Article2017

Exploring the mediating role of intellectual capital and competitive advantage on the relation between CSR and financial performance in SMEs

149 citations0/0 files storedSocial Responsibility Journal

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Intellectual Capital and Performance Analysis Corporate Social Responsibility Reporting Corporate Governance and Financial Management

Abstract

Purpose The relationship between corporate social responsibility (CSR) and financial performance (FP) is a much-researched topic in academic arena. Recent studies disclosed that intellectual capital (IC) significantly impacts the success and survival of organizations. Moreover, theoretical assertions confirm that competitive advantage (CA) mediates the association between IC and FP. This has opened up new dimensions for the study. Therefore, this study aims to develop a theoretical model, first, to specify these relations and, second, to explore the mediating role of IC and CA on the relation between CSR and FP in the context of small- and medium-sized enterprises (SMEs). Design/methodology/approach Hypotheses are tested through a survey conducted on 384 SMEs in Rajasthan state. A structured questionnaire having 38 variables was used, and collected data are subjected to confirmatory factor analysis. Structural equation modeling was used to validate the measurement model and to test the mediating effect. Findings The findings indicate a weak positive relation between CSR and FP. The empirical data provide supportive evidence that IC has a profound impact on CSR and FP relationship. Specifically, it was noticed that the mediating role of CA on this relationship was not as reflective as described in the literature. Research limitations/implications The limitation of this study is that it is limited to one country, more specific to one geographical area of a country; therefore, findings of the study cannot be generalized in terms of its implications to other regions and countries. Originality/value Very few empirical studies have analyzed the mediating role of IC and CA on the relationship between CSR and FP. This study is expected to enable scholars and practitioners to have a more definite and direct understanding of the implication of IC and CA in association between CSR and FP.

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References

1981Evaluating Structural Equation Models with Unobservable Variables and Measurement Error 1999Cutoff criteria for fit indexes in covariance structure analysis: Conventional criteria versus new alternatives 2004Firm resources and sustained competitive advantage 1988On the Evaluation of Structural Equation Models 1990Comparative fit indexes in structural models.2010Strategic management a stakeholder approach 1991Structural Equations with Latent Variables.1993Strategic assets and organizational rent

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2018Investment in corporate social responsibility, disclosure practices, and financial performance of banks in Nigeria 2019Intellectual capital and SMEs’ performance: A structured literature review 2022Accentuating the interconnection between green intellectual capital, green human resource management and sustainability 2019Corporate Social Responsibility and Intellectual Capital: Sources of Competitiveness and Legitimacy in Organizations’ Management Practices 2021Does intellectual capital efficiency explain corporate social responsibility engagement-firm performance relationship? Evidence from environmental, social and governance performance of US listed firms

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