CSR and New Ventures

Strategic Management Journal
Strat. Mgmt. J., 33: 11351153 (2012)

Published online EarlyView in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/smj.1962
Received 8 July 2010; Final revision received 7 February 2012
SOCIAL RESPONSIBILITY IN NEW VENTURES:
PROFITING FROM A LONG-TERM ORIENTATION
TAIYUAN WANG
1
* and PRATIMA BANSAL
2
1
IE Business School, Madrid, Spain
2
Richard Ivey School of Business, The University of Western Ontario, London,
Ontario, Canada
Socially responsible activities help create business value, develop strategic resources, and insure
against risks, but also cost money and distract management. These prior ndings are mainly
based on established corporations and may not extend to new ventures in which the liability
of newness may suppress some positive effects and amplify some negative impacts of socially
responsible activities. New ventures whose strategic decisions have a long-term orientation,
however, are able to counteract their liability of newness and thereby generate net positive
economic returns. We tested these relationships by surveying the chief executive ofcers and
presidents and studying the signature Web sites of 149 new ventures. Copyright 2012 John
Wiley & Sons, Ltd.
INTRODUCTION
Considerable research has been directed to the
exploration of the economic benets of corpo-
rate social responsibility (CSR). By furthering
social good and going beyond legal requirements,
CSR activities help create business value, develop
strategic resources, and insure against risks, but
also cost money, distract managers, and aggra-
vate relationships between principals and agents
(Margolis and Walsh, 2003; Orlitzky, Schmidt, and
Rynes, 2003). On balance, though, the positive
effects of CSR activities generally outweigh the
negative, resulting in net neutral or positive eco-
nomic returns (Margolis, Elfenbein, and Walsh,
2007; Margolis and Walsh, 2003; Orlitzky et al.,
2003).
Keywords: long-term orientation; corporate social respon-
sibility; new ventures; nancial performance
Correspondence to: Taiyuan Wang, IE Business School,

