitative designs and the combination of the quantitative and

qualitative designs to form the third perspective of a mixed method (Lund, 2012). The

considerations and rationale for using the quantitative method with a correlation analysis

design for the research study is the focus of the next two sections.

Research Method

Research methods are resourceful tools for researchers to achieve specific goals

for research studies (Venable & Baskerville, 2012). Research methods are also (a)

specific techniques, (b) processes (c) procedures, (d) tools such as research questions and

hypotheses used to analyze research study data (Wahyuni, 2012), and (e) tools used by

researchers to enhance the credibility of research study findings (Saxena, Prakash,

Acharya, & Nigam, 2013). The quantitative research method with a correlational analysis

design allows researchers to use measurable variables from consistent processes and

procedures (Patterson & Morin, 2012) to test hypotheses (K.Yilmaz, 2013) and address

research questions. An analysis of the purpose of this study supports the use of the

quantitative method.

The general purpose of this study was to provide leaders of organizations with

evidence regarding the relationship between CSP and CFP. The specific purpose of this

study was to examine the relationship between CSP represented by FRI composite scores

and CFP represented by financial data for ROA, ROE, and EPS, in the banking industry

within the United States to assist leaders in the banking industry in making informed

decision. Quantitative data represented the independent and dependent variables of the

study in response to stated research questions and hypotheses while investigating a

business problem (K.Yilmaz, 2013). The FRI composite scores for the banks included in

the census population of the study were the numeric scores for CSP while variables for

CFP included numeric data for ROA, ROE, and EPS (Kanata & Kartikaningdyah, 2015;

Li, Puumalainen & Toppinen, 2014; Reeve, Warren, & Duchac, 2011). Partial correlation

analysis supported if there is a relationship between CSP and CFP and the significance of

the relationship (Iqbal, Sarwat, Hasan, Baloch, & Salim, 2014).

Qualitative methodology would not support the primary purpose of this study.

Elements of a qualitative study include the application of processes, procedures, and

principles of deductive reasoning (K.Yilmaz, 2013) arriving at defined conclusions based

on, for example, (a) observations, (b) experiences or (c) principles versus inductive

reasoning based on concerns that may include interpretation context (Gay et al., 2009;

K.Yilmaz, 2013). This study was quantitative in design (I. Yilmaz, 2013; K.Yilmaz,

2013; Patterson & Morin, 2012); as a result, a qualitative design was not a feasible

option. In addition, elements of a qualitative design such as participant observation, field

study, and discovering and mapping multiple perspectives to gain better understanding of

a phenomenon (Gay et al., 2009) were not applicable.

The mixed method design was a feasible option for the study as the supporting

role of both the qualitative and quantitative designs enhances the prospect of a

comprehensive study (Lund, 2012). Specifically, the method is a combination of the

qualitative and quantitative methods (Lund, 2012), and when either of the qualitative or

quantitative design is not sufficient for a study, a mixed method design is appropriate.

This study incorporated measurable variables that are congruent with the purpose of the

study and related hypotheses; a quantitative design was, therefore, sufficient, and

addressed the research questions and hypotheses without the support of a second research

method (Newman & Covrig, 2013). In addition, time and cost constraints enhanced the

prospect of applying only the quantitative design to the study.

Research Design

A research design allows a researcher to establish a research methodology and

appropriate research methods to address research hypotheses or questions in a study

(Wahyuni, 2012). Quantitative research design types considered for this study were

experimental and nonexperimental. The overall purpose of the study guided the selection

of the most appropriate design.

An experimental research design is appropriate for establishing a cause and effect

relationship, involves the manipulation of variables, and involves the use of random

sampling (Feldman & Vasquez-Parraga, 2013; Imai, Tingley, & Yamamoto, 2013). This

study was nonexperimental in design and did not (a) use random sampling; (b)

manipulate data, nor (c) use data to justify a cause and effect relationship. Therefore, the

nonexperimental design was the appropriate choice for the study as it supported the

purpose of the study and addressed the testing of hypotheses to examine the relationship

between variables.

A correlational analysis design correlated with the purpose of this study and was

congruent to the selected research design. The correlational design allows for efficient

examination of relationships, and this study addressed the relationship between CSP and

CFP using numeric variables (Gay et al., 2009) to address stated research questions and

hypotheses (Wahyuni, 2012). The proposed sample size was the census population of all

25 banks included in Fortune’s MACs listing and while no sample size calculation was

necessary, I opted to conduct sample size calculations.

Population

The population for this study was banks within the United States that are from

Fortune’s MAC listing. The FRI score is a composite score rating from eight attributes.

The first four attributes include (a) the attraction, development, and retention of qualified

and talented employees, (b) quality management of organizations, (c) the quality of goods

and services produced by organizations, (d) and innovation (Barchiesi & La Bella, 2014;

Melo & Garrido-Morgado, 2012). The remaining four attributes are (a) value as a means

of long-term investments, (b) the financial soundness of organizations, (c) social

responsibility with community and environmental considerations, and (d) the effective,

efficient use of assets by organizations (Barchiesi & La Bella, 2014; Melo &

GarridoMorgado, 2012). The final index scores are an aggregation of the scores of the

criteria (Orlitzky & Swanson, 2012) and the overall reputation score highlights and

confirms the responsibility to communities and the environment.

The sample for the proposed study consisted of the social and financial

performance data for 25 banks within the United States. The correlation study focused

only on the 25 banks in the census population with consistent data to examine the

relationship between CSP and CFP. The literature provides support for the selection of all

units from the population; as noted by Gay et al. (2009), it is best to sample the entire

population if a population has fewer than 100 units. The data covered a 3year period from

2011-2013 and reported the social and financial performance of the census population;

the 3 year chronological span mitigated bias from the low number of banks included in

the census population . However, since the sample size of 25 could invalidate the sample

size requirement for statistical validity of the study findings, two sample size calculations

were completed. Since the sample size was adequate, I did not have to use bootstrapping

to resample data in the testing of the research hypotheses (Calmettes, Drummond, &

Vowler, 2012).

Ethical Research

Ethical considerations of studies included protection of sensitive data, respect for

study population, and requiring approval or consent to protect study participants

(Connelly, 2014; Hardicre, 2014). This study did not include human participation,

sensitive or confidential data collection, or the need for consent forms. However, based

on guidelines established by the governing board of Walden University and precedence,

basic ethical considerations were applicable to the study and degree confirmation process.

The governing board of the Walden University requires approval of studies by the

Institutional Review Board (IRB) to support enhancing scholar compliance and adherence

to the rubric requirements of the institution. The approval number for this study is 07-28-

15-0158847. In addition, students adhere to the American Psychological Association

(APA) format in study article. Other ethical considerations for this study included storage

of data on an external hard drive for secure storage (Connelly, 2014). Files on the hard

drive are password protected and deletion of data will occur 5 years after the completion

of the study. Based on the nonsensitive publically available data for the study, the plan

for the deletion process is short term. Research logs and journals were not applicable to

the study, so there are no ethical considerations for the disposal of logs or journals.

Data Collection Instruments

During the data collection process, FRI was the source of the data for social

performance and the financial performance data obtained from the websites of the 25

banks in the United States that comprise the census population for the proposed study. In

addition, the website at ycharts.com was a resource tool for financial performance data.

The next sections of the study provide a detailed overview of the proposed instruments

and the data analysis techniques.

Instruments

Two types of instruments relate to the study; social performance instruments, and

financial performance instruments. Social performance instruments are from a

nonfinancial perspective while the financial performance instruments relate to ratios and

profitability calculations. While the scope of the individual instruments differs to some

degree in the study, a combination of both sets of instruments is necessary to complete

the data analysis to address the hypotheses of the study.

Social performance instruments. Proprietary databases such as KLD (Ahamed

et al., 2014; Sun, 2012) were a consideration for study. However, the high cost of

approximately $5,000 was a critical factor in seeking an alternative social performance

instrument that the literature supports as valid and reliable (Rahman & Post, 2012). In

1999, Szwajkowski and Figlewicz supported the use of the FRI as resourceful for

measuring CSP. Recent findings of research study by Barchiesi and La Bella (2014) also

support the use of FRI as a valid indicator of the social performance of a firm.

