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Reexamining Corporate Social Responsibility and Shareholder Value: The Inverted-U-Shaped Relationship and the Moderation of Marketing Capability

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Abstract

In the literature, CSR’s roles on firm performance are found to be positive, negative, or neutral. This inconclusive pattern suggests there may be a more complicated mechanism at work than the traditional focus on simple linear associations. We propose and test an inverted-U-shaped relationship between CSR and shareholder value, the fundamental measure of firm performance. Further, we incorporate a critical firm attribute, marketing capability, to moderate the nonlinear link between CSR and shareholder value, thereby exploring a previous understudied area involving the interplay between CSR and market-side competency. The results show that an initial increase in CSR engagement positively drives firm shareholder value, but the effect turns negative when a firm pursues excessive CSR engagement. Notably, however, this negative association does not apply to firms that have a high marketing capability. Our research generates meaningful implications for a stakeholder view of CSR, strategic management, firm valuation, resource-based theories, and business practices.

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Authors and Affiliations

  1. Helzberg School of Management, Rockhurst University, 1100 Rockhurst Road, Kansas City, MO, USA

    Wenbin Sun

  2. Nanjing Tech University, Nanjing, Jiangsu, China

    Shanji Yao

  3. School of Marketing, University of New South Wales, Sydney, Australia

    Rahul Govind

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  1. Wenbin Sun
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  2. Shanji Yao
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  3. Rahul Govind
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Correspondence to Wenbin Sun.

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Sun, W., Yao, S. & Govind, R. Reexamining Corporate Social Responsibility and Shareholder Value: The Inverted-U-Shaped Relationship and the Moderation of Marketing Capability. J Bus Ethics 160, 1001–1017 (2019). https://doi.org/10.1007/s10551-018-3854-x

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