C/Alvarez de Baena, 4, Madrid, 28006, Spain.
E-mail: Taiyuan.Wang@ie.edu
These ndings are mainly drawn from estab-
lished corporations; the context of new ventures
remains largely unexplored. This omission is quite
surprising, given that new ventures are a signi-
cant driver of the economic engine and have sub-
stantial social impacts. The founding rate of new
ventures each year represents almost a stagger-
ing 10 percent of the total business population
(Aldrich and Ruef, 2006), which serves to cre-
ate half of all new jobs, drives major sources of
innovations, and contributes substantially to eco-
nomic growth (Moutray, 2009). However, new
ventures have also been reported to dispropor-
tionately harm the environment (e.g., by creating
commercial wastes and carbon dioxide emissions)
(Worthington and Patton, 2005) and operate ille-
gally more often than their established corporate
peers (Webb et al., 2009).
We redress this oversight by examining the eco-
nomic returns of CSR activities for new ventures.
We argue that the liability of newness, which
arises from the short temporal existence of new
ventures, may impede some positive effects and
Copyright 2012 John Wiley & Sons, Ltd.
1136 T. Wang and P. Bansal
intensify some negative effects of CSR activities,
resulting in overall negative economic returns. We
also posit that new ventures whose strategic deci-
sions have a long-term orientation, versus those
with a short-term focus, can attenuate the impacts
of their liability of newness by better integrat-
ing CSR attributes into their product features and
production processes, identifying implicit value
from stakeholder relationships developed through
CSR activities, seeking insurance-type benets of
CSR investments, and reducing managerial distrac-
tions for the conduct of CSR activities. As these
mechanisms suggest, we found a negative relation-
ship between CSR activities and nancial perfor-
mance for a sample of 149 new ventures, and that
this relationship was positively moderated by the
degree of these new ventures long-term orienta-
tion.
This study contributes to CSR research in two
ways. First, it brings new ventures directly into the
CSR spotlight, recognizing their difference from
established organizations and pointing to the need
for more thoughtful consideration of new ventures
in the world of CSR. Second, this study recognizes
the importance of time in CSR research, expressed
in a ventures newness and long-term orientation.
Notions of time have been virtually absent in
CSR research, despite the fact that time plays
an important role in CSR decisions (Slawinski
and Bansal, 2009). Our efforts at recognizing the
interplay between the more objective aspect of
time, reected in a ventures newness, and the
more subjective aspect of time, reected in a
ventures long-term orientation, potentially open
new avenues of CSR research.
THEORY AND HYPOTHESES
The economics of CSR
CSR refers to the rms consideration of, and
response to, issues beyond the narrow economic,
technical, and legal requirements of the rm
(Davis, 1973: 312). An activity is socially respon-
sible only if it furthers the social good, outstrips
the rms economic goals, and goes beyond the
requirements of the law (McWilliams and Siegel,
2001). Typical CSR activities include develop-
ing products that have social and environmen-
tal features, adopting production methods that
reduce environmental impacts, employing human
resource systems that care for employees and nur-
ture labor relationships, investing in infrastructure
development for local communities, and pursu-
ing philanthropic initiatives (Aguilera et al., 2007;
McWilliams and Siegel, 2001).
A central area of inquiry in this eld is whether
and how CSR activities affect rms economic
returns (Grifn and Mahon, 1997; Hillman and
Keim, 2001; Hull and Rothenberg, 2008; Mackey,
Mackey, and Barney, 2007; Margolis et al., 2007;
McWilliams and Siegel, 2000; Orlitzky et al.,
2003). Prior research suggests that CSR activi-
ties can have both positive and negative impacts
on rms nancial performance (Waddock and
Graves, 1997).
First, there is business value that resides in the
interaction between CSR activities and business
strategies (Porter and Kramer, 2006). Consumers
have become aware of social and environmental
issues and developed preferences for products with
CSR attributes (Brown and Dacin, 1997; Luo and
Bhattacharya, 2006). As a result, a rm can create
a certain level of CSR by embodying its products
with CSR attributes (such as pesticide-free fruit)
or by using CSR-related resources in its produc-
tion process (such as naturally occurring insect
inhibitors and organic fertilizers) (McWilliams
and Siegel, 2001: 119), thereby achieving suc-
cessful differentiation from its competitors (Fom-
brun, Gardberg, and Barnett, 2000; Porter and
van der Linde, 1995). A rm may also employ
environmentally friendly technologies to reduce
the costs of energy consumption and waste recy-
cling, thus realizing overall operating efciency
(King and Lenox, 2002; Klassen and Whybark,
1999). Furthermore, the consumer base for prod-
ucts with CSR attributes is growing (Brown and
Dacin, 1997; Luo and Bhattacharya, 2006), sug-
gesting the burgeoning of business opportunities
for rms that are able to create value through their
CSR activities.
Second, CSR activities help build strategic
resources, including stakeholder relationships and
positive CSR reputations. People classify them-
selves into social categories based on stereotypical
perceptions of themselves and others (Ashforth and
Mael, 1989). Therefore, rms that constantly pur-
sue CSR activities are attractive to stakeholders
with a self-image of social responsibility (Turban
and Greening, 1997), leading to close stakeholder
relationships (Donaldson and Preston, 1995; Jones,
1995). Through CSR activities, a rm signals to the
Copyright 2012 John Wiley & Sons, Ltd. Strat. Mgmt. J., 33: 11351153 (2012)
DOI: 10.1002/smj
Social Responsibility in New Ventures 1137
public that it is a good corporate citizen, result-
ing in a positive CSR reputation (Fombrun and
Shanley, 1990). Positive CSR reputations enable
rms to obtain and sustain legitimacy (Bansal and
Roth, 2000), charge premiums for products and/or
services (Klassen and McLaughlin, 1996), recruit
and retain quality employees (Greening and Tur-
ban, 2000; Turban and Greening, 1997), and attract
investors and capital providers (Mackey et al.,
2007).
Third, CSR activities insure against corporate
risks (Godfrey, 2005; Godfrey, Merrill, and
Hansen, 2009). Because socially responsible rms
generally operate at standards beyond legal require-
ments (Carroll, 1991), their CSR activities may
prevent additional costs incurred to comply with
stricter industry standards or legal requirements
(Hart, 1995). Furthermore, CSR activities may
help avoid negative impacts of unexpected acci-
dents (Bansal and Roth, 2000). If a socially respon-
sible rm experiences a harmful event, the moral
capital it has accrued through CSR activities may
mitigate value degradation and negative sanctions
from major stakeholders (Godfrey, 2005; Godfrey
et al., 2009).
Along with these positive effects, CSR activ-
ities can also undermine economic returns by
adding costs, distracting managers, and/or creating
agency problems. First, the more resources a rm
deploys for its CSR activities, the fewer resources
it has available for its core business (McWilliams
and Siegel, 2001; Waddock and Graves, 1997).
Although a rm may build value by develop-
ing products with CSR attributes (Porter and van
der Linde, 1995), the research and development
(R&D) costs incurred may offset the economic
value earned (McWilliams and Siegel, 2000). A
rm that has limited access to nancial capital may
also need to choose between CSR investments and
others that are more closely associated with keep-
ing pace in the competitive environment, which, if
not tended, can result in competitive disadvantage
(Barney, 1991).
Second, CSR activities may distract managers
from their core duties. Managers responsibilities
mainly pertain to the rms business activities, and
they may be incapable of, or at least not com-
petent at, pursuing CSR activities (Davis, 1973).
CSR requires building cooperation among different
stakeholders (Etzion, 2007; Hart, 1995), who often
differ in attitudes and beliefs about what and how
social and environmental issues should be solved
(Petts et al., 1999). Managers must reconcile these
differences to move the rm toward CSR, which
distracts them from their core duties.
Third, managers may pursue their own interests
