Corporate Social Responsibility Does Not Always Last

Some people may think that being morally responsible on a Monday gives them license to act immoral on Tuesday. This is what researchers (Ormiston & Wong, 2013) found in their study of Fortune 500 companies. Specifically, a firm’s past corporate social responsibility was positively related to future corporate social irresponsibility. Further, the more moral a CEO appears in public, the stronger this relationship is.

In their study, the researchers examined 49 companies from the Fortune 500, and the data was obtained from a previous study that had examined the relationship between CEO characteristics, management team processes, and firm performance. Kinder, Lydenberg, Domini Inc.’s social ratings scale served as the measure of corporate social responsibility and corporate social irresponsibility. This ratings scale looks at behaviors within the domains of community relations, diversity, employee relations, environment, product, corporate governance, and human rights. Ratings by research assistants based on publicly available information about the CEO’s behavior served as the indicator of moral behavior. The behavior of the CEO was rated according to items such as “Is giving, generous towards others,” “Behaves in a sympathetic and considerate manner,” and “Makes moral judgments; judges self and others in terms of right and wrong.”