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Impact of CSR on Financial Performance and Brand Image

by Suleman


Firstly, I would like to express my gratitude to my supervisor. Thanks for her patience and valuable suggestions for my dissertation. Secondly, I gratitude to all the teachers and classmates at the University of Birmingham who offered advice for me. Finally, I would like to thank my parents. During my university, they provided me with unconditional support.

  1. Introduction

This introduction firstly considers the study’s reason, key definitions, and tools that underpin this research. It then briefly introduces the companies used as case studies. At the same time, briefly introduces the approach to conducting the case studies is outlined in the methodology section. Finally, the research aims and objectives are summarized here. Throughout this dissertation, the author will refer to themselves as ‘the student.’

1.1 Reason for This Study

The concept of Corporate Social Responsibility (CSR) was initially proposed by Oliver Sheldon in his book ‘The Philosophy of Management’ in 1924. He argued that ethical factors in business operations are not only contained in the pursuit of profit maximization but also include the satisfy customer demand (Sheldon, 2003a). With the continuous expansion of scholars’ research on CSR, CSR’s theory has made considerable progress in the past century. As outlined in the key definition 1.2 (below), with the increasing awareness of sustainable human development, developed countries pay more and more attention to corporate social responsibility. Corporate social responsibility performance has changed from a voluntary behavior to a conscious behavior that responds to policies and obeys the law (Luo, Li, 2007a).

Impact of CSR on Financial Performance and Brand Image

Porter and Kramer (2006a) stressed that CSR has beneficial corporate image, brand image, competitive advantages, social stability, and financial performance. However, some companies, especially private company often ignore manage CSR. They are thereby creating a negative impact on company development. For example, Tesco Supermarket in Zhejiang Province sells water-infused beef in 2008. It makes customers have a massive dissatisfaction with the supermarket, and then harm supermarket sales (Jia, 2008a). The brand image and financial performance are being impacted negatively because of it. Therefore, this report’s objective is to prove CSR has a positive relationship with corporate financial performance and brand image. To achieve the aim of this report that is prove CSR has a significant impact on financial performance and brand image. Moreover, analysis of how CSR influences them.

1.2 key Definition

CSR’s concept is briefly outlined here as an introduction; a more detailed exploration is offered in section 2 Literature Review. The concept of CSR was initially proposed by the western scholar Oliver Sheldon. In his book ‘The Philosophy of Management’ published in 1924, he argued that ethical factors get contained in business operations. It is not only the pursuit of profit maximization but also the satisfaction of customer demand (Sheldon, 2003b). As scholars have expanded the research on CSR continuously, CSR theory has developed over the past century. It is a broad and diverse perspective. McGuire (1963) defines CSR as companies that have economic and legal obligations and bear some social responsibilities that exceed these obligations. He believes that CSR should transcend financial and legal dimensions. It also includes the duties of employees, communities, and people. Friedman (1970a) believed that in a free competitive economic environment, a corporation’s only social responsibility is under basic market rules, using limited resources entirely and effectively to create profits as much as possible. However, most scholars believe that CSR has a positive impact on the company with the time going on. According to the study, the student also believes that CSR has positive effects on the company.

1.3 Theoretical Framework

As outlined in the research aims and objectives in section 1.5 (below), this research through a theoretical framework to analyze cases. They are providing evidence for this report. With the enrichment of scholars’ research and opinions, the theories relate to it also be created. Since the 1980s, Ed Freeman popularized the concept of stakeholder thinking in the book <Strategic Management: Theoretical Research of Stakeholders>. After that, the stakeholder theory began to be widely spread. Scholars link stakeholder theory with CSR. It will be discussed more in Stakeholder Theory section 2.3.1 (below). Many subsequent studies tried to establish the correlation between the “social” of an enterprise and economic performance. They believed that the “social” implementation of an enterprise should be related to its financial performance. Therefore, CSR is regarded as the behavior of enterprises to treat stakeholders. The stakeholder theory has also become a very influential theory in the discussion of CSR. Another representative theory is the triple bottom line principle. John Elkington put it forward in 1995. This theory holds that people should not only pay attention to the economic value added by the enterprise but also the environmental and social value-added or destroyed by the enterprise. This theory has driven many companies to re-position their relationship between economic, social, environmental, and performance. They use ecological protection and community health as a useful tool for greater profits (Le, 2008a).

