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How Corporate Social Responsibility Affects Firm Performance: The Inverted-U Shape Contingent on Founder CEO

Author

Listed:
  • Qian Wang

    (The Modern Enterprise Management Research Center of Shaanxi Province, School of Business, Xi’an University of Finance and Economics, Xi’an 710100, China)

  • Huiru Chen

    (School of Business Administration, Zhejiang Gongshang University, Hangzhou 310018, China)

  • Yajiong Xue

    (Department of Management Information Systems, College of Business, East Carolina University, Greenville, NC 27858, USA)

  • Huigang Liang

    (Department of Business Information and Technology, Fogelman College of Business and Economics, University of Memphis, Memphis, TN 38152, USA)

Abstract

Despite abundant research on the relationship between CSR and firm performance, prior research generated highly inconsistent findings. No consensus has been achieved on the relationship between CSR and firm performance. The objective of this research is to examine how the relationship between CSR and firm performance is contingent on founders’ management roles, especially in the situation of the founder as CEO, which will provide insights into the inconsistent impacts of CSR. Based on panel data analysis, we empirically test the nonlinear relationship between corporate social responsibility (CSR) and firm performance for China’s Growth Enterprise Market (GEM) listed companies. We further explore how this relationship differs under two types of CEOs: founder CEOs and non-founder CEOs. Our econometric analysis produces two major findings. First, there is an inverted U-shaped relationship between CSR and firm performance. Second, the presence of founder CEO weakens the relationship between CSR and firm performance, making the inverted U-shaped curve flatter. This research makes both novel theoretical and practical contributions to entrepreneurship and organization research by providing an enriched understanding of the relationship between CSR and firm performance. It integrates multiple theories to create a framework within which the contingent impacts of CSR can be holistically understood. It also helps managers to realize the nonlinear economic consequences of CSR activities and the different regulatory effects of founder management.

Suggested Citation

  • Qian Wang & Huiru Chen & Yajiong Xue & Huigang Liang, 2022. "How Corporate Social Responsibility Affects Firm Performance: The Inverted-U Shape Contingent on Founder CEO," Sustainability, MDPI, vol. 14(18), pages 1-24, September.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:18:p:11340-:d:911326
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