IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v68y2015i2p341-350.html
   My bibliography  Save this article

How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction

Author

Listed:
  • Saeidi, Sayedeh Parastoo
  • Sofian, Saudah
  • Saeidi, Parvaneh
  • Saeidi, Sayyedeh Parisa
  • Saaeidi, Seyyed Alireza

Abstract

Direct relationship between corporate social responsibility (CSR) and firm performance has been examined by many scholars, but this direct test seems to be spurious and imprecise. This is because many factors indirectly influence this relation. Therefore, this study considers sustainable competitive advantage, reputation, and customer satisfaction as three probable mediators in the relationship between CSR and firm performance. The findings from 205 Iranian manufacturing and consumer product firms reveal that the link between CSR and firm performance is a fully mediated relationship. The positive effect of CSR on firm performance is due to the positive effect CSR has on competitive advantage, reputation, and customer satisfaction. The final findings show that only reputation and competitive advantage mediate the relationship between CSR and firm performance. Taken together, these findings suggest a role for CSR in indirectly promoting firm performance through enhancing reputation and competitive advantage while improving the level of customer satisfaction.

Suggested Citation

  • Saeidi, Sayedeh Parastoo & Sofian, Saudah & Saeidi, Parvaneh & Saeidi, Sayyedeh Parisa & Saaeidi, Seyyed Alireza, 2015. "How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction," Journal of Business Research, Elsevier, vol. 68(2), pages 341-350.
  • Handle: RePEc:eee:jbrese:v:68:y:2015:i:2:p:341-350
    DOI: 10.1016/j.jbusres.2014.06.024
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296314002215
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jbusres.2014.06.024?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Clyde Eiríkur Hull & Sandra Rothenberg, 2008. "Firm performance: the interactions of corporate social performance with innovation and industry differentiation," Strategic Management Journal, Wiley Blackwell, vol. 29(7), pages 781-789, July.
    2. Hadi Chapardar & Raveed Khanlari, 2011. "Iranian Corporations and Corporate Social Responsibility," SAGE Open, , vol. 1(3), pages 21582440114, October.
    3. Manuel Branco & Lúcia Rodrigues, 2006. "Corporate Social Responsibility and Resource-Based Perspectives," Journal of Business Ethics, Springer, vol. 69(2), pages 111-132, December.
    4. Hela Sheth & Kathy Babiak, 2010. "Beyond the Game: Perceptions and Practices of Corporate Social Responsibility in the Professional Sport Industry," Journal of Business Ethics, Springer, vol. 91(3), pages 433-450, February.
    5. Galbreath, Jeremy & Galvin, Peter, 2008. "Firm factors, industry structure and performance variation: New empirical evidence to a classic debate," Journal of Business Research, Elsevier, vol. 61(2), pages 109-117, February.
    6. Martin Bennett & Stefan Schaltegger & Dimitar Zvezdov, 2011. "Environmental Management Accounting," Palgrave Macmillan Books, in: Magdy G. Abdel-Kader (ed.), Review of Management Accounting Research, chapter 3, pages 53-84, Palgrave Macmillan.
    7. Yu-Shan Chen & Shyh-Bao Lai & Chao-Tung Wen, 2006. "The Influence of Green Innovation Performance on Corporate Advantage in Taiwan," Journal of Business Ethics, Springer, vol. 67(4), pages 331-339, September.
    8. Supriti Mishra & Damodar Suar, 2010. "Does Corporate Social Responsibility Influence Firm Performance of Indian Companies?," Journal of Business Ethics, Springer, vol. 95(4), pages 571-601, September.
    9. Coyne, Kevin P., 1986. "Sustainable competitive advantage--What it is, what it isn't," Business Horizons, Elsevier, vol. 29(1), pages 54-61.
    10. Stephen J. Brammer & Stephen Pavelin, 2006. "Corporate Reputation and Social Performance: The Importance of Fit," Journal of Management Studies, Wiley Blackwell, vol. 43(3), pages 435-455, May.
    11. Teoh, Siew Hong & Welch, Ivo & Wazzan, C Paul, 1999. "The Effect of Socially Activist Investment Policies on the Financial Markets: Evidence from the South African Boycott," The Journal of Business, University of Chicago Press, vol. 72(1), pages 35-89, January.
