CSR Portfolio Complexity and Firm Performance: Assessing the Moderating Effects of Slack Resources

Introduction

Considering the diversity and strength of stakeholders in today’s environment, organizations continuously seek to address stakeholder concerns by engaging in socially and environmentally responsible practices that align with diverse stakeholder demands. Furthermore, the salience of particular stakeholders is likely to change over time depending on changes in the market, stakeholder interests, and organizational strategies (Ali, 2017). Considering the diversity and volatility of stakeholder demands, organizations face a challenging environment when identifying and leveraging resources to address stakeholder concerns. As firms determine strategies and engage in particular actions in regard to corporate social responsibility (CSR), it is important for firms to strategically identify and engage in a portfolio of CSR that yields mutually beneficial results for the firm and its stakeholders.

Fortune 500 firms have been reported to spend a total of around $20 billion per year on CSR-related activities (Meier and Cassar, 2018). These investments are distributed across a broad range of stakeholder issues and concerns, including educational, environmental, governance-related, and other socially responsible activities. While research has found significant relationships between CSR and financial performance, scholars also suggest that the existing results and effect sizes of relationships provide evidence that there is much to be explored in the relationship between CSR and firm performance (Vishwanathan et al., 2020). Whereas some organizations focus their socially responsible donations and efforts towards consistent partnerships among a narrow group of stakeholders, other organizations often seek to diversify their CSR and philanthropic efforts across a wider range of stakeholders and issues (Seo et al., 2021). This perspective of examining the diversity and changing nature of a firm’s CSR efforts in relation to firm performance has recently emerged as an area of interest to scholars, and numerous questions regarding how a firm leverages a CSR portfolio remain to be explored.

While some scholars have viewed CSR as an aggregate summation of actions, other research has emphasized the importance and impacts of individual CSR strategies and actions. What has yet to be fully developed, however, is a holistic perspective that views a firm’s CSR actions as an integrative and diverse portfolio of distinct projects and actions (Salazar et al., 2012). Similar to the ways in which a firm leverages a complex repertoire of competitive actions to outperform rivals (Connelly et al., 2017; Ferrier and Lyon, 2004), organizations are likely to pursue a CSR portfolio with greater breadth to identify mutually beneficial CSR actions that meet the diverse and changing needs of stakeholders (Brower and Mahajan, 2013; Turner et al., 2021). While the existing literature provides significant insights into the performance outcomes associated with the aggregate sum of a firm’s CSR efforts or the specific impacts associated with individual CSR actions, questions remain regarding the extent to which a firm’s management of CSR actions as an interdependent portfolio of actions relates to firm performance. As such, the present study seeks to address these key questions at the intersection of the literatures addressing broad and specific forms of CSR: How does the complexity of a firm’s CSR portfolio impact firm performance? In particular, how do CSR portfolio measures such as CSR volume, diversity, and dynamism directly and indirectly impact firm performance outcomes?