Abstract
Although many companies are aware of the importance of sustainability and CSR, they still focus on profits without considering sustainable development. This study explores the relationships among corporate social responsibility (CSR), corporate reputation (CR) and corporate financial performance (CFP), by testing the mediating effect of CFP and constructing an integrated sustainability model based on the CSR perspective and stakeholder theory. Although many recent studies have investigated CSR using structural equation modeling to test the relationships among the three variables, measuring this mediation effect is quite rare in the literature. We use Reputation Institute as a secondary data source of CSR and CR and collect data for the period 2011–2017 on 39 companies in 15 countries (i.e., 273 observations). Firm size, sales growth rate, interest coverage ratio, age and industry are the control variables. Our results show that CR positively affects CFP and CSR. Furthermore, we find integrated approaches for business sustainability, revealing that CFP enhances CSR and also that it has a mediating effect on the relationship between CR and CSR.
Highlights
Schaltegger and Burritt [1] believe managers need to have motivations to lead their corporation to sustainable operations
Employing structural relationships to describe and test for corporate reputation (CR), CFR and Corporate social responsibility (CSR), we find that Corporate Financial Performance (CFP) is an important intermediary variable
It is proven that CFP has a mediating effect on the relationship between CR and CSR and structuring it is an essential academic contribution to this study
Summary
Schaltegger and Burritt [1] believe managers need to have motivations to lead their corporation to sustainable operations. Related studies divide motivation into four types: reactionary (short-term interest), reputational (corporation image), responsible (inside-out performance management system) and collaborative (working on guiding people outside who are affected by the business to have a conversation). With the increase in media focus and global impact, companies have to cultivate and maintain a specific image and reputation to bring about more interest. Jones [3] assesses how reputation affects the Wall Street stock market between 1987 to 1989, showing that a better reputation less decreases share prices. A good reputation can secure better financial status. From the stakeholder theory, when a company has better financial performance, stakeholders will have more expectations on its performances. Corporate social responsibility (CSR) is a crucial indicator, as it is in a corporate financial report as well as the “CSR Area” on an enterprise’s homepage
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