    12. Alfred Marcus, 1989. "The deterrent to dubious corporate behavior: Profitability, probability and safety recalls," Strategic Management Journal, Wiley Blackwell, vol. 10(3), pages 233-250, May.
    13. Darren D. Lee & Robert W. Faff & Kim Langfield-Smith, 2009. "Revisiting the Vexing Question: Does Superior Corporate Social Performance Lead to Improved Financial Performance?," Australian Journal of Management, Australian School of Business, vol. 34(1), pages 21-49, June.
    14. Elizabeth Webb, 2004. "An Examination of Socially Responsible Firms’ Board Structure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 8(3), pages 255-277, June.
    15. Eugene W. Anderson & Mary W. Sullivan, 1993. "The Antecedents and Consequences of Customer Satisfaction for Firms," Marketing Science, INFORMS, vol. 12(2), pages 125-143.
    16. Belaid Rettab & Anis Brik & Kamel Mellahi, 2009. "A Study of Management Perceptions of the Impact of Corporate Social Responsibility on Organisational Performance in Emerging Economies: The Case of Dubai," Journal of Business Ethics, Springer, vol. 89(3), pages 371-390, October.
    17. Jarvis, Cheryl Burke & MacKenzie, Scott B & Podsakoff, Philip M, 2003. "A Critical Review of Construct Indicators and Measurement Model Misspecification in Marketing and Consumer Research," Journal of Consumer Research, Oxford University Press, vol. 30(2), pages 199-218, September.
    18. Eugene W. Anderson & Claes Fornell & Roland T. Rust, 1997. "Customer Satisfaction, Productivity, and Profitability: Differences Between Goods and Services," Marketing Science, INFORMS, vol. 16(2), pages 129-145.
    19. Weber, Manuela, 2008. "The business case for corporate social responsibility: A company-level measurement approach for CSR," European Management Journal, Elsevier, vol. 26(4), pages 247-261, August.
    20. Homburg, Christian & Rudolph, Bettina, 2001. "Customer satisfaction in industrial markets: dimensional and multiple role issues," Journal of Business Research, Elsevier, vol. 52(1), pages 15-33, April.
    21. Maignan, Isabelle & Ferrell, O. C., 2001. "Antecedents and benefits of corporate citizenship: an investigation of French businesses," Journal of Business Research, Elsevier, vol. 51(1), pages 37-51, January.
    22. Duygu Turker, 2009. "Measuring Corporate Social Responsibility: A Scale Development Study," Journal of Business Ethics, Springer, vol. 85(4), pages 411-427, April.
    23. Li, Suhong & Ragu-Nathan, Bhanu & Ragu-Nathan, T.S. & Subba Rao, S., 2006. "The impact of supply chain management practices on competitive advantage and organizational performance," Omega, Elsevier, vol. 34(2), pages 107-124, April.
    24. Ching-Hsun Chang, 2011. "The Influence of Corporate Environmental Ethics on Competitive Advantage: The Mediation Role of Green Innovation," Journal of Business Ethics, Springer, vol. 104(3), pages 361-370, December.
    25. Peter Wright & Stephen P. Ferris, 1997. "Agency Conflict And Corporate Strategy: The Effect Of Divestment On Corporate Value," Strategic Management Journal, Wiley Blackwell, vol. 18(1), pages 77-83, January.
    26. Morten Huse & Robert Hoskisson & Alessandro Zattoni & Riccardo Viganò, 2011. "New perspectives on board research: changing the research agenda," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 15(1), pages 5-28, February.
    27. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2006. "Corporate Social Responsibility: Strategic Implications," Journal of Management Studies, Wiley Blackwell, vol. 43(1), pages 1-18, January.
    28. K. O’Shaughnessy & Eric Gedajlovic & Patrick Reinmoeller, 2007. "The influence of firm, industry and network on the corporate social performance of Japanese firms," Asia Pacific Journal of Management, Springer, vol. 24(3), pages 283-303, September.
    29. Daniel H. Simon & Miguel I. Gómez & Edward W. McLaughlin & Dick R. Wittink, 2009. "Employee attitudes, customer satisfaction, and sales performance: assessing the linkages in US grocery stores," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 27-41.
