We investigate the nature of the relationship between Corporate Social Responsibility (CSR) and Corporate Financial Performance (CFP) by examining how it changes across a third dimension that accounts for firm-specific factors. We propose a semi-latent specification of an endogenous control variable, which can, for the first time, explicitly identify, for each individual firm, the threshold level where the marginal impact of CSR on CFP turns positive. We provide empirical evidence that this threshold depends on the additional dimension and consequently, the previously reported U-shape seems to be an aggregation of relationships of differential magnitude and direction. This disaggregation fits the data better and therefore, we maintain that the addition of a higher dimension, along with the identification of the threshold level, can explain the conflicting results in the literature.
|Number of pages||37|
|Journal||Annals of Operations Research|
|Early online date||17 Dec 2020|
|Publication status||Published - Nov 2021|
Bibliographical noteThe final publication is available at Springer via http://dx.doi.org/10.1007/s10479-020-03834-y
Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.
- Asymmetric relationship
- Corporate financial performance (CFP)
- Corporate social responsibility (CSR)
- Firm size
ASJC Scopus subject areas
- Decision Sciences(all)
- Management Science and Operations Research