Corporate Social Responsibility and Financial Performance: The Moderating Role of Ownership Concentration in Turkey

Abstract

The objective of this study is to investigate the impact of corporate social responsibility (CSR) engagement on firm financial performance in a developing country, Turkey, and to analyze the moderating role of ownership concentration in the CSR–financial performance relationship. The sample consists of non-financial public firms listed on the Borsa Istanbul (BIST)-100 index and covers the period between 2014 and 2018. Empirical results using an instrumental variable approach show that corporate social responsibility has a positive relationship with financial performance. Furthermore, findings indicate that this relationship is negatively moderated by ownership concentration even when endogeneity is controlled for.

Do Employees Matter in the Relationship between Corporate Social Responsibility and Financial Performance?

“…Conversely, if employees consider the organization to be irresponsible, they may punish the company [10]. The results of this study support that, despite the additional costs in CSR, companies benefit through an improved relationship with their stakeholders [53].…”

Firm Characteristics and Corporate Social Responsibility: The Case of Czech Transportation and Storage Industry

“…On the other hand, the application of CSR concept could affect the firm performance negatively. According to Akben-Selcuk [6], it could be because CSR expenditures cause additional costs for the firms and divert funds from more profitable potential investments. However, the application of CSR concept can bring financial benefits that could be clearly quantifiable in the long run.…”

“…It may lead to a temporary decline in business performance. On the other hand, stakeholder theory suggests that firms should participate in good relationships with all stakeholders and that CSR expenditures could accelerate financial performance because of indirect benefits [6,7].…”

An Integrated Framework on the Sustainability of SMEs

“…Spence [12] describes SMEs as fortress enterprises, focused on operational duty and quite disconnected from the general business environment, reactively responding to urgent issues. Thus, most SMEs view CSR as a risky activity, an investment with no significant financial return [13,14]. Due to this reasoning, it is less likely for an SME to invest a significant amount of money in a CSR program, as they would receive less publicity for the social responsibility actions, as opposed to large companies [15].…”