Diversification and corporate social performance in manufacturing companies

Dina Patrisia, Shabbir Dastgir

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

The effects of diversification on financial performance are well-established, less so the way in which diversification influences company behaviour towards stakeholder demand and social concern. This paper investigates the relationship between business diversification and corporate social performance (CSP) in an industrial setting, in Indonesia. CSP is measured with an index constructed from content and disclosure analysis of annual company reports in line with global reporting initiative standards. A sample of 107 listed manufacturing companies from the Indonesian Stock Exchange is used to estimate a lagged multiple regression model to show that industry-level diversification does not have an effect on CSP. However, distinguishing between related and unrelated diversification produces a different outcome whereby, related diversification is negatively and statistically significantly correlated with CSP. Unrelated diversification, on the other hand, shows a positive and statistically significant relationship. It means the relationship between unrelated diversification and CSP is more positive than the relationship between related diversification and CSP. The findings offer a unique insight into industrial diversification and CSP in Indonesia’s expanding manufacturing sector.
Original languageEnglish
Pages (from-to)121-139
Number of pages19
JournalEurasian Business Review
Volume7
Issue number1
Early online date1 Jul 2016
DOIs
Publication statusPublished - 1 Apr 2017

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Diversification
Manufacturing companies
Corporate social performance
Indonesia
Stock exchange
Regression model
Stakeholders
Manufacturing sector
Multiple regression
Global Reporting Initiative
Financial performance
Industry
Disclosure
Business relationships

Cite this

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Diversification and corporate social performance in manufacturing companies. / Patrisia, Dina; Dastgir, Shabbir.

In: Eurasian Business Review, Vol. 7, No. 1, 01.04.2017, p. 121-139.

Research output: Contribution to journalArticle

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