Acceso usuarios
Abdelaziz Hakimi, Rim Boussaada, Majdi Karmani
Purpose – This paper aims to investigate the reciprocal nonlinear relationship between corporate social responsibility (CSR) and firm performance (FP).
Design/methodology/approach – The authors used a sample of 814 European firms over the period 2008– 2017. The Panel Smooth Transition Regression (PSTR) model was performed as an econometric approach.
Findings – Firstly, results show a threshold effect in the CSR–FP relationships within the two directions. More specifically, the authors found that firms are more likely to engage in CSR by surpassing a threshold of 1.231%for return on assets (ROA) and 0.821%forTobin’s Qratio. Secondly, the authors also found that the impact of CSR on FP is positive and significant only if the environment, social and governance score surpasses the threshold of 56.780% when the dependent variable is ROA and 41.02%when Tobin’s Q ratio measures performance.
Research limitations/implications – A significant part of the literature supports the linear relationship between CSR and FP from the unique direction (CSR→FP). This study comes to fill this gap by assessing the possible nonlinear relationship. In addition, this nonlinear relationship is tested under the two directions.
Therefore, defining the threshold of FP that allows companies to engage in CSR, on the one hand, and the threshold of engagement in CSR that improves FP, on the other hand, could be an exciting topic.
Practical implications – To get the full benefit from CSR effects, firms should be with better financial performance to be socially responsible.
Originality/value – To the best of our knowledge, few studies have explored the nonlinear relationship between CSR and FP. In addition, this study raises the question of whether this relation is causal. The authors assess the two nonlinear relationships between CSR ? FP and FP ? CSR by determining the optimal thresholds.
