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Editor: Universidad Carlos III de Madrid. Instituto para el Desarrollo Empresarial INDEM

Issued date: 2010-09

ISSN: 1989-8843

Serie-No.: INDEM Working Paper Business Economic10-03

Keywords: Corporate social responsibility , Stakeholders , Inventories

Rights: Atribución-NoComercial-SinDerivadas 3.0 España

Abstract:In this article, we study the impact of implementing corporate social responsible CSR practices on afirm’s inventory policy. Our proposal is that there is an inverted U-shape relationship between firms’ CSR andtheir inventory levels. Two elements explainIn this article, we study the impact of implementing corporate social responsible CSR practices on afirm’s inventory policy. Our proposal is that there is an inverted U-shape relationship between firms’ CSR andtheir inventory levels. Two elements explain such proposal. First, stakeholders have different interestsregarding the outcome of the inventory system. Specifically, we hypothesize that customers pressurefirms to increase inventories; employees have conflicting views regarding inventories and, for thisreason, they do not pressure firms in a particular direction; and environmental activists force firms toreduce inventories. The second reason is that there is different level of stakeholder proactivenesscontingent on the intensity in the implementation of social responsible policies. In particular, we positthat for low levels of CSR, customers are more relevant, while for larger levels other stakeholders gainmore importance.We test this theoretical prediction by crossing two databases, COMPUSTAT, for financial data, andKLD for data on social responsibility. Our final database contains data on 1881 different US companies for theperiod 1996-2006. The results found conform to our theoretical prediction.Our analysis will be helpful to strategic and tactical decision-making processes on inventorymanagement and will allow researchers to offer concrete advice on the likely outcomes of various stakeholderrelationship practices in order to improve the effectiveness of inventory systems. Additionally, the connectionbetween CSR and inventory policies has interest at a macroeconomic level given that, on the one hand, there is agrowing tendency for firms to behave in a socially responsible way. On the other, inventories are responsible forup to 87% of the total peak-to-trough movement in GDP. Thus, our results suggest that this tendency toincorporate the social dimension in firms’ strategy should smooth out the overall economic cycle given thatfirms apply more intensive CSR policies in the expansive periods decreasing inventories rather than during thedownturns increasing inventories.+-





Author: Barcos, Lucía; Barroso, Alicia; Surroca, Jordi; Tribó, Josep A.

Source: http://e-archivo.uc3m.es


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Universidad Carlos III de Madrid Repositorio institucional e-Archivo http:--e-archivo.uc3m.es Instituto para el desarrollo empresarial (INDEM) INDEM - Working Paper Business Economic Series 2010-09 Corporate social responsibility and inventory policy Barcos, Lucía http:--hdl.handle.net-10016-9313 Descargado de e-Archivo, repositorio institucional de la Universidad Carlos III de Madrid CORPORATE SOCIAL RESPONSIBILITY AND INVENTORY POLICY* LUCÍA BARCOS Universidad Carlos III de Madrid Department of Business Administration Calle Madrid, 126 Getafe (Madrid), Spain, 28903 Phone: (34) 91-624-9572 Fax: (34) 91-624-9607 e-mail: lbarcos@emp.uc3m.es ALICIA BARROSO Universidad Carlos III de Madrid Department of Business Administration Calle Madrid, 126 Getafe (Madrid), Spain, 28903 Phone: (34) 91-624-8687 Fax: (34) 91-624-9607 e-mail: alicia.barroso@uc3m.es JORDI SURROCA Universidad Carlos III de Madrid Department of Business Administration Calle Madrid, 126 Getafe (Madrid), Spain, 28903 Phone: (34) 91-624-8640 Fax: (34) 91-624-9607 e-mail: jsurroca@emp.uc3m.es JOSEP A.
TRIBÓ* Universidad Carlos III de Madrid Department of Business Administration INDEM Institute Calle Madrid, 126 Getafe (Madrid), Spain, 28903 Phone: (34) 91-624-9321 Fax: (34) 91-624-9607 e-mail: joatribo@emp.uc3m.es * Corresponding author * Financial support from Ministerio de Ciencia y Tecnologia (Grant #ECO2009-10796 and CONSOLIDER #ECO2006-04046-002) is gratefully acknowledged.
The usual disclaimers apply CORPORATE SOCIAL RESPONSIBILITY AND INVENTORY POLICY Abstract In this article, we study the impact of implementing corporate social responsible (CSR) practices on a firm’s inventory policy.
Our proposal is that there is an inverted U-shape relationship between firms’ CSR and their inventory levels.
Two elements explain such proposal.
First, stakeholders have different interests regarding the outcome of the inventory system.
Specifically, we hypothesize that customers pressure firms t...





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