Revisiting the CSR–performance nexus: insights from multiple theoretical lenses applied in the UAE

PurposeDespite the intensive research on corporate social responsibility (CSR) and firm financial performance, little is known about how the linkage between CSR and firm financial performance is heterogeneous across industries and how the performance implications are differentiated among specific categories of CSR activities. The purpose of this paper is to explore how the association between a firm’s engagement in CSR and firm financial performance is heterogeneous across industries and CSR categories.Design/methodology/approachUsing a sample of 17,083 firm-year observations representing 1,877 firms from the largest 3,000 US companies during years 1991 and 2011, the authors compare the association between CSR and firm financial performance across ten industry sectors defined by Global Industry Classification Standard and across the four CSR categories classified by Mandl and Dorr (2007).FindingsThe authors find that the association between the overall CSR activities and firm performance is heterogeneous across industries. CSR has significant positive implications for firms from most, but not all, industries. Comparing the performance implication of CSR practices targeting different stakeholder groups, the empirical results indicate that different types of CSR have different influences on financial performance of firms from different industry sectors.Research limitations/implicationsThis study provides new angles for managers in maximizing firm performance through CSR activities and suggests an important and interesting direction for researchers who engage in CSR research. Due to its heterogeneous nature, the CSR-performance relationship needs to be examined more specifically – across industries and different CSR categories. Findings from studies incorporating both company industrial sector and CSR categories would provide more meaningful and practical implications for managers.Practical implicationsThis study provides important managerial implications. First, to maximize firm performance through CSR activities, managers must interpret the linkage between CSR and firm financial performance from the perspective of a specific industrial sector and acknowledge the importance of CSR practices across different CSR categories. Second, the findings suggest that CSR practices aiming at different stakeholder groups generate different financial returns in different industries. Firms engage in CSR to satisfy different stakeholder groups. When budgets are tight, managers may give higher priority to the CSR practices that have stronger effects on firm financial performance.Originality/valueThis study advances our understanding of the CSR-financial performance relationship by exploring its heterogeneous nature across industry sectors and across specific categories. To obtain the biggest gain from CSR spending, managers must have a good understanding how a specific CSR category can contribute to the financial performance of their particular company in their particular industry.

PurposeThe association between ethical leadership and employees’ ethical behaviors is well-established. But can ethical leadership go beyond this and drive employees’ corporate social responsibility (CSR) engagement? The purpose of this study is to examine the association between ethical leadership and employees’ perception of their engagement in CSR activities while exploring the mediating role of person–organization fit.Design/methodology/approachUsing a quantitative research design, data were collected via self-administered questionnaires from 142 employees of multi-national companies in Malaysia. This study used partial-least squares structural equation modeling to test and validate the research model and hypotheses posited.FindingsThe results reveal that ethical leadership has a positive impact on employees’ CSR engagement, mediated through person–organization fit. Moreover, analyses were carried out to assess the predictive performance of the proposed model. Our results confirmed the predictive capability of the proposed model.Research limitations/implicationsThis study has provided a better understanding of employees’ CSR engagement, which is a crucial factor for effectiveness of CSR implementation in any organization. Finding evidence on the positive role of ethical leadership in driving employees’ CSR engagement extends both the leadership and CSR literature and offers new avenues for future research studies.Practical implicationsThis study has shown that ethical leadership can stimulate employees’ CSR engagement through creating a better person–organization fit. This understanding can help managers in finding ways for more effective involvement of employees in a company’s CSR activities and creating a better working environment.Social implicationsOrganizations can find better ways to involve employees in CSR activities through having ethical leaders who lead by example and champion social causes. Although ethical leadership will benefit society, it will also help employees experience a better fit between their values and those of the organization.Originality/valueDespite extensive research on CSR, its drivers and outcomes, there is still limited knowledge on the role of leaders in driving employees’ CSR engagement. Findings from an emerging economy (i.e. Malaysia) will offer fresh insights into the growing CSR and leadership literature.