    30. Paul Shum & Sharon Yam, 2011. "Ethics and Law: Guiding the Invisible Hand to Correct Corporate Social Responsibility Externalities," Journal of Business Ethics, Springer, vol. 98(4), pages 549-571, February.
    31. Manfred Schwaiger, 2004. "Components And Parameters Of Corporate Reputation – An Empirical Study," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 56(1), pages 46-71, January.
    32. Jeremy Galbreath & Paul Shum, 2012. "Do customer satisfaction and reputation mediate the CSR–FP link? Evidence from Australia," Australian Journal of Management, Australian School of Business, vol. 37(2), pages 211-229, August.
    33. Bert Scholtens & Yangqin Zhou, 2008. "Stakeholder relations and financial performance," Sustainable Development, John Wiley & Sons, Ltd., vol. 16(3), pages 213-232.
    34. Tobias Gössling & Chris Vocht, 2007. "Social Role Conceptions and CSR Policy Success," Journal of Business Ethics, Springer, vol. 74(4), pages 363-372, September.
    35. de Beer, Patrick & Friend, Francois, 2006. "Environmental accounting: A management tool for enhancing corporate environmental and economic performance," Ecological Economics, Elsevier, vol. 58(3), pages 548-560, June.
    36. Vicente Lima Crisóstomo & Fátima de Souza Freire & Felipe Cortes de Vasconcellos, 2011. "Corporate social responsibility, firm value and financial performance in Brazil," Social Responsibility Journal, Emerald Group Publishing, vol. 7(2), pages 295-309, June.
    37. Suresh Kotha & Violina P Rindova & Frank T Rothaermel, 2001. "Assets and Actions: Firm-Specific Factors in the Internationalization of U.S. Internet Firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(4), pages 769-791, December.
    38. Luis Cabral, 2012. "Living Up to Expectations: Corporate Reputation and Sustainable Competitive Advantage," Working Papers 12-19, New York University, Leonard N. Stern School of Business, Department of Economics.
    39. Cindy Lombart & Didier Louis, 2012. "Consumer satisfaction and loyalty: Two main consequences of retailer personality," Post-Print hal-00956956, HAL.
    40. Lombart, Cindy & Louis, Didier, 2012. "Consumer satisfaction and loyalty: Two main consequences of retailer personality," Journal of Retailing and Consumer Services, Elsevier, vol. 19(6), pages 644-652.
    41. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    42. Amy J. Hillman & Gerald D. Keim, 2001. "Shareholder value, stakeholder management, and social issues: what's the bottom line?," Strategic Management Journal, Wiley Blackwell, vol. 22(2), pages 125-139, February.
    43. Lin, Chin-Huang & Yang, Ho-Li & Liou, Dian-Yan, 2009. "The impact of corporate social responsibility on financial performance: Evidence from business in Taiwan," Technology in Society, Elsevier, vol. 31(1), pages 56-63.
    44. Chen, Fang-Yuan & Chang, Yu-Hern & Lin, Yi-Hsin, 2012. "Customer perceptions of airline social responsibility and its effect on loyalty," Journal of Air Transport Management, Elsevier, vol. 20(C), pages 49-51.
    45. Mehran Nejati & Sasan Ghasemi, 2012. "Corporate social responsibility in Iran from the perspective of employees," Social Responsibility Journal, Emerald Group Publishing, vol. 8(4), pages 578-588, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jeremy Galbreath & Paul Shum, 2012. "Do customer satisfaction and reputation mediate the CSR–FP link? Evidence from Australia," Australian Journal of Management, Australian School of Business, vol. 37(2), pages 211-229, August.
    2. Hafiz Yasir Ali & Rizwan Qaiser Danish & Muhammad Asrar‐ul‐Haq, 2020. "How corporate social responsibility boosts firm financial performance: The mediating role of corporate image and customer satisfaction," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(1), pages 166-177, January.
    3. Abdelmajid EL WAATMANI, 2018. "Industrial clusters and promotion of CSR: the case of developing countries," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 9(2), pages 69-80, December.
    4. Faisal Mahmood & Faisal Qadeer & Usman Sattar & Antonio Ariza-Montes & Maria Saleem & Jaffar Aman, 2020. "Corporate Social Responsibility and Firms’ Financial Performance: A New Insight," Sustainability, MDPI, vol. 12(10), pages 1-19, May.
