IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i22p15440-d978965.html
   My bibliography  Save this article

Does Corporate Social Responsibility Fuel Firm Performance? Evidence from the Asian Automotive Sector

Author

Listed:
  • Minimol M. Chandrasekaran

    (Rajagiri College of Social Sciences (Autonomous), Kochi 682039, Kerala, India)

Abstract

Corporations are now expected to self-regulate in order to uphold their social obligations to society. This is known as the social responsibility of corporations or corporate social responsibility. CSR helps a business to be mindful of the impacts it has on the economy, society, and environment. The most important CSR component for the automotive industry is unquestionably environmental responsibility. Despite the fact that many businesses still place a strong emphasis on economic responsibility, it is widely acknowledged that all three CSR elements are essential for the success of a firm. This study’s objective is to look into the effects of corporate social responsibility (CSR) on business performance in the automobile sector, with an emphasis on Asian nations. Sample companies were selected from the Thomson Reuters database according to the data availability on corporate social performance and firm performance for more than 10 years. Data analysis was performed using the software STATA. Fixed and random effects panel regression models were used to analyse the relationships. The findings of this study are consistent with the idea that corporate social responsibility considerably improves the performance of automobile companies. The study concludes that companies need to focus more on CSR spending, as it improves the financial performance of the company. The study contributes to the existing literature as it validates the strong relationship between CSR components and firm performance in the automobile sector, which has not been much explored in the extant literature. The results of the panel data regression demonstrated that not only the environmental score is significant in determining the firm performance; other components such as social and governance scores are also equally important in achieving the desired firm performance, which is totally against the common notion that since automobile firms cause much damage to the environment, they need to focus only on environmental aspects through their CSR initiatives.

Suggested Citation

  • Minimol M. Chandrasekaran, 2022. "Does Corporate Social Responsibility Fuel Firm Performance? Evidence from the Asian Automotive Sector," Sustainability, MDPI, vol. 14(22), pages 1-12, November.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:22:p:15440-:d:978965
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/22/15440/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/22/15440/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Vincent Frigant, 2009. "CSR in the auto industry: do the first-tier suppliers have stakeholders?," International Journal of Automotive Technology and Management, Inderscience Enterprises Ltd, vol. 9(4), pages 377-393.
    2. 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.
    3. Maury, Benjamin, 2022. "Strategic CSR and firm performance: The role of prospector and growth strategies," Journal of Economics and Business, Elsevier, vol. 118(C).
    4. Roberto Garcia-Castro & Miguel Ariño & Miguel Canela, 2010. "Does Social Performance Really Lead to Financial Performance? Accounting for Endogeneity," Journal of Business Ethics, Springer, vol. 92(1), pages 107-126, March.
    5. Minna Halme & Jyrki Niskanen, 2001. "Does corporate environmental protection increase or decrease shareholder value? The case of environmental investments," Business Strategy and the Environment, Wiley Blackwell, vol. 10(4), pages 200-214, July.
    6. Ron Bird & Anthony D. Hall & Francesco Momentè & Francesco Reggiani, 2007. "What Corporate Social Responsibility Activities are Valued by the Market?," Journal of Business Ethics, Springer, vol. 76(2), pages 189-206, December.
    7. Joana Costa & José Pedro Fonseca, 2022. "The Impact of Corporate Social Responsibility and Innovative Strategies on Financial Performance," Risks, MDPI, vol. 10(5), pages 1-20, May.
    8. Philip Beske & Julia Koplin & Stefan Seuring, 2008. "The use of environmental and social standards by German first‐tier suppliers of the Volkswagen AG," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 15(2), pages 63-75, March.
    9. Mihai Dragomir & Diana Alina Blagu & Sorin Popescu & Mircea Fulea & Călin Neamțu, 2022. "How Well Are Manufacturing Companies in Transylvania, Romania Adapting to the Low-Carbon Economy in Order to Become Sustainable?," IJERPH, MDPI, vol. 19(4), pages 1-18, February.
    10. Qianqian Hu & Tianlun Zhu & Chien-Liang Lin & Tiejun Chen & Tachia Chin, 2021. "Corporate Social Responsibility and Firm Performance in China’s Manufacturing: A Global Perspective of Business Models," Sustainability, MDPI, vol. 13(4), pages 1-17, February.
    11. 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.
    12. Jiaqi Luo & Mingxiao Bi & Dandan Jia, 2022. "Corporate Social Responsibility Risk and Firm Performance: A Network Perspective," IJFS, MDPI, vol. 10(2), pages 1-20, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jiangjun Li & Tao Fu & Shengyue Han & Rui Liang, 2023. "Exploring the Impact of Corporate Social Responsibility on Financial Performance: The Moderating Role of Media Attention," Sustainability, MDPI, vol. 15(6), pages 1-16, March.

