Abstract
As corporate social responsibility (CSR) gains momentum in the business world, it is imperative to comprehend the relationship between CSR and corporate financial performance (CFP). While there is prior research looking at this relationship, scholars have proposed a contingency view that is meant to determine the situational contexts in which critical associations between CFP and CSR activities will arise. This study provides further insight into the moderating effects of corporate political activity, specifying the ways in which different arrangements of corporate CSR and CPA might align or otherwise, thus influencing CFP beyond associated dissimilar effects on corporate performance. The data for this study was obtained for the periods 2007–2016 from the samples selected from the list of Fortune’s World’s Most Admired Companies. The dynamic panel data was analyzed using the System Generalized Method of Moment estimation. The main findings are that CSR does not significantly influence CFP. However, CPA does negatively moderate the relationship between CSR and CFP. This indicates that high political expenditures worsen a firm’s financial position compared to the financial position of firms with less spending on CPA.
Highlights
The practice of corporate social responsibility (CSR) has increasingly gained popularity among organizational managers, since firms are being assessed based on their societal contributions as well as financial performance
This study tried to examine the complex relationship between CSR and corporate financial performance (CFP), with corporate political activity (CPA) serving as the moderator
It utilized data from the most admired Fortune corporations between 2007 and 2016. It determined no significant associations between CSR and CFP
Summary
The practice of corporate social responsibility (CSR) has increasingly gained popularity among organizational managers, since firms are being assessed based on their societal contributions as well as financial performance. Much research has involved inconsistent outcomes, owing mainly to a disregard for contingency variables as well as errors in measurements, wrongly specified models, undersized sampling across multiple industries, singular CSR dimensions, and an indefinably broad operationalization of CSR and corporate financial performance (CFP) aspects [1,2,3] Such factors considerably affect the connections between these activities. Empirical investigations propose that corporations consistently apply CPA by moving toward changes in regulations, relative to societal and environmental problems, via lobbying efforts, participation in advisory groups, and other conventional socio–political channels [14] Up to this point, little research has examined how indirect factors, such as CPA, affect the relationship between CSR and CFP in the business environment. The last section comprises the conclusion and recommends future modes of research
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
