The mediating role of natural and social resources in the corporate social responsibility—corporate financial performance relationship

Abstract

Failure to obtain definitive results regarding the influence of corporate social responsibility (CSR) on corporate financial performance (CFP) has prompted scholars to investigate mechanisms behind this relationship. This paper follows the same path and distinguishes two dimensions of CSR (social and environmental) to expand the pool of potential mediators on the basis of natural-and social resource-based view (RBV) of the firm. In a unique dataset comprising seven potential mediators for 300 companies, a direct relationship only existed between environmental CSR and CFP, in contrast to the "new road" from social CSR to CFP that goes through external reputation and innovativeness-variables that form an opposing mediation. 1 | INTRODUCTION Corporate social responsibility (CSR) is an increasingly common subject of research, especially in the areas of management and finance. CSR activities are increasingly common among managers (Horváth et al., 2017) and "firms have greatly increased the amount of resources allocated to [CSR] activities" (Barnea & Rubin, 2010, p. 71). This gives rise to questions on the relationship between CSR and corporate financial performance (CFP). As Wang, Sewon, and Claiborne (2008) noted, CSR needs economic justification, because without evident benefits for companies, CSR may not continue to flourish. CSR programs are costly and must compete for companies' limited financial resources. Although empirical research on the CSR-CFP relationship spans nearly 50 years,1 the findings are ambiguous, as repeatedly demonstrated in literature reviews (De Bakker, Groenewegen, & Den

Corporate Social Responsibility Disclosure and Financial Performance: The Mediating Role of Financial Statement Comparability

“…Meanwhile, according to hypothesis H3, the significant benefits of financial statement comparability should allow firms easy access to capital markets at low cost, resulting in a positive correlation between financial statement comparability and financial performance. In addition, a large amount evidence also supports the view that positive signals through CSR disclosure cannot only directly affect financial performance but also indirectly through other mediators, such as competitive advantage, reputation and customer satisfaction [2,4], access to capital [3], productivity [5], visibility [6], natural and social resources [7], or stakeholder influence capacity [8]. Therefore, in agreement with these studies, we hypothesize H4 as follows:…”

“…In Figure 1, we propose the following analytical framework (with hypotheses attached) for the investigation based on the underlying theories and past research: social resources [7], or stakeholder influence capacity [8]. Therefore, in agreement with these studies, we hypothesize H4 as follows:…”

“…Accordingly, instead of trying to clarify whether CSR disclosure is positively or negatively associated with financial performance, it is proposed that intermediate variables be used in the analysis [2]. The mediator variables identified in previous studies are quite diverse, such as competitive advantage, reputation and customer satisfaction, productivity, access to capital, corporate image, stakeholder influence capacity, natural and social resources, and corporate visibility [2][3][4][5][6][7][8].…”

Corporate social responsibility spending as a building block for sustainable corporate ethical identity: Lessons from Indian business groups

“…The empirical evidence is inconclusive on the direct effect of CSR on firm value (Barnea & Rubin, 2010; Di Giuli & Kostovetsky, 2014; Fisman et al, 2008; Manchiraju & Rajgopal, 2017; Margolis et al, 2009; Ratajczak, 2021). In a comprehensive meta‐analysis, Margolis et al (2009) find that some studies document a positive relation between CSR expenditure and firm performance (which contrast the views of shareholder wealth maximization theory), whereas others report a negative relation (in line with shareholder wealth maximization theory).…”

Reporting and Disclosure of Investments in Sustainable Development

“…CSR reporting is primarily a narrative complement to financial reporting, as it is currently not integrated at the level of recording individual economic events, although it is slowly being standardized [16]. The CSR is claimed to be unstable [17] and poorly integrated in financial reporting [18] and weakly understood [19].…”