Effect of CSR on Corporate Performance: The Mediating Role of Human Resources Management

Abstract

The management and marketing literature has increasingly emphasized the significance of corporate social responsibility (CSR) in determining company performance over the past few decades. While there is growing recognition of the potential impact of CSR initiatives on business outcomes, there remains a lack of consensus on the specific mechanisms through which CSR influences performance. This ambiguity underscores the need for further research to elucidate the relationship between CSR and business performance. Our research seeks to address this gap by examining the role of CSR-based human resource management as a potential mediating factor in this relationship. This focus is particularly pertinent given the pivotal role that employees, as key stakeholders, play in shaping organizational outcomes. By analyzing data from a sample of small and medium-sized manufacturing companies using partial least squares structural equation modelling (PLS-SEM), we found evidence supporting the hypothesis that CSR initiatives can positively impact business performance. Importantly, our findings suggest that the effectiveness of a company's CSR strategy in enhancing performance may be contingent upon the extent to which these initiatives are geared towards improving human resource management efficiency. In conclusion, current study contributes to the evolving understanding of the complex interplay between CSR and business performance, highlighting the critical role of human resource management practices in mediating this relationship.