Evaluation of the Impact of Corporate Social Responsability on Stakeholder Management and Value Creation for Private Equity Companies

Ludmilla Besson & Dimitar Dimov

Student thesis: Master thesis

Abstract

Corporate Social Responsibility (CSR) first gained importance as a risk management tool, but also as a value creation tool in the past couple of years. At the same time, CSR has been used as a driver of reputation, where the benefits of CSR are geared towards a better image of the company. Even so, the CSR focus has been on the external stakeholder side (customers, investors, NGOs), while the internal side (employees) has been neglected in the research. Specifically, very few studies have focused on linking CSR to employees’ impressions of the organization. The fast integration of CSR in the Private Equity (PE) sector is mainly influenced by the fear to lose investors if unethical investments were made. This study aims to analyze the PE sector, as it does not seem to be proactive in the field, although it seems to have the potentiality to emphasize and benefit more from sustainable practices, internally speaking. Hypothesis on the potential value creation of CSR initiatives through the reputation gap are addressed in this paper, studying the impact of reporting towards the customer-facing employees of a Danish portfolio company. Empirical evidence supports the fact that PE firms use CSR as a defensive tool, and that hidden value creation can be enhanced on a reputation side if used as a more proactive tool. In particular, results indicate that CSR improves employees corporate identity (also addressed as internal reputation) through different organization behaviors, particularly when the frontline employees are familiar with their company’s CSR projects. This implies that the more CSR is being communicated through the company, the better the reputation gap is likely to lead to value creation. Evolution and improvements of the study are suggested as promising future research paths

EducationsMSocSc in Service Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2015
Number of pages138