Interrelationship between the Corporate Social Responsibilities Activities and the Corporate Financial Performance: Comparative Analysis of IBM, Dell and Intel across the Timeline of 2012-2018
Table of Contents
- Introduction 4
1.1Research Aim 4
1.2 Research Questions 4
1.3 Research Variables 5
- Literature Review 5
2.1 The relationship between performance of firm along with CSR expenditure of the companies including DELL, IBM and Intel 5
2.3 Association of CFP with CSR 7
- Research Methodology 7
3.1 Research Paradigm 7
3.2 Method of data collection 7
3.3 Technique of data Analysis 8
3.4 Research Limitations 9
3.5 Timeline of research 9
Reference List 15
Appendices 17
1.Research Topic-
Interrelationship between the Corporate Social Responsibilities Activities and the Corporate Financial Performance: Comparative Analysis of IBM, Dell and Intel across the Timeline of 2012-2018
- Introduction
This primary focus of this study is to identify the impact of Corporate Social Responsibilities on the performance of organisation including IBM, Dell and Intel across the timeline of 2012 to 2018. Over the past 30 years, CSR has seen to have emerged and occupying a significant role in specific aspects of the organization. This specific research aims to examine the effect of CSR activities on the performance related to cost, quality, flexibility and delivery of organisations including IBM, Dell and Intel. The researcher for this particular study would deal with the importance of CSR activities for the given organisations and would be using secondary research technique through applying realism research philosophy and descriptive research design.
The objectives of the research are given below:
The relationship between the Corporate Social Responsibility expenditure and firm performance of the companies IBM, Dell and Intel.
To investigate into the factors, this can promote the financial performance of IT companies including Intel, DELL and IBM.
To investigate interrelationship between CFP and CSR activities for promoting financial performance of IT industry.
2.1Research Aim
The aim for this specific research is to identify the interrelationship between Corporate Social Responsibility activities and the Corporate Financial Performance of the IT organisations including IBM, Dell and Intel across the timeline of 2012 to 2018.
2.2 Research Questions
The main research questions for this research are as follows:
The primary question is given below:
What is the connection between CSR expenditure along with firm performance of the companies including IBM, Dell and Intel?
The secondary questions are as follows:
What are the factors, which can promote the financial performance of IT companies including Intel, DELL and IBM?
Is there any interrelationship between CFP and CSR activities for promoting financial performance of IT industry?
Is there any recommended strategy for the improvement of the financial performance while maintaining the CSR guidelines?
2.3 Research Variables
Independent Variable: Corporate Social Responsibility (CSP)
Dependent Variable: Corporate Financial Performance (CSR)
This study would analyze CSR activities of organization including Dell, Intel and IBM and its effect on their Corporate Financial Performance including their net profit, financial report, annual revenue, and equity ratio, liquidity of cash, current assets and sales profit.
- Literature Review
The literature review forms the most crucial part of a research. Understanding the various aspects of CSR actions along with its effect on the organization’s performance of is important for this study. CSR has been seen to have emerged and occupying a significant role in specific aspects of the organization.
3.1 The relationship between performance of firm along with CSR expenditure of the companies including DELL, IBM and Intel
The literature consists of mixed results related to the relationship between the corporate financial performances along with CSR. In accordance with the neo-classical theory, Corporate Social Activities have negative effects on the financial performance of an organization. However, in accordance with the theory of stakeholder, companies need to have good relationship with all their stakeholders. Therefore, according to Graafland and Smid (2019), it has been seen that socially responsible companies like Intel, Dell and IBM seem to get better financial returns, which can be done by indirect effects, such as recruiting efficient employees or through developing more capital.