1.4 Background

1.4.1 Background About CSR in UK and China Business Environment

The student concludes from her reading to develop the literature for this dissertation. With society’s development, more and more scientific research institutions and news dissemination institutions are participating in social responsibility work. While realizing their development and building social responsibility brands, these institutions have made positive contributions to CSR’s localization and have become vital in promoting social responsibility. These professional institutions have gradually begun to prepare social responsibility reports, carry out social responsibility training, and related management consulting in recent years. Effectively promoted the spread of the concept of social responsibility and the deepening of practice (Ding, 2015a).

For example, since 2009, the Institute of Economics Chinese Academy of Social Sciences’ CSR research center has released the “White Paper on Chinese CSR Report” based on typical CSR theory, triple bottom line theory, stakeholder theory, and international specific evaluation methods. It deeply evaluates the current situation of CSR in China, thereby promoting the development of CSR. According to research, readers can find that the overall score of China’s CSR Development Index is low. There are apparent differences in different industries and different types of enterprises. According to the 2010 Social Responsibility Report of Chinese Enterprises, Chinese enterprises’ average score is 29.8 (out of 100). The 63.7 percent of enterprises are between 0 and 30 marks. It shows that Chinese CSR needs to be strengthened (Zhang, 2012). More and more companies include CSR data in their annual financial reports. For example, G250 companies increased from 65% in 2015 to 78%. It shows that they believe that CSR information is closely related to their stakeholders (KPMG, 2017a).

The reason why CSR is developing rapidly in China is complicated. One of the reasons is that the various practical needs of sustainable development at this stage. It results from multiple factors, including the active promotion of the government and social organizations, the demonstration and guidance of leading enterprises, and the power of public opinion (Ding, 2015b).

However, there are still some problems in the disclosure and supervision of CSR in China. According to Wang (2019), it can be manifested mainly in three aspects. Firstly, is that information on the CSR report disclosure casually. For example, the Semir apparel company in China does not disclose CSR reports every year. Making stakeholders lack understanding of it. At the same time, it makes companies ignore manage CSR. Secondly is that the company only discloses good news and does not mention anything about negative information. For example, the ICBC (Industrial and Commercial Bank of China) 2009 CSR Report never noted the environmental pollution risks involved in Zijin Mining’s mining projects and Canadian oil projects (Zijin Mining, 2011). Thirdly is that the company often ignore its external stakeholders. Finally, the company often make relate plan but rarely takes action.

Compared with China, the development of CSR in western countries is more sound and rapid. Companies in most European countries such as the United Kingdom, Italy, Germany, and other countries have relatively complete CSR management systems (Luo, Li, 2007b). For example, the “EU Non-Financial Reporting Directive” has covered the entire EU. It is the most important law to promote CSR reporting (KPMG, 2017b). Enterprises can complete CSR work by themselves. It also reflects the mature CSR level of Western countries. In March 2006, the European Union adopted the latest CSR policy statement, listing it into the core of economic growth and employment development strategies. They initiated the “European Alliance for Corporate Social Responsibility.” The relevant drafts have been issued, and Germany, the UK, Italy, Sweden, France, and other countries have formulated action plans to implement CSR (Luo, Li, 2007c). In recent years, CSR reports in the United Kingdom, and other European and American countries tend to discuss human rights (KPMG, 2017c).

Therefore, the business environment in China is different from the UK. The UK companies think more highly of it. At the same it has a more perfect system relate to CSR. In China, the CSR concept has just begun to be popularized and valued. Analysis case companies from these two countries can help compare CSR’s impact in different types of societies. At the same time, it helps to prove the universality of the effects.

