Nexus Between Corporate Social Responsibility and Corporate Financial Performance: The Mediating Effect of Intangible Assets

Abstract

This study aims to examine intangible assets as mechanisms underlying the direct corporate social responsibility (CSR)-corporate financial performance (CFP) relationship. Based on signalling theory, we developed an integrated model taking the corporate image (CIM) and corporate identity (CID) as double mediators between the relation ship of CSR and CFP. Using the convenience sampling procedure, we dispersed an anonymous survey to employees and customers in 33 multi-national companies working in Pakistan. The structural equation-al modelling using Smart PLS 3.0 on 456 valid responses revealed the best fit for the study measurement and structural models. Further, the mediation analyses of intangible assets in the simple form identified both CIM and CID have partial indirect effects on the CSR-CFP relationship.Our overall mediation model taking both mediators simultaneously,revealed the full mediation effect of the CSR-CFP connection.Specifically, we found that corporate image has higher relative significance than the CID in the mediation model. However, both simultaneously result in greater CFP for the firms.