CORPORATE SOCIAL RESPONSIBILITY ENGAGEMENT, ECONOMIC POLICY UNCERTAINTY, AND FIRM FINANCIAL PERFORMANCE

The link between corporate social responsibility (CSR) engagement and firm financial performance has been examined in a variety of contexts. We extend this link to an understudied but important context for strategic decisions: environmental uncertainty. We draw on stakeholder theory to investigate t...

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Bibliographic Details
Published in:Journal of business strategies 2020-09, Vol.37 (2), p.1-21
Main Authors: Muriithi, Sammy G, Walters, Bruce A, Gilley, Otis W
Format: Article
Language:English
Subjects:
Analysis
Conflict resolution
Corporate social responsibility
Economic aspects
Economic forecasting
Economic policy
Employees
Growth rate
Hypotheses
Information accessibility
Information management
Investigations
Reputations
Social responsibility
Stakeholders
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Summary:The link between corporate social responsibility (CSR) engagement and firm financial performance has been examined in a variety of contexts. We extend this link to an understudied but important context for strategic decisions: environmental uncertainty. We draw on stakeholder theory to investigate the potential moderating influence of an increasingly important measure of environmental uncertainty -economic policy uncertainty (EPU), on the CSR-performance relationship. Panel data analysis of 484 firms using KLD data and the Compustat/Capital IQ database reveal that EPU appears to moderate the relationship between CSR and financial performance. Moreover, supplemental analysis reveals that this moderated relationship varies when considering individual components of CSR. Implications for both research and practice are suggested regarding managers' emphases among various CSR initiatives in times of high policy uncertainty.
ISSN:0887-2058
2162-6901