Social Sustainability of a Firm: Orientation, Practices, and Performances

Abstract

This paper investigates how firms’ social sustainability practices can influence their social performance and, ultimately, financial performance. We include two corporate social sustainability practices: employee-oriented (employee well-being and equity) and socially driven (corporate social involvement) practices. Three leading social theories (social identity theory, social exchange theory, and resource-based view) are applied in explaining how firms’ social practices influence intermediate and bottom-line performance outcomes. Empirical results of 212 US manufacturing firms reveal that (1) the social orientation of the firm promotes firms’ social performances (employee-oriented and community-oriented outcomes) directly; (2) social orientation also indirectly promotes employee-oriented outcomes via employee well-being and equity practices, and so does community-oriented outcome via corporate social involvement practices; and (3) the firms’ social performances can enhance financial performance. The theoretical and managerial implications derived from these empirical results are discussed as well.