The Role of Corporate Social Responsibility in Enhancing Firm Performance from the Perspective of IT Employees in Jordanian Banking Sector: The Mediating Effect of Transformational Leadership

Ra’Ed Masa’Deh,Shadi Abualoush,Forat Alkhalafat,Ala'Aldin Alrowwad,Bader Obeidat

doi:10.5539/mas.v12n7p1

Abstract

Direct relationship between Corporate Social Responsibility (CSR) and firm performance has been extensively studied by scholars in several majors. The direct examination of this relationship seems to be relatively imprecise since many other variables have indirect influence on this relationship. Therefore, this study takes into considerations Transformational Leadership (TFL) as a probable mediator in the role CSR plays to enhance the firm performanceamong Information Technology (IT) employees in banking sector. Data were collected from IT employees within IT departments from 25 banks in Jordan through a questionnaire survey. 354 valid questionnaires were returned and analyzed using different quantitative techniques. This research finds that CSR has a significant influence on firm performance and three of its dimensions, namely, economic responsibility, ethical responsibility, and discretionary responsibility have a significant effect on firm performance, whereas legal responsibility has no remarkable effect. It also finds that CSR has a positive influence on TFL. Specifically, discretionary responsibility has a significant effect on TFL, whereas other dimensions have no significant contribution to TFL. As well as, it finds that TFL has a positive contribution to the firm performance. Inspirational motivation and individualized consideration have the only remarkable contribution to the firm performance. Finally, it has been revealed that TFL partially mediates the relationship between CSR and firm performance.

Highlights

In today’s business environment, there is a growing interest from the public in firms’ transparency and credibility regarding the disclosure of such information in order to make a balance between stakeholders’ goals (Wang et al, 2015)
This research aimed at building on previous literatures to study the role of Corporate Social Responsibility (CSR) in enhancing the firm performance through the mediating effect of TFLamong Information Technology (IT) employees in banking sector
The research posited that formulating an effective CSR strategy can be considered as an incubator to strengthen and entrench leaders with transformational behaviors

Summary

Introduction

In today’s business environment, there is a growing interest from the public in firms’ transparency and credibility regarding the disclosure of such information in order to make a balance between stakeholders’ goals (Wang et al, 2015). Aras and Crowther (2008) argued that corporations all over the world shed the light on CSR. This concern stems from the reality that CSR strengthens companies’ relations with their environment and lead to better firm performance. Building on this view, plenty of studies were conducted to ensure a positive relationship between CSR and firm performance. Donker et al (2008) suggested a positive correlation between the engagement in social activities and the firm performance They suggested that CSR could be considered as a strategic factor in boosting the firm performance. While adopting CSR as a strategy can lead to such preferable intangible outcomes as reputation (Schwaiger, 2004), employee satisfaction (Epstein and Roy, 2001), IT implementations (Kateb et al, 2015) or better customer satisfaction, most scholars have focused on the financial measures in addressing the possible linkage between CSR and major organizational outcomes (Mishra and Suar, 2010; Obeidat et al, 2013)

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