The inverse U-shaped relationship between corporate social responsibility and competitiveness: Evidence from Chinese international construction companies

Abstract

The relationship between corporate social responsibility (CSR) and its material implications is a classic inquiry with tremendous academic and practical values. In recent years, the inquiry has shifted to the CSR-competitiveness link by viewing competitiveness as a more comprehensive construct that is able to capture more sustainable business success than traditional financial performance. This paper argued an inverse U-shaped relationship between CSR and competitiveness considering the complex interaction between both benefits and costs of CSR. Focusing on Chinese international construction companies (CICCs), it empirically tests the curvilinear relationship between the two constructs. By undertaking a panel data regression on 55 CICCs and 473 observations from 2010 to 2019, the inverse U-shaped relationship between CSR and competitiveness is confirmed: CICCs’ competitiveness will increase at first with their CSR engagement but will decline from a threshold level where CSR costs begin to gain priority. This study opens up a new avenue through which business executives and policymakers are inspired to wisely manage social responsibility resources and pursue a balance where the business and society should strike.