The secondary data for social performance was accessible from the archive of

Fortune’s reputation index scores for the 3 year period 2011-2013. Fortune analysts

gathers the data for the reputation index from a cross section of approximately 15,000

senior executives and financial experts throughout the United States (Ahamed et al.,

2014; Barchiesi & La Bella, 2014). The Hay Group has administered the collection of the

data from the reputation ratings since 1997and completes the ratings on an 11-point scale

from 0 to 10. The zero endpoint is equivalent to a poor rating and 10 to being excellent.

Companies’ ratings focus on the MACs per industry (Ahamed et al., 2014; Barchiesi &

La Bella, 2014).

The respondents rate companies on a 10-point scale where 1 represents poor and

10 represents excellent. The computation of the final rankings is the average of the

attribute scores divided into approximately 64 industries. The MACs listing includes only

the top 50% of companies in each industry (Ahamed et al., 2014; Barchiesi & La Bella,

2014). The overall score is an indicator of the level of responsibility to communities and

the environment (Barchiesi & La Bella, 2014). The listing of the companies is a

compilation of results from the judgment of industry experts based on predefined

attributes (Barchiesi & La Bella, 2014; Beauchamp & O’Connor, 2012)

The attributes include (a) a focus on employees, (b) the management teams of

organizations, (c) quality goods and services, (d) innovativeness, (e) creating value as a

form of long-term investment, (f) the financial soundness of organizations, (g) social

responsibility concerns and community and the environment, and (h) the effective use of

assets by organizations (Barchiesi & La Bella, 2014). The effectiveness of the global

spread of business is a ninth attribute referenced in some literature (Barchiesi & La Bella,

2014; Sarstedt et al., 2012).

Based on the assumption that CSP reputations reflect CSP values and behaviors of

stakeholders of organizations, reputational indices are a popular approach to measuring

CSP (Soana, 2011). The inclusion of corporate social performance strategies in marketing

and innovation by business leaders is resourceful for customer retention and reputation

building. Each strategy or innovation that supports CSP can have a positive impact on the

reputation of a business organization; therefore, if CSP values and reputation implications

are complimentary, CSP reputation reflects CSP values.

Soana (2011) confirmed the FRI as a proxy of social performance and noted that

15 empirical studies used the index (Barchiesi & La Bella, 2014). The repetitive use of

the index in over 15 studies support the validity of the instrument as a measuring tool as

reuse supports the concept that there are consistency and validity of the instrument.

Findings of 13 of the previously conducted studies confirm a positive CSP-CFP

relationship, one a mixed relationship, and one, no relationship (Soana, 2011).

Financial performance instruments. Banks provide financial capital for the

creation of jobs, the growth, and development of industries, investments, innovation, and

the general prosperity of societies and economies (Fatma et al., 2014; Matei & Voica,

2013; Madrakhimova, 2013). These financial considerations and the wide scope of

services and products provided by management and employees of banks contribute to an

interest in further review and examination of the CSP-CFP relationship in the banking

industry. Financial results of an organization confirm the strength and weaknesses of

business operation while providing management with quantitative evidence to make valid

inferences (Abels & Martelli, 2012). Financial performance is also the primary means of

measuring and confirming the result of business strategic policies and the operational

tasks of organizations based on monetary values (Abels & Martelli, 2012).

This study incorporated (a) accounting, (b) efficiency of investments, and (c)

profitability of investments measurements for financial performance. The analysis of

financial data from the websites of the 25 banks in the census population of the study

over a 3 year period, 2011-2013, were included in the examination of the relationships

between X and Y for the timeframe period for the social performance data. The specific

numeric data collections for the financial performance of the study were (a) ROA and

ROE- accounting measures and (b) EPS-profitability of investments measurement (Fu &

Jia, 2012; Iqbal et al., 2013; Raza, Ilyas, Rauf, & Qamar, 2012).

Accounting measurements. Waddock and Graves (1997) as well as Raza et al.

(2012) support the use of ROA and ROE in the measurement of CFP in their studies.

Return on assets and ROE are accounting PMs of competitive effectiveness, competitive

internal efficiency, and the optimal use of assets (Fu & Jia, 2012). The formula to

calculate rate of return on assets is ROA=NEAT/ASSET (Lee et al., 2013). NEAT is net

earnings after tax deduction. ASSET is the total asset reported by a bank and fair value

accounting requirements support the assets of banks listed on balance sheets at current

value (Cohen, Cornett, Marcus, & Tehranian, 2014). ROA was applicable to the study as

the measurement effectively evaluates and confirms the profitability of an organization

(Enqvista, Graham, & Nikkinen, 2014; Katchova & Enlow, 2013). ROE also measures

the profitability of an organization. The formula to calculate the rate of return on equity is

ROE=NEAT/EQUITY .NEAT is net earnings after tax deduction. EQUITY is the net

equity stated in the annual report (I. Yilmaz, 2013; Julian & Ofori-Dankwa, 2013;

Katchova & Enlow, 2013).

Profitability of investments measurements. EPS measure the profitability of

investments while measuring the amount of income earned by common stock shares

(Reeve et al., 2011). The use of EPS is a common measure of accounting returns

(Ahmed, Islam, & Hasan, 2012) and provides an indication of the effectiveness of a firm.

Stockholders are key stakeholders in an organization as their investments generate capital

and provide financial support. Measuring the profitability of stockholders’ investments

includes an analysis of their financial contributions to CSP projects and confirms the

relativity of EPS measurement in a CSP-CFP examination study. The formula to calculate

earnings per share is EPS = (Net Income-Preferred Dividends)/Number of Common

Shares Outstanding (Reeve et al., 2011). Net income is revenues less expenses such as

operating costs and losses. Accounting measures relate to varied accounting procedures

and management principles (Ahamed et al., 2014) and market-based measure may not be

a sufficient measurement group on its own therefore, the proposed study included

indicators from both measurement groups (Michelon et al., 2013).

Data Collection Technique

The data for CSP and CFP were FRI composite scores and ROA, ROE, and EPS

data as reported by the 25 banks in the census population of this research. As a result, the

study did not warrant the collection of data, for example, from a survey, site visit, or

observation. In addition, the performance of a pilot study was not applicable to the

research study. Reputation Index score data from Fortune survey represented CSP values

for the 25 banks that comprise the census population for the study. The corporate

websites of the 25 banks in the census population provided access to the financial

information for ROA, ROE, and EPS. In addition, ycharts.com was a resource for CFP

data.

After completing the data retrieval for the study, saving of the retrieved

information on an external drive is the first safety precaution. The storing of the data for

another five years after the completion of the study is another safety measure. The study

design did not warrant research logs, journaling, or cataloging. However, keeping data

organized required consistent storing of all rough drafts, and revised editions of the study

on an external drive for five years after the study completion.

Data Analysis

The examination of the correlational relationship between CSP and CFP included

partial correlation data analysis using the SPSS software statistical package and table

results presented in APA format. The SPSS calculation of the collected data from FRI

and the websites of the 25 banks in the census sample addressed the central research

questions as well as the hypotheses of the study to confirm the relationship, if any,

between CSP and CFP and the degree of relationship. Three separate analyses were

completed. To meet the Doctor of Business Administration (DBA) requirement of

including more than 1 independent variable in a research, I included firm size as a control

variable (Lee et al., 2013; Michelon et al., 2013; Servaes & Tamayo, 2013) with total

assets as the measurement (Iqbal et al., 2014). Sample size calculations confirmed the

census population size of 25 as adequate for the study; therefore, there was no need to use

bootstrapping in testing the research hypotheses (Calmettes et al., 2012).

Partial correlation analysis incorporates the general assumptions of Pearson

correlation (Vargha, Bergman, & Delaney, 2013). This correlation design is widely used

in research studies in assessing bivariate correlation after eliminating the influence of one

or more control variable (Kenett, Huang, Vodenska, Havlin, & Stanley, 2015; Vargha et

al., 2013). The easy interpretation of analysis results relates to the affirmation of the

correlation and level of influence of one variable on another (Kenett et al., 2015)

The selection of partial correlation analysis design for this research is congruent

with the purpose of the research-to examine the relationship between CSP and CFP as a

means to assist banking industry leaders in their decision-making. The primary question

for the research study that related to the specific business problem of the research is: In

the banking sector of the United States, what is the relationship between CSP, represented

by FRI composite scores, and CFP, represented by ROA, ROE,and EPS while controlling

for firm size? The central research questions for the study were:

RQ1: While controlling for firm size, what is the relationship between Fortune

reputation index composite scores and ROA, ROE, and EPS for banks located in the

United States?

