Abstract
Purpose. The aim of this paper is to shed light on the relationship between the adoption of SA8000 – which is considered the most important ethical certification standard – and firm performance.
Design/methodology/approach. We analyse secondary longitudinal balance sheet data of listed firms employing a rigorous event-study approach and compare SA8000 certified companies to different control groups based on three matching criteria, i.e., industry, size, and pre-certification performance. We then study the moderating effects of the cultural features, the country’s development, and the labour intensity on the causal relationship through multiple regression methods.
Findings. We show that SA8000 certification positively affects labour productivity and sales performance and allows firms to maintain (rather than increase) profitability. Furthermore, we highlight the fact that the relationship between SA8000 and profitability is moderated by some cultural features of the home country.
Originality/value. This is the first study which empirically tests the effects of the ethical certification SA8000 on firm performance using a cross-country sample. In addition, we contribute to the wider debate on the effects of CSR practices on firm performance.