PurposeThe paper aims to examine the corporate social responsibility (CSR) activity of audit firms.Design/methodology/approachUsing hand-collected data on all Chinese audit firms’ CSR activities from 2007 to 2020, this study constructs two measures to proxy for audit firms’ CSR engagement: a dummy variable to indicate whether an auditor engages in CSR activities in year t and the frequency with which auditors conduct CSR activities in year t. The authors use ordinary least squares regression as a baseline methodology, along with the entropy balancing method and instrumental variable approach to alleviate potential endogeneity concerns.FindingsThe baseline results show that socially responsible audit firms provide higher quality audit services than their counterparts. In particular, the authors find that clients audited by socially responsible audit firms are less likely to receive an aggressively clean opinion. Moreover, the findings suggest that CSR activities related to community and employees are more relevant in improving audit quality compared with those related to other dimensions of CSR. Further analyses show that capital markets and audit clients react positively to audit-firm CSR activity. Audit firms engaging in CSR increase their audit inputs in response to risky clients, as compared with their counterparts. Finally, cross-sectional analyses show that the positive relationship is more pronounced for non-Big 4 and non-industry experts and is attenuated by within-firm geographic dispersion. In terms of client characteristics, the positive effect of audit-firm CSR is stronger when their clients face the higher financial risk or have lower CSR awareness than others. Taken together, these findings are consistent with the ethical view of audit-firm CSR engagement.Practical implicationsThe study advances investors’ understanding of audit-firm CSR engagement and helps them evaluate the credibility of audited financial reports. Besides, the findings may also help guide the audit firms to conduct more CSR activities and help guide the audit clients to choose CSR audit firms.Originality/valueTo the best of the authors’ knowledge, this study provides the first large-sample evidence by empirically examining the association between audit-firm CSR activity and audit service performance. Besides, this paper also explores audit-firm CSR activity from two competing perspectives, thereby providing a comprehensive understanding of this issue. Finally, this work responds to the call for more CSR research in emerging markets.

PurposeThis study aims to investigate the evolution of sustainability reporting in the United Arab Emirates (UAE) against a backdrop of changing legislation. It uses qualitative content analysis within the corporate social responsibility (CSR) communication framework proposed by Kotler and Lee (2005) to investigate how corporations in the UAE disclosed information on their CSR activities in 2018 and 2023.Design/methodology/approachThe authors refer to the CSR communication framework proposed by Kotler and Lee (2005), which puts forward a set of marketing communication strategies that can be used to promote a corporation. The authors identify the strategies used by the top 14 companies operating in the UAE in their CSR disclosure in the fall of 2018 and the spring of 2023, respectively. The authors note any changes that have occurred over time and differences between the distinct business sectors.FindingsThe findings indicate a continuing reliance on the marketing communication strategies associated with corporate philanthropy, cause promotion and being a good corporate citizen. All of the corporations in the study showed evidence of engaging in an increasing diversity of CSR initiatives and a corresponding diversity in the marketing communication strategies they used to promote them.Practical implicationsCorporations wishing to promote themselves through their CSR activities and build a positive reputation would do well to select a diverse set of CSR activities communicated in a variety of ways.Originality/valueTo the best of the authors’ knowledge, this study is the first longitudinal, comparative study examining the CSR marketing strategies of the top corporations in the UAE. As such, it contributes to the ongoing debate on CSR in the Middle East in general and to understanding more about the approach as well as the changes in approach to CSR in a Muslim-majority Middle-eastern and secular developing economy, the impact of CSR legislation and government regulation on CSR disclosures in different business sectors and the promotional opportunities afforded by effective CSR disclosure within the UAE in particular.

