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- Category: Politics: Moral Issues
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Journal of Business Ethics (2007) 76:335–346 DOI 10.1007/s10551-006-9285-0
Ó Springer 2007
The Creation of Value Through Corporate Reputation
´ ´ ´ Jose Luis Fernandez Sanchez ´ Ladislao Luna Sotorrıo
ABSTRACT. The relationship between social and financial performance (CSP – FP) has been a main objective in the literature on business management, as it would provide an economic justification for the social investment insofar as it contributes to the creation of value. This relationship has been empirically tested by several authors though without using a theoretical model that sustains this relationship. The aim of this article is to propose a theoretical model of the process of the creation of value from the reputation generated by companies, integrating the factors that have been shown to be more relevant in this process from previous research, in such a way that hypotheses are put forward regarding the existence of this relationship and the factors that determine it. Finally, an empirical test is performed using the 100 most prestigious companies operating in Spain during 2004. KEY WORDS: social performance, financial performance, corporate reputation, stakeholder theory, value management, intangible assets
Introduction In the last 30 years companies have been showing a growing interest in integrating social aspects into their strategies with the aim of achieving sustainable development. This process originates from the belief that a social strategy or corporate social responsibility (CSR) provides an increase in social performance (CSP) and brings with it an improvement in the financial performance (FP) of the company, thus forming the central paradigm of the social responsibility of the company (CSR – CSP – FP). In this paradigm a priority objective has been to test the relationship between social and financial performance (CSP – FP), as it would provide an economic
justification for the social investment insomuch as it contributes to the creation...
Ó Springer 2007
The Creation of Value Through Corporate Reputation
´ ´ ´ Jose Luis Fernandez Sanchez ´ Ladislao Luna Sotorrıo
ABSTRACT. The relationship between social and financial performance (CSP – FP) has been a main objective in the literature on business management, as it would provide an economic justification for the social investment insofar as it contributes to the creation of value. This relationship has been empirically tested by several authors though without using a theoretical model that sustains this relationship. The aim of this article is to propose a theoretical model of the process of the creation of value from the reputation generated by companies, integrating the factors that have been shown to be more relevant in this process from previous research, in such a way that hypotheses are put forward regarding the existence of this relationship and the factors that determine it. Finally, an empirical test is performed using the 100 most prestigious companies operating in Spain during 2004. KEY WORDS: social performance, financial performance, corporate reputation, stakeholder theory, value management, intangible assets
Introduction In the last 30 years companies have been showing a growing interest in integrating social aspects into their strategies with the aim of achieving sustainable development. This process originates from the belief that a social strategy or corporate social responsibility (CSR) provides an increase in social performance (CSP) and brings with it an improvement in the financial performance (FP) of the company, thus forming the central paradigm of the social responsibility of the company (CSR – CSP – FP). In this paradigm a priority objective has been to test the relationship between social and financial performance (CSP – FP), as it would provide an economic
justification for the social investment insomuch as it contributes to the creation...