through CSR activities at the cost of shareholder
wealth (Wright and Ferris, 1997), thereby creating
an agency problem (Eisenhardt, 1989). The pur-
suit of CSR activities can create substantial bene-
ts to managers. Solving social and environmental
issues can improve managers public image, which
in turn helps them gain political power, public
respect, and future career opportunities (Wright
and Ferris, 1997). Meanwhile, the insurance-type
benets of CSR may protect managers more than
shareholders: public embarrassment and harass-
ment can ruin managers careers (Wright and Fer-
ris, 1997), whereas shareholders can avoid such
unsystematic risks through their investment port-
folios.
The above review of prior CSR research based
on established corporations suggests that CSR
activities have both positive and negative effects
on economic returns (Strike, Gao, and Bansal,
2006; Waddock and Graves, 1997). These effects,
however, may not apply to new ventures because
their strategic and organizational properties differ
substantially from those of established organiza-
tions (Hannan and Freeman, 1989; Stinchcombe,
1965).
New ventures: short of time for CSR
New ventures are for-prot organizations that have
existed for a short period of time since being
founded (Zahra, 1996).
1
Although a specic time
criterion to discriminate new ventures from estab-
lished organizations may seem arbitrary (Zahra,
Ireland, and Hitt, 2000), eight years is a com-
monly used benchmark (Atuahene-Gima and Li,
2004; Zahra, 1996). Generally speaking, such rms
are still in the entrepreneurial, or birth and growth,
stages of their life cycle (Miller and Friesen, 1984;
Quinn and Cameron, 1983).
New ventures suffer from the liability of new-
ness (Stinchcombe, 1965); they lack sophisticated
operating processes and routines, systems and
structures for efcient internal communications,
and the knowledge to establish stable relationships
1
In this study, we exclude newly established social enterprises,
whose primary goal is to address social issues and for whom
economic returns are less relevant.
DOI: 10.1002/smj
with clients, suppliers, and other stakeholders (Bar-
ringer and Greening, 1998; Bruderl and Schussler,
1990). By denition, newness is due to the short
time a new venture has existed. From a learning
perspective (Amit, 1986), this shortness of time
constrains the new ventures accumulated knowl-
edge and capabilities, resulting in a liability of
newness.
The liability of newness may weaken some pos-
itive effects and intensify some negative effects
of CSR activities on new ventures nancial per-
formance. First, newness may inhibit new ven-
tures ability to realize economic returns from
CSR investments. To create business value through
CSR, a rm needs to incorporate social and envi-
ronmental properties into product features (Porter
and van der Linde, 1995). Such product develop-
ment often consumes substantial resources
(McWilliams and Siegel, 2001) and depends on
the rms previous innovation capabilities (Cohen
and Levinthal, 1990). Because new ventures have
existed for only a short period of time and often
have capital constraints (Stinchcombe, 1965), they
need time to develop the resources and capabilities
required for incorporating social and environmen-
tal innovations into product features.
Second, newness may restrict new ventures
abilities to harvest the benets from stakeholder
relationships and positive reputations arising from
CSR. A rms ability to generate economic returns
from its stakeholder relationships relies on its
stakeholder inuence capacity, which helps to
identify, act on, and prot from opportunities to
improve stakeholder relationships through CSR
(Barnett, 2007: 803). A rm builds its stake-
holder inuence capacity by accumulating knowl-
edge about its key stakeholders, which is a path-
dependent process that takes time to be realized
(Barnett, 2007). Similarly, newness makes it dif-
cult for new ventures to build a positive CSR
reputation because efforts at quickly building an
image as an upstanding corporate citizen generally
fail (Fombrun et al., 2000: 102).
Third, newness may make the insurance type
benets from CSR activities irrelevant for new
ventures. Unlike large established rms that are
carefully monitored by the public (Ullmann, 1985),
new ventures may escape public scrutiny and, thus,
their unexpected accidents may not be caught by
the watchful eye of the public (Jenkins, 2004,
2006). Furthermore, new ventures may even
operate illegally (Webb et al., 2009), implying
they may not need to protect themselves through
CSR activities as established corporations often do.
The negative effects of CSR activities, how-
ever, may be intensied for new ventures through
two mechanisms. First, the capital costs associated
with CSR activities are often high (Brammer and
Millington, 2008), stiing new ventures efforts to
build economies of scale. Although overall costs
can be reduced by employing technologies that
consume less energy, generate less waste, or use
fewer materials (King and Lenox, 2002; Klassen
and Whybark, 1999), the benets that accrue from
these lower costs take time to materialize, whereas
the capital costs are immediate. For example, a
new venture in our sample was grateful to the
government for its development of a waste treat-
ment facility; the cost of developing such a facility
would have been impossible for this new venture
or any single small business to bear.
Second, newness may magnify the managerial
distractions from CSR activities. New ventures
often need to fully commit their resources and
capabilities to their core business activities, such
as product and market development, engineering,
manufacturing, and logistics (Barringer and Green-
ing, 1998; Bruderl and Schussler, 1990). Because
founders and managers of new ventures may lack
the necessary skills (Davis, 1973), the pursuit
of CSR activities may distract them from core
business activities. Funding CSR activities may
also cause tensions and conicts among divisions
that compete for organizational resources (Lewis,
2000), which may result in negative outcomes for
new ventures because they did not take the time to
develop trust among organizational members (Bar-
ringer and Greening, 1998; Bruderl and Schussler,
1990).
Certainly, we acknowledge that new ventures do
benet from some CSR activities. A new venture
often relies on its local community for resources
(Peredo and Chrisman, 2006), and thus its sup-
port for local community may enhance its resource
endowment. New ventures often lack the nan-
cial capital to pay high salaries to attract top
talent. CSR activities, however, offer an alterna-
tive benet with which to attract and retain qual-
ity employees willing to work for less money in
socially responsible rms (Greening and Turban,
2000; Turban and Greening, 1997). However, by
weighing the major negative impacts caused by
the liability of newness against these benets, we
suggest that the overall effects of CSR activities
DOI: 10.1002/smj
on economic returns for new ventures tend to be
negative.
Hypothesis 1: There is a negative relationship
between CSR activities and nancial perfor-
mance among new ventures.
The importance of long-term orientation
In the previous section, we argued that new ven-
tures are likely to experience negative economic
returns for their CSR activities because of the
liability of newness. The notion of newness is
based on an objective view of time, which is often
referred to as clock time (Mosakowski and Ear-
ley, 2000: 797). In this section, we suggest that
the impacts of newness are contingent upon the
new ventures temporal orientation, a subjective
perspective of time reected in the temporal depth
of its strategic decisions (Ancona, Okhuysen, and
Perlow, 2001; Fiegenbaum, Hart, and Schendel,
1996; Lee and Liebenau, 1999).
A rms temporal orientation can range from
being short to long; strategic decisions with a
short-term orientation emphasize efciency,
whereas decisions with a long-term orientation
emphasize effectiveness (Covin and Slevin, 1989;
Venkatraman, 1989). Although long-term effec-
tiveness and short-term efciency may not be
mutually exclusive, they often reect different
strategic priorities and require different organi-
zational processes (Hamel and Prahalad, 1989,
1994). By building a vision that directs resource
allocation and inspires organizational members to
achieve competitive advantage in the future (Brews
and Purohit, 2007; Grant, 2003), rms with a long-
term orientation often engage in activities that do
not necessarily generate immediate returns, such