    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. Hajer Tebini & Bouchra M’Zali & Pascal Lang & Paz Méndez-Rodrı́guez, 2015. "Social Performance and Financial Performance: A Controversial Relationship," International Series in Operations Research & Management Science, in: Enrique Ballestero & Blanca Pérez-Gladish & Ana Garcia-Bernabeu (ed.), Socially Responsible Investment, edition 127, chapter 0, pages 53-73, Springer.
    2. Gonzalo Maldonado-Guzman & Sandra Yesenia Pinzon-Castro & Gabriela Citlalli Lopez-Torres, 2016. "Corporate Social Responsibility and Business Performance: The Role of Mexican SMEs," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 6(10), pages 568-579, October.
    3. Andrea Pérez & Carlos López & María del Mar García-De los Salmones, 2017. "An empirical exploration of the link between reporting to stakeholders and corporate social responsibility reputation in the Spanish context," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 30(3), pages 668-698, March.
    4. Alan Gregory & Rajesh Tharyan & Julie Whittaker, 2014. "Corporate Social Responsibility and Firm Value: Disaggregating the Effects on Cash Flow, Risk and Growth," Journal of Business Ethics, Springer, vol. 124(4), pages 633-657, November.
    5. Roberto Fernández-Gago & Laura Cabeza-García & Mariano Nieto, 2016. "Corporate social responsibility, board of directors, and firm performance: an analysis of their relationships," Review of Managerial Science, Springer, vol. 10(1), pages 85-104, January.
    6. Tanja Schwarzmüller & Prisca Brosi & Vera Stelkens & Matthias Spörrle & Isabell M. Welpe, 2017. "Investors’ reactions to companies’ stakeholder management: the crucial role of assumed costs and perceived sustainability," Business Research, Springer;German Academic Association for Business Research, vol. 10(1), pages 79-96, June.
    7. Elizabeth-Anne Thomas, 2019. "How Useful Is the Global Reporting Initiative (GRI) Reporting Framework to Identify the Non-financial Value of Corporate Social Performance (CSP)?," CSR, Sustainability, Ethics & Governance, in: Nicholas Capaldi & Samuel O. Idowu & René Schmidpeter & Martin Brueckner (ed.), Responsible Business in Uncertain Times and for a Sustainable Future, pages 37-87, Springer.
    8. 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.
    9. Liliana Nicoleta Simionescu & Dalina Dumitrescu, 2018. "Empirical Study towards Corporate Social Responsibility Practices and Company Financial Performance. Evidence for Companies Listed on the Bucharest Stock Exchange," Sustainability, MDPI, vol. 10(9), pages 1-23, September.
    10. Franck Brulhart & Sandrine Gherra & Bertrand V. Quelin, 2019. "Do Stakeholder Orientation and Environmental Proactivity Impact Firm Profitability?," Journal of Business Ethics, Springer, vol. 158(1), pages 25-46, August.
    11. repec:zbw:bofrdp:2013_013 is not listed on IDEAS
    12. Grougiou, Vassiliki & Leventis, Stergios & Dedoulis, Emmanouil & Owusu-Ansah, Stephen, 2014. "Corporate social responsibility and earnings management in U.S. banks," Accounting forum, Elsevier, vol. 38(3), pages 155-169.
    13. Saurabh Mishra & Sachin Modi, 2013. "Positive and Negative Corporate Social Responsibility, Financial Leverage, and Idiosyncratic Risk," Journal of Business Ethics, Springer, vol. 117(2), pages 431-448, October.
    14. Alexis Cellier & Pierre Chollet & Jean-François Gajewski, 2011. "Les annonces de notations extrafinancières véhiculent-elles une information au marché?," Revue Finance Contrôle Stratégie, revues.org, vol. 14(3), pages 5-38, September.
    15. 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.
    16. Deepa Sharma & Suman Chakraborty & Ashwath Ananda Rao & Lumen Shawn Lobo, 2023. "The Relationship of Corporate Social Responsibility and Firm Performance: A Bibliometric Overview," SAGE Open, , vol. 13(1), pages 21582440231, March.
    17. Cornett, Marcia Millon & Erhemjamts, Otgontsetseg & Tehranian, Hassan, 2016. "Greed or good deeds: An examination of the relation between corporate social responsibility and the financial performance of U.S. commercial banks around the financial crisis," Journal of Banking & Finance, Elsevier, vol. 70(C), pages 137-159.
    18. Muhammad Zahid & Haseeb Ur Rahman & Musa Khan & Wajahat Ali & Fazaila Shad, 2020. "Addressing endogeneity by proposing novel instrumental variables in the nexus of sustainability reporting and firm financial performance: A step‐by‐step procedure for non‐experts," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3086-3103, December.
    19. Sandra Escamilla-Solano & Antonio Fernández-Portillo & Jessica Paule-Vianez & Paola Plaza-Casado, 2019. "Effect of the Disclosure of Corporate Social Responsibility on Business Profitability. A Dimensional Analysis in the Spanish Stock Market," Sustainability, MDPI, vol. 11(23), pages 1-17, November.
    20. Kim, Sooin & Yoo, Jungmin, 2022. "Corporate Opacity, Corporate Social Responsibility, and Financial Performance," Finance Research Letters, Elsevier, vol. 49(C).
    21. 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.

    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:gam:jsusta:v:14:y:2022:i:22:p:15440-:d:978965. See general information about how to correct material in RePEc.

    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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.