    5. Woon Leong Lin & Chin Lee & Siong Hook Law, 2021. "Asymmetric effects of corporate sustainability strategy on value creation among global automotive firms: A dynamic panel quantile regression approach," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 931-954, February.
    6. Anteneh Mulugeta Eyasu & Demoz Arefayne & Collins G. Ntim, 2020. "The effect of corporate social responsibility on banks’ competitive advantage: Evidence from Ethiopian lion international bank S.C," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1830473-183, January.
    7. Yu-Muo Lee & Jin-Li Hu, 2018. "Integrated Approaches for Business Sustainability: The Perspective of Corporate Social Responsibility," Sustainability, MDPI, vol. 10(7), pages 1-20, July.
    8. María del Mar Miras‐Rodríguez & Amalia Carrasco‐Gallego & Bernabé Escobar‐Pérez, 2015. "Are Socially Responsible Behaviors Paid Off Equally? A Cross‐cultural Analysis," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 22(4), pages 237-256, July.
    9. Abdelmajid EL WAATMANI, 2018. "Industrial clusters and promotion of CSR: the case of developing countries," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 9(2), pages 69-80, December.
    10. Tiago Melo & Alvaro Garrido‐Morgado, 2012. "Corporate Reputation: A Combination of Social Responsibility and Industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 19(1), pages 11-31, January.
    11. Antonio Martos-Pedrero & Francisco Joaquín Cortés-García & David Jiménez-Castillo, 2019. "The Relationship between Social Responsibility and Business Performance: An Analysis of the Agri-Food Sector of Southeast Spain," Sustainability, MDPI, vol. 11(22), pages 1-23, November.
    12. Yan Zhu & Li-Yun Sun & Alicia Leung, 2014. "Corporate social responsibility, firm reputation, and firm performance: The role of ethical leadership," Asia Pacific Journal of Management, Springer, vol. 31(4), pages 925-947, December.
    13. Úbeda-García, Mercedes & Claver-Cortés, Enrique & Marco-Lajara, Bartolomé & Zaragoza-Sáez, Patrocinio, 2021. "Corporate social responsibility and firm performance in the hotel industry. The mediating role of green human resource management and environmental outcomes," Journal of Business Research, Elsevier, vol. 123(C), pages 57-69.
    14. Ben Lahouel, Béchir & Ben Zaied, Younes & Managi, Shunsuke & Taleb, Lotfi, 2022. "Re-thinking about U: The relevance of regime-switching model in the relationship between environmental corporate social responsibility and financial performance," Journal of Business Research, Elsevier, vol. 140(C), pages 498-519.
    15. Myeongju Lee & Hyunok Kim, 2017. "Exploring the Organizational Culture’s Moderating Role of Effects of Corporate Social Responsibility (CSR) on Firm Performance: Focused on Corporate Contributions in Korea," Sustainability, MDPI, vol. 9(10), pages 1-18, October.
    16. Reimann, Felix & Ehrgott, Matthias & Kaufmann, Lutz & Carter, Craig R., 2012. "Local stakeholders and local legitimacy: MNEs' social strategies in emerging economies," Journal of International Management, Elsevier, vol. 18(1), pages 1-17.
    17. Mukherjee, Abhishek & Bird, Ron & Duppati, Geeta, 2018. "Mandatory Corporate Social Responsibility: The Indian experience," Journal of Contemporary Accounting and Economics, Elsevier, vol. 14(3), pages 254-265.
    18. Zia ur Rehman & Asad Khan & Asim Rahman, 2020. "Corporate social responsibility's influence on firm risk and firm performance: the mediating role of firm reputation," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(6), pages 2991-3005, November.
    19. Woo Sung Kim & Kunsu Park & Sang Hoon Lee, 2018. "Corporate Social Responsibility, Ownership Structure, and Firm Value: Evidence from Korea," Sustainability, MDPI, vol. 10(7), pages 1-20, July.
    20. E.O. Marfo & L. Chen & H. Xuhua & H.A. Antwi & E. Yiranbon, 2015. "Corporate Social Responsibility: Driving Dynamics on Firm’s Profitability in Ghana," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(3), pages 116-132, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:68:y:2015:i:2:p:341-350. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/jbusres .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.