Bridging the Gap: The Moderating Roles of Institutional Quality and Compliance on the Link between CSR and Financial Performance

S.A.A. Bokhari, M. Ali, G. Albort-Morant, H. Latan, Ana Beatriz Lopes de Sousa Jabbour (), S. Ullah, M.A. Salam and T. Vo-Thanh
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Ana Beatriz Lopes de Sousa Jabbour: Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School

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Abstract: Corporate social responsibility (CSR) is widely acknowledged to have a significant impact on firm's financial performance, but it is yet ambiguous how institutional, cultural and national factors influence this relationship in corruption contexts. Therefore, institutional mechanisms and perceived corruption should not be considered in isolation, as this would jeopardize the company's ability to act in a socially responsible manner. Obtaining an institutional approach of corruption and using self-administered survey data collected from 632 Pakistani firms operating in manufacturing and service sectors, we investigated the impact of CSR, institutional quality and law enforcement (IQLE), and internal compliance and ethical management (ICEM) on firm financial performance. Our results found that IQLE negatively moderates and weakened the positive relationship between CSR and firm financial performance. Additionally, we discover that ICEM positively moderates and strengthened the direct relationship between CSR and financial performance. We show that improving compliance and ethics management, CSR has the potential to enhance financial performance. \textcopyright 2023 Elsevier Ltd

Keywords: Compliance management; Corporate social responsibility; Crime; Economic and social effects; Finance; Financial performance; Institutional approaches; Institutional qualities; Institutional quality and law enforcement; Internal compliance and ethical management; Manufacturing sector; Philosophical aspects; Service sectors; Survey data (search for similar items in EconPapers)
Date: 2023
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Published in Journal of Cleaner Production, 2023, 404, ⟨10.1016/j.jclepro.2023.136897⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04276021

DOI: 10.1016/j.jclepro.2023.136897

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