Purpose This study aims to investigate the disparity in corporate social responsibility (CSR) engagement between construction firms and other sectors in India. This paper explores the financial implications of CSR activities on company performance. Design/methodology/approach A literature review was first conducted to identify six key financial metrics (net profit, total assets, equity, income, share capital and R&D expenditure), which were used to assess the relationship between financial performance and CSR investment. After that, this paper analysed financial data from FY22 for construction and non-construction firms in India. Regression analysis is used to further explore these relationships. Findings The study reveals significant differences in CSR engagement. Non-construction firms exhibit higher net profits and a more substantial investment in CSR initiatives. Regression analysis confirms a positive association between net profit and CSR spending. Interestingly, other financial metrics have minimal impact on CSR activities. Furthermore, non-construction firms exhibit a stronger commitment to CSR across all thematic areas. Originality/value This research contributes to a deeper understanding of CSR practices and financial dynamics in the Indian business landscape, particularly within the construction sector. The findings on the connection between financial performance and CSR engagement offer valuable insights for policymakers and stakeholders. This knowledge can be used to develop strategies that promote sustainable practices and corporate responsibility in construction and other industries.

Research summary : Building on economic geography and institutional theory, we develop and test theory relating geographic variables to the strength of corporate social responsibility ( CSR ) engagement and the cost of equity capital. For a large sample of U.S. firms over the period 1998–2009, we find strong and robust evidence that firms located in areas characterized by high levels of local CSR density score higher in CSR engagement. In addition, firms located close to major cities and financial centers exhibit higher CSR engagement compared to firms located in more remote areas. Moreover, the effect of CSR engagement on reducing equity financing costs is even greater for firms in high CSR density areas than for firms in low CSR density areas . Managerial summary : Does the location of CSR engagement by firms affect the strength of CSR engagement by their neighbors? Does the geography of engagement have an impact on financial performance? Our findings show that a firm's CSR engagement increases in areas where there is dense CSR engagement and when it is located near large cities. In these areas, norms, values, and knowledge related to CSR are transmitted to firms through face‐to‐face meetings and frequent social interactions with groups such as peers, labor unions, news media, universities, and community organizations, which tend to be concentrated in large cities. Our findings further highlight that CSR engagement reduces equity financing costs for firms in areas where CSR is widely practiced . Copyright © 2015 John Wiley & Sons, Ltd.

PurposeThis study aims to guide firms in emerging markets on whether corporate social responsibility (CSR) engagement facilitates their access to debt with the moderation of asset structure and firm performance. Considering the moderating effect analysis, this study explores the substitutive or complementary effect of these two contingencies on CSR-oriented firms in accessing debt financing.Design/methodology/approachDrawing on data collected for 16 emerging markets between 2008 and 2019, this study runs country–industry–year fixed-effects regression.FindingsThis study finds that CSR performance and reporting facilitate access to debt in emerging markets. However, CSR performance does not have an inverted U-shaped influence on firms’ access to debt financing. The moderation analysis of this study shows that asset tangibility has a negative moderating effect on the link between CSR engagements (i.e. both CSR performance and reporting) and access to debt, confirming a substitutive relationship between asset tangibility and CSR engagements in accessing debt. In contrast, firm performance is positively moderating the nexus between CSR engagement proxies and access to debt, which confirms a complementary type of relationship between firm performance and CSR engagements in accessing debt.Practical implicationsThe empirical evidence of this study implies that creditors critically consider CSR engagements of firms in the loan-granting decision process. Similarly, the inverted U-shaped relationship between CSR and access to debt implies that there is an optimal level of CSR engagement creditors might consider in their decision. Likewise, the moderating effects analysis highlights that asset tangibility and firm performance are two conditions under which CSR performance and reporting are linked to access to debt.Originality/valueEmerging countries are a different set of countries than developed ones; they have high growth rates and hence need financing, have a weaker institutional environment and have weaker stakeholder power. These particularities motivated the authors to conduct a separate study focusing on CSR and debt financing links drawing on a wide range of emerging countries. Thus, this study adds to the ongoing debate by examining the conditions under which CSR-oriented firms can access debt financing in emerging economies.

Do financial constraints matter when firms engage in CSR?