as investing in R&D (Miller and Friesen, 1982;
Venkatraman, 1989), spotting trends in consumers
preferences that may lead to new markets (Con-
nor, 1999; Narver, Slater, and MacLachlan, 2004),
and developing strategic resources that do not have
explicit short-term value (Hamel and Prahalad,
1989, 1994).
Firms with a long-term orientation can offset
the liability of newness in the pursuit of CSR
by making strategic decisions that better realize
the benets of CSR activities. First, a long-term
orientation widens the rms eld of vision, which
enables the rm to recognize the potential value of
CSR investments. As a result, rms with a long-
term orientation tend to choose a technology that
will endure and emphasize continuous innovation,
even though doing so may involve greater short-
term costs.
Second, rms with a long-term orientation tol-
erate or even encourage the development of strate-
gic resources that do not offer explicit short-term
value (Hamel and Prahalad, 1989, 1994), allowing
these rms to identify implicit value from complex
stakeholder relationships built from CSR activities.
Rouse and Daellenbach (1999) found that a com-
panys drivers developed a close relationship with
the customers to whom they delivered products,
but the immediate value of this relationship was
not apparent. If the rm had emphasized short-term
protability and outsourced its delivery services, a
choice that was irresponsible to its drivers, the rm
would have lost this valuable relationship with its
customers. This example suggests that, compared
with rms that focus on short-term protability,
rms with a long-term orientation can draw value
from stakeholder relationshipsvalue that is often
implicit and difcult to identify (Barnett, 2007).
Third, rms with a long-term orientation draw
on a greater body of information in decision mak-
ing, which helps to realize more of the insurance
type benets associated with CSR activities. For
example, a shing company in our sample indi-
cated on its Web site that by actively participat-
ing in the collection of marine data for scien-
tic research, it understood the potential issues
in the marine environment. As a result, the com-
pany was able to develop and adopt shing activ-
ities that will not harm the marine environment,
thereby avoiding nes and generating sustainable
returns. Meanwhile, rms with a long-term ori-
entation often operate well beyond current legal
requirements, avoiding the compliance costs that
come with stricter laws.
Fourth, rms with a long-term orientation reduce
CSR-related managerial distractions by aligning
the interests and motivation of different stakehold-
ers, who may otherwise hold different or even
conicting attitudes and beliefs about what and
how social and environmental issues should be
solved (Petts et al., 1999). For example, a rm
in our sample successfully engaged local investors
to collectively support the development of tech-
nology companies in the region by presenting a
vision that the whole community would benet
substantially from these technology rms over the
DOI: 10.1002/smj
long run. This example suggests that, guided by
a vision rather than prodded by short-term con-
siderations (Fiegenbaum et al., 1996), rms with
a long-term orientation can align the interests of
internal and external stakeholders, facilitating the
implementation of CSR.
The above discussion suggests that a long-
term orientation may attenuate the major negative
impacts of the liability of newness and, thus, can
help new ventures realize economic returns from
CSR activities. Therefore, as long-term orientation
increases, the negative relationship between CSR
and new venture performance (Hypothesis 1) will
decrease in its magnitude, or even become posi-
tive, if the long-term orientation is strong enough.
Put differently, a long-term orientation can be con-
sidered a positive factor that alters or reverses the
relationship between CSR and new ventures nan-
cial performance.
Hypothesis 2: The relationship between CSR
activities and nancial performance among new
ventures is positively moderated by the degree
of new ventures long-term orientation.
DATA AND METHODS
Sample
The sample was drawn from Dun & Bradstreets
2008 Guide to Canadian Manufacturers Direc-
tory. Manufacturers are particularly relevant to
this study because they often have substantial
social and environmental impacts (Williamson,
Lynch-Wood, and Ramsay, 2006). We dened
new ventures as rms eight years old or younger
(Atuahene-Gima and Li, 2004; Zahra, 1996). We
excluded rms that had fewer than 10 employees
because such small rms often do not have a well-
dened strategy (Covin, Green, and Slevin, 2006).
We also excluded diversied rms because of the
variance in the social and environmental properties
of their different products (McWilliams and Siegel,
2001). Based on these criteria, we identied 846
new ventures with valid contact information for
chief executive ofcers (CEOs) or presidents.
Data sources
Data for long-term orientation and nancial per-
formance were collected through a survey targeted
to the CEOs and presidents of these new ventures,
the most knowledgeable individuals with respect
to their rms strategic intents and performance
criteria (Miller and Friesen, 1984). Small and new
enterprises generally do not publicize their nan-
cial reports (Dess and Robinson, 1984) and tend
to have a variety of performance criteria that may
not be fully reected by their nancial reports
(McWilliams and Siegel, 2001). Therefore, using a
survey to collect data for new ventures long-term
orientation and nancial performance was not only
practical but also appropriate.
We made several efforts to assure a response
from the CEO or president of the rm. Our
questionnaire was addressed directly to the CEO
or president by using the individuals name, not
merely the title. The CEO or president was under
no obligation to respond and could discard the
questionnaire if he or she did not wish to complete
it. A number of the completed questionnaires con-
tained written comments on our study and were
signed and dated by the CEOs or presidents, indi-
cating their personal participation.
Given that different respondents may prefer dif-
ferent types of surveys (Kaplowitz, Hadlock, and
Levine, 2004), we used both mail and online ques-
tionnaires to encourage responses. From June to
October 2008, ve rounds of contacts (invita-
tion letter, rst-round questionnaire, fax reminder,
second-round questionnaire, and phone call
reminder) (Dillman, 2007) generated 204 responses
(42 online and 162 by mail). Eight questionnaires
contained signicant missing values, resulting in
196 usable data points (response rate = 23%).
We found no evidence of response bias (Arm-
strong and Overton, 1977) by testing for the dif-
ferences in (a) response rates across industries and
regions; (b) age, sales, and number of employ-
ees between responding and nonresponding rms;
and (c) all variables in the survey between early
and late responding rms and between online and
mail responding rms. We found no evidence for
common method bias from the method-factor test
(Liang et al., 2007).
We drew CSR data from these rms signature
Web sites following the approach taken in prior
research (Chapple and Moon, 2005). Trying to
connect with general audience and key stakehold-
ers, companies use their Web sites to report CSR
considerations and activities (Esrock and Leichty,
1998). Companies signature Web sites generally
contain information consistent with other corporate
DOI: 10.1002/smj
archival documents such as annual reports (Bansal,
2005; Maignan and Ralston, 2002), suggesting the
validity of using Web sites to collect CSR data
(Chapple and Moon, 2005). By drawing on dif-
ferent data sources for CSR and for long-term
orientation and nancial performance, our design
further avoids common method bias (Podsakoff
et al., 2003).
Immediately after the 196 rms responded to
the survey, the rst author searched the Inter-
net and found 149 of these rms had signa-
ture Web sites, from which the author saved
all the introductory Web pages, including About
Us, History, and Mission and Vision State-
ments. Guided by previous studies comprehen-
sive descriptions of CSR activities (Aguilera et al.,
2007; Carroll, 1991; Margolis and Walsh, 2003;
McWilliams and Siegel, 2001; Orlitzky et al.,
2003), the author and two well-trained research
assistants (Ph.D. candidates in management) inde-
pendently read the saved Web pages to seek infor-
mation about these rms CSR activities.
2
The nal sample included 149 new ventures,