1.4.2 Background About Luckin Coffee

Luckin Coffee was founded in January 2018. Coming from Xiamen, China. It is a typical representative of China’s new retail coffee. It is committed to becoming China’s leading high-quality coffee brand and professional coffee service provider. Luckin Coffee focuses on workplace and young consumers. At the end of 2019, the number of directly operated stores in China reached 4,507. (Luckin Coffee, 2020). According to statistics, Luckin Coffee has more than 1.3 million users, 3 million orders, and 5 million sales (Shun, 2018). In 2019, Luckin Coffee was listed on Nasdaq in the United States. Become the Asian company with the largest IPO financing in Nasdaq that year. Before Luckin Coffee was born, the Chinese coffee market was monopolized by the American company Starbucks. Compared to Starbucks’ coffee with a cup of tens of RMB, Luckin’s affordable price is viral among consumers (Wanbiao, 2019).

However, American Muddy Waters Research published an 89-page short report on the Luckin Coffee stock in 2019. The author of the information sent 92 full-time and 1,400 part-time investigators, collected more than 25,000 receipts, conducted 10,000 hours of store video recording, and managed many internal WeChat chat records. According to the research, Muddy Waters report that in the third quarter of 2019, the number of products sold per day in a single store was be exaggerated 69%. In the fourth quarter of 2019 was be exaggerated 88%. Once the news was disclosed, Luckin’s stock price plunged by more than 20%. Investigators have tracked 981 stores offline since the fourth quarter of 2019, and each store sold only 263 items in a single day. However, Luckin Coffee’s report shows that in the third quarter of 2019, each store sold 444 items in a single day. Comparing real cases and reported cases, Luckin Group exaggerated store operating profits by 397 million yuan in the third quarter of 2019. Luckin also sale other products that are non-freshly brewed beverages, such as light meals, juice, nuts, mugs, etc. According to the company’s report, its revenue contribution increased from 7% in the second quarter of 2018 to 23% in the third quarter of 2019, and the project contribution increased from 6% to 22% accordingly. However, according to research, this kind of business only accounts for 6.2%. It is exaggerated by nearly 400% (Muddy Waters, 2020a). In short, Luckin Coffee is lying to the stakeholders. After the report was published, the company’s stock price plummeted and was delisted.

1.4.3 Background About Dasani Water

Dasani Water is a brand from COCA-COLA. COCA-COLA is a famous international company from the USA. Dasani Water was designed in 1991 (DASANI, 2020).

In 2004 media reports that it is not pure water. It is filtered tap water created in a factory. Dasani’s packaging states that this water is “pure” water with added minerals. However, according to the test, people found that Dasani source is British local tap water. Moreover, it adds other substances, which can no longer be called pure water. It through a purification process and added mineral salts, but the source was still tap water (Zhang, 2004a).

The scientific also findings that the water contained the legal amount of bromate – a substance that can cause an increased risk of cancer in high doses although safe at the levels found. After the bromate content in the drink exceeded the British legal standard, the entire batch of products was withdrawn. Even if Coca-Cola stressed, there was no health risk from drinking bottles of Dasani. It have a tremendous negative impact on Coca-Cola. Coca-Cola removed all 500,000 bottles of Dasani in the circulation market. After the incident was exposed, Coca-Cola’s stock price fell by 26 cents to 48.78 US dollars. It decreases by 0.53%. This incident caused the company to lose billions of dollars. At the same time, product releases in Europe had to get canceled. Making company marketing expenses were lost (Zhang, 2004b). Therefore, in this case, Dasani miss manages its social responsibility. As the report, this case makes Dasani permanent withdrawal from the UK market. It harms the financial performance of the company. At the same time, this case also has a negative impact on the Dasani brand image.

