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      Exploring the Bi-directional relationship between corporate social responsibility and financial performance in Indian context

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      Social Responsibility Journal
      Emerald

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          Abstract

          Purpose

          This study aims to investigate the relationship between corporate social responsibility (CSR) and financial performance from the bi-directional perspective.

          Design/methodology/approach

          The final sample for this study are 79 companies listed in the national stock exchange for a period of eight-years (2008–2015). Random effect panel regression was performed to examine the possible link.

          Findings

          The result shows that CSR has a positive impact on the contemporaneous and future financial performance of the selected companies. Further, the study shows that only social dimension has a positive and significant impact on concurrent and future financial performance. The results further validate slack resource theory as lagged financial performance has a positive and significant impact on CSR.

          Practical implications

          The strategic value of CSR indicates that it should be seen as a value-enhancing strategy, and therefore, incorporated with the broader corporate strategy of the company. Companies should not trade-off between CSR and financial performance, rather a strategic synchronization of CSR with corporate functioning is essential. This will pave a way to build a stakeholder-sense in the corporate entities.

          Originality/value

          The study comprehensively examines the relationship between CSR and financial performance from both “prospective” and “retrospective” framework. This bi-directional approach has received minimal attention in the Indian context.

          Related collections

          Most cited references81

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          The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders

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            A Three-Dimensional Conceptual Model of Corporate Performance

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              The Corporate Social Performance and Corporate Financial Performance Debate

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                Author and article information

                Journal
                Social Responsibility Journal
                SRJ
                Emerald
                1747-1117
                1747-1117
                July 20 2020
                November 09 2021
                July 20 2020
                November 09 2021
                : 17
                : 8
                : 1062-1078
                Article
                10.1108/SRJ-05-2019-0177
                7dcc5fc2-eeaf-4157-b30b-c3ca0467a924
                © 2021

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