This study was conducted to explore the relationship between Corporate Social Responsibility (CSR) Engagement and Employee Job Satisfaction in Schools of Kampala District, Uganda. CSR refers to an organization’s commitment to contribute positively to society through ethical practices, environmental sustainability, and community engagement. The study assessed the relationship between (i) frequency of CSR engagement and employees’ job satisfaction and (ii) type of CSR activity and employees’ job satisfaction. A descriptive and correlational research design was used to collect data from 50 teachers purposively selected from 6 secondary schools Kampala. SPSS software was used to analyse the data. The study findings showed a strong positive correlation between CSR engagement and employee job satisfaction (r = 0.65, p < 0.01). In addition, the regression analysis conducted showed community outreach as the predictive power of CSR engagement on job satisfaction (R² = 0.45, p < 0.01). It is therefore concluded that CSR engagement has a statistically significant relationship with job satisfaction. Employers are therefore urged to promote CSR activities in their institutions, align CSR with employees’ values, encourage employee involvement in CSR and recognise employees that actively engage in CSR.

Purpose– The purpose of this paper is to investigate the mediating role of perceived overall justice and the moderating effect of self- and other-centered motives in the relationship between organizational corporate social responsibility (CSR) and organizational attractiveness using a sample of job applicants.Design/methodology/approach– The hypotheses were tested using a 2-by-2 experimental design and a sample of 376 South Korean University students.Findings– The results showed that organizational CSR positively influenced job applicants’ perceived overall justice. Moreover, it was found that perceived overall justice mediated the influence of CSR on organizational attractiveness. However, contrary to the hypotheses, the indirect effect of CSR on organizational attractiveness through perceived overall justice was significant only for job applicants who attributed self-centered motives to CSR.Practical implications– As it was found that job applicants who attributed other-centered motives to organizational CSR had high levels of perceived overall justice regarding organizations, independent of the actual level of engagement in CSR, it is crucial that organizations show sincerity in executing CSR. In addition, small- and medium-sized organizations may not have sufficient resources for CSR, but it is especially crucial for them to focus on CSR activities that are aligned with their business, implement CSR programs consistently, and focus on CSR itself rather than on advertising in order to facilitate, among job applicants, the attribution of other-centered motives to their CSR.Originality/value– From the perspective of overall justice and attributed motives, this study intensively explores the internal mechanism by which organizational engagement in CSR influences organizational attractiveness among job applicants. In practical terms, this study shows that it is important for organizations to consistently invest in CSR with authenticity, even when CSR activities are insubstantial and doing so may be attributed to self-centered motives. Limitations and directions for future research are discussed.

This paper purposes to develop a corporate social responsibility (CSR) model to guide small and medium enterprises (SMEs) in the South African construction industry (SACI) towards sustainable business performance (SBP). A theoretical CSR model was developed from the literature and validated through Partial Least Squares Structural Equation Modelling (PLS-SEM), using primary questionnaire data obtained from 110 SMEs in the SACI, who are registered on the construction industry development board (cidb) register of contractors between Grade 1 and 6 general building (GB) and/or civil engineering (CE). The PLS-SEM results indicate that CSR drivers influencing the CSR practices of SMEs, along with CSR implementation challenges experienced by SMEs, influence the perception of SMEs pertaining to the relationship between the integration of CSR and SBP all of which influences the CSR activities considered by SMEs to achieve SBP, thus implying that the holistic adaption of the PLS-SEM (CSR model) by SMEs in the SACI equates to more SBP. However, SMEs practicing CSR activities to achieve SBP are subjected to specific CSR: drivers and implementation challenges as well as SME owner perceptions.

