EconPapers    
Economics at your fingertips  
 

Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance

Woon Leong Lin, Siong Hook Law and W. N. W. Azman‐Saini
Authors registered in the RePEc Author Service: W.N.W Azman-Saini ()

Corporate Social Responsibility and Environmental Management, 2020, vol. 27, issue 3, 1279-1293

Abstract: This study assesses the impact of corporate social responsibility (CSR) on corporate financial performance (CFP) by using an innovative threshold estimation technique. We examine whether the CSR effect on CFP is varied with the distinct levels of market differentiation. The empirical analysis is based on a world automotive panel dataset for the period of 2011–2017. We unveil an inverted V‐shaped relationship between CSR and CFP and confirm that the increasing nonparametric regression line up to a certain threshold level indicates a positive effect on CFP, whereas a decreasing line indicates a negative effect. Hence, these findings support the idea that engagement in CSR can boost firm performance by incorporating with market differentiation, since higher firm performance is associated with strong differentiation (i.e., less substitutability), but CSR may not provide large benefits in firms with too high market differentiation.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1002/csr.1883

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:corsem:v:27:y:2020:i:3:p:1279-1293

Access Statistics for this article

More articles in Corporate Social Responsibility and Environmental Management from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2020-11-09
Handle: RePEc:wly:corsem:v:27:y:2020:i:3:p:1279-1293