Creating Shared Assets

Abstract

The purpose of this paper is to assess the creation of so-called shared assets, as a long-term result of corporate social responsibility (CSR) activities, particularly with regard to the financial sector. Central to the study is the shared value concept by Porter and Kramer (2011). A newly developed quantitative measure of so-called shared assets -- the accounting equivalent of shared value -- is assessed. This suggests a utilitarian motive for CSR within a CSR decision making process. Several theories or models are applied to construct a framework to study the data -- utilitarian ethics, Carroll’s (1991) CSR Pyramid, institutional theory and shared value creation. By focussing on CSR, companies create value that is broader than just financial value. The creation of shared value is similar to self-creation of intangible assets, which are not capitalised. It is hypothesised that CSR activity leads to the creation of shared assets on the long run. In this paper two samples are studied: A rather old sample from 2004, which contains 734 companies from 28 countries, from which 171 from the financial sector from 23 countries and the 2012 sample contains 3,553 companies from 56 countries, including 796 financials. 724 companies appear in both databases, from which 166 are financials. Self-creation of shared assets is similar to the self-creation of non-capitalised goodwill through spending on the improvement of the corporate image. The results of our analysis show only negative associations with financial sector membership. Although statistical evidence is clear, the outcomes may be disturbed by international heterogeneity. This may introduce confounding factors into the cross-sectional dataset. Further analysis is needed to eliminate any disturbing factors. The outcomes of this study provide indications that the rather abstract concepts of shared value and shared assets can operationalised. The discrepancy between expected outcomes and the actual outcomes may suggest a challenge for the financial sector. CSR has its pay-off -- shared assets. This conclusion may lead to a stronger corporate focus on CSR in the future, with possible large social impact. This is the first known accounting study to assess the creation of shared assets and shared value.