Chapter 3: Corporate Social Performance Needs More Competition not Less: An Idea for a Paradigm Shift in CSP

It has been almost 30 years since Ullman’s (1985) widely cited article “Data in Search of a Theory: A Critical Examination of the Relationships Among Social Performance, Social Disclosure and Economic Performance of Us Firms.” Yet, corporate social performance (CSP) (and corporate social responsibility [CSR] at large) is still in the search of such a theory (Margolis, Elfenbein, & Walsh, 2007; Orlitzky, Schmidt, & Rynes, 2003; Van der Laan, Van Ees, & Van Witteloostuijn, 2008; Wood, 2010).

Despite the large literature on the relationship between social performance (SP) and financial performance (FP) it is intriguing that the CSP literature still lacks a solid theory. More than 40 years have elapsed since the famous Friedman’s aphorism¹ which signaled the beginning of an extensive research regarding the SP-FP relationship. This research was productive in the way that it examined many levels of social responsibility (i.e., toward various stakeholders, see Wood (2010) for a comprehensive review), irresponsibility (Frooman, 1997) as well as a variety of measures of SP. It gave birth to the very interesting stakeholder theory (Freeman, 1984) and different theories on what it actually means for a firm to be socially responsible as well as why a firm would be socially responsible.