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The Mediating Roles of Corporate Reputation, Employee Engagement, and Innovation in the CSR—Performance Relationship: Insights from the Middle Eastern Banking Sector

Author

Listed:
  • Khodor Shatila

    (ICN Artem Business School, Faculty of Business Adminstration, 54000 Nancy, France)

  • Carla Martínez-Climent

    (Department of Business Organization, Universitat Politècnica de València, 46022 Valencia, Spain)

  • Sandra Enri-Peiró

    (Research Department, ESIC Business & Marketing School, Spain & ESIC University, 28223 Madrid, Spain)

Abstract

This study investigates how Corporate Social Responsibility (CSR) influences financial performance in the Middle Eastern banking sector through the mediating roles of corporate reputation, employee engagement, and innovation orientation. Drawing on stakeholder theory and the resource-based view, a survey of 297 senior banking executives was analyzed using structural equation modeling. The results show that CSR has both a direct positive impact on financial performance and an indirect effect by strengthening intangible resources. Among the mediators, innovation orientation emerged as the strongest pathway, followed by employee engagement and reputation. Collectively, the model accounted for more than 60% of the variance in financial performance, confirming that socially responsible strategies are not symbolic but yield tangible economic value. In the Middle Eastern banking sector—characterized by regulatory turbulence, cultural expectations, and digital transformation—CSR initiatives such as financial inclusion programs, green financing, and Sharia-compliant services provide both legitimacy and resilience. These findings highlight the strategic importance of embedding CSR into banking practices, showing that socially responsible institutions not only secure reputational gains but also cultivate motivated employees, foster innovation, and achieve sustainable profitability. By situating CSR within the unique context of Middle Eastern banking, this study extends the literature on CSR—performance linkages in emerging markets and demonstrates how intangible capabilities can be mobilized to secure long-term financial sustainability.

Suggested Citation

  • Khodor Shatila & Carla Martínez-Climent & Sandra Enri-Peiró, 2025. "The Mediating Roles of Corporate Reputation, Employee Engagement, and Innovation in the CSR—Performance Relationship: Insights from the Middle Eastern Banking Sector," JRFM, MDPI, vol. 18(10), pages 1-23, September.
  • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:10:p:534-:d:1756567
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    References listed on IDEAS

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    1. George Nyantakyi & Francis Atta Sarpong & Philip Adu Sarfo & Nneka Uchenwoke Ogochukwu & Winnifred Coleman, 2023. "A boost for performance or a sense of corporate social responsibility? A bibliometric analysis on sustainability reporting and firm performance research (2000-2022)," Cogent Business & Management, Taylor & Francis Journals, vol. 10(2), pages 2220513-222, December.
    2. Nicolas, Maxime L.D. & Desroziers, Adrien & Caccioli, Fabio & Aste, Tomaso, 2024. "ESG reputation risk matters: An event study based on social media data," Finance Research Letters, Elsevier, vol. 59(C).
    3. Wang, Ou & Wu, Hao & Li, Chang, 2025. "Corporate social responsibility performance and litigation risk," Finance Research Letters, Elsevier, vol. 72(C).
    4. Deepa Sharma & Suman Chakraborty, 2024. "Corporate social responsibility and financial performance: does CSR strategic integration matter?," Cogent Business & Management, Taylor & Francis Journals, vol. 11(1), pages 2392182-239, December.
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    Cited by:

    1. Mona Ali Mohamed Khalil & Mohamed Abdelraouf & Tamer Shahwan, 2026. "Evaluating the effect of corporate social responsibility (CSR) on corporate financial performance” an applied study on Egyptian stock market," Future Business Journal, Springer, vol. 12(1), pages 1-18, December.

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