RQ2: While controlling for firm size, what is the relationship between Fortune

reputation index composite scores and return on assets for banks located in the United

States?

RQ3: While controlling for firm size, what is the relationship between Fortune

reputation index composite scores and return on equity for banks located in the United

States?

RQ4: While controlling for firm size, what is the relationship between Fortune

reputation index scores and earnings per share for banks located in the United States?

The derivative hypotheses of the proposed study with a 0.05 level of significance

are:

H10: While controlling for firm size, there is no relationship between Fortune

reputation index composite scores and return on assets for banks in the United States.

H1a: While controlling for firm size, there is a relationship between Fortune

reputation index composite scores and return on assets for banks in the United States.

H20: While controlling for firm size, there is no relationship between Fortune

reputation index composite scores and return on equity for banks in the United States.

H2a: While controlling for firm size, there is a relationship between Fortune

reputation index composite scores and return on equity for banks in the United States.

H3o: While controlling for firm size, there is no relationship between Fortune

reputation index composite scores and earnings per share for banks in the United States.

H3a: While controlling for firm size, there is a relationship between Fortune

reputation index composite scores and earnings per share for banks in the United States.

The testing of multiple hypotheses can potentially result in an inflation of the

overall alpha error (Armstrong, 2014) and the probability of wrongfully concluding that,

that there is statistically significant effect with each additional test in testing when there is

actually no effect (Gelman, Hill, & Yajima, 2012). The application of correction will

circumvent the issue of concluding that there is a significant difference in the analysis of

the data when it is not (Armstrong, 2014; Gelman et al., 2012).

Data coding to protect the identity of the 25 banks in the census population of the

research was not necessary as the names and list are public information. I evaluated the

CSP-CFP relationship using partial correlation. The same type of units were included for

each year in the time series range but with possibly different values; FRI composite

scores represented CSP with total assets as the control variable for firm size as the

independent variables and ROA, ROE, and EPS data as the dependent variables.

Data analysis results could supported or refuted the contract theory that there is a

link between leaders of organizations and stakeholder groups . There is also an obligation

to the communities the stakeholder groups serve (Korontzis, 2013; Sapkauskiene &

Leitoniene, 2014). Data analysis results also supported or refuted the stakeholders’ theory

and the premise that CSR strategies and activates can have a positive impact on all

stakeholders while also contributing to the financial performance of organizations

(Michelon et al., 2013). Based on the correlational study design, research findings of a

positive and significant correlation between CSP and CSP support the contract and

stakeholder theories and the business case for CSR (Bouvain, Baumann, & Lundmark,

2013). While a negative and insignificant correlation contradicts the principles of the

contract and stakeholders’ theories, the negative and insignificant results would be a

signal to business leaders to make better-informed decisions regarding CSR strategies and

activities.

Study Validity

Two key indicators of the quality of measuring instruments in research studies are

the reliability and validity of the employed measures (Perez & Rodriguez-del-Bosque,

2013). This section of the study provides evidence to confirm the reliability and validity

of (a) FRI compsite scores, (b) ROA, (c) ROE, & (d) EPS, the reasoning behind the

selection of the instruments, and arguments for and against the instruments. In addition,

the section includes processes and tools that will enhance the validity and reliability of

the study.

Reliability

The reliability of scales and the level of internal consistency of the scales have an

impact on minimizing random errors (Perez & Rodriguez-del-Bosque, 2013; Pallant,

2007). Fortune’s reputation index is one out of approximately 39 unique measures of CSP

applied to empirical research studies examining the CSP-CFP relationship (Aguinis &

Glavas, 2012). However, despite the frequency of use of the FRI composite scores in

existing research studies, critics have questioned the subjectivity of evaluations that

include the index, as well as the attributes. Criticisms of the index include the assessment

of overall quality of measurement versus measuring CSP coupled with the perception of a

financial halo effect based on a stronger correlation between prior financial performance

and corporate reputation ranking (Peretti et al., 2013). However, internal requisites that

confirm the reliability of the FRI composite scores for this study include the process to

retrieve data to compose the reputation index (Fatma et al., 2014; Melo &

GarridoMorgado, 2012). For example, the annual collection of the data (Melo &

GarridoMorgado, 2012) using standard procedures to calculate the composite score for

the reputation index increase the reliability of the index for measuring CSP.

A lack of standardized processes in collecting research data can result in the

collection of unreliable data (Uronu Lameck, 2013) that can negatively influence research

study findings. Standard surveys completed by top managerial executives and financial

analyst who are experts in varied industries (Fatma et al., 2014) provide the ratings for

firms from industrial sectors related to the survey participants. Having respondents rating

firms from their related industrial sectors facilitates data consistency and reliance on the

assumption that survey results will be informative (Melo & Garrido-Morgado, 2012).

The reputation index is also a viable tool for measuring CSP as the instrument

provides reasonable and credible measurement results (Szwajkowski & Figlewicz, 1999)

in research studies (Waddock & Graves, 1997). The CSR elements that contribute to the

reasonableness and credibility of the reputation index include (a) the ability to attract,

develop, and retain talented and qualified employees, (b) the quality of management of

organizations, (c) the quality of goods or services produced by organizations, and (d)

innovativeness of organizations. Other attributes include (e) value as an element of

longterm investments, (f) the financial soundness of organizations, (g) social

responsibility to the community and the environment, and (h) the effective and efficient

use of organizational assets (Barchiesi & La Bella, 2014; Melo & Garrido-Morgado,

2012).

Hillenbrand and Money (2007) were supporters of the use of the reputation index

based on the attribute of responsibility to communities and environments. Yet researchers

such as Baldarelli & Gigli (2014) referenced that information represented by a reputation

data appears to focus more on past financial success. However, arguments in support of

FRI include statements that the data are not relative to the financial performance of

organizations or driven by the financial performance (Flanagan, O’Shaughnessy, &

Palmer, 2011). This finding disputes the financial halo effect of prior financial

performance (Baldarelli & Gigli 2014) and corporate reputation ranking resulting in a

stronger correlation.

The second research instrument consideration for this study was the measuring of

CFP. As previously noted, ROA, ROE, and EPS are the measurements for CFP. The

frequency of the use of accounting measures of ROA, ROE, and EPS for CFP confirms

the reliability of the financial measurements for use in this study (Fu & Jia, 2012;

Rakotomavo, 2012; Skudiene et al., 2013; Tuhin, 2014). Another reliability element of

using accounting measures of ROA, ROE, and EPS for CFP relates to data collection.

Legislations including the SOX Act provide elements of standardization for the collection

of the financial data of the 25 banks included in this study (Kim et al., 2015) in addition

to the guidelines of the FDIC. Accounting measures are standardized common readily

available means of measuring CFP (Ahamed et al., 2014; Iqbal et al., 2013; Raza et al.,

2012), and, therefore, a feasible option for this study.

Validity

Using an instrument that measures what it is intended to measure validates the

instrument and assures findings’ validity (Johnston et al., 2014; K. Yilmaz, 2013; Uronu

Lameck, 2013). Application of the instrument to a similar population or within similar

environment is also a validity concern (Fatma et al., 2014). Internal and external validity

are two types of validation in research studies (K. Yilmaz, 2013) and the stronger the

degree to which a scale measures what it is intended to measure, the greater the validity

(Bakker, 2012; Gay et al., 2009; Pallant, 2007). External validity is the extent to which

the findings of the proposed study generalize from the sample to the entire population that

relates to the study (K. Yilmaz, 2013). In this study, the participant pool and the sample

are all from the same industry, governed by the same basic federal and state guidelines,

and share common stakeholder groups. These characteristics may promote the study’s

external validity (Fatma et al., 2014). However, the strategies of management teams differ

across organizations and priorities of management teams vary from one bank to the next;

therefore, not all banks are equally proficient in their selection and implementation of

CSR projects that may lessen the assurance. In addition, the Hay Group confirms that the

primary difference between companies on the MACs listing and companies excluded

from the list is in the implementation of organizational practices and not for any

identifiable superior means of how they operate (Iyengar , Kargar, &

Sundararajan, 2011).

