Abstracts Category : Other

Impact of Corporate Social Responsibility on Financial Performance in the Pharmaceutical Industry

by Stephen A Adamu

Many studies have examined the association between corporate social responsibility (CSR) and corporate financial performance, but scholars argue that the exact relationship between CSR and corporate financial performance remains unclear. This quantitative study examines the impact of CSR on corporate financial performance in the pharmaceutical industry. The study addresses the research question: What is the financial performance in the pharmaceutical industry among companies that have embraced CSR? The alternative hypothesis predicted positive correlations between financial performance and CSR. The related null hypotheses predicted that there would be no correlations between any of 8 dimensions of CSR and corporate financial performance. Archival data from 18 leading global pharmaceutical companies ranked by Access to Medicine Index were used to answer the research question. In 4 of the 8 hypotheses tested, the results show partial support for a positive effect of CSR on corporate financial performance in the pharmaceutical industry based on significant correlations in 2014. Specifically, significant 2014 relationships with corporate financial performance were observed for CSR general access to medicine management, CSR capacity advancement in product development and distribution, CSR product donations and philanthropic activities, and overall CSR. However, no significant 2014 relationships with corporate financial performance were observed for CSR public policy and market influence, CSR research and development, CSR pricing, manufacturing, and distribution, and CSR patents and licensing. In the 8 hypotheses tested, the findings in 2012 did not show any effect of CSR on corporate financial performance in the pharmaceutical industry. The results of this study suggest at the minimum, that CSR does not negatively impact corporate financial performance in the pharmaceutical industry. This study does not support arguments against product donations and philanthropic activities. The partial support for a positive effect of CSR on corporate financial performance and no negative impact of CSR on financial performance in the pharmaceutical industry, could encourage corporate leaders to pay attention to, not only their corporate financial profits, but also ethical, environmental, and social issues such as improving the access to medicines; and contributing to improving society.