Corporate social responsibility and firm performance: the role of firm reputation

Abstract

Purpose This study aims to examine the role of firm reputation as a mediator in the relationship between corporate social responsibility and firm performance, along with the underlying mechanism. Design/methodology/approach This research is quantitative research that aims to explain the phenomenon of the relationship between the implementation of corporate social responsibility and firm performance. A total of 573 companies listed on the Indonesia Stock Exchange for the 2019–2021 period were sampled in this study. The analysis method in this study combines time series data and cross-section data called pooled data. Findings This research found a significant positive association between corporate social responsibility and firm reputation as well firm reputation is positively related to firm performance. In contrast, corporate social responsibility directly affects firm performance insignificantly. Based on the analyses, firm reputation mediates the effect of corporate social responsibility on firm performance. Research limitations/implications This study is limited due to its reliance on secondary data related to publicly listed companies from 2019 to 2021, which involves various downsides, that is many businesses still have not disclosed their engagement in corporate social responsibility practices. This study will ultimately yield practical implications for organizational managers, as it emphasizes the significance of corporate social responsibility in enhancing firm success. Originality/value The research presented in this paper contributes to the existing body of knowledge on corporate social responsibility by examining the impact of corporate social responsibility on firm performance. Furthermore, this study provides additional evidence for shared value creation by explaining the impact of corporate social responsibility on firm performance.