1.0 What is a Literature Review and what does it achieve?

A literature review refers to both a summary and discussion of the complete and current place of knowledge on a specific area of study or topic as found in journal articles and academic books. However, it is a search of the literature of a particular topic and then evaluating it to establish what it talks about the problem under research. It discusses state of the art in consideration to the study topic being written about. It might also be an extensive study and analysis of the literature in connection to a particular research problem. It involves critical research and integration of data from numerous sources whereby it considers any literature gap that might call for future research. Literature is of two types, that is, a “stand alone” article review and a section of research report or proposal. A “stand alone” article review refers to where review articles give an overview, or a picture of recent research focused on a particular problem (Rowe 2014). It should be noted that review articles are published in journals related to academic work. On the other hand, a section of a research report or proposal involves a review of literature near the start of the document to give a context and the reason why the research was conducted. In our contemporary world, research reports will have an element of literature. Literature is inseparable from researching projects as far as academic research is concerned.

A literature review has a different achievement for learners and ordinary researchers. It achieves to point out the existing as well as establish theories in a particular study. It exposes the gaps that might be found in a given theory, and this makes it possible for further research to be conducted in the future. It also helps learners to access to study on a specific area by identifying good articles or journals that are related, meaningful and imperative and piecing them together to a good and complete research report. It is essential in providing a starting point for researchers who want to study a particular area. Nonetheless, it makes researchers avoid duplication of research in a specific problem. It helps researchers to get clues on where to conduct future research as well as giving hints on the focus areas during their actual research. A literature review is instrumental in highlighting the key findings in a particular problem. Finally, researchers can achieve a compelling analysis of the methods and techniques used by other researchers.

2.0 Literature Review on Corporate Social Responsibility

            Corporate social responsibility has been detailed explained in our contemporary academic literature. The academic literature has provided numerous interpretations of the concept thus enabling people to understand it better than before. Assertively, corporate social responsibility is understood as how a firm or firms deal with its environment. It helps people to understand business and society as one depends on the other. Society expects business to satisfy its wants or rather demands and therefore the firm should know that it has responsibilities to extend to the community. In the 1950s, the first book to acknowledge corporate social responsibility is the “Social Responsibilities of the Business” authored by Howard R. Bowen. The CSR became a common term among the people in 1970s. Multinational corporations which were as a result of globalization lead to the existence of corporate social responsibility.

2.1 Corporate Social Responsibility across Countries

            Corporate social responsibility which is popularly known as corporate citizenship, sustainable, responsible business or corporate social performance are a form of corporate self-regulation assimilated in the business model in which companies or firms manage the process of business to bring a positive effect on society (Dahlsrud 2015). The CSR has been differently defined in various countries. For instance, in Ghana, it is referred to as capacity building for sustainable livelihoods while in the Philippines, it is defined as giving back to society. In the United States, CSR is termed as a philanthropic activity in which companies donate parts of its profit to charitable causes in the community. The social responsibility of business involves ethical, economic, legal as well as discretionary expectations that society has of the organization at a particular period (Machi and McEvoy 2016). CSR is governed by a mechanical technique where business monitors and ensures law adherence and maintaining ethical standards.

2.2 Views on Corporate Social Responsibility

            Su and Jie (2015) view corporate social responsibility in three perspectives.

1. Sceptic perspective- The idea of corporate social responsibility is opposed to freedom and democracy according to this perspective. It is deemed to frustrate the focus of business on its objective of creating wealth.
2. Utopian perspective- the perspective argues that corporate social responsibility shows the notion that firms have a prior duty to any stakeholder touched by their work, for example, those people who might be negatively or positively affected by the operation of the company. According to Freeman and Evan works, corporations should respect as well as recognize the interests of the stakeholders within the vicinity of the company.
3. Realist perspective- Su and Jie (2015) assert that corporate social responsibility is about the integrity with which a company or a firm governs itself while fulfilling its mission and living by its values but not the expertise and funds of companies which they choose to invest in society to assist in solving social issues.

2.3 Key Drivers of Corporate Social Responsibility.

According to Su and Jie (2015) corporate social responsibility is viewed as a highly competitive driver that needs good resources. The programs of CSR have their main contributors or drivers.

1. Bottom Line Effect- The driver involves a socially responsible element in corporate practice. Numerous firms show corporate citizenship through philanthropy. The success of a business corporation is currently gauged and defined by examining businesses by use of “triple bottom line” which involves financial environmental and social performance.
2. Influence of the Corporation Disasters- Senior officials in business corporations have shown selfish behavior which has negatively affected their daily operations. Corporate social responsibility has come in the restore order and integrity in the business corporations. Kraus and Brtitzelmaier (2012) in his work asserted that corporations are moving away from philanthropic strategy towards corporate social responsibility and are shifting towards the alliance of corporate social responsibility with corporate governance and business approach.
3. Customer Loyalty- in our contemporary business, firms have invested in building as well as maintaining the loyalty of customers. Kraus and Brtitzelmaier (2012) argued that customer loyalty could be developed through initiating corporate social responsibility programs which offer a competitive advantage in the market where they will find ethically produced products and services.
4. Lower Equity Risk Premium and Reputation Management- Bad corporate reputations and brands lead to damage to the economy when customers boycott their products and services. Intensive corporate social responsibility programme lowers equity risk premium of a firm. Companies are faced with numerous reputational as well as legal risk if they fail to have sufficient social responsibility measures standby.

                                                              2.4 Theoretical Review

           A theoretical review can be developed around various theories that came to discuss the rationale behind environmental reporting over a specified period.

