The Impact of Corporate Social Responsibility on Financial Performance in Indonesian Highly Polluted Industries: Mediating Role of Industry Competitiveness

Abstract

This research aims to examine the impact of Corporate Social Responsibility (CSR) on the financial performance of highly polluted national and international companies in Indonesia. Additionally, the study explores the role of industry competitiveness in mediating the relationship between CSR dimensions and financial performance. The research employed a quantitative methodology and collected data from 238 company respondents using primary and secondary sources. Partial least square structural equation modeling (PLS-SEM) was used to analyze the data and establish significant relationships between the variables. The results indicate that both CSR dimensions and industry competitiveness have a substantial impact on financial performance. Specifically, CSR’s economic, environmental, and social dimensions positively and significantly affect financial performance. Furthermore, industry competitiveness significantly mediates between corporate social responsibility (CSR) and financial performance. These findings provide empirical and theoretical insights for improving CSR measures and financial performance in heavily polluted industries. Companies should actively pursue CSR initiatives and increase industry competitiveness to enhance financial performance sustainably.