Opening the “black box” between corporate social responsibility and financial performance: From a critical review on moderators and mediators to an integrated framework

Abstract

The link between corporate social responsibility (CSR) and corporate financial performance (CFP) has been debated for several decades, resulting in a research shift from the CSR-CFP relationship to the mechanism of how to turn CSR into CFP. Nevertheless, such mechanism often appears as a “black box”, we only know that some moderators and mediators are at play in it. This research presented in the paper provides an in-depth review of the moderators and mediators in empirical research on the CSR-CFP link. We collected a total of 270 journal articles on the CSR-CFP link, 77 of which engaged moderators and mediators. Their moderating and mediating effects as well as the applied theories, are summarized and elaborated. Then, an integrated framework to bridge CSR and CFP by moderators and mediators is developed with a view to develop robust strategies to translate CSR programmes to the true value. It is found from the research that a mediator could be a process or outcome indicator to translate CSR into CFP, and a moderator could play a role from both the external and internal sides of a firm. The suitable indicators underpinning the moderating effects can be categorized at the macro-, meso-, or micro- level, while those underpinning mediating effects are mainly at the meso level. This research contributes theoretically to the mechanical analysis of utilizing CSR to ensure firms' long-term development, and it sheds lights on the practical implications of how to develop strategic CSR programmes to fulfil a firm's commitment to social, economic, and environmental sustainability.