The curvilinear relationship between corporate social responsibility and competitive advantage: Empirical evidence from China

Abstract

The positive or negative impacts corporate social responsibility (CSR) may have on business performance have drawn research interest. In recent years, the focus of research has shifted toward the link between CSR and corporate competitive advantage. Corporate competitive advantage is a multifaceted and holistic concept that captures more than just corporate financial performance. Building on the resource‐based view (RBV), corporate competitive advantage construct theory, and CSR behavior theory, we explore how a firm's CSR engagement shapes its corporate competitive advantage. Our analysis of a panel dataset of 64 companies with a top‐100 CSR development index in China and 704 firm‐year observations over the sample period from 2009 to 2019 reveals an inverse U‐shaped relationship between CSR and corporate competitive advantage. This signifies that corporate competitive advantage first increases with CSR engagement but declines as it reaches a threshold level where CSR activities are beyond the affordability of the firm. We also examine how behaviors at various CSR engagement levels influence different dimensions of corporate competitive advantage. These results support a curvilinear relationship, explaining why many CSR strategies have been ineffective in the past. The findings may help guide corporate decisions and government policymaking on CSR.

Cambios en las prácticas de responsabilidad social empresarial en tiempos de pandemia por COVID-19

“…Al incurrir en prácticas de RSE, las organizaciones crean una ventaja competitiva (Marakova et al, 2021;Mai et al, 2023;Wu y Li, 2024) que les permite mejorar su rentabilidad, favoreciendo el rendimiento financiero (Fombrun y Shanley, 1990;Jizi et al, 2014;Ioannou y Serafeim, 2010). Sin embargo, en épocas de crisis financieras las tendencias por realizarlas y divulgarlas pueden cambiar en función del deterioro financiero de las entidades y el entorno empresarial incierto, considerando que, tanto las organizaciones como los diversos actores de la sociedad, tratan de evitar el efecto de la crisis mediante medidas correctivas (Karaibrahimoglu, 2010).…”

Diversified boards and the achievement of environmental, social, and governance goals

“…Gao et al (2023) examined the complexity of CSR and its impact on financial performance, emphasizing contextual factors Chen, Hansen, et al (2023). investigated employees' perceptions of CSR and its effects on work attitudes, providing insights into personorganization fit Wu and Li (2023). shifted focus toward the link between CSR and corporate competitive advantage, uncovering an inverse U-shaped relationship that explains the inefficacy of many CSR strategies.…”