Corporate social responsibility and cash flow volatility: The curvilinear moderation of marketing capability

CSR’s beneficial roles on firm financial performance have been well documented. However, the relationships existing in the literature are largely assumed to be linear. In this research, we propose a U-shaped relationship between CSR and firm cash flow volatility to demonstrate CSR’s dynamic implication on the performance instability and therefore extend the understanding of CSR into a new area involving firm performance risk factors. Further, we incorporate another key firm characteristic, marketing capability, to formulate the interactive associations between CSR and firm market-side ability toward better risk management. The results show that CSR may reduce firm cash flow volatility at low and moderate levels but will increase the volatility when the engagement is high. However, a firm with high marketing capability will eliminate the negative impact of CSR.