Empirically, the relationship between the financial performances of organisations including Intel, Dell and IBM along with their corporate social responsibility activities has been investigated by many studies. Although a optimistic relationship between the financial performance of the chosen organisations along with the corporate social responsibility studies, have been documented by data, which have been conducted for gaining insight into companies’ corporate social responsibilities activities, there is some contradictory evidence as well. As opined by Hopkins (2017), organisations having older assets are assumed to build their plans within a period when there used to be less severe regulatory constraints. Vveinhardt and Zygmantaite (2015) have stated that those organisations are less likely to adopt social changes, which have older assets. In accordance with Wang et al. (2015), it can be said that five most commonly applied accounting measures can be applied in the corporate financial performance plus the corporate social performance for showing the outcome of the correlation between financial performances of organization and corporate social responsibility activities, which can be predetermined due to prior use of measures. From the measures, the positive relationship between CSR and CFP of Intel, IBM and Dell have been seen. Assaf et al. (2017) have stated that those studies conducted for gaining a detailed insight into the effect of the Corporate Social Activities on the financial performance on the organisations had not taken the role of R & D into consideration, thereby leading to biased estimates regarding the effect of the CSR. In terms of the chosen organisations, R & D have been taken resorted to. According to Nollet et al. (2017), the effect of the CSR regarding the performance of company on finances have been found neutral after considering the expenditures of R & D in terms of Intel, Dell and IBM. In a similar way, the effect of size on the relationship between regarding the performance of company on finance plus corporate social responsibility activities had been taken into consideration by Ortas et al., (2015).
According to Boesso et al. (2017), 128 empirical evidences have been taken out which have reported that a positive relationship between organization’s financial performance and corporate social responsibility activities have been found by 59%, whereas a negative relationship had been found out by 14% and no relations hip had been found out by 27%. With the usage of reputation as proxy for corporate or environmental social responsibilities, a positive relationship is seen between financial outcomes and CSR of the chosen companies. Through the usage of corporate charitable giving as a proxy, CSP has been used by Assafet al., (2017). According to Cavazotte and Chang (2016), higher financial performance are seen to be given by those firms like Dell, Intel and IBM whose CSP are both high and low, with the poor social performers, who are doing their best in the short run unusually and better social performers giving their best unusually in the long run. Chen et al. (2019), has used additional variables, which are level of differentiation and innovation in linking firms’ performance after incorporating CSR. According to Nwaneri (2015), there is an optimistic relationship among the financial performance and CSR activities of firms. Multinational Companies are seen to be adapting CSR more in order to have enhanced financial performance. In accordance with ISE-100 Index CSR activities are positively connected with the firms’ financial performance. Hence, it can be said that the impact of Corporate Social Responsibilities Activities on firms’ financial performance can either be positive or negative. However, Corporate Social Responsibilities Activities are more likely to affect firms’ financial performance effectively. In terms of the chosen organisations like Dell, Intel and IBM, there is a positive relationship between CSR and CFP.
3.2 Association of CFP with CSR
It is necessary to maintain the guidelines regarding CSR for expanding area of business operation. The evaluation of the sales along with the revenue report and the gross profit of Intel, Dell and IBM would enable researchers in developing a concept on the CFP of any industry. For improving the stakeholder engagement, which seems to be a necessary component to build the CSR activities giving knowledge on the necessity of possible activities is crucial. Ho (2017), has said that increase in the participation of Intel, Dell and IBM to maintain the corporate social responsibilities would be enhanced by their financial performance and development.
- Research Methodology
4.1 Research Paradigm
According to Flick (2015), a guideline for proceeding with further research work would be provided through determination of a specific research design. In this study, the researcher would use realism as research philosophy as the premise of business conduct is related to the real issue. Besides, a descriptive design would be used. Moreover, a deductive approach would be followed as the entire research process would be dependent on data from secondary sources for the establishment of the relationship between dependent as well as independent variables. The research would take resort to deductive method as statistical output regarding secondary data, which can be evaluated on the activities related to CSR and CFP of three IT companies including Dell, IBM and Intel.
