HOW CAN CORPORATE SOCIAL RESPONSIBILITY (CSR) EFFECT COMPANY PERFORMANCE

Abstract

Companies faced with complex market conditions, external effects and asymmetric information can lead to market failures and optimize profits. In the literature, market failure can build the theoretical basis for the implementation of corporate social responsibility (CSR) of companies. In fact, companies in competitive markets can use CSR as a management tool to gain more profitable through diversification. Furthermore, the implementation of social responsibility requires the detection of future trends and developments that make the company more stable for the unexpected events. Therefore, CSR can offer companies the chance to achieve higher profits they would receive without CSR. In addition, CSR can lead to higher costs and thus the financial performance worse. Many research are taken in which the method of study is quantitative or using the KLD data base. In this study, I will examine the relationship of CSR and financial performance in different view and different method. Those issues will be improved by the case of Vedan in Vietnam. This is a very clear example of the relationship between CSR and Financial performance.