A Study Investigating Corporate Social Responsibility (CSR) and Financial Performance of Retail Industry in the UK

Abstract

The study explored the empirical links between corporate social responsibility (CSR) and financial performance of four retail companies (Marks and Spencer, Tesco, Next and Primark) in the UK from 2006-2014. Prior studies have reported the relationships between CSR and financial performance generally as positive, negative or mixed, using either primary or secondary research methods, but the results have been inconclusive. This research has attempted to clarify these with deductive and mixed method approaches. First, donations, community work and carbon emissions were deducted from the literature and the companies’ websites, annual reports and CSR reports, as the CSR dimensions, and mapped out onto the companies’ revenue, operating profits and return on capital employed using correlation analysis. Second, 250 mall intercept survey questionnaires were administered to London retail shoppers and analyzed to explain their perceptions on the identified CSR dimensions and sales revenue of the selected retail companies. The secondary data was analyzed with correlations whereas primary data was explored with descriptive statistics and factor analysis. For both methods, the findings revealed a positive correlation between donations and sales revenue (perceived sales revenue) for all the companies except Primark where the donation criterion was not applicable. The implication of this is that, retail managers can imply philanthropic strategies to improve sales revenue. But, findings from both methods show negative correlation between carbon emissions and (perceived) sales revenue for both Marks and Spencer and Tesco whereas community work relates negatively with (perceived) sales revenue for Tesco. Methodologically, these provide some indications that retailers’ philanthropic activities can boost sales growth. Future research can widen the methodological approach to different sectors.