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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: 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)
Date: 2019
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DOI: 10.1007/s10551-018-3854-x

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