4Capital and Performance

 

By Dr. Alex Liu

 

 

 


 

 

Our research findings, as well as those from numerous other studies, clearly illustrate the significant influence of 4Capital on the success of entrepreneurial teams. Importantly, this relationship extends beyond just new organizations; it holds true for established and large organizations as well. This chapter will concentrate its analysis on the latter, offering a wealth of insightful results for review. Additionally, this chapter is partially grounded in the published note below, which serves as a foundational reference.

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4Capital and Corporate Social Responsibility

 

Our 4Capital theory originates from the entrepreneurship research we have conducted. Naturally, the theory has quickly gained recognition in the fields of entrepreneurship and business development. Many scholars and practitioners, such as Ernest Chu, concur that startups have a better chance of succeeding, and established enterprises can experience rapid growth only if these organizations achieve an optimal combination of material capital, intellectual capital, social capital, and spiritual capital.

Simultaneously, the belief in developing spiritual capital and related practical strategies is beginning to gain recognition in the fields of corporate social responsibility and enterprise sustainable development. Some scholars and practitioners, including Ken Eldred, argue that business ethics is a superior concept to corporate social responsibility, while spiritual capital encompasses more meaningful aspects than business ethics.

In recent years, corporate social responsibility has become a widely acknowledged term, with its significance recognized broadly. For instance, both Fortune and Forbes have included a social responsibility category in their business ratings. In Europe and North America, nearly all public companies have established CSR departments. However, in practice, most of these CSR departments function as public relations departments, focusing primarily on philanthropy and self-promotion. These CSR departments are often perceived as cosmetic additions and reactive measures to avoid criticism, resulting in criticism themselves.

The 4Capital theory posits that once an enterprise achieves its optimal 4Capital combination, corporate social responsibility will naturally follow. Simultaneously, the enterprise will attain long-term and sustainable rapid development. In the United States, empirical research, such as that published in the Global Finance and Strategic Management Journal since 2001, has consistently supported our perspective. More and more research has demonstrated a strong, significant, positive relationship between CSR and long-term financial performance. In other words, the stronger CSR an enterprise embraces, the better its financial returns. Conversely, cosmetic CSR efforts have been shown to have negative impacts on financial returns for the corporations that adopt them.

For the aforementioned reasons, the CSR departments of many enterprises have started to explore our 4Capital theory and have begun efforts to apply it to achieve corporate social responsibility and long-term sustainable development. This is because, under our 4Capital theory, corporate social responsibility and long-term sustainable development mutually support rather than conflict with each other.

 

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