Stakeholder Prioritization, Strategic Corporate Social Responsibility and Company Performance: Further Evidence

Using KLD data on more than 900 company's performance over a nine-year period in seven areas of corporate social responsibility (environment, community, corporate governance, diversity, employee relations, human rights, and product quality), this research note re-tests Michelon et al. proxies for prioritization and strategic approaches to CSR. The results show that, when a company pursues CSR initiatives that are linked to stakeholder preferences and allocates resources to these initiatives in a strategic way, the positive effect of its CSR initiatives on financial corporate performance (CP) strengthen. The analysis of KLD's variance and top tiers is thus proposed as a parsimonious way to measure when companies link their CSR initiatives to salient stakeholder preferences and undertake the corporate social actions that are ultimately relevant to the company's strategy and financials.