Purpose This paper aims to investigate the reciprocal nonlinear relationship between corporate social responsibility (CSR) and firm performance (FP). Design/methodology/approach The authors used a sample of 814 European firms over the period 2008–2017. The Panel Smooth Transition Regression (PSTR) model was performed as an econometric approach. Findings Firstly, results show a threshold effect in the CSR–FP relationships within the two directions. More specifically, the authors found that firms are more likely to engage in CSR by surpassing a threshold of 1.231% for return on assets (ROA) and 0.821% for Tobin’s Q ratio. Secondly, the authors also found that the impact of CSR on FP is positive and significant only if the environment, social and governance score surpasses the threshold of 56.780% when the dependent variable is ROA and 41.02% when Tobin’s Q ratio measures performance. Research limitations/implications A significant part of the literature supports the linear relationship between CSR and FP from the unique direction (CSR → FP). This study comes to fill this gap by assessing the possible nonlinear relationship. In addition, this nonlinear relationship is tested under the two directions. Therefore, defining the threshold of FP that allows companies to engage in CSR, on the one hand, and the threshold of engagement in CSR that improves FP, on the other hand, could be an exciting topic. Practical implications To get the full benefit from CSR effects, firms should be with better financial performance to be socially responsible. Originality/value To the best of our knowledge, few studies have explored the nonlinear relationship between CSR and FP. In addition, this study raises the question of whether this relation is causal. The authors assess the two nonlinear relationships between CSR ? FP and FP ? CSR by determining the optimal thresholds.

This paper examines the association between the level of corporate social responsibility (CSR) activities and earnings quality with the level of donation expenses and the voluntary issuance of CSR reports filed with the Global Reporting Initiative (GRI) as proxies for CSR activities. Donation expenditures could be the most direct measure of managers willingness to conduct CSR activities, while the voluntary issuance of CSR reports filed with GRI captures a direct signal of managers willingness to conduct CSR activities. The results of this study provide evidence that firms active in CSR are likely to report earnings of a higher quality. More specifically, after controlling for firm-specific factors, we find that firms with more corporate donations have lower discretionary accruals and greater accounting conservatism. Furthermore, this negative relationship between donation and discretionary accruals is more pronounced when firms voluntarily issue CSR reports. Prior studies have focused on the association between financial performance and CSR activities of firms. However, managerial choices and signals on financial performance with voluntary CSR activities have not been specifically considered. This study adds to the existing literature on CSR by providing evidence of the role of CSR on earnings quality and helps academics and practitioners to understand the role of corporate donations and voluntary CSR disclosures in earnings quality.

Purpose– The purpose of this study is to understand how hotel managers perceive the benefits that may accrue to employees and hotels through their engagement in corporate social responsibility (CSR) activities.Design/methodology/approach– In-depth interviews with 23 hotel managers, representing various functional responsibilities, were undertaken across four provinces in Thailand. The sample included local and international chain hotels.Findings– Hotel managers from all functional areas and levels acknowledged that CSR substantially enhanced the employer–employee relationship. Five themes depicting the beneficial effects were identified: a relationship unifying process, having fun, feeling pride, developing skills and building teamwork. These themes reflect three core factors of emotional responses, social capital and task-related skills.Practical implications– The paper illustrates that CSR activities can be customised to elicit specific effects that will engender beneficial outcomes for both hotel management and employees.Originality/value– This paper provides new insights into how hotel managers perceive the employer-employee relationship is enhanced through CSR engagement. In addition, the paper presents a practical model that will be of interest to both academics and practitioners.

Research Summary While prior research has generated meaningful insights into the antecedents of firms' corporate social responsibility (CSR), little attention has been devoted to examining the influence of CEO affectivity—a relatively stable tendency to experience positive or negative emotions. This study explores how CEO positive affectivity (PA) and negative affectivity (NA) may be related to firms' CSR activities. Specifically, we contend that CEO PA is positively related to CSR, whereas CEO NA is negatively related to CSR. We further investigate how CEO social capital may moderate the relationship between CEO affectivity and CSR. Our results support our hypotheses, suggesting the unique role of CEO emotions in CSR research. Managerial Summary Does CEO emotion affect firms' CSR activities? Our study finds that CEO PA increases a firm's engagement in CSR, while CEO NA decreases a firm's engagement in CSR. The above relationships are also subject to the influence of CEO social capital. Our findings suggest that CEOs should be aware of how their affective tendencies can influence their firm's CSR strategy and consider avenues to utilize emotional influence advantageously while avoiding potential affective bias.