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Research on the relationship between social responsibility and the financial performance of companies has yielded ambivalent results. Since investments on different areas of social responsibility can promote distinct outcomes, in this study we focus on internal corporate social responsibility (I-CSR), that is, investments on employees. The objective of the study is to verify if outlays on I-CSR affect organizational performance. We analyzed financial information from companies listed in the São Paulo Stock Exchange, and their social balance sheets filled with the Brazilian Institute of Social and Economic Analysis between 2001 and 2007, applying Two-Stage Least Squares (2SLS) equation model to minimize endogeneity and reverse causality problems. The results indicate that overall I-CSR was associated with revenue contemporarily, one and two years after the investments. Corporate outlays on healthcare, pension plans, employee education and profit-sharing all had positive effects on revenue in the years that followed such investments

Internal Corporate Social Responsibility and Performance: A Study of Publicly Traded Companies