Purpose Assuming that corporate social responsibility (CSR) is “a process of accumulating knowledge and experience” (Tang et al., 2012, p. 1298), this paper aims to investigate whether and how CSR knowledge (Asif et al., 2013; Kim, 2017) affects financial performance in the European banking industry. Design/methodology/approach The empirical research analyses a panel of 72 banks from 20 European countries over seven years (2009-2015). The hypotheses were tested using fixed effects regression analysis and the two-stage Heckman model (1976) to address endogeneity bias. Findings The findings of this work are twofold. First, consistent with the concept of knowledge absorptive capacity (Cohen and Levinthal, 1990), the internal CSR of banks (Kim et al., 2010) positively affects citizenship performance (Peterson, 2004a). Second, in line with the reputational effect of CSR (Margolis et al., 2009; Bushman and Wittenberg-Moerman, 2012), citizenship performance is a positive predictor of a bank’s financial performance. Practical implications From a knowledge-based perspective, the analysis shows that accrued internal CSR knowledge plays a key role in implementing effective CSR programs for external stakeholders. Moreover, this study shows how CSR engagement in external initiatives can improve a bank’s competitiveness because of the relationship between citizenship performance and the positive reputation of a bank. Social implications The management of CSR initiatives may favor the sharing of knowledge and creation of trust relationships among banks and internal and external stakeholders. CSR knowledge contributes to expanded value creation for both society and banks. Originality/value The knowledge management perspective of CSR provides new insights into the sustainability of banks’ business models and contributes to advancing the debate on the governance modes and effects of CSR. Moreover, the CSR perspective offers additional opportunities for addressing the challenges associated with sharing tacit knowledge within and outside of organizations.

The current study aims to answer dual, related questions: Does corporate environmental policy affect corporate reputation, and does this link also influence risk‐adjusted profitability and company's risk? With a comprehensive framework involving analyses of each question, among a sample of firms traced by the Reputation Institute, this study reveals several notable results, after correcting for endogeneity biases. First, environmental engagement and green product innovation are both antecedents of corporate reputation. Second, corporate reputation has a positive impact on risk‐adjusted profitability and Z score indicator of financial distress risk. Thus, corporate environmental responsibility and green practices represent cospecialized assets that enhances an intangible asset, namely, corporate reputation. The latter influence constitutes a missing link between sustainable development and the firm's financial performance. Overall, environmental engagement and corporate reputation act as insurance‐like protections of firm competitiveness.

PurposeThis paper aims to provide new evidence on firm-specific determinants and effects of corporate social and environmental responsibility (CSER) in the food industry.Design/methodology/approachThe current study is designed to empirically answer dual related research questions. First, we investigate the extent to which effective corporate governance (CG) mechanisms foster CSER. Second, we analyse the impact of CSER engagement on corporate financial performance (CFP). Consistent with the research design, to avoid sample selection bias, the authors employed Heckman two-step model (1979) to a worldwide sample of 324 food firms between 2011 and 2017.FindingsThe findings of the study reveal that effective board characteristics foster CSER engagement. Furthermore, CSER engagement is a positive predictor of improved profitability and also reduces the cost of debt (COD).Originality/valueThis article has elements of originality regarding the research questions, the context and the method. First, the authors demonstrate that CSER is a “missing link” between CG and CFP in the food industry. The authors’ contribution complements the debate on CSER and CFP through the stakeholder theory, the resource-based view and the innovation management perspective. They disentangle the effect of CG from the impact of social and environmental responsibility after correcting for endogeneity bias. The implications of the study contribute to a win-win scenario for companies investing in CG that result in higher CSER engagement, better profits and lower cost of capital.

This study analyzes whether and how corporate social responsibility (CSR) affects the financial performance of the European banking industry. According to agency theory, CSR engagement should be negatively related to financial performance. By contrast, from the stakeholder perspective and according to the resource-based view, CSR should positively impact banks' financial performance. Over a period of six years (2009)(2010)(2011)(2012)(2013)(2014)(2015) following the explosion of the sub-prime crisis, the econometric estimates of the current study confirm a positive effect of CSR engagement on banks' financial performance. Net interest income and profitability increase with the increase in social performance. At the same time, CSR is negatively related to non-performing loans. Therefore, in contrast to the trade-off model, our results support a win-win vision of the relationship between the social and financial performance of banks.

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