1.4.4 Rational for Selecting these Two Case Study Companies

The first reason is that the case study of these two companies can help explore CSR’s impact on corporate financial performance and brand image. As outlined in the strategies in section 3.1.3 (below), case study methods help to examine the effects of CSR on specific factors. According to the background, these two companies’ analyses can find that these two companies all miss managing CSR. It creates a negative impact on corporate financial performance and brand image. Therefore, these two companies are suitable to be used.

The second reason is that as mentioned background about CSR in the UK and China business environment in section 1.4.1 earlier, CSR develop more in China in recent years. However, there are still some problems in the disclosure and supervision of CSR. Luckin Coffee is a representative company in this environment. Therefore, the Luckin Coffee case is worth to discuss. Even if CSR has developed early and better in western countries, their companies also will miss manage it sometimes. Dasani Water is a classic example. Therefore, it is worth discussing.

1.5 Research Question, Aims and Objectives

This report aims to prove that CSR has a significant impact on financial performance and brand image. To achieve this aim, this study set up two research questions following:

RQ 1: Does CSR affect company financial performance and brand image?

RQ 2: How does CSR influence them?

To answer these research questions, the objectives are put forward by the student:

To analyze the impact of CSR.

To discuss the relationship between CSR and corporate financial performance, brand image.

To give recommendation help to improve manage CSR.

The SMART model will be used to evaluate more accessible and more transparent measures of this report’s work. The SMART model began in 1955. It is a tool for measuring objectives. It has been used by most companies now. It is interpreted as specific, measurable, achievable, realistic, and time-bound. To be more precise, it requires the objective should be straightforward. It can be measured and achievable. At the same time, the aim and purpose should have a relationship. The objective was an exact deadline (CMI, 2020).

As mentioned earlier, the aim and objectives of this report are specific. They also have a relationship. According to the analysis and discuss how CSR influences them, we get the results. Therefore, it can be said that it is measurable and achievable. All research should finish before the deadline of the dissertation. Therefore, it meets the time-bound principle. In short, the work of this report is SMART.

2. Literature Review

2.1 Outline of Literature Review Section

This report’s topic is the influence of CSR on the firm’s financial performance and brand image. Therefore, this report uses the system structure and method to analyze. Firstly, in the literature review, the author will briefly introduce CSR’s history and the development of related views. Making readers have a specific understanding of it. Secondly, using two models to underpin this investigation. Through Stakeholder Theory and Triple Bottom Lines Principle to elaborate on CSR’s explicit content and scope. At the same time, discuss its impact. According to the analysis by these two models, it can be found that CSR has an impact on corporate financial performance and brand image. Therefore, in the third part, the author discusses the relationship between CSR and corporate financial performance, brand image.

Therefore, in the third part, the author discusses the relationship between CSR and corporate financial performance, brand image. Moreover, discuss CSR in modern society to show its current status and development. Finally, discuss the limitation of scholars’ research to find ways to improve the study of CSR. Therefore, it can be seen that the critical points of this report are CSR with corporate financial performance and brand image. All of them will be identified in the following paragraph.

2.2 CSR

  • 2.2.1 A Brief History of CSR

According to Can Chen (2015) research, she summary the development and change of opinions about CSR. From the 1950s to the 1970s, the sociology-economic scholars believe that the first goal of an enterprise is to ensure its survival, and the second is to maximize profits. To achieve these goals, they must assume social obligations and the resulting social costs. From the 1980s to the 1990s, people turn to focus on the environment. In the 1980s, the CSR movement began to rise in developed countries in Europe and America gradually. Some non-governmental organizations and public opinion related to Greenpeace, environmental protection, social responsibility, and human rights have also continued to call for the link between social responsibility and trade. As a result, consumers’ attention has shifted to caring about product quality, environment, occupational health, and labor security, etc. With increasing pressure and their own development needs, many European and American multinational companies have paid attention to their social responsibilities. From the 1990s to the present, the social responsibility movement is becoming more frequent and intense. Public and companies more and more think highly of CSR, and try to fulfil their responsibilities.