representing 18 industries (categorized by two-
digit Standard Industrial Classication [SIC]
codes) in the manufacturing sector (SIC: 2039).
On average, these new ventures were 5.4 years old,
employed 46 people, and generated nine million
Canadian dollars in sales.
Measures
Financial performance
In the questionnaire (see Appendix), we measured
nancial performance through a nine-item, seven-
point scale that was validated in prior research
(Stam and Elfring, 2008). The nine items included
sales level (P1), market share (P2), sales growth
(P3), cash ow (P4), ability to fund business
growth from prots (P5), return on assets (P6),
return on equity (P7), return on sales (P8), and
overall rm performance/success (P9). Also using
Dun & Bradstreets database, Ling, Zhao, and
Baron (2007) found such a performance scale to
be positively and signicantly related to objective
data, suggesting good consistency.
2
Empirical results reported in the paper were based on the
authors coding. The coding of the two research assistants was
used to examine interrater reliability.
Long-term orientation (LTO)
We measured long-term orientation using a four-
item, seven-point scale that was validated in prior
research (Miller and Friesen, 1982; Venkatraman,
1989). The four items were: 1) As your rm
denes strategies, you generally emphasize long-
term (over 5 years) goals and strategies (LTO1);
2) Your rms criteria for resource allocation
largely reect long-term considerations (LTO2);
3) Your rm emphasizes basic research to build
future competitive advantage (LTO3); and 4) As
your rm denes strategies, your major concern
is how to build future competitive advantage
(LTO4).
Corporate social responsibility (CSR)
We measured CSR by counting the number of
discrete activities that a rm pursued. From each
of the 149 rms Web pages (About Us, His-
tory, and Mission and Vision Statements), the
rst author and a research assistant independently
identied discrete CSR activities. We employed
the following criteria to ensure the validity of this
count measure. First, we focused on statements
that indicated specic CSR activities and excluded
broad statements (such as We are committed to
protecting the earth), which, we reasoned, could
exist in the absence of real activities. Second, we
excluded statements suggesting that the rms core
business was to fulll specic social or environ-
mental needs. For example, a rm in our sam-
ple produced a type of equipment that helped its
customers reduce energy consumption. Although
reducing energy consumption is CSR-related, the
nature of the rms business does not indicate the
rm pursued a CSR activity; it just addressed a par-
ticular need of its customers. Third, we excluded
statements suggesting the rms intention to do
something socially responsible or environmentally
friendly (will do statements). For example, a rm
in our sample claimed it would pursue the ISO
14001 environmental standard. Although pursuing
the ISO 14001 standard is a specic CSR activity,
the rm had not yet done so. By excluding such
will do statements, this CSR measure also helped
control for, or at least reduce, the reverse causality
(i.e., nancial performance leads to CSR), given
that rms with better nancial performance are
more likely to have the intention to pursue CSR
activities (Orlitzky et al., 2003).
DOI: 10.1002/smj
Table 1. Examples of discrete CSR activities
Community
We give at least 10 percent of our prots back to the community.
We contribute to the development of a local business association.
We help to develop an educational program of a local school.
We open communication about site operations and productions to the community.
. . .
Employee relations
We build an equal working environment that is free of harassment and discrimination.
We develop a facility that enables us to operate at minimum risk to employees.
We develop a working environment that emphasizes work relationships.
We foster teamwork, support ongoing people training and development, and provide effective communication.
. . .
Environment
We implement the ISO 14001 standard to address environmental issues.
We pack shipments with biodegradable materials.
We develop and implement an active downgrade scheme.
We develop a facility that enables us to reduce emissions.
. . .
Products & production
We use GMO-free (genetically modied organisms) ingredients for our products.
We produce products using recycled materials.
We produce products using natural materials.
We implement the HACCP (Hazard Analysis and Critical Control Points) in our production.
. . .
Other stakeholders
We support charitable organizations, locally and internationally.
We continuously donate products to fund-raising events.
We sponsor kids programs, sports teams, school trips, and so on.
We raise Canadian kids awareness for families in Africa through our programs.
. . .
Based on these criteria, 145 discrete CSR items
were identied by the rst author and the research
assistant. Next, the second author inspected these
items and eliminated seven items that were not
considered to be sufciently discrete and specic,
resulting in 138 CSR activities pursued by 47
new ventures. These CSR activities can be cate-
gorized into ve groups, including community,
employee relations, environment, products &
production, and other stakeholders (Table 1),
which generally align with the ve major types of
CSR activities reported in the Kinder, Lydenberg,
Domini (KLD) social screens (Hillman and Keim,
2001; Waddock and Graves, 1997). For each rm,
we added all its discrete CSR activities and used
a formative index to measure its CSR.
To investigate the moderating effect of long-
term orientation on the relationship between CSR
activities and new ventures nancial performance,
we formed an interaction term by multiplying
the four indicators of long-term orientation and
the formative index of CSR. These items were
centered before being multiplied in order to reduce
multicolinearity (Aiken and West, 1991).
Control variables
Recently, CSR researchers have paid increasing
attention to CSR disclosure, which refers to a
rms self-reported CSR information without con-
rming real CSR activities (Maignan and Ral-
ston, 2002; Ullmann, 1985). Because self-reported
CSR information is not audited (Gray, Kouhy, and
Lavers, 1995), a rm may use CSR disclosure to
present its beliefs and attitudes toward social and
environmental issues, which may diverge from its
actual CSR activities. Furthermore, a rm may
use CSR disclosure to advertise the CSR attributes
of its products and/or services, and such adver-
tising may overstate the rms real CSR efforts
(McWilliams and Siegel, 2000). Thus, it is optimal
to control for the effect of CSR disclosure, given
that our hypotheses are developed on the basis of
CSR activities.
DOI: 10.1002/smj
Table 2. CSR keywords and frequency of appearance
CSR keywords Frequency CSR keywords Frequency CSR keywords Frequency
Accountability 1 Exceed (standard) 18 Power 4
Biodegradable 4 Fair 5 Preservation 4
Bio-fuel 1 Fundraising 1 Recycle 23
Charity 3 Future (generation,
society, environment)
6 Renewable 1
Community 18 Global warming 1 Responsibility 11
Conservation 5 GMO-free (genetically
modied organisms)
2 Reuse 3
Contamination 3 Green/Greener 16 Risk 1
Corporate citizenship 2 HACCP (hazard analysis
and critical control
points)
3 Safety 31
Donation 4 Harmful 2 Security 5
Downgrade 1 Hazard/hazardous 2 Sponsor 1
Drug-free 2 Health 20 Stewardship 1
Earth 4 Honest 4 Surpass (standard) 1
Eco- (system, friendly) 4 Integrity 9 Sustainability/sustainable 5
Emission 4 ISO14001 2 Trans-fat-free 1
Energy 16 Nature 24 Transparency 1
Enrich 2 Non-invasive 3 Trees 3
Environment 75 Nontoxic 2 Trust/trusted 9
Equality 1 Organic 4 Waste 18
Ethics 4 Philanthropy 1 Wellbeing 1
We measured CSR disclosure by examining the
number of times that CSR keywords appeared
on these rms Web sites (About Us, History,
and Mission and Vision Statements pages). The
rst author and another research assistant inde-
pendently read each of the 149 rms Web sites,
recorded sentences that reected the rms CSR
considerations and activities, and identied CSR
keywords from these sentences. We did not distin-
guish between a keywords different forms (e.g.,
responsibility, responsible, and responsibly) and
tenses (e.g., recycle and recycled), but listed differ-
ent keywords that possess similar meanings (e.g.,
donate and sponsor). As shown in Table 2, we
identied 57 CSR keywords, which appeared a
total of 403 times on these rms Web sites.
3
We measured CSR disclosure using the formula
CSR
Disclosure
=
i=1
T
i
/K, where N is the num-

