The Mediating Roles of Corporate Reputation, Employee Engagement, and Innovation in the CSR—Performance Relationship: Insights from the Middle Eastern Banking Sector

Khodor Shatila, Carla Martínez-Climent and Sandra Enri-Peiró ()
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Khodor Shatila: ICN Artem Business School, Faculty of Business Adminstration, 54000 Nancy, France
Carla Martínez-Climent: Department of Business Organization, Universitat Politècnica de València, 46022 Valencia, Spain
Sandra Enri-Peiró: Research Department, ESIC Business & Marketing School, Spain & ESIC University, 28223 Madrid, Spain

JRFM, 2025, vol. 18, issue 10, 1-23

Abstract: This study investigates how Corporate Social Responsibility (CSR) influences financial performance in the Middle Eastern banking sector through the mediating roles of corporate reputation, employee engagement, and innovation orientation. Drawing on stakeholder theory and the resource-based view, a survey of 297 senior banking executives was analyzed using structural equation modeling. The results show that CSR has both a direct positive impact on financial performance and an indirect effect by strengthening intangible resources. Among the mediators, innovation orientation emerged as the strongest pathway, followed by employee engagement and reputation. Collectively, the model accounted for more than 60% of the variance in financial performance, confirming that socially responsible strategies are not symbolic but yield tangible economic value. In the Middle Eastern banking sector—characterized by regulatory turbulence, cultural expectations, and digital transformation—CSR initiatives such as financial inclusion programs, green financing, and Sharia-compliant services provide both legitimacy and resilience. These findings highlight the strategic importance of embedding CSR into banking practices, showing that socially responsible institutions not only secure reputational gains but also cultivate motivated employees, foster innovation, and achieve sustainable profitability. By situating CSR within the unique context of Middle Eastern banking, this study extends the literature on CSR—performance linkages in emerging markets and demonstrates how intangible capabilities can be mobilized to secure long-term financial sustainability.

Keywords: corporate social responsibility; employee engagement; innovation orientation; financial performance; middle eastern banking sector (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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