مسئولیت پذیری اجتماعی شرکت ها و چسبندگی قیمت Corporate social responsibility and cost stickiness

۱٫ Introduction We examine the effect of firms’ CSR involvement on cost stickiness, where “…costs are sticky if the magnitude of the increase in costs associated with an increase in volume is greater than the magnitude of the decrease in costs associated with an equivalent decrease in volume” (Anderson, Banker, & Janakiraman, 2003, p. 48). The conventional model of cost accounting, as well as activity-based costing, posits that costs are proportional to the cost drivers (Noreen, 1991). However, subsequent research has found a more complex relationship between cost and activities whereby some costs rise more when activity increases but do not fall proportionately with a decrease in activity (Cooper & Kaplan, 1998). Anderson et al. (2003) use firm-level selling, general, and administrative (SG&A) expenses as cost components, and confirm cost stickiness.1 We examine a hitherto unexplored determinant of cost stickiness: firms’ involvement in CSR activities. Based predominantly on agency and stakeholder theory, some studies have argued that employing valuable firm resources to engage in CSR can have significant managerial benefits, (Freeman, 1984; Wartick & Cochran, 1985; Wood, 1991). CSR can also have a positive impact by providing better access to valuable resources (Cochran & Wood, 1984; Waddock & Graves, 1997) and by attracting and retaining higher-quality employees (Greening & Turban, 2000; Turban & Greening, 1997), thus allowing for better marketing of products and services (Fombrun, 1996; Moskowitz, 1972), and creating unforeseen opportunities (Fombrun, Gardberg, & Barnett, 2000). Furthermore, CSR involvement can mitigate the likelihood of negative regulatory, legislative, or fiscal action (Berman, Wicks, Kotha, & Jones, 1999; Freeman, 1984; Hillman & Keim, 2001), attract socially conscious consumers (Hillman & Keim, 2001), or attract financial resources from socially responsible investors (Kapstein, 2001). These benefits are presumed to offset the higher costs associated with CSR, “because resources must be allocated to allow the firm to achieve CSR status” (Siegel & Vitaliano, 2007) (italics added). On the one hand, Friedman (1970), describes CSR involvement as being value destroying for investors, thus predicting a negative relationship between CSR involvement and firm value. For instance, Preston and O’Bannon (1997) discuss the managerial opportunism hypothesis, and argue that managerial self-serving interests might lead to CSR overinvestment: an act detrimental to the interests of stakeholders and likely to create a competitive disadvantage, affecting firm value negatively (Benabou & Tirole, 2010). Both these views allude to long-term CSR investment, which is as much a response to external pressure as it is to firm-level resources. The level of resources that will be devoted to CSR activities in the short-term depends mainly on the accessibility of resources not required for other purposes. From a cost behaviour perspective, it is interesting to explore the CSR cost behaviour pattern: in particular the presence or absence of cost stickiness. The theoretical perspective on cost stickiness relies on the notion that many costs, including investments on CSR-related activities, arise from managers’ deliberate resource commitment decisions, and adjustment costs associated with changing resource commitments make costs ‘sticky’ (e.g., Anderson et al., 2003). When activity levels decrease, managers may be reluctant to downsize CSR resources, e.g., contribution to charities, supporting housing and education programs and the like. By contrast, when activity levels increase, managers have to make additional investments in CSR-related activities, e.g., additional investments to minimise environmental degradation. Therefore, to the extent that managers recognize the trade-offs arising because of adjustment costs, they will reduce CSR investments to a lesser extent when activity decreases than they will expand CSR investments when activity increases, generating cost stickiness (Anderson et al., 2003; Banker, Byzalov, & Chen, 2013). This effect is likely to be more pronounced for firms with positive CSR involvement: voluntary corporate actions designed to improve social conditions (Mackey, Mackey, & Barney, 2007); than for firms with controversial (negative) CSR involvement. The former allows firms to tap into valuable resources and to attract and retain high quality employees, among other positive factors, and the long-term investments to create and maintain these may be subject to lesser downward adjustment. However, some firms will be associated with a “…set of corporate actions that negatively affects an identifiable social stakeholder’s legitimate claims in the long run” (Strike, Gao, & Bansal, 2006, p. 852). Negative CSR can be considered as a cost-saving strategy at the cost of reduced stakeholder value (Kotchen & Moon, 2012). We expect CSR costs of such firms to exhibit cost anti-stickiness behaviour, i.e., costs increase less when activity rises but decrease more when activity falls by an equivalent amount). We use firm-level CSR scores from Kinder, Lydenberg, Domini Research & Analytics (KLD) database. Although KLD does not provide the actual dollar investments associated with CSR activities, KLD derive their scoring after careful evaluation of firm-level CSR activities. Waddock & Graves (1997), note that “…where possible, KLD uses quantitative criteria to determine the rating (e.g., $ amount paid in fines or penalties; % of employees receiving certain kinds of benefits).” Kempf and Osthoff (2007) also used KLD data in exploring the effect of socially responsible investing on portfolio performance. Some other papers that use KLD data to denote environmental investment, for example, include Kim and Statman (2012), and deVilliers, Naiker, & van Staden (2011). Firms demonstrating CSR strengths are characterised by the KLD scoring system as using innovative remediation products, providing environmental services, manufacturing products that promote the efficient use of energy, and having in place strong pollution prevention programs including both emissions reduction and toxic-use reduction programs. These activities require continued investments that are part of the firm-level operating costs (the outcome variable in the cost stickiness model). We use two different CSR proxies and two KLD-generated scores on positive CSR activities (CSR_STR), as well CSR activities of concern (CSR_CON). We find that CSR-related investments exhibit cost stickiness, as they decrease less with a decrease in firm revenue, an effect that is primarily attributed to firm-year observations with positive CSR involvement. On the other hand, firm-year observations with negative CSR involvement exhibit cost antistickiness. The use of an aggregate CSR score might mask the effect of each CSR dimension on cost stickiness (Attig, Cleary, El Ghoul, & Guedhami, 2014; Galema, Plantinga, & Scholtens, 2008), since CSR is, by definition, a multidimensional construct (Carroll, 1979). Therefore, we examine cost stickiness for the components of CSR, namely: environment-related CSR, employee-related CSR, product-related CSR and, finally, community-related CSR. Consistent with our main results, we find costs to be sticky for the positive CSR involvement observations in these individual categories. However, the anti-cost-stickiness argument for these individual categories is not supported. We contribute to extant literature in a number of important ways. First, our findings enrich the CSR literature by documenting managerial trade-offs regarding resource adjustments. To the best of our knowledge, ours is the first study to use CSR as a contextual variable affecting cost stickiness. Second, we follow recent research on CSR to theoretically and empirically distinguish the negative aspects of CSR from the positive ones (Godfrey, Merrill, & Hansen, 2009; Kotchen & Moon, 2012; Muller & Kräussl, 2011; Strike et al., 2006), and investigate the CSR-related cost behaviour patterns on these two aspects separately. Third, we contribute to the cost stickiness literature, since costs are a fundamental determinant of earnings, and it would be useful to understand variables, like CSR, that might have an impact on cost behaviour. The remainder of the paper proceeds as follows. Section 2 reviews the related literature and develops testable hypotheses. Section 3 explains research design issues. The following section provides our sample selection procedure and descriptive statistics. We report the main test results in Section 5. Section 6 concludes the paper.