ber of different CSR keywords that appeared on
the rms Web site, T
i
, is the number of times
3
Seven words were identied by only the author or the research
assistant, including commitment, exceed, goodwill, quality, stake-
holders, surpass, and training. We reexamined these words in
their contexts and decided to treat exceed and surpass (e.g.,
in terms of industry standards and legal requirements) as CSR
keywords. The other ve words are not CSR related.
that keyword i appeared, and K is the number of
total general words on the rms Web site. We
divided by K because rms that have large Web
sites are likely to include more CSR keywords than
rms that have small Web sites. The intraclass cor-
relation coefcient for CSR disclosure coded by
the author and by the research assistant was 0.90,
suggesting good interrater reliability (Shrout and
Fleiss, 1979).
We also controlled for several variables col-
lected from Dun & Bradstreets database. Firms
operating in different industries may have dif-
ferent benets and pressures for the pursuit of
CSR activities (Hull and Rothenberg, 2008; Russo
and Fouts, 1997). We used 17 dummy variables
to control for the differences in the 18 indus-
tries. Regional regulations and policies may affect
CSR decisions of local rms (Campbell, 2007).
We used two dummies to control for these ven-
tures places of origin (i.e., Western, Central, and
Eastern Canada). Different markets may have dif-
ferent social and institutional requirements for
CSR (Campbell, 2007). We used two dummies
to control for these rms market scope, which
captured the countries to which the new ven-
tures sell, including only the Canadian market, the
North American market (Canada and the United
DOI: 10.1002/smj
States), and the global market (Canada, the United
States, and at least one other country). Large rms,
which are generally older, may realize economies
of scale from their CSR investments (McWilliams
and Siegel, 2001). We controlled for rm size (log
of sales and log of number of employees) and rm
age (number of years since the rm was estab-
lished).
It may be innovation rather than CSR that
actually contributes to nancial performance (Luo
and Bhattacharya, 2006; McWilliams and Siegel,
2000). To exclude this possibility, we controlled
for product and process innovations collected from
the survey. As shown in the Appendix, the sur-
vey items Inno Prd1 and Inno Prd2 capture the
degree and amount of product innovation, and
items Inno Prc1 and Inno Prc2 reect the degree
and amount of process innovation. If a rm did
not have product or process innovation, zero was
assigned to the corresponding items.
ANALYSES AND RESULTS
We tested the two hypotheses using the partial least
squares (PLS),
4
which permits variables to have
both antecedents and consequences in the model
(Barclay, Higgins, and Thompson, 1995). A rms
decision to pursue CSR activities may be based
on its belief that CSR will help improve nancial
performance, and rms with better nancial per-
formance can better afford CSR investments. Prior
research has noted that large established rms in
some industries are likely to achieve economies of
scale from CSR investments (Hillman and Keim,
2001; Hull and Rothenberg, 2008; Waddock and
Graves, 1997). Therefore, CSR may be endoge-
nous to factors such as industry, rm size, and
rm age. The use of PLS simplies the modeling
of CSR as an endogenous variable.
The measurement model
The descriptive statistics and correlations of all the
measurement items except dummies of different
industries, places of origin, and market scope are
listed in Table 3. Items used to measure the same
factor were highly correlated. CSR activities and
CSR disclosure had a high correlation (r = 0.64, p
< 0.001), which was still lower than the cut value
4
Multiple regressions generated qualitatively identical results.
0.70 (Nunnally, 1978), suggesting that they were
likely to have captured different things. However,
such a high correlation may cause multicolinearity,
leading to biased results. We checked variance
ination factors (VIFs) for all the variables and
found that the highest VIF was 2.55. Therefore,
multicolinearity was not an issue (Paetzold, 1992).
To examine the reliability, convergent validity,
and discriminant validity of these measures, we
conducted a PLS model by using the independent
and control variables to predict CSR and nancial
performance. As shown in Table 4, reliability and
convergent validity were evidenced by the load-
ings for all items being well above 0.70 on their
respective factors (Nunnally, 1978), and by the
high average variance extracted and Cronbachs
alpha (Barclay et al., 1995). The loadings of these
items on their factors were much higher than their
cross-loadings on other factors, which were all
lower than the cut value 0.70, suggesting satisfac-
tory discriminant validity (Barclay et al., 1995).
The structural model
Figure 1 provides the standardized path coef-
cients of the structural model, in which CSR was
endogenous and predicted by rm size, rm age,
long-term orientation, and dummies of industry,
places of origin, and market scope. Firms gener-
ally report what they actually do (Abrahamson and
Park, 1994; Chapple and Moon, 2005), and, thus,
there should be a path from CSR activities to CSR
disclosure.
The path from CSR activities to nancial perfor-
mance was negative and signicant (Beta =0.25,
p < 0.05), supporting Hypothesis 1. We calcu-
lated the unstandardized path coefcient of CSR
activities by B = Bet a SD
PERF
/SD
CSR
, where
Beta is the standardized coefcient, and SD
PERF
and SD
CSR
are the standard deviations of nancial
performance and CSR (Bring, 1994). The unstan-
dardized coefcient of CSR was 0.14, suggesting
that each CSR activity was related to a 0.14point
decrease in the 17 performance scale. The stan-
dard deviation of nancial performance was 1.26
(Table 4). The 0.14-point decrease in the 17 per-
formance scale is equivalent to 0.11 standard devi-
ations (0.14/1.26), which included approximately
nine percent of rms in the sample. Thus, as a new
venture pursued one more CSR activity, its per-
ceived nancial performance compared with com-
petitors would be ranked nine percentiles lower.
DOI: 10.1002/smj
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DOI: 10.1002/smj
Table 4. The measurement model
Size Age CSR
activities
CSR
disclosure
LTO Product
innovation
Process
innovation
Financial
performance
Mean 2.46 5.40 0.93 0.0094 4.34 3.92 3.59 4.68
Standard deviation 0.93 2.01 2.25 0.0153 1.31 2.02 2.30 1.26
Cronbachs alpha 0.92 NA NA NA 0.86 0.90 0.96 0.96
Average variance extracted 0.91 NA NA NA 0.70 0.82 0.93 0.77
Number of employees 0.91 0.04 0.03 0.02 0.05 0.03 0.03 0.02
Sales 0.99 0.07 0.10 0.06 0.09 0.01 0.07 0.07
Age 0.06 1.00 0.01 0.00 0.04 0.03 0.07 0.13
CSR activities 0.09 0.01 1.00 0.64 0.10 0.18 0.03 0.05
CSR disclosure 0.05 0.00 0.64 1.00 0.09 0.08 0.07 0.06
LTO1 0.08 0.03 0.09 0.09 0.80 0.15 0.17 0.16
LTO2 0.07 0.02 0.08 0.09 0.81 0.11 0.13 0.19
LTO3 0.15 0.02 0.03 0.02 0.87 0.26 0.15 0.22
LTO4 0.01 0.09 0.12 0.10 0.86 0.23 0.07 0.27
Inno Prd1 0.03 0.09 0.24 0.09 0.18 0.83 0.27 0.08
Inno Prd2 0.01 0.01 0.14 0.07 0.23 0.98 0.39 0.23
Inno Prc1 0.04 0.07 0.01 0.10 0.14 0.34 0.93 0.03
Inno Prc2 0.05 0.07 0.01 0.06 0.15 0.38 1.00 0.12
P1 0.11 0.07 0.02 0.06 0.18 0.24 0.15 0.85
P2 0.10 0.06 0.06 0.07 0.26 0.28 0.21 0.78
P3 0.07 0.03 0.08 0.01 0.13 0.31 0.16 0.79
P4 0.02 0.15 0.06 0.06 0.23 0.13 0.06 0.90
P5 0.06 0.10 0.02 0.04 0.25 0.17 0.05 0.89
P6 0.02 0.17 0.06 0.05 0.23 0.15 0.05 0.90
P7 0.05 0.16 0.06 0.04 0.25 0.14 0.04 0.91
P8 0.01 0.14 0.06 0.06 0.22 0.07 0.01 0.92
P9 0.03 0.10 0.08 0.06 0.26 0.16 0.14 0.93
Note: Age, CSR activities, and CSR disclosure were measured by single items and did not have meaningful Cronbachs alpha and
average variance extracted.
-0.03
Financial
performance
(32%)
CSR activities
(26%)
Long-term
orientation
-0.25
*
0.05
0.27
**
Firm size
0.20
*
Firm age Inno_prd
0.14
Inno_prc
0.10
0.19
* 0.16
0.04
0.30
***
0.64
***
CSR disclosure
(40%)
Figure 1. The structural model
Notes:
1) Dummies of industry, places of origin, and market scope were examined but not included to save space.
2) Numbers in brackets were variance explained.
3) Standardized path coefcients,

