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Too little of a good thing? Curvilinear effects of corporate social responsibility on corporate financial performance

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  • Woon Leong Lin

    (Taylor’s University)

Abstract

The purpose of this study is to contribute to the existing body of research on the impact of Corporate Social Responsibility (CSR) on Firm Performance (FP). The study employs a longitudinal panel data sample of 132 automotive companies, using a dynamic Generalized Method of Moments model. The analysis examines the relationship between CSR ratings and yearly financial performance, taking into account various control variables. The results of the analysis suggest that there is a non-linear, U-shaped relationship between CSR and FP. The direction of this relationship (positive or negative) is dependent on the level of CSR engagement. This means that CSR activities do not immediately yield benefits, but instead provide advantages once a certain level of CSR has been reached. The study also finds that the impact of CSR on FP is positively moderated by technological innovation. This indicates that firms with higher levels of investment in technology benefit more from CSR activities in terms of their financial performance.

Suggested Citation

  • Woon Leong Lin, 2024. "Too little of a good thing? Curvilinear effects of corporate social responsibility on corporate financial performance," Review of Managerial Science, Springer, vol. 18(8), pages 2197-2228, August.
    • Handle: RePEc:spr:rvmgts:v:18:y:2024:i:8:d:10.1007_s11846-023-00682-5
    DOI: 10.1007/s11846-023-00682-5
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    More about this item

    Keywords

    Corporate social responsibility; Corporate financial performance; Dynamic model; System GMM; Curvilinear;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies

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