Corporate Social Responsibility and Firm Financial Performance: A Case of SME’s Sector in Pakistan.
The paper assesses its relationship with firm innovation and Organizational performance in a single integrative model by using spss data set of 53 Pakistani SME’s firms. A questionnaire of self-administrative is developed to collect the data. Researcher personally visits of different SME’s firms and collect the data from manager of SME’s firms. The research use 275 questionnaire is distributed in different SME’s sector. In this study the statistical techniques of data analysis are used to investigate and find out the relationship among the Firm performance and the other factors. SPSS version16 is used for reliability analysis, descriptive statistics, regression analysis, correlation analysis, to check either modal is good fit or not. Our results supports a partial mediation effect of innovation performance on the relationship between corporate social responsibility and firm performance, meanwhile the effect of corporate social responsibility on firm performance shrinks upon the adding of innovation performance to the model. The findings may help to understand how corporate social responsibility is an important driver mechanism for companies to be more inventive, proficient and effective.
Abdulai Mahmoud, M., & Hinson, R. E. (2012). Market orientation, innovation and corporate social responsibility practices in Ghana's telecommunication sector. Social Responsibility Journal, 8(3), 327-346.
Alang, S. M., McAlpine, D. D., & Henning-Smith, C. E. (2014). Disability, health insurance, and psychological distress among US adults: an application of the stress process. Society and mental health, 4(3), 164-178.
Amit, R., & Schoemaker, P. J. (1993). Strategic assets and organizational rent. Strategic Management Journal, 14(1), 33-46.
Aupperle, K. E., Carroll, A. B., & Hatfield, J. D. (1985). An empirical examination of the relationship between corporate social responsibility and profitability. Academy of Management journal, 28(2), 446-463.
Bansal, P. (2005). Evolving sustainably: A longitudinal study of corporate sustainable development. (26). (3)
Battaglia, M., Testa, F., Bianchi, L., Iraldo, F., & Frey, M. (2014). Corporate social responsibility and competitiveness within SMEs of the fashion industry: Evidence from Italy and France. Sustainability, 6(2), 872-893.
Baumgartner, R. J. (2014). Managing corporate sustainability and CSR: A conceptual framework combining values, strategies and instruments contributing to sustainable development. Corporate Social Responsibility and Environmental Management, 21(5), 258-271.
Baumgartner, R. J., & Ebner, D. (2010). Corporate sustainability strategies: sustainability profiles and maturity levels. Sustainable Development, 18(2), 76-89.
Bhattacharya, C. B., & Sen, S. (2004). Doing better at doing good: When, why, and how consumers respond to corporate social initiatives. California management review, 47(1), 9-24.
Black, S. E., & Lynch, L. M. (2001). How to compete: the impact of workplace practices and information technology on productivity. Review of Economics and statistics, 83(3), 434-445.
Bocquet, R., Le Bas, C., Mothe, C., & Poussing, N. (2013). Are firms with different CSR profiles equally innovative? Empirical analysis with survey data. European Management Journal, 31(6), 642-654.
Boons, F., & Lüdeke-Freund, F. (2013). Business models for sustainable innovation: state-of-the-art and steps towards a research agenda. Journal of Cleaner Production, 45, 9-19.
Bowen, H. R., & Johnson, F. E. (1953). Social responsibility of the businessman: Harper.
Branco, M. C., & Rodrigues, L. L. (2006). Corporate social responsibility and resource-based perspectives. Journal of Business Ethics, 69(2), 111-132.
Capelli, P., & Neumark, D. (2001). External job churning and internal job flexibility. NBER Working Paper, 8111, 2001.
Carter, C. R. (2005). Purchasing social responsibility and firm performance: The key mediating roles of organizational learning and supplier performance. International Journal of Physical Distribution & Logistics Management, 35(3), 177-194.
Coelho, A. S., Branco, R. M., & Rodrigues, G. S. (2006). Aprimoramento da produtividade de sistemas de manufatura e aplicação de algoritmos genéticos na solução de problemas de agrupamentos celulares. Revista Produção Online, 6(3).