4.2 Method of data collection
Data is needed to be collected after the determination of the variables in an assembled format in order to avail the data readily while analyzing. For Corporate Financial Performance, which is of financial value, income statement of IT companies including Dell, IBM and Intel would be analysed. The financial report of Dell, Intel and IBM of the year 2012-2018 would be analysed. From the income statement, factors such as revenue, net profit, operating income, gross margin, and net income, operating expense and others within the year of 2017-2018 of IT companies including Dell, IBM and Intel would be identified and analysed. In order to collect the revenue data, from each annual report, the first row of the income statement would be collected and assembled. For collecting data of corporate social responsibilities of Dell, IBM and Intel, their human resource activities, consumer behaviour, Ethical Labour Practices and Investment in environment would be analysed.
4.3 Technique of data Analysis
Here dependent variable is CSR (Corporate Social Responsibility) and independent variable is CSR (Corporate Financial Performance). Financial data from the year 2012 to the year 2018 has been chosen of Dell, IBM and Intel for the purpose of data analysis.
1st Analysis- CAGR Calculation
CAGR calculation helps to understand the growth rate of the companies from the year 2012 to the year 2018. This would help to understand the perceived growth rate of the three companies.
2nd Analysis- Correlation Analysis
Correlation analysis has been used to understand the variation between both the variables. It also helps to understand the links and relationship along with changes that is associated with both the variables dependent and independent. Causality between both the variables cannot be determined with the help of correlation analysis.
3rd Analysis- Linear Regression Analysis
However, correlation analysis will be helpful for analysing strength of linear association that exists between both dependent and independent variables. Simple linear regression analysis also helps to understand the relation between dependent and independent variable with the help of equation, equation will be helpful for predicting the future of both the variable. Correlation analysis helps in finding the connection and relationship between two variables.
4.4 Research Limitations
Few researchers are depended on the availability of time as well as chosen methodology. It is required to collect data in sufficient time frame. This research has been faced with hurdle due to lack of time. For justifying research questions, it would be helpful to gather information from government websites.
4.5 Timeline of research
List of Activities
1st to 2nd week
2nd
to 4th week
4th to 8th week
8th to 11th week
11th to 15th week
Topic selection
Project Background
Projection of aims and objectives
Literature review
Determination 0f methodology
Collection of Data
Improved Project Proposal
Final Document Submitted
Table 1: Gantt chart
(Source: Created by learner)
4.6 Assumptions
Each week starting from the 1st week of February is represented by each number.
The ones highlighted in yellow have been completed and ones in green are yet to be completed.
5.0 Conclusion
The report has been based on the identification of the impact of Corporate Social Responsibilities and Corporate Financial Performance during the conduct of the business. In this paper both the concepts including Corporate Social Responsibilities and Corporate Financial Performance have been incorporated for understanding the effect of Corporate Social Responsibilities on the Financial Performance of Dell, Intel and IBM. For providing clear idea, the researcher has collected secondary data from reliable and valid resources of company. Data has been collected from annual reports from 2012-2018 of the chosen companies including IBM, Intel and Dell in order to analyze further. Corporate Social Responsibility has been used as an independent variable whereas Corporate Financial Performance has been used as a dependent variable. Three types of analysis including CAGR Calculation, Correlation Analysis and Linear Regression have been carried out for finding out the causal relationship between the variables.
6.0 Reference List
Acquier, A., Valiorgue, B. & Daudigeos, T., (2017). Sharing the shared value: A transaction cost perspective on strategic CSR policies in global value chains. Journal of Business Ethics, 144(1), pp.139-152.
Anser, M.K., Zhang, Z. & Kanwal, L., (2018). Moderating effect of innovation on corporate social responsibility and firm performance in realm of sustainable development. Corporate Social Responsibility and Environmental Management, 25(5), pp.799-806.
Assaf, A.G., Josiassen, A., Ahn, J.S. & Mattila, A.S., (2017). Advertising spending, firm performance, and the moderating impact of CSR. Tourism Economics, 23(7), pp.1484-1495.
Boesso, G., Favotto, F. & Michelon, G., (2015). Stakeholder prioritization, strategic corporate social responsibility and company performance: further evidence. Corporate Social Responsibility and Environmental Management, 22(6), pp.424-440.
Cavazotte, F. & Chang, N.C., (2016). Internal corporate social responsibility and performance: A study of publicly traded companies. BAR-Brazilian Administration Review, 13(4).
