Corporate Social Responsibility, Customer Satisfaction, and Market Value

TLDR

Although prior research has addressed the influence of corporate social responsibility (CSR) on perceived customer responses, it is not clear whether CSR affects market value of the firm. This study develops and tests a conceptual framework that predicts customer satisfaction partially mediates the relationship between CSR and firm market value, that corporate abilities such as innovativeness capability and product quality moderate the financial returns to CSR, and that these moderated relationships are mediated by customer satisfaction. The authors test the framework using a large-scale secondary data set. In firms with low innovativeness capability, CSR reduces customer satisfaction and harms market value, while the mediated and asymmetrically moderated results provide important implications for marketing theory and practice.

Abstract

Although prior research has addressed the influence of corporate social responsibility (CSR) on perceived customer responses, it is not clear whether CSR affects market value of the firm. This study develops and tests a conceptual framework, which predicts that (1) customer satisfaction partially mediates the relationship between CSR and firm market value (i.e., Tobin's q and stock return), (2) corporate abilities (innovativeness capability and product quality) moderate the financial returns to CSR, and (3) these moderated relationships are mediated by customer satisfaction. Based on a large-scale secondary data set, the results show support for this framework. Notably, the authors find that in firms with low innovativeness capability, CSR actually reduces customer satisfaction levels and, through the lowered satisfaction, harms market value. The uncovered mediated and asymmetrically moderated results offer important implications for marketing theory and practice.