The effects of corporate social responsibility on organizational performance in the Iranian pharmaceutical industry: The mediating role of TQM

Abstract

In recent years, society and many organizations have been paying increasing attention to the social responsibilities of organizations towards various stakeholder groups. To ensure the fulfillment of social responsibilities of organizations towards society, corporate social responsibility should be embedded in day-to-day operations and managerial decision-making. Total quality management is also a commonly used managerial tool that takes into considerations the interests of various stakeholder groups. This paper investigates how the relationship between corporate social responsibility and total quality management affect the organizational performance measured by the Balanced Scorecard (BSC). The results of the analysis, using structural equation modeling on 933 completed questionnaires sent to the pharmaceutical companies in Iran, suggest that social responsibility is significantly associated with the integration of this responsibility into quality management programs. Quality management, in turn, has a significant and positive effect on organizational performance. The results provide contribution to the earlier studies that have found inconsistent results on the direct association between social responsibility and organizational performance by demonstrating that quality management mediates the relationship between social responsibility and organizational performance. In practice, Managers can strengthen their relationships with stakeholders and, ultimately, improve organizational performance if social responsibility towards stakeholders is embedded in operational routines and processes.