Publication: The profitability of socially responsible companies: Public subsidies for sheltered employment centers
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Publication Date
2015
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Ramon Llull University
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During economic crises, more than ever, the companies realize the impact of their activities on society through their social reponsibility. Firms that practice social responsibility strategies are more attractive to their customers, and sometimes this is a way to obtain competitive advantages such as creation of value, better social image, high consumer loyalty and, in consequence, higher profits. Prior literature justifies that there is a positive association between corporate social responsibility and financial performance.
A kind of company with a special commitment to develop its business in a responsible way for society is sheltered employment centers, businesses whose workers are mostly disabled people. The objective of this paper is to analyse whether the sheltered employment centers that receive public subsidies achieve greater economic profitability on average than those centers that do not receive it. Although the number of these firms has been growing during the crisis, when governments have reduced their financial help, some theoretical papers justify their profitability due to public subsidies received.
After obtaining the total sample of sheltered employment centers in the Community of Madrid using statistical and artificial intelligence methods, our results show that sheltered employment centers, on average, are productive enterprises in which their profitability is not conditioned by the public aid granted. The model obtained shows that these companies are profitable businesses when they can pay their interest expenses with profits every period. Additionally, the social and labour integration of disabled people is a way to improve their corporate social responsibility.
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