From fossil fuels to renewables: evaluating the effect of CSR strategies on firm performance in the energy industry
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2024-06-28
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en
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This Master Thesis explores the impact of Corporate Social Responsibility (CSR) on firm performance, specifically by analyzing a firm’s acquisitions and divestments, and how this relationship is moderated by institutional pressures. As legitimacy is important for firms to be seen as trustworthy (Suchman, 1995), CSR initiatives are implemented to gain legitimacy and to comply to stakeholder demands (Du and Vieira, 2012). It finds out its potential for greenwashing within the energy industry, as firms can gain legitimacy while continuing their polluting but well performing business practices (Dahl, 2010; Delmas and Burbano, 2011; Cherry and Sneirson, 2010; Wei et al., 2020). This study offers insights how a firm’s CSR strategy, measured by the amount of green and grey acquisitions and divestments, affect firm performance. Employing a fractional regression analysis, the study analyzes data from firms in the energy industry acquiring or divesting assets in the period January 2002 to December 2022. Results indicate firms acquiring grey assets have improved performance. When divesting grey assets, a firm’s performance increases. However, the positive impact on firm performance by divesting a grey asset diminishes when it is moderated by institutional pressures. Institutional pressures, however, also impact firm performance positively. Additionally, firms move towards more green business portfolios. However, as firms acquiror more grey than green, this could indicate firms are still more focused on a strategy around fossil fuels. This imbalance could potentially be a greenwashing strategy. These findings underscore the importance of aligning strategic decision making with stakeholder expectations and sustainability objectives and highlight the necessity of a more considered approach to acquisition and divestment decisions around grey assets. Not only considering its impact on performance, but managers should also account for institutional pressures to meet sustainable growth and long-term value creation.
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Faculteit der Managementwetenschappen