The content validity of the research instruments is essential for the study

(Johnston et al., 2014) and the judgment of experts in the field of a research study can

impact content validity (Johnston et al., 2014). In the study, a composite score from

annual data collection that incorporates the eight measurable attributes of the reputation

index (Pallant, 2007) supports the assurance of content validity of the instruments of the

study. Financial data that are under the guidelines of legislation including the SOX Act

(Kim et al., 2015; Peterson, 2013) and the FDIC also supports the assurance of content

validity of the instruments of the study.

Sampling errors can have a negative impact on the validity of the study and

mitigation of potential sampling errors in research studies includes having a larger sample

(Uronu Lameck, 2013). Therefore, the size of the census population of the study of 25

banks could be a validity issue. However, while the literature supports larger samples for

quantitative studies, Gay et al. (2009) posited that if a population is less than 100 there

should be no sampling. The study analysis of all available banks on the Fortune listing

will assist in mitigating the low number of banks in the study since all the selected banks

comprise the actual population related the research.

Internal validity is relevant to research studies that try to establish a casual

relationship (K. Yilmaz, 2013). This study was an attempt to examine the relationship

between CSP and CFP and not an attempt to establish a casual relationship (Soana, 2011).

There was no manipulation of data; therefore, internal validity is not a consideration for

this research.

Transition and Summary

The preceding section of the study incorporated (a) a restatement of the primary

purpose of this proposed study, (b) more detailed overviews of the role of the researcher,

the research study sample presented. Section 2 also addressed (a) the data collection

process, (b) the testing of the hypotheses, (c) the applicable data analysis technique, and

(d) arguments presented to support the reliability and validity of the selected instruments

for the proposed study. Section 3 of this study begins with an overview of (a) purpose and

the method of the study (b) the presentation of research study findings, (c) the study’s

application to professional practice, and (d) implications for social change. Section 3

culminates with recommendations for actions, suggestions for future studies, my

reflections, the summary, and conclusions.

Section 3: Application to Professional Practice and Implications for Change

Introduction

The purpose of this quantitative correlational study was to examine whether or not

a relationship exists between CSP and CFP. Three separate analyses of data were

completed for the years 2011, 2012, and 2013. Research findings for the year 2011

supported a low positive correlation between FRI composite scores and ROA, FRI

composite scores and ROE, and FRI composite scores and EPS. For the year 2012,

research findings supported a moderate positive correlation between FRI composite

scores and ROA, a very low positive correlation between FRI composite scores and ROE

and also a very low positive correlation between FRI composite scores and EPS. For the

year 2013, research findings supported a high positive correlation between FRI composite

score and ROA, a low postive correlation between FRI composite score and ROE, and a

very low positive correlation between FRI composite score and EPS.

Presentation of the Findings

Single index scores from FRI (Melo & Garrido-Morgado, 2012; Orlitzky &

Swanson, 2012) and accounting financial data for ROA, ROE, and EPS (El-Chaarani,

2014; Fu & Jia, 2012; Hall & Lee, 2014) were examined for the years 2011 to 2013.

Since research evidences indicate smaller firms may not be as socially active as larger

companies, the size of organizations measured in total asset was an applied control

variable (El-Chaarani, 2014; Fu & Jia, 2012; Iqbal et al., 2014; Waddock & Graves,

1997).

The original date range of the data collection was for the time period 2009 to

2012 with a total census population sample of 40 banks operating within the United

States. However, after completing data collection, I identified inconsistencies in reported

FRI composite scores for several banks during the selected period for data collection. For

example, some banks had reported scores for only 1year during the selected time period

for the data collection.

Further analysis of the population sample confirmed the years 2011-2013 as

having a higher level of consistent data for the census population sample for 25 banks.

Using a confidence level of 95% and a confidence interval of +/-5, sample size

calculations using application on resolutonrsearch.com and returnpath.com presented

findings confirming a size of 24 from a population of 25. Based on the availability of FRI

composite scores data, the sample size calculations results, and support in the literature

noted by Gay et al. (2009) that, if the population of a research study has fewer than 100

people or units, it is best to sample the entire population, sample size of 25 was

acceptable for completing data analysis. Bootstrapping for resampling was not necessary

and therefore not included as a part of the partial correlation calculations.

Financial data collection for ROA, ROE, and diluted EPS were from the annual

reports of the banks in the census population sample located on the respective websites as

well from ycharts.com. The partial correlation analysis was on a yearly basis and detailed

findings presented in the same manner. Since the listing of MACs is public information,

there is no need to keep the names of the banks anonymous.

Table 1 incorporates the FRI composite scores, ROA, ROE, and EPS data for

2011. Two banks had missing ROA data; FRI composite scores ranged from 4.09 to 7.27,

ROA from (0.02) to 1.53, ROE from (5.51) to 15.80, and EPS from (0.34) to 8.63. Since

archived conversion history for foreign exchange is typically a maximum of 180 days, I

calculated foreign currency conversions for earnings per share stated in foreign currency

at the existing U. S. daily value on the date the data analysis ran. Specific conversions

included converting British Pound, Japanese Yen, Euro, and Swiss Franc to U.S.

currency.

Table 1

Banks’ FRI Scores, Return on Assets, Return on Equity, and Earnings per Share 2011

Banks FRI Scores Return on Assets

Return on Equity

Earnings per Share

($) Diluted

Bank of America 5.04 0.06 0.69 0.01

Bank of NY Co 7.08 0.86 7.55 2.03

Barclays 6.06 0.24 6.95 1.40

BB &T Corp 6.04 0.79 7.59 1.83

BNP Paribas 5.37 0.32 8.26 3.55

Citigroup 4.88 0.57 6.40 3.63

Credit Suisse 6.42 0.20 6.07 1.47

Deutsche Bank 5.64 0.21 8.30 8.63

Fifth Third 4.66 1.15 9.00 1.18

Goldman Sachs 7.25 0.27 3.70 4.51

HSBC Holdings 6.28 0.06 10.90 0.91

J P Morgan Chase 7.19 0.86 11.00 4.48

KeyCorp 4.09 1.04 8.79 0.87

Morgan Stanley 5.66 0.28 3.33 1.25

Mizuho Financial 4.74 N 11.70 0.16

Northern Trust 6.98 0.66 8.59 2.47

PNC Financial 7.01 1.11 8.80 5.64

Regions Financial 4.17 (0.02) (5.51) (0.34)

State St Corp 6.38 1.09 10.00 3.79

Sumitomo Mitsui 5.12 N 9.60 2.66

SunTrust Bank 4.77 0.38 2.56 0.94

UniCredit Group 5.17 0.77 11.20 7.75

UBS 5.66 2.1 9.10 1.06

U.S. Bancorp 7.27 1.53 15.80 2.47

Wells Fargo 6.25 1.25 11.93 2.82

Table 2 incorporates the FRI composite scores, ROA, ROE, and EPS data for

2012. The result details confirmed missing ROAs for 2 banks, missing ROEs for 3 banks,

and a few banks with zero ROA and EPS; FRI scores ranged from 3.87 to 7.23, ROA

from (0.04) to 1.90, ROE from (5.1) to 16.20, and EPS from (0.02) to 14.13.