In conclusion, the CSR movement was initiated by western developed countries launched in the 1980s. With the development of economic globalization and the promotion of international organizations, governments, multinational companies, and non-governmental organizations, CSR has gradually become a generally accepted concept. CSR presents a global development trend. It is no longer an individual act of an enterprise, nor a personal act of a country. More and more governments and enterprises have joined this movement. CSR is developing on an international scale (Che, 2015).

  • 2.2.2 Different Views on CSR from Scholars

The concept of CSR was initially proposed by the western scholar Oliver Sheldon in his book ‘The Philosophy of Management’ published in 1924 (Sheldon, 2003c). Scholars continued to study it subsequently. McGuire, Sundgren, and Schneeweis (1988) proposed that in addition to economic and legal obligations, corporations should assume more social responsibility.  Kurovs and Waściński (2016a) regarded social responsibility as a vital part of the corporate operation model in the current business era. They proposed that corporations should take society, environment, government, and other stakeholders into consideration when they make business strategies.

However, a few scholars have negative attitudes towards CSR. They think it lacks practical significance and value. For example, one of the CSR representative scholars Friedman (1970b) believed that in a free competitive economic environment, market competition is open and fierce. The only social responsibility of a corporation is under basic market rules, using limited resources entirely and effectively to create profits as much as possible. His view is based on the theory of economic freedom. Moreover, Mackey and Barney (2007) designed a theoretical model related to the supply and demand for investment opportunities in socially responsible firms. They found that socially accountable activities possibly have a negative impact on the market value of a firm.

In conclusion, most scholars like McGuire, Sundgren, Schneeweis, Kurovs and Waściński have a positive attitude towards the importance and impact of CSR. They think CSR has beneficial incorporate business strategies, establish a positive corporate image, and held competitive advantages (Porter, Kramer, 2006b). Kramer and Porter (2011), suggest that excellent CSR performance is helping to form corporate values, promote social stability, and stimulate economic development. The development of a corporate significantly relies on the society it lives. Therefore, corporations have to demonstrate their social responsibility to maintain the contractual relationship between the corporation and organization (Donaldson and Dunfee, 2002). Their opinions show the relationship between CSR and corporate development. If the company assume its social responsibilities actively, it will be more easily recognized by society Improving its development.

Nowadays, in the commercial market, CSR has been gradually increasing over time. It has a significant impact on corporate development. Especially in corporate sustainability development, financial performance, and brand image. However, some companies often ignore it. For example, IBM Shanghai discriminates against employees with depression in 2008, AVON commercial bribery in 2008, Mercedes-Benz has quality problems, and so on (Jia, 2008b). They have a tremendous negative impact on the company. Therefore, it is a topic worthy of discussion.

2.3 Models Used to Underpin this Investigation

The definition of CSR is abstract. It means the company incorporates social and environmental responsibilities into its business operations and interactions with stakeholders (UNIDO, 2020). It failed to express useful content to the public and entrepreneurs. Therefore, introduced the theory relate to CSR is to elaborate on the specific content and scope contained in CSR. At the same time, discuss its impact.

Through the literature review process, two analysis tools have been selected, and they are stakeholder theory and triple bottom line principle. Both of them are related to CSR and show the content of CSR. At the same time, show the influence of CSR on financial performance and brand image. They are associated with the topic of this report. Therefore, these two tools are suitable to be used to analyze the case.

  • 2.3.1 Stakeholder Theory

Many scholars research from the perspective of stakeholders in the study of CSR. For example, Donaldson and Dunfei proposed a theoretical hypothesis that is, companies and stakeholders have a series of ‘integrative social contracts’. Companies should respond to the interests of stakeholders. If the company ignores the interests of stakeholders, it will harm its long-term development and sustainable development (Chen, Jia, 2003).

