Are social and environmental practices a marketing tool? Empirical evidence for the biggest European companies

Abstract

Purpose

The purpose of this study is to analyse whether CSR practices performed by European companies (both those CSR practices related to marketing‐based strategies and those that are not) create value. That value creation will be gauged through two variables: reputation and shareholder value creation.

Design/methodology/approach

To carry out this research, the 120 biggest European companies whose CSR practices have been analysed by Deloitte and Kinchhoff in The Good Company Ranking were taken. European firms have adopted an active stance on CSR and their organisational aspects and responsibilities related to sustainability are better‐founded compared with other companies. Financial data and reputation were obtained from the Forbes and Fortune websites, respectively.

Findings

The findings obtained show that all CSR practices, especially those linked to enhancing a company's image, have a positive effect on shareholder value creation, given that investors are able to detect the level of corporate commitment to sustainable development. On the other hand, none of the typologies of CSR practices undertaken have a relevant influence on corporate reputation.

Originality/value

The results of this study advise managers to design their CSR strategies with an orientation to increasing corporate reputation through large investments in CSR which prevent them from being imitated by direct rivals.

Citation

Gallego‐Álvarez, I., Prado‐Lorenzo, J., Rodríguez‐Domínguez, L. and García‐Sánchez, I. (2010), "Are social and environmental practices a marketing tool? Empirical evidence for the biggest European companies", Management Decision, Vol. 48 No. 10, pp. 1440-1455. https://doi.org/10.1108/00251741011090261