Table 2

Banks’ FRI Scores, Return on Assets, Return on Equity, and Earnings per Share 2012

Banks FRI Scores Return on Assets

Return on Equity

Earnings per Share

($) Diluted

Bank of America 4.53 0.19 1.94 0.25

Bank of NY 6.42 0.74 7.11 2.03

Barclays 5.75 (0.04) 0.23 0

BB&T Corp 6.02 1.11 10.83 2.70

BNP Paribas 4.75 0.35 8.02 3.52

Citigroup 5.15 0.38 4.12 2.44

Credit Suisse 5.65 0.13 3.86 0.83

Deutsche Bank 5.46 0.01 0.44 0.33

Fifth Third 5.36 1.34 11.60 1.66

Goldman Sachs 7.04 0.78 10.70 14.13

HSBC Holdings 6.07 0.60 8.40 0.74

JP Morgan Chase 7.23 0.94 11.00 5.20

KeyCorp 4.41 0.99 8.48 0.89

Morgan Stanley 5.32 0.00 NM (0.02)

Mizuho Financial 4.59 N 11.30 0.16

Northern Trust 6.85 0.74 9.34 2.81

PNC Financial 6.92 0.93 7.26 5.30

Regions Financial 3.87 0.86 10.69 0.71

State St Corp 6.23 1.05 10.03 4.20

Sumitomo Mitsui 4.55 N N 2.02

SunTrust Banks 4.88 1.11 9.56 3.59

UniCredit Group 4.30 0.43 N 0..23

UBS 4.48 1.90 (5.10) 0

U.S. Bancorp 7.12 1.65 16.20 2.84

Wells Fargo 6.48 1.41 12.95 3.36

Table 3 incorporates the FRI composite scores, ROA, ROE, and EPS data for

2013. The result details confirmed missing ROAs and ROEs data as was the pattern in

2011 and 2012 and 1 bank with zero EPS; FRI scores ranged from 4.02 to 7.46, ROA

from (1.64) to 1.65, ROE from 0.97 to 15.80, and EPS from 0 to 15.46 .

Table 3

Banks’ FRI Scores, Return on Assets, Return on Equity, and Earnings per Share 2013

Banks FRI Scores Return on Assets

Return on Equity

Earnings per Share

($) Diluted

Bank of America 5.21 0.53 5.24 0.90

Bank of NY 6.85 0.58 5.99 2.03

Barclays 5.53 0.03 0.97 0.35

BB&T Corp 6.06 0.90 8.65 2.19

BNP Paribas 5.32 0.25 5.52 2.58

Citigroup 5.43 0.73 7.11 4.35

Credit Suisse 6.44 0.25 5.68 1.29

Deutsche Bank 6.37 0.03 1.11 1.25

Fifth Third 5.30 1.48 13.10 2.02

Goldman Sachs 6.57 0.85 11.00 15.46

HSBC Holdings 6.42 0.70 9.20 0.84

J P Morgan Chase 7.46 0.75 9.00 4.35

KeyCorp 4.64 1.02 8.88 0.97

Morgan Stanley 5.58 0.33 4.17 1.41

Mizuho Financial 4.99 N 10.90 0.18

Northern Trust 6.92 0.77 9.54 2.99

PNC Financial 6.97 1.24 9.36 7.39

Regions Financial 4.02 0.94 10.80 0.77

State St Corp 6.18 1.02 10.50 4.62

Sumitomo Mitsui 5.19 N N 3.42

SunTrust Bank 4.84 0.78 6.24 2.41

UniCredit Group 5.53 (1.64) N 0

UBS 5.43 2.5 6.70 0.81

U S Bancorp 7.14 1.65 15.80 3.00

Wells Fargo 7.00 1.51 13.87 3.89

The alpha p value for the study was 0.05 and the decision to reject or not to reject

Ho dependent on whether or not the calculated significance values in the study were

greater than or less than the alpha p value (Aquilonius & Brenner, 2015; Gbadamosi,

2016). If the calculated significance level is greater than 0.05, the relationship is not

statistically significant and Ho is not rejected in favor of Ha. If the calculated significance

level is less than 0.05, the relationship is statistically significant and Ho rejected in favor

of Ha (Aquilonius & Brenner, 2015; Gbadamosi, 2016).

The signs and size of the coefficients of each CSP component were also data

analysis considerations (Gbadamosi, 2016). Components with positive coefficient support

positive relationships with outcome variables; negative coefficients support negative

relationships with outcome variables (Gbadamosi, 2016). By comparing, the calculated

level of significance with the coefficient of each predictor with the set alpha p value of

0.05, data analyses findings also addressed the strength of relationships based on the size

of the predictor’s coefficient (Gbadamosi, 2016). Ranges for the correlation levels

were .10 to .30 qualified as a low correlation, .40 to .50 a moderate correlation, and .60

and above as high correlation (Gbadamosi, 2016).

Partial correlation using SPSS 22 allowed for answering the research questions

posed in the study as well as addressing the hypotheses derived from the research

questions. Preliminary analyses of Pearson correlation presented findings to confirm or

refute if total assets influenced the CSP-CFP relationship and table 4 presents a summary

of Pearson correlation analysis results for 2011 without controlling for total assets. For

FRI and ROA, when r(21) =.22 and p was .30 with an alpha set value of 0.05, the

evidence supported no rejection of the null hypothesis H10 and a statistically

nonsignificant relationship (Gbadamosi, 2016). In analyzing the sign and size of the

correlation, a score of .22 supported a low positive partial correlation between FRI and

ROA (Gbadamosi, 2016).

For FRI and ROE when r(21) = .47 and p was .02 with an alpha set value of 0.05,

the relationship was statistically significant and H20 rejected in favor of H2a (Aquilonius

& Brenner, 2015). A correlation score of .47 supported a moderate positive partial

correlation between FRI and ROE. For FRI and EPS when r(21) = .29 and p was .19 with

an alpha set value of 0.05, the evidence supported no rejection of the null hypothesis

H30 and a statistically nonsignificant relationship (Gbadamosi, 2016). A correlation score

of .29 supported a low positive partial correlation.

Table 4

Pearson Correlation Among Variables (N=25) 2011

Correlations

Control Variables FRI ROA ROE EPS TOTALA

-none-a FRI Correlation 1.000 .224 .469 .286 .016

Significance (2-tailed) . .304 .024 .185 .943

df 0 21 21 21 21

ROA Correlation .224 1.000 .679 .027 -.290

Significance (2-tailed) .304 . .000 .904 .180

df 21 0 21 21 21

ROE Correlation .469 .679 1.000 .403 .119

Significance (2-tailed) .024 .000 . .057 .589

df 21 21 0 21 21

EPS Correlation .286 .027 .403 1.000 .346

Significance (2-tailed) .185 .904 .057 . .105

df 21 21 21 0 21

TOTALA Correlation .016 -.290 .119 .346 1.000

Significance (2-tailed) .943 .180 .589 .105 .

df 21 21 21 21 0

a. Cells contain zero-order (Pearson) correlations.

Table 5 provides a summary of the partial correlation analysis results for 2011

while controlling for total assets. For FRI and ROA when r(20) =.24 and p was .28 with

an alpha set value of 0.05, the statistically nonsignificant results did not support a

rejection of the null hypotheses H10 that there is no relationship between FRI and ROA

for banks in the United States (Gbadamosi, 2016). In the analysis of the sign and size of

the correlation between FRI-ROA (Gbadamosi, 2016), the score of .24 supported a low

positive partial correlation between FRI and ROA. The analyses of the data computation

for FRI and ROE when r(20) = .47 and p was .03 with an alpha set value of 0.05

supported a rejection of the null hypothesis H20 that there is no relationship between FRI

and ROE for banks in the United States and the result viewed as statistically significant

(Gbadamosi, 2016). With r(20) = .47, the data supported a moderate positive partial

correlation between ROA and ROE. In analyzing the computation results for FRI and

EPS when r(20) = .30 and p was .18 with an alpha set value of 0.05, the results supported

statistically nonsignificant relationship (Gbadamosi, 2016) and no rejection of the null

hypothesis H30 that there is no relationship between FRI and EPS for banks in the United

States. With r(20) = .30, the data supported a low positive partial correlation between FRI

and EPS.

Table 5

Partial Correlation Among Variables (N=25) 2011

Correlations

Control Variables FRI ROA ROE EPS TOTALA

TOTALA FRI Correlation 1.000 .239 .471 .300

Significance (2-tailed) . .284 .027 .176

df 0 20 20 20

ROA Correlation .239 1.000 .751 .141

Significance (2-tailed) .284 . .000 .530

df 20 0 20 20

ROE Correlation .471 .751 1.000 .388

Significance (2-tailed) .027 .000 . .074

df 20 20 0 20

EPS Correlation .300 .141 .388 1.000

Significance (2-tailed) .176 .530 .074 .

df 20 20 20 0

a. Cells contain zero-order (Pearson) correlations.

