The Moderating Role of Market Strategy in Explaining CSR-Performance Link: A Multi-level Model

Abstract

Existing studies on the relationship between corporate social responsibility (CSR) and performance have mainly taken a macro perspective, focusing on how CSR influences the external stakeholders. However, the approach has relatively underexplored the role of internal stakeholders (i.e., employees) which function as an intermediating mechanism of the CSR-performance link. Utilizing the 4-wave longitudinal survey data of approximately 3,500 employees in 520 branches as well as archival data from one of the largest Korean commercial banks, we examine whether the relationship between CSR and performance is mediated by employee engagement, and further examine if market strategies such as customer and competitive orientation moderate the mediation. Our results show that employee engagement mediates the CSR-performance relationship, and each market strategy differentially moderates the mediated relationship. The customer orientation strategy strengthens the positive influence of CSR on employee engagement and performance, whereas the competitive orientation strategy makes the positive influence of CSR disappear. Our findings suggest that the firm can maximize the financial return from CSR through engaged employees when CSR as a non-market strategy goes hand in hand with the market strategy.