Corporate Social Responsibility

Although a positive relationship has been shown to exist between CSR and a firm's corporate financial performance, results from these analyses may need to be examined under different lenses for emerging and developed economies, especially since firms based in emerging economies oftentimes have weak firm-level governance.

For companies operating in emerging markets, engaging in CSR practices enables widespread reach into a variety of outside markets, an improved reputation, and stakeholder relationships. In all cases (emerging markets vs. developed economies), implementing CSR policies into the daily activities and framework of a company has been shown to allow for a competitive advantage versus other companies, including the creation of a positive image for the company, improved stakeholder relationships, increased employee morale, and attraction of new consumers who are committed to social responsibility. Despite all of the benefits, it is important to note that several drawbacks exist, including possible accusations of hypocrisy, the difficulty of measuring the social impact of CSR policies, and oftentimes placing companies at a disadvantage against competitors when prioritizing CSR ahead of advancing a company's R&D

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