The effects of corporate social responsibility on corporate reputation and firm financial performance: Moderating role of responsible leadership

Abstract

Abstract Drawing on stakeholder theory and contingency theory, this study examines the effects of Corporate Social Responsibility (CSR) on corporate reputation and financial performance of Pakistani firms with a moderating role of responsible leadership. Perceptual data on CSR, reputation, and performance were collected from 224 senior‐level Pakistani managers through a questionnaire survey. Structural equation modeling was used to analyze the data. The results reveal that socially responsible initiatives for disparate stakeholders significantly and positively influence corporate reputation and financial performance. Moreover, CSR–reputation and CSR–performance direct relationships were found to be negatively moderated by responsible leadership. It suggests that when socially responsible firms have leaders with strong stakeholder values, they practice excessive CSR that hurts performance.