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A stakeholder‐centric paradigm bids well for the “business case” ‐ An investigation through moderated‐mediation model

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  • Muzhar Javed
  • Muhammad Waheed Akhtar
  • Mudassir Husnain
  • Rabnawaz Lodhi
  • Sonia Emaan

Abstract

This study examines the effect of responsible governance on a firm's financial performance and corporate reputation using the lens of stakeholder theory and signaling theory. We believe that no single theory fully underpins all the hypothesized relationships. This study also investigates the indirect effect of responsible governance on a firm's financial performance and corporate reputation via corporate social responsibility (CSR). Further, drawing on contingency perspective and using the lens of upper echelon theory, we test the moderating effect of different orientations of responsible leadership on the relationship between responsible governance and CSR. After, adopting a multi‐wave research design and using a survey method, we find that responsible governance significantly improves a firm's financial performance and reputation. Further, we find that CSR mediates the relationship between responsible governance and firm‐level outcomes. Moreover, moderating results reveal that the orientation of a traditional economist and an opportunity seeker strengthen the relationship between responsible governance and CSR whereas the orientation of an integrator and an idealist weaken this relationship. The study concludes with its implications and directions for future research.

Suggested Citation

  • Muzhar Javed & Muhammad Waheed Akhtar & Mudassir Husnain & Rabnawaz Lodhi & Sonia Emaan, 2020. "A stakeholder‐centric paradigm bids well for the “business case” ‐ An investigation through moderated‐mediation model," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(6), pages 2563-2577, November.
    • Handle: RePEc:wly:corsem:v:27:y:2020:i:6:p:2563-2577
    DOI: 10.1002/csr.1976
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    2. Paolo Esposito & Zubair Ahmad & Vincenzo Riso & Noman Mustafa, 2024. "Beyond the business case? Retracing the walk of Corporate social responsibility and financial performance relationship in the Oil and Gas sector," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 2211-2224, May.

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