The Value of Good: Do Top Corporate Citizen Firms Dare to Care in Hard Times?

The goal of the modern corporation is often debated as a choice between economic responsibility to shareholders (Milton Friedman, 1970) and social responsibility to society (Frederick, 1994; Freeman, 1984). This debate is the underpinning of diverse shareholder theory versus stakeholder theory. A study of executive attitudes to social responsibility finds these executives strongly assert in addition to making a profit, business should help to solve social problems whether or not business helps to create those problems (Holmes, 1976). However, firms with a reputation for better social performance do not always perform better financially (Peloza, 2009). Furthermore, while managers may desire to achieve outstanding financial and social performance, their desire and ability to achieve both is debatable, especially during periods of crisis. This study evaluates the financial benefit to investors of acclaimed Top Corporate Citizen firms during recent financial crises to assess whether socially-oriented firms abandon social agendas when financial performance is threatened. The results provide insight into which stakeholders and social issues suffer during periods of financial crisis. For these top corporate citizen firms, the results indicate investor financial benefits differ during periods of market crisis, but these firms’ better social agendas do not suffer. During periods of crisis, these socially conscious firms do exhibit a trade-off between “doing good” and “doing well”