Walk the talk? How symbolic and substantive CSR actions affect firm performance depending on stakeholder proximity

Drawing on neo-institutional and stakeholder theory, this study examines the link between a firm’s corporate social responsibility (CSR) actions and its financial performance. The authors investigate whether and how a firm’s symbolic (“talk”) and substantive (“walk”) CSR actions, alone or combined, affect financial performance depending on the main stakeholder group they are directed at (i.e., high-proximity internal stakeholders such as employees versus low-proximity external stakeholders such as customers or the wider society). In a comparison of two domains targeting either high- or low-proximity stakeholders, results show that substantive/symbolic CSR actions have a positive impact/no impact on financial performance if directed toward high-proximity stakeholders, and that the opposite is true of actions directed at low-proximity stakeholders. Further, results show that low-proximity stakeholders have greater difficulty distinguishing between mere talk and real walk. The study relies on an international, cross-industry dataset from Thomson Reuters’ Asset4ESG and Datastream from 2002 to 2011