This study investigates the effects on organization’s financial performances of, first, the extent to which the organizations are involved in controversial business activities, and second, their level of social performance. These companies can be considered non-socially responsible given the harmful nature of the activities they are involved in. Managers of these companies may still have incentives to pursue socially responsible actions if they believe that engaging on those actions will help them to achieve legitimacy and improve investors’ perception about them. We develop a comprehensive methodology to investigate these corporate social performance (CSP)-related effects in a complex but specific setting. To this end, we analyze a sample of 202 US firms for the period 2005–2008 using a novel method in this area: partial least squares. Our results indicate that, contrary to the general findings in prior literature, companies involved in controversial business activities which engage in CSP do not directly reduce the negative perception that stakeholders have about them. Instead, we found evidence of a positive mediation effect of CSP on financial market-based performance through innovation.

Although business ethics has a long history as a core theme within the realm of strategic management it has not received considerable attention in top strategy journals until recently. In this paper, we assess the state of business ethics research published over a 5-year period (2006–2010) in Strategic Management Journal to ascertain whether there has been an increase in business ethics research published in the top strategy outlet. The results of our content analysis reveal that ethics research in SMJ is indeed on the rise yet this research stream is still underrepresented with only 5.8 % of all articles published over the five-year period having an ethics theme. Moreover, the link between Corporate Social Performance and Financial Performance was identified as the top theme during the review period.

This paper examines how it is possible for firms in controversial sectors, which are often marked by social taboos and moral debates, to act in socially responsible ways, and whether a firm can be socially responsible if it produces products harmful to society or individuals. It contends that a utilitarian justification can be used to support the legal and regulated provision of goods and services in these areas, and the regulated and legal provision of these areas produces less harm than the real alternative—illegal and unregulated supply. Utilitarianism is concerned as much with harm minimisation as good maximisation, and both are equally important when it comes to maximising welfare (Bentham 1789, 1970; Mill [1863] 1964). Any adequate theory of CSR must, therefore, have the capacity to handle a business that minimises harm as well as those that more straightforwardly maximise good. In this paper we therefore attempt two tasks. First, we argue that the legal but regulated provision of products and services may be better from an overall utilitarian perspective than a situation in which these harmful or immoral goods and services are illegal but procurable via a black market. Porter and Kramer’s (2006) strategic CSR framework is then presented to describe how firms in these controversial sectors can act in socially responsible ways. This model highlights the importance of firm strategy in selecting areas of socially responsible behaviours that can be acted upon by firms in each industry.

This study starts from the observation that there are relatively few controversial issues in corporate social responsibility (CSR). Given its strong normative background, CSR is rather an atypical discipline, especially in comparison with moral philosophy or applied ethics. Exploring the mainstream CSR agenda, this situation was echoed by widespread consensus on what was considered to be “good practice”: reducing pollution, shutting down sweatshops, discouraging tax evasion, and so on. However, interpretation of these issues through the lens of moral pluralism unveils latent controversies. The moral appraisal of good practices within CSR depends on key moral concepts (such as harm, responsibility, intention, and consequences), which have various—and often incompatible—interpretations. In a nutshell, this article argues that from a moral pluralist standpoint, all CSR topics are potentially controversial.