Can earning much lead to doing good? Firm performance implications for corporate social responsibility

Abstract

PurposeThe purpose of this study is to examine the influence of firm performance on corporate social responsibility (CSR) and its possible moderating effect. Despite the significance of CSR, there remains an extensive debate about how it is affected by firm performance.Design/methodology/approachThe conceptual model is mainly built on goal-setting theory. Based on archival data from multiple data sets on 1,650 companies, collected from 2010 to 2017, the hypotheses are tested using the two-stage instrumental variable regression method.FindingsThere is an inverted U-shaped relationship between firm performance and CSR that first increases and then decreases. In addition, considering the boundary conditions, state ownership makes the inverted U-shaped curve steeper, while high executive wage concentration makes the inverted U-shaped curve flatter.Research limitations/implicationsThis study harmonizes the traditional contradictory findings of the influence of firm performance on CSR, that is, it supports a positive, negative or neutral relationship between the two.Originality/valueThis research provides a necessary structure for the CSR literature. By delving deeply into the relationship between firm performance and CSR, it enables scholars to better address the critical management question of whether earning more will lead to doing good.