Companies should prioritize CSR activities

Oct 13, 2025 by vinooalluri.com 67 views

The Effect of Corporate Social Responsibility on Company Value in Manufacturing Companies Listed on the Indonesia Stock Exchange

Introduction

In today's business world, Corporate Social Responsibility (CSR) has become a major concern among companies, especially for those registered on the Indonesia Stock Exchange (IDX). As the global economy continues to grow, companies are under increasing pressure to not only generate profits but also to contribute to the well-being of society. This study aims to test the effect of CSR on company value, with a focus on manufacturing companies listed on the IDX. By examining the relationship between CSR and company value, this research provides valuable insights for companies, investors, and policymakers.

The Importance of Corporate Social Responsibility

Corporate Social Responsibility refers to a company's commitment to operating in a responsible and sustainable manner, taking into account the impact of its activities on the environment, society, and the economy. CSR involves a range of activities, including philanthropy, community development, environmental protection, and social justice. By engaging in CSR activities, companies can build a positive image, increase stakeholder trust, and attract investors.

Research Methodology

This research population includes manufacturing companies listed on the IDX in 2012 to 2013, which published annual reports and have been audited. The sample selection method used is purposive sampling, which produces a total of 20 companies per year. Data analysis was carried out using SPSS version 21 software, which includes classical assumptions testing, hypothesis tests, T tests, and determinant tests.

Research Result

The results of this study indicate that corporate social responsibility and growth opportunities have a positive and significant influence on company value. This indicates that companies that are active in CSR activities tend to have a higher market value, as well as attract greater investors. On the other hand, company size does not show a significant effect on the company's value.

The Positive Influence of CSR on Company Value

The positive influence of CSR on company value can be interpreted in several ways. First, companies that apply CSR well are able to build a positive image in the eyes of the public and consumers. This good image can increase customer loyalty and, in turn, increase company revenue. In addition, investment in CSR activities can reduce the risk of reputation, which is often a major concern in the business world today.

Second, involvement in CSR shows that the company has a concern for the surrounding social and economic environment. This can increase stakeholder trust and attract investors, who are looking for companies with strong social responsibility as part of their portfolio.

The Absence of Significant Influence of Company Size

As for the company's size, the results that show the absence of significant influence may be caused by other factors that affect the company's value, such as managerial strategies or broader market conditions. This shows that not always a larger company size will guarantee a higher value.

Conclusion

Overall, this research provides useful insights about the importance of corporate social responsibility in the context of manufacturing companies listed on the Indonesia Stock Exchange. These results underline the need for companies to pay attention and integrate CSR activities into their business strategies, not only to fulfill social obligations, but also to increase the value of companies in the eyes of investors and the general public.

Recommendations

Based on the findings of this study, the following recommendations are made:

Companies should prioritize CSR activities: Companies should recognize the importance of CSR and prioritize its activities as part of their business strategies.
Investors should consider CSR: Investors should consider CSR as a key factor in their investment decisions, as companies with strong CSR practices tend to have higher market value.
Policymakers should support CSR: Policymakers should support CSR by creating a favorable business environment that encourages companies to engage in CSR activities.

Limitations

This study has several limitations, including:

Sample size: The sample size of this study is relatively small, which may limit the generalizability of the findings.
Data availability: The data used in this study is limited to the period of 2012 to 2013, which may not reflect the current business environment.
Measurement of CSR: The measurement of CSR used in this study is based on a single indicator, which may not capture the full range of CSR activities.

Future Research Directions

Future research should aim to address the limitations of this study by:

Increasing sample size: Future studies should aim to increase the sample size to improve the generalizability of the findings.
Using multiple indicators: Future studies should use multiple indicators to measure CSR, to capture the full range of CSR activities.
Examining the impact of CSR on other outcomes: Future studies should examine the impact of CSR on other outcomes, such as employee satisfaction, customer loyalty, and community development.

By addressing these limitations and expanding the scope of the study, future research can provide more comprehensive insights into the effect of CSR on company value.
Frequently Asked Questions (FAQs) about the Effect of Corporate Social Responsibility on Company Value

Q: What is Corporate Social Responsibility (CSR)?

A: Corporate Social Responsibility (CSR) refers to a company's commitment to operating in a responsible and sustainable manner, taking into account the impact of its activities on the environment, society, and the economy.

Q: Why is CSR important for companies?

A: CSR is important for companies because it helps to build a positive image, increase stakeholder trust, and attract investors. Companies that engage in CSR activities tend to have higher market value and are more attractive to investors.

Q: What are some examples of CSR activities?

A: Some examples of CSR activities include:

Philanthropy: donating money or resources to charitable causes
Community development: investing in local communities and supporting economic development
Environmental protection: reducing waste, conserving energy, and protecting natural resources
Social justice: promoting equality, fairness, and human rights

Q: How does CSR affect company value?

A: CSR has a positive and significant influence on company value. Companies that engage in CSR activities tend to have higher market value and are more attractive to investors.

Q: What are some benefits of CSR for companies?

A: Some benefits of CSR for companies include:

Improved reputation and image
Increased stakeholder trust and loyalty
Attraction of investors and customers
Reduced risk of reputation damage
Improved employee morale and engagement

Q: What are some challenges of implementing CSR?

A: Some challenges of implementing CSR include:

Limited resources and budget
Difficulty in measuring the impact of CSR activities
Resistance from employees or stakeholders
Difficulty in balancing business goals with social and environmental responsibilities

Q: How can companies measure the effectiveness of CSR?

A: Companies can measure the effectiveness of CSR by:

Tracking financial metrics, such as revenue and profit
Monitoring social and environmental metrics, such as employee satisfaction and carbon emissions
Conducting surveys and focus groups to gauge stakeholder perceptions
Using benchmarking and comparison to industry peers

Q: What are some best practices for CSR implementation?

A: Some best practices for CSR implementation include:

Developing a clear CSR strategy and policy
Engaging stakeholders and employees in CSR decision-making
Measuring and reporting CSR performance
Integrating CSR into business operations and decision-making
Continuously monitoring and improving CSR practices

Q: What are some common mistakes companies make when implementing CSR?

A: Some common mistakes companies make when implementing CSR include:

Failing to develop a clear CSR strategy and policy
Ignoring stakeholder and employee concerns
Focusing solely on financial metrics and neglecting social and environmental impacts
Failing to measure and report CSR performance
Not integrating CSR into business operations and decision-making

Q: How can companies stay up-to-date with the latest CSR trends and best practices?

A: Companies can stay up-to-date with the latest CSR trends and best practices by:

Attending industry conferences and events
Reading CSR literature and research
Joining CSR networks and associations
Participating in online forums and discussions
Collaborating with other companies and stakeholders to share best practices.