Moral Imperative or Economic Necessity? The Role of Institutional Investors in the Corporate Social Responsibility—Financial Performance Relationship

Jihwan Yeon (), Hyoung Ju Song and Bora Kim
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Jihwan Yeon: The College of Hospitality and Tourism Management, Sejong University, Seoul 05006, Republic of Korea
Hyoung Ju Song: Rosen College of Hospitality Management, University of Central Florida, Orlando, FL 32819, USA
Bora Kim: Surrey Hospitality and Tourism Management, University of Surrey, Guildford Surrey GU2 7XH, UK

Sustainability, 2025, vol. 17, issue 2, 1-18

Abstract: This study examines how institutional ownership concentration, quantified by the Herfindahl-Hirschman Index (HHI), influences the financial consequences of CSR initiatives within the U.S. restaurant industry. This study distinguishes between CSR activities that are integral to core operations (operation-related CSR) and those that are not (non-operation-related CSR), analyzing their impacts on both market-based (ROA) and accounting-based performance (Tobin’s q) measures. Employing panel regression analysis, findings reveal that higher institutional ownership concentration enhances the alignment of operation-related CSR with improved financial performance. Conversely, the institutional ownership concentration does not significantly moderate the impact of non-operation-related CSR on both performance measures. Given the restaurant industry’s high consumer visibility and operational reliance on social and environmental factors, this study fills gaps in CSR literature by offering insights for aligning CSR strategies with institutional owners’ expectations. The results provide actionable guidance for policymakers and industry practitioners to optimize organizational outcomes from CSR activities.

Keywords: corporate social responsibility; operation-related CSR; non-operation-related CSR; financial performance; institutional ownership; restaurant industry (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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