Stanford Research Institute in 1963 has a narrower definition of stakeholders. It is that ‘there are some interest groups in the enterprise. Without their support, the enterprise cannot survive. It makes people realize that shareholders are not the only interest group of a company’. Freeman in 1984 ‘Strategic Management-Stakeholder Approach’ put forward that stakeholders are any individuals or groups that can influence the process of achieving corporate goals (Feng, Zhang, 2009). According to Clarkson (1995), the existence of CSR indicates that stakeholders have previously invested in corporate capital. After that, firms produce a tangible or intangible capital return to stakeholders. CSR and stakeholder theory are significant concepts in business ethics (Freeman, Dmytriyev, 2017).

The definition of stakeholders is that those individuals and groups who are affecting or affected in the process of corporate achieving their objectives (Freeman, 2001). In other words, CSR is the corporate responsibility of stakeholders.

The stakeholders can be divided into two types that are direct stakeholders and indirect stakeholders. Direct stakeholders, including employees, customers, suppliers, and so on. Indirect stakeholders, including government, community, public, and so on (Bowen, 2013). He argued that compared to direct stakeholders, corporate should pay more attention to the interests of indirect stakeholders when it made a management decision. Direct and indirect stakeholders have a significant impact on corporate. According to the study of stakeholder classification from the cybernetic perspective by Xu, Chang, Xie (2006), stakeholders can be divided into dominant control status (shareholders), passive control status (employees), externally related status (suppliers, consumers, governance, etc.). Dominant control stakeholders have a great impact on the company and then are passive control stakeholders. Externally related stakeholders have the least effect on the enterprise. In their opinion, the subdivision of stakeholders in the research focus of stakeholder theory. The realization of the interests of stakeholders is the key to corporate governance.

Until recent years, corporate more and more think highly of CSR. Profits have no longer been the unique objective of the corporate. They will focus on the relationship with stakeholders when they make a decision. The stakeholder theory has broken the traditional public perception of corporations. Showing that CSR is not only the responsibility to make profits for shareholders but more importantly, represents a pivotal bond and cooperation between the organization and its stakeholders (Murray and Vogel, 1997a). When a company has established a good relationship with its stakeholders, the company’s brand image and reputation will also increase.

  • 2.3.2 Triple Bottom Lines Principle

In recent years, the concept of CSR and sustainable development has gained more and more attention in the business field. The use of the triple bottom line principle related to it is becoming more and more common. Elkington proposed the triple bottom line principle in 1995. Based on the premise, companies are responsible for the wider community, not just their shareholders. He then suggested that companies need to measure their ‘sustainability’ through a series of measurable performance indicators. Therefore, the triple bottom line principle has been created. They are society, economy, environment. It is also the triple social responsibility of the company (Peng, Ren, 2003a).

These three responsibilities have a bottom line. For example, the bottom line of corporate economic responsibility is not to lose money. The bottom line of corporate environmental responsibility is to meet the emission standards and not to violate relevant environmental laws and regulations in terms of the bottom line of CSR, such as complying with the local minimum wage, bars, and related labour security and welfare regulations. The bottom line of the government’s responsibility is to pay taxes on time, and so on (Ying, 2012).

According to research by scholars, the triple bottom line (CSR) is inextricably linked to corporate financial performance. According to the results of the Swiss Financial Research Group SAM research on the Dow Jones Sustainability Group Index (DJSGI) shows that companies committed to sustainable development have better financial performance than their “unsustainable” competitors (Peng, Ren, 2003b).

Undertaking and emphasizing CSR will contribute to the sustainable development of enterprises. Therefore, with the product and widespread recognition of the “triple bottom line” principle, many companies have re-positioned the relationship between economic, social, environmental, and financial performance (Le, 2008a). It represents a pivotal bond and cooperation between the organization and its three triple bottom lines. At the same time, it shows the influence and importance of CSR. For example, Nestcafe cooperates with coffee farmers in Yunnan, China.

