​Corporate Social Responsibility and Shareholder Wealth: The Role of Marketing Capability

Saurabh Mishra and Sachin B. Modi
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Key Takeaways

Marketing capability enhances CSR efforts with verifiable benefits to key firm stakeholders, but it has no role in community-based charity efforts.


In evaluating the financial value of CSR, it is important to consider both overall CSR efforts and CSR component types, as different CSR types have varying effects on shareholder wealth.


Responding to hot-button issues of relevance to firm stakeholders results in greater shareholder wealth than community-based efforts, when leveraged through marketing capability.

Evaluating the role of marketing capability in the relationship between corporate social responsibility (CSR) and shareholder wealth, this study finds that CSR efforts affect stock returns and idiosyncratic stock risk only in the presence of high marketing capability.

“There remain significant doubts among C-level executives regarding the financial returns to CSR. This study shows that the picture is not downright grim, since stakeholder-based CSR efforts are observed to positively inform shareholder wealth when complemented with superior marketing capability.”

“CSR is often considered outside the domain of marketing in many firms, with limited attention from marketing managers. This misplaced view can lead to CSR efforts that are not aligned well with the marketing capability of firms and result in suboptimal shareholder outcomes.”


Although interest in CSR appears strong among firms, an extensive body of research on the financial implications of CSR has produced mixed evidence. Supporting the equivocal findings, opposing theoretical perspectives have been offered in extant literature. This represents an interesting paradox, with continuing investigation into this puzzle providing important theory and practice implications. We posit that CSR affects shareholder wealth in the presence of complementary forces, and marketing capability is one such key force.



We build on competing theories on the CSR-shareholder relationship to consider marketing capability, overall CSR, six different CSR types, and stock returns and idiosyncratic firm  risk in a common framework. Our empirical analysis is based on secondary information for a large sample of 1,725 firms for the period of 2000-2009.



We show that overall CSR efforts do not affect shareholder wealth on their own, but only in the presence of marketing capability. Furthermore, while marketing capability has positive (negative) effects with verifiable CSR efforts – environment (e.g., using clean energy), products (e.g., providing to the disadvantaged), diversity (e.g., pursuing top management diversity), corporate governance (e.g., limiting board compensation), and employees (e.g., supporting unions) – on stock returns (idiosyncratic risk), it has no significant effect with community-based efforts (e.g., charitable giving).



C-level executives and marketing managers should note that firms are likely to benefit their shareholders most from environmental-based CSR efforts, followed by improvements in diversity, corporate governance, and employee benefits, if they are able to leverage these through marketing capability. Moreover, while community-based CSR efforts provide valuable societal benefits, they are not as value relevant from a shareholder perspective as other CSR types. Researchers should also incorporate CSR types in their investigations.

Full Article:

Saurabh Mishra and Sachin B. Modi (2016), "Corporate Social Responsibility and Shareholder Wealth: The Role of Marketing Capability," Journal of Marketing, 80 (1), 26-46.
doi: http://dx.doi.org/10.1509/jm.15.0013

Saurabh Mishra is Associate Professor, Desautels Faculty of Management, McGill University (e-mail: 

Sachin B. Modi is Associate Professor, College of Business, Iowa State University (e-mail: smodi@iastate.edu).​

Author Bio:

Saurabh Mishra and Sachin B. Modi
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