From driver to enabler: the moderating effect of corporate social responsibility on firm performance

Tian Lan, Yu Chen, Huafang Li, Lijia Guo and Jiashun Huang

Economic Research-Ekonomska Istraživanja, 2021, vol. 34, issue 1, 2240-2262

Abstract: Corporate social responsibility (CSR) is assumed to have a direct influence on firm performance. However, the existing literature provides a mixed depiction of the relationship between CSR and firm performance. In this study, CSR is considered as an enabler for firm performance, rather than a direct driving force. Using a sample of U.S. firms, we test the enabler hypothesis and find that CSR positively moderates the relationship between marketing investments and firm financial performance, i.e., the enabling hypothesis is supported. The moderating effect of CSR is further moderated by how firms treat their employees. Mistreating employees weakens CSR’s moderating effect because it may make customers to perceive CSR activities as self-interested makeups rather than purely charitable actions in nature. Overall, our study suggests a logic shift from considering CSR as a driver for firm performance to an enabler and provides implications for both future research and practices.

Date: 2021
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DOI: 10.1080/1331677X.2020.1862686

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