Daellenbach, U., Sharma, S., & Vredenburg, H. (1998). A dynamic theory of corporate reputation formation and stability. Halifax, Nova Scotia: St. Mary’s University.
Du, S., & Vieira, E. T. (2012). Striving for legitimacy through corporate social responsibility: Insights from oil companies. Journal of Business Ethics, 110(4), 413-427.
Ebner, D., & Baumgartner, R. J. (2007). Sustainable Development In Companies: An International Survey Challenges In The Management Of New Technologies (pp. 535-552).
Eesley, C., & Lenox, M. J. (2006). Firm responses to secondary stakeholder action. Strategic Management Journal, 27(8), 765-781.
Evans, N., & Sawyer, J. (2010). CSR and stakeholders of small businesses in regional South Australia. Social Responsibility Journal, 6(3), 433-451.
Falle, S., Rauter, R., Engert, S., & Baumgartner, R. J. (2016). Sustainability Management with the Sustainability Balanced Scorecard in SMEs: Findings from an Austrian Case Study. Sustainability, 8(6), 545.
Freeman, R. E. (2010). Strategic management: A stakeholder approach: Cambridge University Press.
Friedman, A. (1970). Foundations of modern analysis: Courier Corporation.
Gallardo-Vázquez, D., & Sanchez-Hernandez, M. I. (2014). Measuring Corporate Social Responsibility for competitive success at a regional level. Journal of Cleaner Production, 72, 14-22.
Gallego-Alvarez, I., Manuel Prado-Lorenzo, J., & García-Sánchez, I.-M. (2011). Corporate social responsibility and innovation: a resource-based theory. Management Decision, 49(10), 1709-1727.
Goll, I., & Rasheed, A. A. (2004). The moderating effect of environmental munificence and dynamism on the relationship between discretionary social responsibility and firm performance. Journal of Business Ethics, 49(1), 41-54.
González-Ramos, M. I., Donate, M. J., & Guadamillas, F. (2014). Technological Posture and Corporate Social Responsibility: Effects on Innovation Performance,“. Environmental Engineering and Management Journal, 13(10), 2497-2505.
Gyves, S., & O'Higgins, E. (2008). Corporate social responsibility: an avenue for sustainable benefit for society and the firm? Society and business review, 3(3), 207-223.
Hammann, E. M., Habisch, A., & Pechlaner, H. (2009). Values that create value: socially responsible business practices in SMEs–empirical evidence from German companies. Business Ethics: A European Review, 18(1), 37-51.
Hannan, M. T., & Freeman, J. (1984). Structural inertia and organizational change. American sociological review, 149-164.
Hansen, E. G., Grosse-Dunker, F., & Reichwald, R. (2009). Sustainability innovation cube—a framework to evaluate sustainability-oriented innovations. International Journal of Innovation Management, 13(04), 683-713.
Harms, R., Wagner, M., & Glauner, W. (2010). Relating personal, firm based and environmental factors to CSR activities in owner-managed SME. Journal of Small Business and Entrepreneurship, 23(2), 195-210.
Hart, S. L., & Sharma, S. (2004). Engaging fringe stakeholders for competitive imagination. The Academy of Management Executive, 18(1), 7-18.
Heikkurinen, P., & Bonnedahl, K. J. (2013). Corporate responsibility for sustainable development: a review and conceptual comparison of market-and stakeholder-oriented strategies. Journal of Cleaner Production, 43, 191-198.
Ihlen, Ø. (2008). Mapping the environment for corporate social responsibility: Stakeholders, publics and the public sphere. Corporate Communications: An International Journal, 13(2), 135-146.
Jawahar, I., & McLaughlin, G. L. (2001). Toward a descriptive stakeholder theory: An organizational life cycle approach. Academy of management review, 26(3), 397-414.
Klewitz, J., & Hansen, E. G. (2014). Sustainability-oriented innovation of SMEs: a systematic review. Journal of Cleaner Production, 65, 57-75.
Lakhal, L., & Pasin, F. (2008). The direct and indirect impact of product quality on financial performance: A causal model. Total quality management & business excellence, 19(10), 1087-1099.