A comparison of the results of the two sets of correlation coefficients indicates a

small increase in the strength of the correlation from .22 to .24 for the relationship

between FRI and ROA. There was no increase in the strength of the correlation for the

relationship between FRI and ROE and a small increase in the strength of the correlation

from .29 to .30 for the relationship between FRI and EPS. This suggests that total asset

had a small impact on the correlation between FRI and ROA, ROE, and EPS.

Table 6 provides a summary of Pearson correlation analyses results for 2012 with

no controlling for total assets. For FRI and ROA, when r(20) =.16 and p was .48 with an

alpha set value of 0.05, the computation results supported no rejection of the null

hypothesis H10, and the result not statistically significant (Gbadamosi, 2016). A

correlation value of .16 supported a low positive partial correlation between FRI and

ROA. An analysis of the data analysis results for FRI and ROE when r(20) = .45 and p

was .04 with an alpha set value of 0.05, the results supported a rejection of the null

hypothesis H20 in favor of H2a and the relationship considered statistically significant

(Gbadamosi, 2016). Based on the sign and size of the correlation, the score of .45

supported a moderate positive partial relationship between FRI and ROE. In reviewing

the FRI-EPS relationship, when r(20) = .56 and p was 0.01 with an alpha set value of

0.05, the findings suggested a statistically significant relationship (Gbadamosi, 2016) and

H30 rejected in favor of H3a that there is a relationship between CSP and EPS for banks in

the United States. The positive correlation score of .56 upported a moderate positive

partial correlation between FRI and EPS.

Table 6

Pearson Correlation Among Variables (N=25) 2012

Correlations

Control Variables FRI ROA ROE EPS TASSETS

-none-a FRI Correlation 1.000 .161 .451 .556 -.040

Significance (2-tailed) . .475 .035 .007 .860

df 0 20 20 20 20

ROA Correlation .161 1.000 .454 .193 -.502

Significance (2-tailed) .475 . .034 .390 .017

df 20 0 20 20 20

ROE Correlation .451 .454 1.000 .462 -.433

Significance (2-tailed) .035 .034 . .030 .044

df 20 20 0 20 20

EPS Correlation .556 .193 .462 1.000 -.151

Significance (2-tailed) .007 .390 .030 . .503

df 20 20 20 0 20

TASSETS Correlation -.040 -.502 -.433 -.151 1.000

Significance (2-tailed) .860 .017 .044 .503 .

df 20 20 20 20 0

a. Cells contain zero-order (Pearson) correlations.

Table 7 provides a summary of the partial correlation analyses results for 2012

while controlling for total assets. In analyzing the computation results, for FRI and ROA

when r(19) =.16 and p was .48 with an alpha set value of 0.05, the findings supported a

statistically nonsignificant relationship (Gbadamosi, 2016) and no rejection of the null

hypothesis H10 that there is no relationship between FRI and ROA for banks in the United

States. The correlation score of .16 supported a low positive partial correlation between

FRI and ROA. For FRI and ROE, when r(19) = .48 and p was .03 with an alpha set value

of 0.05, the data computation results supported the alternative hypotheses H2a that there is

a relationship between FRI and ROE and H20 rejected. The computations also supported

statistically significant relationship (Gbadamosi, 2016) while the positive correlation

of .48 supported a moderate positive partial relationship between FRI and ROE. For FRI

and EPS when r(19) = .56 and p was .01 with an alpha set value of 0.05, the null

hypothesis H30 that there is no relationship between CSP and EPS for banks in the United

States was rejected. The statistically significant relationship was positive with a

correlation score of .56. The correlation score of .56b supported a moderate positive

partial correlation between FRI and EPS.

Table 7

Partial Correlation Among Variables (N=25) 2012

Correlations

Control Variables FRI ROA ROE EPS TASSETS

TASSETS FRI Correlation 1.000 .163 .482 .557

Significance (2-tailed) . .481 .027 .009

df 0 19 19 19

ROA Correlation .163 1.000 .304 .137

Significance (2-tailed) .481 . .180 .554

df 19 0 19 19

ROE Correlation .482 .304 1.000 .445

Significance (2-tailed) .027 .180 . .043

df 19 19 0 19

EPS Correlation .557 .137 .445 1.000

Significance (2-tailed) .009 .554 .043 .

df 19 19 19 0

a. Cells contain zero-order (Pearson) correlations.

A comparison of the results of the two sets of correlation coefficients indicates no

increase in the strength of the correlation for the relationship between FRI and ROA.

There was a small increase in the strength of the correlation for the relationship between

FRI and ROE from .45 to .48 and no increase in the strength of the correlation for the

relationship between FRI and EPS. This suggests that total asset had an even smaller

impact on the correlation between FRI and ROA, ROE, and EPS.

Table 8 provides a summary of Pearson correlation analyses results for 2013 with

no controlling for total assets. For FRI and ROA when r(20) =.05 and p was .83 with an

alpha set value of 0.05, the relationship was confirmed as statistically nonsignificant

(Gbadamosi, 2016) and H10 not rejected. The positive correlation of .05 supported a less

than low positive partial correlation between FRI and ROA. Based on the computation

results for FRI and ROE when r(20) = .25 and p was .25 with an alpha set value of 0.05,

the relationship was statistically nonsignificant (Gbadamosi, 2016) and no rejection of

H20 that there is no relationship between FRI and ROE. The positive correlation score of

.25 supported a low positive partial relationship between FRI and ROE. In analyzing the

FRI and EPS correlation results, when r(20) = .39 and p was .08 with an alpha set value

of 0.05, the results supported a statistically nonsignificant relationship (Gbadamosi, 2016)

and no rejection of H30 that there is no relationship between FRI and EPS. The positive

correlation score of .39 supported a low positive partial relationship between FRI and

EPS.

Table 8

Pearson Correlation Among Variables (N=25) 2013

Correlations

Control Variables FRI ROA ROE EPS TASSETS

-none-a FRI Correlation 1.000 .048 .254 .387 .154

Significance (2-tailed) . .832 .254 .075 .494

df 0 20 20 20 20

ROA Correlation .048 1.000 .666 .113 -.407

Significance (2-tailed) .832 . .001 .616 .060

df 20 0 20 20 20

ROE Correlation .254 .666 1.000 .353 -.443

Significance (2-tailed) .254 .001 . .108 .039

df 20 20 0 20 20

EPS Correlation .387 .113 .353 1.000 -.105

Significance (2-tailed) .075 .616 .108 . .641

df 20 20 20 0 20

TASSETS Correlation .154 -.407 -.443 -.105 1.000

Significance (2-tailed) .494 .060 .039 .641 .

df 20 20 20 20 0

a. Cells contain zero-order (Pearson) correlations.

Table 9 provides a summary of the partial correlation analyses results for 2013

while controlling for total assets. In reviewing the computation results for FRI and ROA,

when r(19) =.12 and p was .60 with an alpha set value of 0.05, the results supported a

statistically nonsignificant relationship (Gbadamosi, 2016) and no rejection of the null

hypothesis H10 that there is no relationship between FRI and ROA for banks in the United

States. The computations also supported a low positive partial correlation between FRI

and ROA with a score of .12. In reviewing the computation results for FRI and ROE,

when r(19) = .36 and p was .11 with an alpha set value of 0.05, the results supported a

statistically nonsignificant relationship (Gbadamosi, 2016) and no rejection of the null

hypothesis H20 that there is no relationship between FRI and ROE for banks in the United

States. The sign and size of the correlation score of .36 supported a low positive partial

correlation between FRI and ROE. For the FRI-EPS relationship, when r(19) = .41 and p

was .07 with an alpha set value of 0.05, the results supported a statistically nonsignificant

relationship (Gbadamosi, 2016) and no rejection of the null hypothesis H30 that there is

no relationship between FRI and EPS for banks in the United States. The sign and size of

the correlation score of .41 supported a moderate positive partial correlation between FRI

and EPS.

