The effect of corporate social responsibility on firm performance: Evidence from Vietnam
-
DOIhttp://dx.doi.org/10.21511/ppm.21(3).2023.42
-
Article InfoVolume 21 2023, Issue #3, pp. 528-542
- Cited by
- 836 Views
-
208 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The vitality of corporate social responsibility (CSR) toward sustainability has been rising rapidly in business activities. Good CSR practices are one of the most critical instruments to satisfy stakeholders’ interests and improve business performance. This study explores the nexus between economic, social, and environmental dimensions of CSR and firm performance based on a balanced scorecard. The sample includes 336 Vietnamese enterprises, excluding financial firms. The survey was conducted from March to June 2021. The empirical results of the partial least squares structural equation modeling (PLS-SEM) demonstrate that CSR significantly affects company performance. The economic dimensions of CSR have the strongest impact on financial performance (p < 0.01; t > 2.57; sample mean is 0.362). However, the environmental dimensions of CSR have not been found to influence customer performance. This study also finds that the three dimensions of CSR positively impact learning and growth, which lead to higher internal business processes and then better customer performance, eventually positively influencing profitable results. Consequently, the firm’s leaders should have strategies for effective CSR implementation to increase financial performance and achieve sustainable development goals. Furthermore, the government and other organizations should actively improve legal policies and regulations related to CSR in order to ensure organizational and national sustainability.
Acknowledgment
This study is funded by Funds for Science and Technology Development of the University of Danang under project number B2020-DN07-08.
- Keywords
-
JEL Classification (Paper profile tab)M10, M14, G30
-
References62
-
Tables6
-
Figures1
-
- Figure 1. Conceptual research model
-
- Table 1. Measurement scale
- Table 2. Characteristics of the sample
- Table 3. Reliability and convergence of the scale
- Table 4. Discriminant validity test among constructs by the Fornell-Larcker standard
- Table 5. Hypotheses testing
- Table A1. Measurement of the study constructs
-
- Aldoghan, M., Aburumman, O. J., Omar, K., & Abdulwahid, N. A. (2022). The impact of key indicators on the overall performance of Saudi Arabian telecommunication companies. Problems and Perspectives in Management, 20(3), 192-203.
- Bai, X., Wang, K.-T., Tran, T. K., Sadiq, M., Trung, L. M., & Khudoykulov, K. (2022). Measuring China’s green economic recovery and energy environment sustainability: Econometric analysis of sustainable development goals. Economic Analysis and Policy, 75, 768-779.
- Barauskaite, G., & Streimikiene, D. (2021). Corporate social responsibility and financial performance of companies: The puzzle of concepts, definitions and assessment methods. Corporate Social Responsibility and Environmental Management, 28(1), 278-287.
- Barnett, M., & Salomon, R. (2006). Beyond dichotomy: The curvilinear relationship between social responsibility and financial performance. Strategic Management Journal, 27(11), 1101-1122.
- Bhattacharya, C. B., & Sen, S. (2004). Doing better at doing good: When, why, and how consumers respond to corporate social initiatives. California Management Review, 47(1), 9-24.
- Birth, G., Illia, L., Lurati, F., & Zamparini, A. (2008). Communicating CSR: Practices among Switzerland’s top 300 companies. Corporate Communications: An International Journal, 13(2), 182-196.
- Blasi, S., Caporin, M., & Fontini, F. (2018). A multidimensional analysis of the relationship between corporate social responsibility and firms’ economic performance. Ecological Economics, 147, 218-229.
- Bui, T. L. H. (2010). The Vietnamese consumer perception of corporate social responsibility. Journal of International Business Research, 9(s1), 75-87.
- Carroll, A. B. (1979). A three-dimensional conceptual model of corporate performance. Academy of Management Review, 4(4), 497-505.
- Carroll, A. B. (2015). Corporate social responsibility: The centerpiece of competing and complementary frameworks. Organizational Dynamics, 44(2), 87-96.
- Cegarra-Navarro, J.-G., Reverte, C., Gómez-Melero, E., & Wensley, A. K. P. (2016). Linking social and economic responsibilities with financial performance: The role of innovation. European Management Journal, 34(5), 530-539.
- Chaudhary, R. (2020). Corporate social responsibility and employee performance: A study among Indian business executives. The International Journal of Human Resource Management, 31(21), 2761-2784.
- Coluccia, D., Fontana, S., & Solimene, S. (2016). Disclosure of corporate social responsibility: A comparison between traditional and digital reporting. An empirical analysis on Italian listed companies. International Journal of Managerial and Financial Accounting, 8(3/4), 230-246.
- de Moura, G. B., & Saroli, L. G. (2020). Sustainable value chain management based on dynamic capabilities in small and medium-sized enterprises (SMEs). The International Journal of Logistics Management, 32(1), 168-189.
