Corporate Social Responsibility and Business Performance in Takaful Agencies: The Moderating Role of Objective Environment

Abstract

The previous research on the relationship between corporate social responsibility (CSR) and business performance produced mixed findings. Scholars exerted the mixed findings are largely influenced by several factors and contexts where different markets, type of companies, industries, and countries would show different results. On that basis, this study examines how the dimensions of objective environment influence the relationship between CSR dimensions and the business performance of Takaful agencies in Malaysia. Malaysia was chosen as the country because it is among the largest Takaful contributors in the world. Stakeholder and contingency theory are used to analyze the hypothetical relationship between the variables. Questionnaires were distributed to Takaful agency managers who operate their businesses in Kuala Lumpur, Putrajaya, and Selangor state. About 211 of them participated in this study. The empirical findings suggest that economic and ethical activities have a direct influence on Takaful agencies’ business performance. Further results imply that while environmental dynamism influences business performance directly, environmental complexity significantly moderates the relationship between legal, philanthropy, and business performance. This research considered only the direct effect of CSR activities and the moderating effect of environmental dimensions on business performance with only the agency managers’ perspective studied. It adds new insights to the CSR and Takaful literature by revealing the relationship between the dimensions of CSR and business performance in the Takaful context, and sheds light on how governing authorities and Takaful operators should implement the CSR strategy and activities to make the industry successful in Malaysia and around the world, as Takaful businesses are heading towards becoming a global industry.

Effect of external corporate factors on takaful performance

“…Similarly, Hsiu-Jen and Shu-Yi (2014) find a significantly positive effect of CSR on companies' financial performance (ROA, ROE and EPS) in Taiwan. Nazri et al (2020) examine the relationship between CSR and business performance in the context of Takaful. They find that Takaful insurance should implement CSR activities to make firms successful worldwide.…”

The interplay between corporate social responsibility and knowledge management strategies for innovation capability development in dynamic environments

“…The existing research on CSR highlights environment features as an important factor to consider when setting a particular CSR strategy (Achi et al, 2022;Nazri et al, 2020;Sun and Cui, 2014;Zhang et al, 2021). Managers should thus pay attention to such features, and in particular, to dynamism, when they design the firm's strategy in terms of CSR (Achi et al, 2022;Zhang et al, 2021).…”

Shariah board and takaful performance: mediating role of corporate social responsibility

“…Similarly, Hsiu-Jen and Shu-Yi (2014) found a signi cantly positive effect of CSR on companies' nancial performance (ROA, ROE, and EPS) in Taiwan. Nazri et al (2020) examine the relationship between CSR and business performance in the context of Takaful. They found that Takaful insurance should implement CSR activities to make the rm successful worldwide.…”