| This paper sheds new light on the much debated issue of how corporations can do well and do good by focusing on the multidimensional nature of corporate social responsibility and acknowledging model uncertainty. Model averaging, a formal statistical framework which explicitly accounts for specification uncertainty, is introduced in the literature and applied to a unique database matching the economic and environmental and social performance of 461 large European firms. Hereby the composition of profitability-linked corporate social responsibility is unveiled and reveals the importance of good business behavior with customers and suppliers. Strong and novel support is also brought to the coexistence of corporate policies monotonically related to economic performance (human resources) and policies with optimal level (environment), hence reconciling competing theories. Implications for business and further research are discussed. |
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