Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance
This study assesses the impact of corporate social responsibility (CSR) on corporate financial performance (CFP) by using an innovative threshold estimation technique. We examine whether the CSR effect on CFP is varied with the distinct levels of market differentiation. The empirical analysis is bas...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Wiley
2020
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| Online Access: | http://psasir.upm.edu.my/id/eprint/86647/1/Market%20differentiation%20.pdf |
| _version_ | 1825952239566454784 |
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| author | Lin, Woon Leong Law, Siong Hook Wan Ngah, Wan Azman Saini |
| author_facet | Lin, Woon Leong Law, Siong Hook Wan Ngah, Wan Azman Saini |
| author_sort | Lin, Woon Leong |
| collection | UPM |
| description | This study assesses the impact of corporate social responsibility (CSR) on corporate financial performance (CFP) by using an innovative threshold estimation technique. We examine whether the CSR effect on CFP is varied with the distinct levels of market differentiation. The empirical analysis is based on a world automotive panel dataset for the period of 2011–2017. We unveil an inverted V-shaped relationship between CSR and CFP and confirm that the increasing nonparametric regression line up to a certain threshold level indicates a positive effect on CFP, whereas a decreasing line indicates a negative effect. Hence, these findings support the idea that engagement in CSR can boost firm performance by incorporating with market differentiation, since higher firm performance is associated with strong differentiation (i.e., less substitutability), but CSR may not provide large benefits in firms with too high market differentiation. |
| first_indexed | 2024-03-06T10:41:57Z |
| format | Article |
| id | upm.eprints-86647 |
| institution | Universiti Putra Malaysia |
| language | English |
| last_indexed | 2024-03-06T10:41:57Z |
| publishDate | 2020 |
| publisher | Wiley |
| record_format | dspace |
| spelling | upm.eprints-866472021-10-17T21:38:54Z http://psasir.upm.edu.my/id/eprint/86647/ Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance Lin, Woon Leong Law, Siong Hook Wan Ngah, Wan Azman Saini This study assesses the impact of corporate social responsibility (CSR) on corporate financial performance (CFP) by using an innovative threshold estimation technique. We examine whether the CSR effect on CFP is varied with the distinct levels of market differentiation. The empirical analysis is based on a world automotive panel dataset for the period of 2011–2017. We unveil an inverted V-shaped relationship between CSR and CFP and confirm that the increasing nonparametric regression line up to a certain threshold level indicates a positive effect on CFP, whereas a decreasing line indicates a negative effect. Hence, these findings support the idea that engagement in CSR can boost firm performance by incorporating with market differentiation, since higher firm performance is associated with strong differentiation (i.e., less substitutability), but CSR may not provide large benefits in firms with too high market differentiation. Wiley 2020-05 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/86647/1/Market%20differentiation%20.pdf Lin, Woon Leong and Law, Siong Hook and Wan Ngah, Wan Azman Saini (2020) Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance. Corporate Social Responsibility and Environmental Management, 27 (3). 1279 - 1293. ISSN 1535-3958; ESSN: 1535-3966 https://onlinelibrary.wiley.com/doi/epdf/10.1002/csr.1883 10.1002/csr.1883 |
| spellingShingle | Lin, Woon Leong Law, Siong Hook Wan Ngah, Wan Azman Saini Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance |
| title | Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance |
| title_full | Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance |
| title_fullStr | Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance |
| title_full_unstemmed | Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance |
| title_short | Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance |
| title_sort | market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance |
| url | http://psasir.upm.edu.my/id/eprint/86647/1/Market%20differentiation%20.pdf |
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