Reexamining Corporate Social Responsibility and Shareholder Value: The Inverted-U-Shaped Relationship and the Moderation of Marketing Capability
Wenbin Sun (),
Shanji Yao () and
Rahul Govind ()
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Wenbin Sun: Rockhurst University
Shanji Yao: Nanjing Tech University
Rahul Govind: University of New South Wales
Journal of Business Ethics, 2019, vol. 160, issue 4, No 10, 1017 pages
Abstract In the literature, CSR’s roles on firm performance are found to be positive, negative, or neutral. This inconclusive pattern suggests there may be a more complicated mechanism at work than the traditional focus on simple linear associations. We propose and test an inverted-U-shaped relationship between CSR and shareholder value, the fundamental measure of firm performance. Further, we incorporate a critical firm attribute, marketing capability, to moderate the nonlinear link between CSR and shareholder value, thereby exploring a previous understudied area involving the interplay between CSR and market-side competency. The results show that an initial increase in CSR engagement positively drives firm shareholder value, but the effect turns negative when a firm pursues excessive CSR engagement. Notably, however, this negative association does not apply to firms that have a high marketing capability. Our research generates meaningful implications for a stakeholder view of CSR, strategic management, firm valuation, resource-based theories, and business practices.
Keywords: CSR; U-shaped relationship; Shareholder value; Marketing capability; Moderating effects (search for similar items in EconPapers)
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