Lamond, D., Dwyer, R., Prado-Lorenzo, J.-M., Gallego-Álvarez, I., García-Sánchez, I.-M., & Rodríguez-Domínguez, L. (2008). Social responsibility in Spain: Practices and motivations in firms. Management Decision, 46(8), 1247-1271.
Lev, B., Petrovits, C., & Radhakrishnan, S. (2010). Is doing good good for you? How corporate charitable contributions enhance revenue growth. Strategic Management Journal, 31(2), 182-200.
Lloret, A. (2016). Modeling corporate sustainability strategy. Journal of Business Research, 69(2), 418-425.
Luo, X., & Bhattacharya, C. B. (2006). Corporate social responsibility, customer satisfaction, and market value. Journal of Marketing, 70(4), 1-18.
Luo, X., & Homburg, C. (2007). Neglected outcomes of customer satisfaction. Journal of Marketing, 71(2), 133-149.
MacGregor, S. P., & Fontrodona, J. (2008). Exploring the fit between CSR and innovation.
Marín, L., Rubio, A., & Maya, S. R. (2012). Competitiveness as a strategic outcome of corporate social responsibility. Corporate Social Responsibility and Environmental Management, 19(6), 364-376.
Maron, B. J., Towbin, J. A., Thiene, G., Antzelevitch, C., Corrado, D., Arnett, D., . . . Young, J. B. (2006). Contemporary definitions and classification of the cardiomyopathies. Circulation, 113(14), 1807-1816.
Matos, S., & Silvestre, B. S. (2013). Managing stakeholder relations when developing sustainable business models: the case of the Brazilian energy sector. Journal of Cleaner Production, 45, 61-73.
Manurung, D.T.H & Rachmat, R.A.H (2019). ISO 14001 Implementation Impact and Financial Performance on Corporate Social Responsibility Disclosure. Jurnal Manajemen, XXIII (2), June. Page 2017-222.
McGuire, J. B., Sundgren, A., & Schneeweis, T. (1988). Corporate social responsibility and firm financial performance. Academy of Management journal, 31(4), 854-872.
McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and financial performance. Strategic Management Journal, 21(5), 603-609.
McWilliams, A., Siegel, D. S., & Wright, P. M. (2006). Corporate social responsibility: Strategic implications. Journal of management studies, 43(1), 1-18.
Mendibil, K., Hernandez, J., Espinach, X., Garriga, E., & Macgregor, S. (2007). How can CSR practices lead to successful innovation in SMEs. Publication from the RESPONSE Project, 1-7.
Nancy, Y. Y., Wagner, J. R., Laird, M. R., Melli, G., Rey, S., Lo, R., . . . Foster, L. J. (2010). PSORTb 3.0: improved protein subcellular localization prediction with refined localization subcategories and predictive capabilities for all prokaryotes. Bioinformatics, 26(13), 1608-1615.
Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization studies, 24(3), 403-441.
Padgett, R. C., & Galan, J. I. (2010). The effect of R&D intensity on corporate social responsibility. Journal of Business Ethics, 93(3), 407-418.
Paramanathan, S., Farrukh, C., Phaal, R., & Probert, D. (2004). Implementing industrial sustainability: the research issues in technology management. R&D Management, 34(5), 527-537.
Park, S.-Y., & Lee, S. (2009). Financial rewards for social responsibility a mixed picture for restaurant companies. Cornell Hospitality Quarterly, 50(2), 168-179.
Perrine, C. G., Scanlon, K. S., Li, R., Odom, E., & Grummer-Strawn, L. M. (2012). Baby-friendly hospital practices and meeting exclusive breastfeeding intention. Pediatrics, 130(1), 54-60.
Polonsky, M. J., Neville, B. A., Bell, S. J., & Mengüç, B. (2005). Corporate reputation, stakeholders and the social performance-financial performance relationship. European Journal of Marketing, 39(9/10), 1184-1198.
Prado?Lorenzo, J. M., Gallego?Alvarez, I., & Garcia?Sanchez, I. M. (2009). Stakeholder engagement and corporate social responsibility reporting: the ownership structure effect. Corporate Social Responsibility and Environmental Management, 16(2), 94-107.