On the one hand, it helps farmers solve sales problems and improve local living conditions. On the other hand, it solves the company’s raw material problems and reduces costs (Yi, 2012). It makes Nestcafe, and its stakeholders develop together. Reflects the relationship between the corporate economic responsibility line and the organization.

2.4 CSR Relationship with Financial Performance and Brand Image

According to research by scholars, scholars have different attitudes toward the impact on CSR. For example, as mentioned earlier McGuire, Sundgren, Schneeweis, Kurovs, and Waściński have a positive attitude towards the importance and impact of CSR. They believe that CSR will have a positive effect on the company’s financial performance and brand image. However, Friedman, Mackey, and Barney take a negative attitude towards it. The fundamental reason for this divergence is fulfilling CSR needs cost. It may have a negative impact on the company’s performance. For example, Friedman (1974) believes that CSR has a negative effect on the survival and development of enterprises. To be more specific, the cost of CSR increases the company to expand. It has a negative impact on the company’s finances, thereby affecting the company’s development. However, most scholars believe that the profit comes to CSR will more remarkable than its cost, and improve its brand image at the same time. Therefore, the research objective of this study is to analyze CSR will have a positive or negative impact on the company’s financial performance and brand image.

  •  2.4.1 Relationship Between Financial Performance and Brand Image

Financial performance is a subjective measure of how a firm uses its assets from its primary mode of business and generate revenues. It identifies how well a company generates revenues and manages its assets, liabilities, and the financial interests of its stakeholders (Will, 2020a). All of them are the main components of financial performance. They will be considered in economic performance, and also will be pointed out in the financial report.

There are many stakeholders in a company, including trade creditors, bondholders, investors, employees, management, and so on. Each group has its interest in tracking the financial performance of a company. There are many ways to measure and influence economic performance, but all measures should be taken in aggregate (Will, 2020b). For example, the company will conduct performance evaluations for each employee and each department.

The brand image refers to the way a market as a whole view for a company or product. Many companies attempt to create a strong brand that people identify with a given product. Besides wishing to simply establish brand awareness, most companies often want their product or business to have a clear logo or to be looked at in some way. This brand image can shape how they release a product, the type of product they released, the kind of advertising they do, and the type of customers they cater to (Alexis, 2020). Brand image and brand are inseparable. The brand image represents the strength and quality of the brand. Therefore, many times, the public will consume according to the brand image. Therefore, to increase the sales of the brand and accelerate the development of the enterprise, many operators pay great attention to the shaping of the brand image (Star Media, 2018). Therefore, due to the impact and influence of a brand image, more and more companies pay attention to it. They try to build a positive brand image.

Since 1992, KeHer and Aaker have conducted a series of experimental tests on the relationship between corporate public image and corporate performance for the first time. The research results show that an excellent corporate available image is conducive to the establishment and implementation of corporate brand strategies, which can promote the sound development of the company and improve corporate performance (KeHer and Aaker, 1998). Nha Nguyen and Gaston LeBlanc (2001) taking the service industry as the research object, study the relationship between corporate public image and corporate performance. The study has shown that the available image of a company can affect the loyalty of customers to the company, and then affect the performance of the company. Zeynep and Rajeev (2004) studied the impact of a company’s public image on the company’s new product sales. The research results show that the right available image of an enterprise can promote the sales of enterprise products, which in turn is beneficial to the improvement of enterprise performance. Therefore, according to the study of scholars find that brand image has a positive relationship with financial performance.

  • 2.4.2 Positive Relationship Between Brand Image and CSR

In the research, it is found that consumers are more inclined to support disaster relief-type charitable activities by enterprises to assume their social responsibilities. In their view, disasters are atypical behavior to test whether companies are willing to give up their interests, and provide the best opportunity for companies to fulfil their social responsibilities (Ellen, L A Mohr et al., 2000). When corporate resources are used to improve social welfare, it will enhance the company’s relationship with key stakeholders, such as consumers or potential employees. Therefore, enterprises taking more social responsibilities can significantly drive the increase of their social capital and significantly affect their social network. After that, establish a good social reputation and public image among stakeholders (Xu, Yang, 2009). Therefore, CSR will have a positive impact on the company’s brand image.