p < 0.10,

p < 0.05,

p < 0.01,

p < 0.001, two-tailed tests.
DOI: 10.1002/smj
The path from the interaction term to nancial
performance was positive and signicant (Beta =
0.30, p < 0.001), supporting Hypothesis 2. The
interaction term explained six percent additional
variance of nancial performance. Therefore, this
interaction term should be included; otherwise,
the model would have generated biased results
(Cortina, 1993). We also checked the robustness
of this interaction effect. We replicated our anal-
yses for the 47 rms that had at least one CSR
activity, and found that the interaction term of
long-term orientation and CSR activities was pos-
itive and marginally signicant (Beta = 0.21, p <
0.10). We conducted subgroup analyses by sep-
arating the 47 rms that had at least one CSR
activity (Group A) from the 102 rms that did not
pursue any CSR activities (Group B). Long-term
orientation exhibited a stronger effect on nan-
cial performance for Group A (Beta = 0.45, p
< 0.01) than for Group B (Beta = 0.14, p =
0.28).
The positive interaction effect suggests that
rms with a low level of long-term orientation
(meanone standard deviation) had a strongly
negative relationship between CSR activities and
nancial performance (Beta = 0.55), while rms
with a high level of long-term orientation (mean +
one standard deviation) exhibited a positive slope
for this relationship (Beta = 0.05). More intu-
itively, our data show that new ventures with both
high levels of long-term orientation and CSR activ-
ities had the highest level of nancial performance
(5.07 in the 17 scale), while those with a high
level of CSR but a low level of long-term orienta-
tion had the lowest level of nancial performance
(3.65 in the 17 scale).
Although not hypothesized, the signicant effect
of long-term orientation on nancial performance
deserves further interpretation (Beta = 0.27, p
< 0.01). The corresponding unstandardized coef-
cient of long-term orientation was 0.26, which
means that one point in the 17 long-term orien-
tation scale is related to a 0.26-point increase in the
17 performance scale. The 0.26-point increase in
the 17 performance scale is equivalent to 0.21
standard deviations (0.26/1.26), which included
approximately 16 percent of rms in the sam-
ple. Therefore, as a new venture increased one
point in its 17 long-term orientation scale, its per-
ceived nancial performance compared with com-
petitors would be ranked approximately 16 per-
centiles higher.
DISCUSSION
By incorporating the liability of newness and long-
term orientation into the positive and negative
effects of CSR activities for new ventures, this
study offers several implications. First, it suggests
that newness may mitigate some positive effects of
CSR activities and intensify some negative effects,
resulting in overall negative economic returns for
new ventures. This nding supports the emerg-
ing view that time matters to CSR (Slawinski
and Bansal, 2009), a view that has been largely
neglected in the existing CSR literature. New ven-
tures need time to develop products that have
social and environmental features, to identify and
build value from complex stakeholder relationships
through CSR activities, and to obtain insurance
type benets of CSR investments. They also need
time to reduce additional costs and managerial dis-
tractions associated with CSR activities.
Second, this study also supports the view that
a long-term orientation matters to new ventures.
We found that a long-term orientation had a direct
positive effect on new ventures nancial perfor-
mance. Strategic reference point theory suggests
that temporal orientation plays a critical role in
decision making, and relatively new organizations
generally have shorter strategic reference points
(Fiegenbaum et al., 1996). Many new ventures
may not have a long-term orientation. Instead,
they confront various short-term challenges, and
their survival is constantly under threat (Miller and
Friesen, 1984; Quinn and Cameron, 1983), lead-
ing to decisions that emphasize the present and
overlook the future. Without a long-term orienta-
tion, these ventures may not emphasize innovation
(Miller and Friesen, 1982; Venkatraman, 1989) or
develop strategic resources (Hamel and Prahalad,
1989, 1994), which are often necessary for superior
nancial performance.
More importantly, we found that a long-term
orientation positively moderated the relationship
between CSR activities and nancial performance,
suggesting that a long-term orientation magnies
the value of the benets that accrue from CSR
activities. We speculate that a long-term orienta-
tion enables rms to recognize and realize eco-
nomic returns of CSR through developing respon-
sible products, building more enduring stakeholder
relationships, insuring themselves from risks, and
reducing managerial distractions from CSR activ-
ities. Short-termist rms, on the other hand, may
DOI: 10.1002/smj
treat CSR as a tactical activity, which may under-
mine the benets that could accrue from their CSR
activities.
Third, this study highlights the importance of
discriminating between CSR activities and disclo-
sure. Some scholars treat a rms self-reported
CSR information as its CSR disclosure (Gray
et al., 1995), which may be used by the rm to
present its beliefs and attitudes toward CSR or to
advertise the CSR attributes of its products and/or
services. Beliefs and attitudes toward CSR mainly
reect a rms moral identity, that is, its desire to
be a moral player and to be seen as such by oth-
ers (Aquino and Reed, 2002; Reed and Aquino,
2003). Social identity theory (Ashforth and Mael,
1989) suggests that a rm with a moral iden-
tity may have attracted socially responsible stake-
holders (Turban and Greening, 1997), resulting in
an image of a good corporate citizen (Fombrun
and Shanley, 1990). However, this positive image
can easily disappear (Fombrun et al., 2000) if the
rm does not pursue the expected CSR activi-
ties (Donaldson and Preston, 1995; Jones, 1995).
CSR advertising may also help to build a positive
CSR reputation related to quality, reliability, and
honesty (McWilliams and Siegel, 2000). However,
such a positive reputation cannot be sustained if
the rms products do not support the advertised
CSR attributes. Therefore, CSR beliefs, attitudes,
and advertising, without actual CSR activities, are
unlikely to build sustainable stakeholder relation-
ships and positive CSR reputations, and thus may
not substantially affect nancial performance.
CSR research has extensively relied on self-
reported CSR information. For example, the widely
used KLD social screens are primarily based on
companies responses to questionnaires and CSR
reports (Waddock and Graves, 1997), which are
generally not audited (Gray et al., 1995). Although
it is necessary to use self-reported CSR informa-
tion to measure CSR, activities should be ltered
from beliefs and attitudes. One approach we sug-
gest is to identify discrete and specic CSR activi-
ties. Reporting discrete and specic CSR activities
inaccurately risks the rms legitimacy because
such activities can be easily scrutinized (Chap-
ple and Moon, 2005). In contrast, CSR disclosures
that are not supported by activities can be merely
advertising or even greenwashing. In this study,
we controlled for CSR disclosure to ensure that
we were not capturing beliefs, attitudes, or adver-
tising, but actual CSR activities. We found that
although CSR activities and CSR disclosure were
highly correlated, CSR disclosure was not signi-
cantly related to nancial performance. This nd-
ing accords with our theoretical hypotheses that
actual CSR activities, rather than CSR disclosure,
affect new ventures nancial performance.
Findings of this study can also inform man-
agement practice. A long-term approach to CSR
can help new ventures prot from their CSR
activities, while short-termism can do new ven-
tures a disservice. Thus, rms with a long-term
orientation should consider pursuing CSR activ-
ities, which will ultimately enhance their nan-
cial performance. Decision makers who take a
moral approach to CSR often believe that pur-
suing CSR activities is just the right thing to do
(Bansal and Roth, 2000; Donaldson and Preston,
1995). These decision makers should formulate
their rms strategic decisions by emphasizing a
long-term orientation, which is likely to lead to
protable outcomes for CSR initiatives.
Limitations and future research
The limitations of this study, especially in regards
to its sample and data sources, deserve attention.
Our sample contained only new ventures, making
it impossible to empirically compare the differ-
ences in the economic returns of CSR activities
between new and established rms. Consequently,
we can only speculate on the contributions of our
work to prior work on established rms. We have
merely cracked open a door on the importance of
objective and subjective time in the relationship
between CSR and nancial performance, and we
hope future researchers will place more empha-
sis on the differences between established and
new ventures approaches to and results from CSR
activities.
Further, we measured long-term orientation and
nancial performance by surveying CEOs and
presidents and measured CSR by counting discrete
CSR activities from ventures Web sites. Although
CEOs and presidents represented the most infor-
mative individuals in these new ventures (Miller
and Friesen, 1984), and Web sites are generally
considered reliable data sources for CSR activities
(Chapple and Moon, 2005; Maignan and Ralston,
2002), our data were essentially self-reported. We
encourage future researchers to seek third-party
sources and longitudinal data to build further reli-
ability in the data and validity in the ndings.
DOI: 10.1002/smj
This research builds on the CSR theory from
new ventures liability of newness (Stinchcombe,
1965). At the same time, we acknowledge that
many new ventures are established to explore and
exploit entrepreneurial opportunities (Barringer
and Greening, 1998; Covin and Slevin, 1990;
Zahra et al., 2000). By targeting new markets,
offering new products and services, and/or imple-
menting new operations, new ventures may break
the equilibrium in the marketplace (Davidsson,
2004), creating substantial economic and social
impacts (Kirzner, 1973). Thus, an important direc-
tion for future research is to develop CSR theory
that accounts for the entrepreneurial aspects of
new ventures. Consumers awareness of social and
environmental issues has been increasing (Brown
and Dacin, 1997; Luo and Bhattacharya, 2006),
suggesting emerging opportunities that can be pur-
sued through CSR activities. Future studies that
examine the nature of CSR-related business oppor-
tunities and how new ventures identify, evaluate,
and exploit (Shane and Venkataraman, 2000) such
opportunities will make important theoretical con-
tributions and practical implications.
Final thoughts
Organizations temporal orientation offers the
opportunity to cast new light on CSR. In what
seems to be an increasingly fast-paced world,
in which rms face ever-increasing pressures for
quick returns, many new ventures are likely to
be reticent to invest in CSR. New ventures that
anticipate being around for a while take a long-
term orientation in strategic decisions and make the
social investments to connect themselves to soci-
ety. These rms build the foundation for a more
sustainable and responsible society. We, therefore,
suggest that objective time (newness) and subjec-
tive time (long-term orientation) point to poten-
tial parameters that can fuel new CSR research,
improving our understanding of the conditions and
contexts that will allow business and society to
work synergistically.
ACKNOWLEDGEMENTS
We thank Stewart Thornhill for his generous sup-
port for collecting the survey data. We are indebted
to Jijun Gao for his advice during the initial devel-
opment of this research. An early version of this
paper was presented in the internal research semi-
nar at IE Business School. We thank David Bach,
Manuel Becerra, Peter Bryant, Karl Cock, Cristina
Cruz, Luis Diestre, Daniel Fernandez, Rachida
Justo, Garen Markarian, Pablo Martin de Holan,
Hana Milanov, and Juan Santalo for their con-
structive comments. We also thank Ryan Raffety,
Natalie Slawinski, and Jianyun Tang for reading
this paper and providing valuable feedback. Fur-
ther, we deeply appreciate the guidance of Edi-
tor, Will Mitchell, and two anonymous reviewers
during the review process; this paper beneted
tremendously from their constructive and thought-
ful comments.
This research was partly funded by the Social
Sciences and Humanities Council of Canada (grant
#410-2008-2233).
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DOI: 10.1002/smj
APPENDIX: Survey Questionnaire
Financial performance
Please evaluate your firms performance in the last year by choosing a number between 1 and 7, where 1 means that
your firm was much worse and 7 means that your firm was much better than major competitors.
P1. Sales level
P2. Market share
P3. Sales growth
P4. Cash flow
P5. Ability to fund business growth from profits
P6. Return on assets (ROA)
P7. Return on equity (ROE)
P8. Return on sales (ROS)
P9. Overall firm performance/success
1
1
1
1
1
1
1
1
1
2
2
2
2
2
2
2
2
2
3
3
3
3
3
3
3
3
3
4
4
4
4
4
4
4
4
4
5
5
5
5
5
5
5
5
5
6
6
6
6
6
6
6
6
6
7
7
7
7
7
7
7
7
7
Long-term orientation (LTO)
LTO1. As your firm defines strategies, you
generally emphasize the immediate future.