1. Operational Efficiency Theory- This theory happens when the correct combination of individuals process and technology to enhance the output and value of any operation of business while reducing the operational cost to the required level (McWilliams et al. 2016). In the purview of corporate social responsibility, desired operational cost can be realized through minimizing risks as well as liabilities effectively through tools of CSR.
2. Legitimacy Theory- In this theory, the corporations regularly aspires to ensure that they work within limits and the norms of their societies and the other parties view their operations as being legitimate. It should be noted that business is given power and legitimacy by the community to operate within their environment. According to Kraus and Brtitzelmaier (2012), the theory of legitimacy is essentially a system-oriented theory in which corporations are seen as part of the larger social environment where they operate.
3. Agency Theory- The theory seeks to explain the connection that exists between the shareholders and the management. , and therefore issues like the moral hazard and conflict of interest might happen. Corporate social responsibility comes in between the two parties so that they can reap maximum gains form the investment.
4. Stakeholder Theory- An essential characteristic of corporate social responsibility comprises the manner at which a firm collaborates and engages with its supporters or stakeholders such as employees, shareholders, communities, and customers. Firms may engage stakeholders to know the needs of the society where they are operating from. Ideally, corporate social responsibility promotes the relationship between companies and communities. Proper corporate social responsibility improves the strengths of firms since it would build effective support from the community as a whole.

2.5 Corporate Social Performance (CSP)

In the modern competitive market environment, business is faced with numerous challenges. Companies must bridge both the social and economic systems for survival and prosperity. CSP is instrumental in capturing the business performance in the social realm thus allowing us to think about corporate social responsibility (McWilliams and Siegel 2010). Corporate social performance is a business firm’s configuration of principles of policies, social responsibility, and processes of social responsiveness as they intertwine to the social relationships of the firm.

2.6 Corporate Financial Performance

            Mostly, businesses operate with the primary motive of earning profits. The financial performance of a firm is depicted through its policy programs and monetary terms operations. The outcomes are shown through the return on investments, assets, sales, and value added. Managers aspire to operate in the best interest of supporters of the business to yield maximum profits. Financial performance is the only element of gauging the wealth of a firm. If a company wants to make huge profits, it must involve all the stakeholders in its operations (Porter and Kramer 2013. Satisfying the community is one of the most adored ways of influencing the wealth of a corporation. Satisfaction can only be realized through proper corporate social responsibility.

2.7 Corporate Social Performance and Corporate Financial Performance

            The study shows that the two concepts have a positive correlation despite other producing contradictory outcomes. There is the various competing theoretical version which explains three different findings on the connection of corporate social performance and corporate financial performance. For instance, Hockerts and Morsing (2011) suggest a unified theory of the connection of CSP and CFP that discusses the various relations that may be viewed between the corporate social responsibility and corporate financial performance hence leaning itself on the parallels between the corporate social responsibility domains and business. The concept of corporate social responsibility renders corporations to have a moral responsibility towards the community. Proponents of corporate social responsibility advocated for corporations to be socially responsible for practical and ethical reasons since it promotes its performance. Corporate social responsibility activities reward customers who may in return show loyalty to the company products.

2.8 Empirical Review

Here, works and methods used by research are reviewed in a relationship with corporate financial performance and corporate social performance. Empirical outcomes on the relationship between these concepts are mixed to produce a positive, negative while others may show non-significant relationships. From the stakeholder perspective, numerous versions on the relationship of CFP-CSP have been suggested in which the most significant number of the study shows a positive correlation between CSP and CFP. Different computational methods have been used to analyze CFP AND CSP indexes because both data cannot be obtained in the absolute figure. Research conducted by Fakay and Buragohain (2015) produced a positive relationship between CFP and CSP. CSP index was computed using eight attributes, consistently rated across all standards and poors 500 by a rating service (Fakay and Buragohain 2015). They were related to stakeholder concerns. The financial performance of the firm was measured by use of return on asset, return on sales and return on equity variables of accounting. The three variables of accounting were used to measure the CFP by the community investment. The control variables were factors like size, risk, and industry which merely affected both CFP and CSP. The three accounting variables were used on 469 firms together with CSP as dependent and independent variables. The outcomes depicted that CFP does depend on CSP and vise versa. The results also revealed that it is imperative to prevent an industry or firm from assessing such a relationship.

Reference List

Dahlsrud, A., 2015. How corporate social responsibility is defined: an analysis of 37 definitions.

Corporate social responsibility and environmental management, 15(1), pp.1-13.

Fakay, Y. and Buragohain, B., 2015. Corporate social responsibility: a review of the literature.

Hockerts, K. and Morsing, M., 2011. A literature review on corporate social responsibility in the innovation process. Copenhagen Business School (CBS), Center for Corporate Social Responsibility, pp.1-28.

Kraus, P. and Brtitzelmaier, B., 2012. A literature review on corporate social responsibility: definitions, theories, and recent empirical research. International Journal of Management Cases, 14(4), pp.282-296.

Machi, L.A. and McEvoy, B.T., 2016. The literature review: Six steps to success. Corwin Press.

McWilliams, A., Siegel, D.S. and Wright, P.M., 2016. Corporate social responsibility: Strategic

Implications. Journal of management studies, 43(1), pp.1-18.

McWilliams, A. and Siegel, D., 2010. Corporate social responsibility and financial performance:

Correlation or misspecification?. Strategic management journal, 21(5), pp.603-609.

Porter, M.E. and Kramer, M.R., 2013. The link between competitive advantage and corporate social responsibility. Harvard business review, 84(12), pp.78-92.

Rowe, F., 2014. What literature review is not: diversity, boundaries and recommendations?

Su, R.J. and Jie, X.W., 2015, January. Literature Review on Corporate Social Responsibility. In 2015 International Conference on Management Engineering and Management Innovation (icmemi-15). Atlantis Press.