- Drury, C. (2018). Management and cost accounting (10th ed.). Andover, Hampshire, United Kingdom: Cengage Learning EMEA.
- Ding, L., Yang, Y., Wang, W., & Calin, A. C. (2019). Regional carbon emission efficiency and its dynamic evolution in China: A novel cross efficiency-malmquist productivity index. Journal of Cleaner Production, 241, 118260.
- Drury, C. M. (2013). Management and cost accounting. Springer.
- Espinoza-Rivera, F. R., Huertas-Vilca, K. S., Obando-Peralta, E. C., & Cordova-Buiza, F. (2023). Corporate social responsibility in Latin American corporations: Role and importance. Problems and Perspectives in Management, 21(2), 642-652.
- Evans, W. R., Davis, W. D., & Frink, D. D. (2011). An examination of employee reactions to perceived corporate citizenship. Journal of Applied Social Psychology, 41(4), 938-964.
- Feng, M., Wang, X., & Saini, J. S. (2015). Monetary compensation, workforce-oriented corporate social responsibility, and firm performance. American Journal of Business, 30(3), 196-215.
- Fornell, C., & Larcker, D. F. (1981). Structural equation models with unobservable variables and measurement error: Algebra and statistics. Journal of Marketing Research, 18(3), 382-388.
- Freeman, R. E., Phillips, R., & Sisodia, R. (2020). Tensions in stakeholder theory. Business & Society, 59(2), 213-231.
- Gallardo-Vázquez, D., & Sanchez-Hernandez, M. I. (2014). Measuring corporate social responsibility for competitive success at a regional level. Journal of Cleaner Production, 72, 14-22.
- García Villena, E., Gracia Villar, S., Dzul López, L. A., Álvarez, R. M., Delgado Noya, I., & Mazón, J. L. V. (2021). Approach to a project framework in the environment of sustainability and corporate social responsibility (CSR): Case study of a training proposal to a group of students in a higher education institution. Sustainability, 13(19), 10880.
- Gonçalves, T. C., Louro, D., & Barros, V. (2023). Can corporate sustainability drive economic value added? Evidence from larger European firms. Journal of Risk and Financial Management, 16(4), 215.
- GRI Standards (GRI). (n.d.). Standards.
- Hair, J., Sarstedt, M., Ringle, C., & Gudergan, S. (2017). Advanced issues in partial least squares structural equation modeling. Sage.
- Hasan, I., Kobeissi, N., Liu, L., & Wang, H. (2018). Corporate social responsibility and firm financial performance: The mediating role of productivity. Journal of Business Ethics, 149(3), 671-688.
- Hoang, T. C., Abeysekera, I., & Ma, S. (2018). Board diversity and corporate social disclosure: Evidence from Vietnam. Journal of Business Ethics, 151(3), 833-852.
- Ittner, C. D., Larcker, D. F., & Meyer, M. W. (2003). Subjectivity and the weighting of performance measures: Evidence from a balanced scorecard. The Accounting Review, 78(3), 725-758.
- Jelonek, D., Tien, N., Dao, M. T. H., & Minh, D. T. (2022). Comparative analysis of business strategy of Vietnamese real estate developers: The use of Hoffer matrix. International Journal of Multidisciplinary Research and Growth Evaluation, 3(1), 197-204.
- Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard – Measures that drive performance. Harvard Business Review.
- Khan, I., Jia, M., Lei, X., Niu, R., Khan, J., & Tong, Z. (2023). Corporate social responsibility and firm performance. Total Quality Management & Business Excellence, 34(5-6), 672-691.
- Kober, R., & Northcott, D. (2021). Testing cause-and-effect relationships within a balanced scorecard. Accounting & Finance, 61(S1), 1815-1849.
- Lipe, M. G., & Salterio, S. E. (2000). The balanced scorecard: Judgmental effects of common and unique performance measures. The Accounting Review, 75(3), 283-298.
- Malesios, C., Dey, P. K., & Abdelaziz, F. B. (2020). Supply chain sustainability performance measurement of small and medium sized enterprises using structural equation modeling. Annals of Operations Research, 294(1), 623-653.
- Manes-Rossi, F., Tiron-Tudor, A., Nicolò, G., & Zanellato, G. (2018). Ensuring more sustainable reporting in Europe using non-financial disclosure – De facto and de jure evidence. Sustainability, 10(4), 1162.
- Maqbool, S., & Zameer, M. N. (2018). Corporate social responsibility and financial performance: An empirical analysis of Indian banks. Future Business Journal, 4(1), 84-93.
- Marin, L., Martín, P. J., & Rubio, A. (2017). Doing good and different! The mediation effect of innovation and investment on the influence of CSR on competitiveness. Corporate Social Responsibility and Environmental Management, 24(2), 159-171.
- Martinez-Conesa, I., Soto-Acosta, P., & Palacios-Manzano, M. (2017). Corporate social responsibility and its effect on innovation and firm performance: An empirical research in SMEs. Journal of Cleaner Production, 142, 2374-2383.