Chen, Z.F., Hong, C. & Occa, A., (2019). How different CSR dimensions impact organization-employee relationships: The moderating role of CSR-culture fit. Corporate Communications: An International Journal, 24(1), pp.63-78.
de Jong, M.D. and van der Meer, M., (2017). How does it fit? Exploring the congruence between organisations and their corporate social responsibility (CSR) activities. Journal of business ethics, 143(1), pp.71-83.
Flick, U., 2015. Introducing research methodology: A beginner’s guide to doing a research project. Sage.
Graafland, J. & Smid, H., (2019). Decoupling among CSR policies, programs, and impacts: An empirical study. Business & Society, 58(2), pp.231-267.
Ho, J.M., (2017). The Corporate Social Responsibility (CSR) Practice of Environmental Sensitive Companies and Its Impacts on Corporate Financial Performance (CFP) (Doctoral dissertation, Curtin University).
Hopkins, M., (2017). CSR and international development. In CSR and Sustainability (pp. 88-108). Routledge.\
Nollet, J., Filis, G. & Mitrokostas, E., (2016). Corporate social responsibility and financial performance: A non-linear and disaggregated approach. Economic Modelling, 52, pp.400-407.
Nwaneri, C., (2015). The impact of corporate social responsibility (CSR) on organization profitability. International Journal of Business and Management, 10(9), p.60.
Ortas, E., Gallego‐Alvarez, I. & Álvarez Etxeberria, I., (2015). Financial factors influencing the quality of corporate social responsibility and environmental management disclosure: A quantile regression approach. Corporate Social Responsibility and Environmental Management, 22(6), pp.362-380.
Pope, S. & Lim, A., (2017). International organisations as mobilizing structures: World CSR associations and their disparate impacts on members’ CSR practices, 2000–2016. Social Forces, 95(4), pp.1725-1756.
Stellner, C., Klein, C. & Zwergel, B., (2015). Corporate social responsibility and Eurozone corporate bonds: The moderating role of country sustainability. Journal of Banking & Finance, 59, pp.538-549.
Vveinhardt, J. & Zygmantaite, R., (2015). Influence of CSR policies in preventing dysfunctional behaviour in organisations. Procedia-Social and Behavioral Sciences, 205, pp.340-348.
Wang, D.H.M., Chen, P.H., Yu, T.H.K. & Hsiao, C.Y., (2015). The effects of corporate social responsibility on brand equity and firm performance. Journal of business research, 68(11), pp.2232-2236.
7.0 Appendices
Appendix A: Evidences of Data Sources
Financial Report of Dell 2017-2018
Financial Report of IBM 2017-2018
Financial Report of Intel 2015-2017
Financial Report of Dell year 2012- 2013
Financial Report of Dell year 2013- 2014
Financial Report of Dell from 2014-2015
Financial Report of IBM from 2013-2014
Financial Report of IBM from 2014-2015
Financial Report of IBM from 2015-2016
Appendix B: Data Links
http://www.annualreports.com/HostedData/AnnualReportArchive/i/NASDAQ_INTC_2013.pdf
http://www.annualreports.com/HostedData/AnnualReportArchive/i/NASDAQ_INTC_2013.pdf
https://s21.q4cdn.com/600692695/files/doc_financials/2014/annual/Intel_2014_Annual_Report.pdf
https://s21.q4cdn.com/600692695/files/doc_financials/2015/annual/2015_Intel_Annual_Report_web.pdf
http://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_INTC_2017.pdf
https://s21.q4cdn.com/600692695/files/doc_financials/2014/annual/Intel_2014_Annual_Report.pdf
https://s21.q4cdn.com/600692695/files/doc_financials/2015/annual/2015_Intel_Annual_Report_web.pdf
https://www.ibm.com/investor/att/pdf/IBM_Annual_Report_2015.pdf
https://www.ibm.com/annualreport/
https://www.ibm.com/annualreport/2013/bin/assets/2013_ibm_annual.pdf
https://www.ibm.com/annualreport/