Corporate social responsibility and firms’ financial performance: a multi-level serial analysis underpinning social identity theory

Abstract

This research aims to investigate how firms’ Corporate Social Responsibility (CSR) perception and disclosure derive accounting, market, and perception-based Firms’ Financial Performance (FFP) through the serial mediation of individual-level organizational identification (OID) and employees' innovative job performance (EIJP). Philosophically, this research comes under the beliefs or worldview of postpositivism and employed a quantitative research design. And thus, the approach to theory development is deductive. Multi-method, multi-source and multilevel data with temporal breaks are collected from 60 manufacturing firms listed on the Pakistan Stock Exchange (PSE). Primary data are collected by following the survey strategy and by conducting multiple surveys. While the secondary data are collected from the annual and sustainability reports published by selected firms on their official websites. This research found the serial mediation of OID and employees’ innovative job performance on the CSR-FFP relationship. Our results will assist the management of the firms to understand the strategic implications of their CSR initiatives. In particular, this research contributed to understand why CSR is viewed to have strategic importance for the firms and how social identity theory (SIT) might be utilized in such endeavors.