LTO2. Your firms criteria for resource
allocation mainly focus on short-term
issues.
LTO3. Your firms ultimate goal is to
increase short-term profitability.
LTO4. As your firm defines strategies, your
major concern is how to harvest temporary
profits.
1

1

1

1
2

2

2

2
3

3

3

3
4

4

4

4
5

5

5

5
6

6

6

6
7

7

7

7
As your firm defines strategies, you generally
emphasize long-term (over 5 years) goals and
strategies.

Your firms criteria for resource allocation
largely reflect long-term considerations.

Your firm emphasizes basic research to build
future competitive edge.

As your firm defines strategies, your major
concern is how to build future competitive
advantage.
Product innovation
In the past three years, has your firm developed new lines of products/services? If yes:
Inno_Prd1: How much did these new lines of products/services differ from other companies products/services?
Very similar 1 2 3 4 5 6 7 Much newer
Inno_Prd2: Compared with major competitors, has your firm introduced fewer or more such new lines of
products/services?
Much fewer 1 2 3 4 5 6 7 Much more
Process innovation
In the past three years, has your firm developed new processes/operating technologies? If yes:
Inno_Prc1: How much did these new processes/operating technologies differ from other companies processes/operating
technologies?
Very similar 1 2 3 4 5 6 7 Much newer
Inno_Prc2: Compared with major competitors, has your firm introduced fewer or more such new processes/operating
technologies?
Much fewer 1 2 3 4 5 6 7 Much more
DOI: 10.1002/smj

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Strategic Management Journal

Strat. Mgmt. J., 33: 11351153 (2012)

Correspondence to: Taiyuan Wang, IE Business School,

/K, where N is the num-

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