Small Firms' Ongoing CSR Initiatives Amidst a Financial Downturn.

A long stream of research has unraveled numerous underpinnings of the relationship between a firm's financial and social performance, yet has not adequately addressed how the changes in a firm's financial situation affects its ongoing community and environmental initiatives. We sought to address this topic by examining the changes in small manufacturing firms' community and environmental initiatives during the recent economic downturn. We developed a theoretical framework by drawing on emerging perspectives in the fields of strategy and cost behavior. Using data gathered from 478 small firms representing multiple manufacturing sectors in the US, we found that a decline in a firm's financial performance is associated with a higher decline in its ongoing community initiatives than in its environmental initiatives. The decline in community initiatives was even greater when a firm operated amidst a highly dynamic organizational context, while the decline in environmental initiatives was not contingent upon the level of dynamism. Potential theoretical and practical implications of these findings are presented. [ABSTRACT FROM AUTHOR]