Mediation Effect of Reputation on the Stakeholders’ Centric CSR and Financial Performance Relationship

Abstract

This paper aims to investigate the relation between stakeholder led CSR, reputation and the financial performance. The stakeholders considered in the research were employees, environment, community, customers and investors. The reputation of the company has been taken as the mediator to analyse the change in CSR and financial performance relationship. A questionnaire was designed having 30 items enumerating the seven constructs. The structured equation modelling has been used to analyse the conceptual model of the impact of CSR on reputation and then on financial performance. The results concluded that all the stakeholders were significant in influencing the CSR decision making, with employees and investors being the most significant ones. It was also concluded that CSR positively impacts the reputation and reputation fully mediates the relationship between CSR and financial performance. Thus, major implication of the study is that managers can adopt the stakeholders' centric CSR activities so as generate the positive reputation which in turn would positively impact the company's sales revenue and profit.