Religiosity and corporate social responsibility practices: evidence from an emerging economy

Abstract

Purpose - The purpose of this study is to present and test a conceptual framework that describes the Islamic religiosity parameters ofriba, zakat and mafsadah and their influence on the adoption of firms’ corporate social responsibility (CSR) practices. Design/methodology/approach - The study applied structural equation modelling to empirically test the proposed model on a sample of 109 Pakistan Stock Exchange (PSX) listed firms. Findings - The study finds that the Islamic religiosity parameters ofribaand mafsadah have a positive influence on the adoption of CSR practices, thus confirming the two study hypotheses. However, the authors did not find any significant influence of the zakat parameter on the adoption of firms’ CSR practices. Research limitations/implications - This study is limited to the Islamic religious concept and only surveyed one stakeholder group, i.e. firms’ managers in the Pakistani context. The authors recommend that future studies should look beyond a single religion with the inclusion of multiple stakeholders in a cross-country setting. Practical implications - The findings possess important policy implication for regulators, stakeholders and practitioners, as the authors demonstrate that different parameters of religiosity are related to CSR practices and these parameters can be used as a substitute for and complement legal institutions in promoting and developing CSR practices. Social implications - The stakeholders’ particular investors and other market participants should be aware of the degree of religiousness and the CSR nexus, as surveyed manger responses in PSX listed firms indicate that better religious firms seem to place more emphasis on social responsibility obligations. Originality/value - This study is among few studies that propose a comprehensive conceptual Islamic religiosity framework to evaluate the influence of a firm’s Islamic religiosity on CSR best practices. It differs from the past studies that were either on Islamic financial institutes or examined the religious influence on a firm’s economic behaviours.

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