To a certain extent, the CSR level represents the company’s efforts to fulfill its social responsibilities. A high level of CSR is conducive to make consumers have a sense of identity with the company, and then increase the company’s sales (Xie, Zhou, 2009a). According to Handelman and Arnold study shows that the level of CSR has a significant impact on the degree of consumer support for the retailer (Murray and Vogel, 1997a). The survey of Dutton shows that the right brand image helps increase customers’ sense of identity with the company. The fulfillment of CSR can help improve corporate reputation and establish the right brand image.

  • 2.4.3 Positive Relationship Between Financial Performance and CSR

Regarding the relationship between CSR and corporate financial performance, Waddock and Graves (1997) pointed out that there are three views in academia. The first is the negative relationship between the two. Neoclassical economists such as Friedman believe that the performance of CSR will lead to competitive disadvantage. The second view is that the two are not related. The third view is that they have a positive relationship. Both the stakeholder theory and the triple bottom line theory support this view. Empirical research by scholars shows that most studies support CSR have a positive connection with corporate financial performance. According to the survey, the opinion of the student is that CSR and corporate financial performance have a positive relationship.

Barnett and Salomon (2006) measured the relationship between socially responsible investing (SRI) and financial-social performance link mutual funds. It is found that socially-oriented firms have a better financial performance compared to those scoring lower in the CSR index. According to the research of Orlitzky (2003), the virtues of taking social and environmental responsibility may be rewarded from an accounting perspective. This is because many investors do not mind paying extra for the CSR strategy. These investors believe and invest in the companies despite the short-term lower financial return, but pay more attention to social responsibility and environmental protection (Baron, 2008). According to these study can be found that the activity of CSR can help to improve the sustainable development of the company, and then improve the competitive advantage and financial performance of the company. In other words, CSR has a positive relationship with financial performance.

2.5 CSR in Modern Society

As mentioned above, CSR plays an essential role in the financial performance and brand image of a company. It is one of the critical parts of business management. The stakeholders and the ‘triple bottom line’ will push companies to assume and value CSR.

However, in the real world, society, economy, and environment are often in an unstable state. The rights and interests of indirect stakeholders are often overlooked. At present, the performance of CSR is not optimistic. The legitimate rights and interests of employees are infringed, tax evasion, and environmental pollution often occur. To sum up the reasons, there are not only the enterprises’ neglect of their social responsibilities but also the government and the lack of market supervision (Xing, 2010). Comparing with Western countries, Eastern companies still more pursue profits. The subjective awareness of CSR is slightly lagging. In general, the management and implementation of CSR lack a standardized, systematic management system and supervision standards (Peng, Ren, 2003c).

However, with the development of economic globalization, the concept of CSR is continually spreading. In recent years, the issue of CSR has received extensive attention from all walks of life. It helps to promote the fulfillment of CSR. With the spread of the awareness of green environmental protection, and the governments of various countries and industry associations successively promulgated relevant policies, strengthened the company’s emphasis on its social responsibility.

2.6 Limitation

Scholars have made mufti-faceted critical research on the impact of CSR. However, the concept of CSR is multidimensional and complex (Carroll, 1979). Many companies lack the necessary understanding and correct implementation of CSR. Resulting in the lack of relevant indicators in CSR reports. Besides, the definition and evaluation of CSR still lack a set of widely recognized evaluation standards (Tschopp, Nastanski, 2013). It isn’t easy to compare the CSR levels of different companies, because the CSR indicators issued by each company or industry are various. Also, there is no corresponding regulatory agency to supervise and promote CSR efforts. Therefore, previous research of scholars are lacked a unified, scientific measurement index.

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