Table 9

Partial Correlation Among Variables (N=25) 2013

Correlations

Control Variables FRI ROA ROE EPS TASSETS

TASSETS FRI Correlation 1.000 .123 .364 .410

Significance (2-tailed) . .597 .105 .065

df 0 19 19 19

ROA Correlation .123 1.000 .593 .078

Significance (2-tailed) .597 . .005 .738

df 19 0 19 19

ROE Correlation .364 .593 1.000 .343

Significance (2-tailed) .105 .005 . .128

df 19 19 0 19

EPS Correlation .410 .078 .343 1.000

Significance (2-tailed) .065 .738 .128 .

df 19 19 19 0

a. Cells contain zero-order (Pearson) correlations.

A comparison of the results of the two sets of correlation coefficients indicates a

small increase in the strength of the correlation for the relationship between FRI and

ROA from .04 to .12. There was also a small increase in the strength of the correlation for

the relationship between FRI and ROE from .25 to .36. In addition, there was a small

increase as well in the strength of the correlation for the relationship between FRI and

EPS from .39 to .41. This suggests that total asset had a small impact on the correlation

between FRI and ROA, ROE, and EPS

In summary, based on research findings, the answers to the noted research

questions are as follows:

In the banking sector of the United States, research findings supported a positive

relationship between CSP represented by FRI and CFP, represented by accounting data,

ROA, ROE, and EPS. However, the strength of the relationship between the variables

varied from year to year. For example, only the findings from the relationship between

FRI and ROE in 2011, FRI and ROE in 2012, FRI and EPS in 2012, and FRI and EPS in

2013 supported a moderate positive partial correlation. Specifically, based on RQ2, the

research findings supported a low positive partial correlation between FRI And ROA for

the years 2011 to 2013. For RQ3, the research findings supported a moderate positive

partial correlation for the years 2011 to 2012 and a low positive partial correlation for

2013. For RQ4, the research findings supported a low positive partial correlation for

2011, a moderate positive partial correlation for 2012 and 2013.

The results correlate to previous studies where early researchers (Waddock &

Graves, 1997) and more recent researchers presented findings of a positive CSP-CFP

relationship (Gee & Norton, 2013; Sun, 2013). In addition, the results correlate to studies

with insignificant relationship findings between CSR and CFP (Gee & Norton, 2013) as

well as span across a variety of industries (Gherghina, Vintila, & Dobrescu, 2015). Fu

and Jia (2012) noted that recent research studies still were inconclusive regarding the

significance of the CSR-CFP relationship and the results of this study are consistent with

their notation. However, the positive relationship findings support the assumption that

social practices can positively impact the financial performance of organizations (Gee &

Norton, 2013) by (a) increasing managerial competencies, (b) increasing knowledge

about social and market environments through the enhancement of organizational

efficiency, and (c) improving relationships with both internal and external stakeholders

(Gherghina et al., 2015).

Based on the context of theoretical framework, the contract theory and

stakeholders’ theory are relevant theories. The general assumptions of the CSR concept

implies that an implicit contract exists between business and society (Ahenkora,

Banahene, & Quartey, 2013; Fontaine, 2013; Gee & Norton, 2013) and it is due to this

assumption that the success rate of CSR considerations is of interest to all stakeholder

groups while relating to the findings of this study. Within the scope of this study, the

findings specifically align with the contract and stakeholders’ theories. The contract

theory concept extends to businesses as well as societies and governments (Byerly,

2013). Even though the concept evolved over the years, the basic premise is still

gaining better understanding of the specific roles, responsibilities, and relationship of

individuals relative to society and the collective well-being of society (Byerly, 2013).

Determining the specific roles, responsibilities, and relationship of individuals relative

to society is also still a basic premise of the concept (Byerly, 2013).

Managers of organizations have a fiduciary duty to the members of all stakeholder groups

and a key aspect of their duties includes reviewing and confirming the success rate of

CSR considerations that impact stakeholders. The confirmation of the level and type of

relationship also provides information to assist in decision-making processes as to

whether or not to continue investments in CSR consideration and in decision-making

regarding innovation, research and development, and long-term sustainability (Bose,

2012).

The stakeholders’ theory concept supports managers of organizations engaging in

social responsible activities without violating the rights of any stakeholder groups

(Barchiesi & La Bella, 2014; Bose, 2012; Harrison & Wicks, 2013). An examination of

the CSP-CFP relationship provides managers and other stakeholders with valuable

information to assist in evaluating the achievement of organizational financial goals as

well as goals related to social responsible activities. This study findings specifically

provides evidence to support or refute continued contributions to CSR concerns in the

banking industry while also meeting or exceeding financial goals. In addition, since some

scholars consider CSP as an essential determinant of the sustainability of organizations

(Chang, Oh, & Messersmith, 2013), the findings also provide feedback to support

managers in their efforts to remain sustainable in a business environment that is

constantly evolving locally and globally.

Applications to Professional Practice

The findings of the study support the contract and stakeholders’ theories with

respect to CSR concerns. It is through the implied contract that exists between

organization leaders and other stakeholder groups that business leaders act on behalf of

all stakeholders including whether or not to invest in CSR concerns (Agudo-Valiente et

al., 2015; Bose, 2012; Fontaine, 2013; Smith, 2012). An implied requirement from the

contractual agreement is accountability and trustworthiness in addressing the needs of

stakeholders. The study findings present results that impact managerial decision-making

regarding profitability and sustainability (Ahenkora et al., 2013; Byerly, 2013; Gee &

Norton, 2013), and, whether or not to continue to invest in CSR activities. Another

consideration would be for business leaders to review if there are other strategies that

relate to CSR that could potentially provide better results in examining the CSP-CFP

relationship.

The stakeholders’ theory posits that in the pursuit of achieving organizational

goals, business leaders should seek to balance the interest of all stakeholders without

violating the rights of any group (Bose, 2012; Harrison & Wicks, 2013; Minoja, 2012).

The positive findings provide support for the stakeholder theory and concerns for the

social needs of society. However, the levels of the confirmed relationships imply a review

of business strategies with the intent of improving the significance of the CSPCFP

relationship.

Based on the shareholders’ theory, opponents of CSR in business might view the

less than average study findings as an indication of misappropriation of funds that

minimize the economic value of organizations (Ahamed et al., 2014; Bazillier & Vauday,

2014; Chin et al., 2013; Yelkikalan & Kose, 2012). However, the concept of the

stakeholders’ theory relates to business leaders focusing on more than just the

achievement of financial goals or short-term returns (Barchiesi & La Bella, 2014); moral

responsibility and social obligation to stakeholders are also essential considerations to

enhance opportunities for sustainability (Sandu, 2012; Yelkikalan & Kose, 2012). By

considering social responsibility as a means of integrating interests of corporate

shareholders, corporate leaders, employees, citizens, and members of communities,

broader social goals such as environmental sustainability, the health, and welfare of

citizens, and social justice, are now concerns of business leaders (Banerjee, 2014).

The concept of CSR is a central concern in the purpose of business organizations,

and, because we live in a world where change is constant, CSR relates to changes in

social relationships, political affairs, and economic concerns (Subasic, Reynolds, Reicher,

& Klandermans, 2012). While there may be differences in opinions regarding CSR, CFP,

and investing in CSR activities, the increasing adaptation of socially responsible activities

by business managers confirm the movement of business leaders to act in a more social

and ethical manner (Balabanov et al., 2015; Ganescu, 2012; Sharma & Mehta, 2012). The

general premise is businesses do not exist in a vacuum and business leaders should

compensate members of society for any negative effects related to business operations

(Ahamed et al., 2014; Gherghina et al., 2015). The sustainability of organizations

correlates with meeting the need of multiple stakeholders (Ganescu, 2012) and while

being socially responsible incurs additional cost (Kaeokla & Jaikengkit, 2012), business

managers still need to consider the social implications of their applied strategies and

activities and address any deficiencies (Boulouta & Pitelis, 2014).

Implications for Social Change

Social change and movements for social change are contingent on factors such as

shared identity, norms, values, and belief systems (Subasic et al., 2012). The concept of

CSR is a movement for social change in the world of business and CSR supporters such

as Bowen (1953) and Freeman (1984) voiced opinions regarding the moral responsibility

of business leaders (Bravo et al., 2012; Revanthy, 2012). Since the 1970s, CSR is a strong

debate topic due to social concerns including the fair treatment of stakeholders from

business leaders (Bazillier & Vauday, 2014; Rupp, Skarlicki & Shao, 2013). However,

the extent to which individual leaders consider and value social and environmental issues

relies upon their personal values and motives (Rupp et al., 2013).