Quinn, R. E., & Cameron, K. S. (1988). Paradox and transformation: A framework for viewing organization and management. Paradox and transformation: Toward a theory of change in organization and management, 289-308.
Quinn, R. E., & Rohrbaugh, J. (1983). A spatial model of effectiveness criteria: Towards a competing values approach to organizational analysis. Management science, 29(3), 363-377.
Richard, P. J., Devinney, T. M., Yip, G. S., & Johnson, G. (2009). Measuring organizational performance: Towards methodological best practice. Journal of management, 35(3), 718-804.
Roberts, P. W., & Dowling, G. R. (2002). Corporate reputation and sustained superior financial performance. Strategic Management Journal, 23(12), 1077-1093.
Rodgers, W., Choy, H. L., & Guiral, A. (2008). Do Investors Value a Firm's Commitment to Social Activities? The Moderating Role of Intangibles and the Impact of the Sarbanes-Oxley Act.
Rojas, R. (2000). Guía para realizar investigaciones sociales: Plaza y Valdés.
Roome, N. (1994). Business strategy, R&D management and environmental imperatives. R&D Management, 24(1), 065.
Russo, A., & Perrini, F. (2010). Investigating stakeholder theory and social capital: CSR in large firms and SMEs. Journal of Business Ethics, 91(2), 207-221.
Salzmann, O., Ionescu-Somers, A., & Steger, U. (2005). The business case for corporate sustainability:: literature review and research options. European Management Journal, 23(1), 27-36.
Schaltegger, S. (2011). Sustainability as a driver for corporate economic success: Consequences for the development of sustainability management control. Society and Economy, 33(1), 15-28.
Sen, S., Bhattacharya, C. B., & Korschun, D. (2006). The role of corporate social responsibility in strengthening multiple stakeholder relationships: A field experiment. Journal of the Academy of Marketing science, 34(2), 158-166.
Seuring, S., & Müller, M. (2008). From a literature review to a conceptual framework for sustainable supply chain management. Journal of Cleaner Production, 16(15), 1699-1710.
Smith, A. D. (2007). Making the case for the competitive advantage of corporate social responsibility. Business Strategy Series, 8(3), 186-195.
Surroca, J., Tribó, J. A., & Waddock, S. (2010). Corporate responsibility and financial performance: The role of intangible resources. Strategic Management Journal, 31(5), 463-490.
Torugsa, N. A., O’Donohue, W., & Hecker, R. (2012). Capabilities, proactive CSR and financial performance in SMEs: Empirical evidence from an Australian manufacturing industry sector. Journal of Business Ethics, 109(4), 483-500.
Turker, D. (2009). Measuring corporate social responsibility: A scale development study. Journal of Business Ethics, 85(4), 411-427.
van der Helm?vanMil, A. H., le Cessie, S., van Dongen, H., Breedveld, F. C., Toes, R. E., & Huizinga, T. W. (2007). A prediction rule for disease outcome in patients with Recent?onset undifferentiated arthritis: How to guide individual treatment decisions. Arthritis & Rheumatism, 56(2), 433-440.
Vázquez-Carrasco, R., & López-Pérez, M. E. (2013). Small & medium-sized enterprises and Corporate Social Responsibility: a systematic review of the literature. Quality & Quantity, 47(6), 3205-3218.
Wade, M., & Hulland, J. (2004). Review: The resource-based view and information systems research: Review, extension, and suggestions for future research. MIS quarterly, 28(1), 107-142.
White, H. (2009). The content of the form: Narrative discourse and historical representation: JHU Press.
Wiklund, J., & Shepherd, D. (2003). Knowledge?based resources, entrepreneurial orientation, and the performance of small and medium?sized businesses. Strategic Management Journal, 24(13), 1307-1314.
Wu, M.-L. (2006). Corporate social performance, corporate financial performance, and firm size: A meta-analysis. Journal of American Academy of Business, 8(1), 163-171.
Copyright (c) 2020 Waqas Ahmad WATTO, Daniel T H MANURUNG, Komang Adi Kurniawan SAPUTRA, Syed Gulam MUSTAFA
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.