Title: Interactive effects of corporate social responsibility and other value-creating investments on corporate financial performance

Authors: Xiaodan Wang; Mingming Feng; Timothy B. Palmer

Addresses: Department of Management, Haworth College of Business, Western Michigan University, 1903 W. Michigan Ave., Kalamazoo, MI 49008-5429, USA ' Department of Accountancy, Haworth College of Business, Western Michigan University, 1903 W. Michigan Ave., Kalamazoo, MI 49008, USA ' Department of Management, Haworth College of Business, Western Michigan University, 1903 W. Michigan Ave., Kalamazoo, MI 49008-5429, USA

Abstract: Research on the financial benefits of corporate social responsibility (CSR) has proliferated in recent years but generated mixed results. Rather than asking if CSR helps or hinders firm performance, it might be more worthwhile to explore conditions impacting relations between CSR and firm performance. That is, given the potential trade-offs between investments in CSR and those in other value-creating activities, it is necessary to examine their interactive impacts on corporate financial performance (CFP). Toward this end, this study explores if, and how, investments in innovation capabilities, branding capabilities and managerial capabilities moderate the effect of CSR on CFP. Testing the hypotheses with a sample of 579 US firms from 1991 to 2010, we found that the positive effect of CSR on CFP is weaker in firms that are more innovative and better at branding, and stronger in firms that spend more on acquiring managerial capabilities.

Keywords: corporate social responsibility; CSR; corporate financial performance; CFP; resource allocation; strategic management; competitive advantage; resource-based view; RBV; branding capabilities; innovation capabilities; managerial capabilities; value creation; firm performance; USA; United States.

DOI: 10.1504/IJSSM.2016.080468

International Journal of Sustainable Strategic Management, 2016 Vol.5 No.2, pp.127 - 148

Published online: 24 Nov 2016 *

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