Socially, the positive research findings support continued investments in CSR

activities as a means of protecting and improving the welfare of citizens and societies

(Yelkikalan & Kose, 2012). Investments and activities include philanthropic projects,

corporate sponsorships and scholarships, or projects such as the building of homes in

underdeveloped communities (Ducassy, 2013; Munro, 2013; Pless et al., 2012).

Investment in the training and development of employees to enhance innovation and

creativity to address elements of CSR is also a viable consideration for social and

economic sustainability. However, the level of significance of the relationship findings

might signal the need to reassess the management of CSR initiatives to confirm if any

violations of implied conditions that relate to the stakeholder theory and contract theory.

While there is an increase in the number of business leaders acting as agents of

social change, there are concerns regarding the engagement of business leaders in

governmental or individual citizens’ activities (Bondy, Moon, & Matten, 2012).

Specifically, the concern is that governments exist to serve society; therefore, having

business leaders intervening into perceived governmental affairs through the adaptation

of CSR concerns may not be a fitting substitute (Banerjee, 2014; Bondy et al., 2012).

Even though some members of society view CSR as an inappropriate substitute for

governmental regulations, the findings from this study support business leaders

continuing to coordinate factors of the contract and stakeholder theories to aid in

addressing CSR concerns.

From a corporate perspective, activities that incorporate CSR considerations

enhance the level of credibility of organizations, improve corporate image, build

customer relationships, and improve the retention rate of stakeholders such as employees

(Fatma et al., 2014). Given recent scandals in the banking industry (Andrikopoulos et al.,

2014; Fatma et al., 2014; Stephens & Skinner, 2013), the accountability and legitimacy of

banking leaders and their organizations are questionable. Since the norm for corporate

managers is to define the role of their organizations in society while applying social and

ethical standards (Ahenkora et al., 2013) banking managers should evaluate the

performance of their organizations from a financial and social perspective. Banks are an

integral part of society as they play an important role in financing (Fatma et al., 2014;

Matei & Voica, 2013) and when stakeholders are able to evaluate the overall performance

of organizational activities, trustworthiness, and reputation can improve.

Recommendations for Action

The positive study findings from hypotheses testing suggest that it is financially

feasible for banking mangers to focus on satisfying the financial goals of their

organizations while contributing to the social welfare of the communities they serve.

However, while the findings in this study confirm a positive relationship, the results from

other findings confirm a conflict (Arsoy et al., 2012; Erhemjamts et al., 2013; Galbreath

& Shum, 2012; Skudiene et al., 2013). The inconsistencies with results are indications of

the need for further research regarding the CSR-CFP relationship.

Further analysis of the findings of this study identifies evidence to support the

continued engage of managers in CSR activities. However, one primary area that requires

further action is the standardization of CSR measurements as well as formal regulation

and standardization of CSR reporting. Regulated and standardized reporting will enhance

instrumentation relative to research studies on the CSR-CFP relationships and positively

contribute to researches with more conclusive findings.

The results of this study may be beneficial to scholars, practitioners, and business

leaders. The concerns of some scholars and researchers that business leaders are

intervening into governmental affairs (Banerjee, 2014; Bondy et al., 2012) makes the

findings of the study also relevant to government officials as they need to affirm that even

though business leaders are being socially responsible, government officials still have an

important role to play in societies. I will share copies of my proposal draft with business

leaders of my former employer as well as my current employer as the CSR efforts of the

related organizations seem to be lagging behind the performances by other banks such as

Bank of America and Wells Fargo and Company. I will also be conducting knowledge-

sharing sessions with banking business leaders and members of my immediate local

community to increase awareness of CSR and the evolving roles of business leaders.

Other presentation to a broader spectrum of community groups such as

Kiwanis Clubs is also a consideration.

Recommendations for Further Research

This study adds to the literature on the CSR-CFP relationship by confirming a

positive relationship between CSP and CFP in the banking industry in the United States.

However, the results did not support an overall strong correlation between the

independent and dependent variables. For example, in 2011, there were a low positive

correlation between FRI and ROA, a very low positive correlation between FRI and

ROE, and a low positive correlation between FRI and EPS. The study findings only

confirmed a strong positive correlation between FRI and ROA in 2013 and a moderate

positive correlation in 2012 between FRI and ROA.

Recommendations for further study include the use of primary data to represent

independent variables; questionnaires or interviews are two options for securing the

primary data. The second recommendation is the conduction of researches that include a

wider range of data collection dates. This would expand the scope of the researches while

increase the level of external validity. This study included a limited sample size with

restrictions based on the section of companies noted on Fortune’s MACs listing and only

companies that rank in the top half of the survey results by industries were in the census

sample population. Researchers should consider gaining access to the entire listing by

industries and conduct studies with a wider sample range. Expanding the study scope to

include banks outside of the United States using varied quantitative, qualitative, and

mixed method research studies can present findings to improve the level of consistency in

study results. Future researchers may also consider additional statistical approaches in

addition to partial correlation that can assist in confirming consistent findings in the

examination of the CSR-CFP relationship.

Reflections

Prior to conducting this research study, there were weeks of reviewing business

literature for a topic that (a) was current with implication into the future, (b) relates to

current scholarly debates and analysis, and (c) was of great interest to researchers and

scholars. The conducted research study provides evidence to support the presence of

concerns for the social welfare of communities despite the viewpoint of opponents of

socially responsible activities in organizations. Conducting the research study enhanced

my knowledge base concerning research methods, designs, and analysis. In addition,

reading multiple peer-reviewed journal articles broadened my knowledge on major topics

and trends in CSR and CSP.

When I began my doctoral study, my awareness of CSR was limited to

philanthropic activities such as the donation of scholarships and community donations.

However, as I worked on the study, my knowledge base broadened; the scope of CSR

includes considerations and activities that extend beyond financial donations. For

example, employee volunteering, innovations to reduce toxic waste as well as innovations

to reduce pollution are all now facets of CSR business leaders considerations.

The second preconceived idea I had was that my study findings would support a

positive and significant relationship between CSP and CFP. While the study findings

support a positive relationship, the significance of the relationship varied more than

anticipated. As more business leaders become supporters of CSR and develop business

strategies that incorporate CSR considerations, my expectation is more collective effort

towards socially responsible behavior in both non-government and government entities.

Further research into the CSR-CFP relationship is a personal future consideration as it

would be interesting to review the findings of a mixed method study on CSR in the

banking industry of South Florida to assess CSR in the industry and location of my

current employment.

Conclusion

Due to the implied impact of CSR on organizations, communities, and

stakeholders, scholars and practitioners are paying more attention to CSR activities

globally (Fatima et al., 2014). This research study is a contribution to the literature on

CSR and the business case for CSR concerns. The purpose of the research was to

examine the relationship between CSR and CFP to assist banking industry leaders in their

CSR investment decisions. The study design included conducting a partial correlation

analysis using FRI data and accounting financial PMs for 25 banks operating in the

United States from 2011 to 2013.

Based on the findings of this research in conjunction with findings from previous

research studies, there are continuing results that imply that CSR activities contribute to

financial performance. Further investigations using additional control variables, study

designs and methods, and sampling are additional considerations to examine CSR-CFP

relationships. Even though being socially responsible involves a cost, business leaders

should continue to invest in CSR while justifying their expenditures as accountability and

trustworthiness are necessary conditions for maintaining an amicable relationship with all

shareholder groups. However, justification should not only be about financial

implications; the social benefits to communities and societies are important facets of CSR

and business leaders need to continue to implement strategies that address social needs.

The increased scope and extent of CSR in our global diaspora has implications for

both government and non-government stakeholders. An area of concern noted in the

literature is the lack of regulation to ensure compliance with incorporating CSR strategies

in more industries and businesses. This is an area for future development for promoting

CSR to assist in preserving our communities, societies, and natural environment. Through

collective CSR efforts, future generations may have better opportunities to experience the

results of current ongoing strategies for the sustainability of our people and planet.

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