Assessing the relation between corporate social responsibility and firm performance in the European food and beverage industry

This thesis developed tools and generated insights that help accurately benchmark firms’ performance in the presence of CSR. First, an aggregation method to construct a composite measure of CSR was described. The methods to integrate and aggregate individual indicators, which capture different facets of CSR help to manage and document sustainability improvements. Second, a dynamic by-production framework was developed with the aim of specifying a technology that best captures the link between production of desirable outputs(conventional and socially responsible outputs) and by-products (socially undesirable outputs). The framework captures the trade-offs between outputs and helps provide a more accurate representation of the production process. The empirical application focused on a sample of European food and beverage industry. The results provided insight into inefficiency related to the generation of CSR outputs and confirm the importance of accounting for adjustment costs in quasi-fixed inputs. Moreover, the results of the empirical application showed that there was a decline in dynamic Luenberger indicators mainly due to technical inefficiency change. This implies that firms should devise strategies to  improve resource use and enhances the utilization of resources. Lastly, the relationship between CSR and investment inefficiency was examined using stochastic frontier approach which aptly characterizes CSR as having a downward pull on firm level investment efficiency. We applied the approach to a sample of European listed companies, providing robust evidence that high CSR performance reduces investment inefficiency. This result is in line with the view that high CSR firms are characterized by low information asymmetry and high stakeholder solidarity, which may represent a source of competitive advantage that helps to reducing investment inefficiency. The results imply that  the implementation of CSR strategies is crucial to improve firm growth and safeguard interests of different stakeholders. This study contributes to a better understanding of the value of CSR and provides arguments for regulatory bodies to promote CSR activities