- Mathew, M., Makhankova, A., Menier, D., Sautter, B., Betzler, C., & Pierson, B. (2020). The emergence of Miocene reefs in South China Sea and its resilient adaptability under varying eustatic, climatic and oceanographic conditions. Scientific Reports, 10(1), 7141.
- Michelon, G., Pilonato, S., & Ricceri, F. (2015). CSR reporting practices and the quality of disclosure: An empirical analysis. Critical Perspectives on Accounting, 33, 59-78.
- Mishra, S., & Suar, D. (2010). Does corporate social responsibility influence firm performance of Indian companies? Journal of Business Ethics, 95(4), 571-601.
- Moneva, J., Rivera-Lirio, J., & Muñoz-Torres, M. (2007). The corporate stakeholder commitment and social and financial performance. Industrial Management and Data Systems, 107(1), 84-102.
- Moneva, J. M., & Eduardo, O. (2010). Corporate Environmental and Financial Performance: A Multivariate Approach. Industrial Management & Data Systems, 110(2), 193-210.
- Nassani, A. A., Yousaf, Z., Radulescu, M., & Haffar, M. (2022). Environmental performance through environmental resources conservation efforts: Does corporate social responsibility authenticity act as mediator? Sustainability, 14(4), 2330.
- Nguyen, D., Ngo, T., Nguyen, R., Cao, H., & Pham, H. (2019). Corporate social responsibility, balanced scorecard system and financial performance in the service sector: The case of Vietnam. Management Science Letters, 9, 2215-2228.
- Nguyen, P.-M., Vo, N. D., Nguyen, N. P., & Choo, Y. (2020). Corporate social responsibilities of food processing companies in Vietnam from consumer perspective. Sustainability, 12(1), 71.
- Okafor, A., Adeleye, B. N., & Adusei, M. (2021). Corporate social responsibility and financial performance: Evidence from U.S tech firms. Journal of Cleaner Production, 292, 126078.
- Pérez, A., & Rodríguez del Bosque, I. (2014). Customer CSR expectations in the banking industry. International Journal of Bank Marketing, 32(3), 223-244.
- Peterson, S. J., Walumbwa, F. O., Byron, K., & Myrowitz, J. (2009). CEO positive psychological traits, transformational leadership, and firm performance in high-technology start-up and established firms. Journal of Management, 35(2), 348-368.
- Platonova, E., Mehmet Asutay, R. D., & Sabri, M. (2018). The Impact of Corporate Social Responsibility Disclosure on Financial Performance: Evidence from the GCC Islamic Banking Sector. Journal of Business Ethics, 151(2), 451-471.
- Pylypiv, N., Piatnychuk, I., Halachenko, O., Maksymiv, Y., & Popadynets, N. (2020). Balanced scorecard for implementing united territorial communities’ social responsibility. Problems and Perspectives in Management, 18(2), 128-139.
- Rosati, F., & Faria, L. G. D. (2019). Business contribution to the Sustainable Development Agenda: Organizational factors related to early adoption of SDG reporting. Corporate Social Responsibility and Environmental Management, 26(3), 588-597.
- Ruggiero, P., & Cupertino, S. (2018). CSR strategic approach, financial resources and corporate social performance: The mediating effect of innovation. Sustainability, 10(10), 3611.
- Rustiarini, N. W., Bhegawati, D., & Mendra, N. (2022). Intellectual capital and financial performance: The mediating effect of sustainability performance. International Journal of Management and Sustainability, 11(4), 221-232.
- Sweeney, L. (2009). A study of current practice of corporate social responsibility (CSR) and an examination of the relationship between CSR and financial performance using structural equation modelling (SEM). Technological University Dublin.
- Tran, A. N., & Jeppesen, S. (2016). SMEs in their own right: The views of managers and workers in Vietnamese textiles, garment, and footwear companies. Journal of Business Ethics, 137(3), 589-608.
- Úbeda-García, M., Claver-Cortés, E., Marco-Lajara, B., & Zaragoza-Sáez, P. (2021). Corporate social responsibility and firm performance in the hotel industry. The mediating role of green human resource management and environmental outcomes. Journal of Business Research, 123, 57-69.
- Wong, A. K. F., & Kim, S. (2020). Development and validation of standard hotel corporate social responsibility (CSR) scale from the employee perspective. International Journal of Hospitality Management, 87, 102507.
- Wrana, J., & Revilla Diez, J. (2018). Multinational enterprises or the quality of regional institutions – What drives the diffusion of global CSR certificates in a transition economy? Evidence from Vietnam. Journal of Cleaner Production, 186, 168-179.
- Zahoor, A., & Sahaf, M. A. (2018). Investigating causal linkages in the balanced scorecard: An Indian perspective. International Journal of Bank Marketing, 36(1), 184-207.