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The role of marketing capability in linking CSR to corporate financial performance: When CSR gives positive signals to stakeholders

Sean Yim (Penn State Erie, The Behrend College, Erie, Pennsylvania, USA)
Young Han Bae (Marketing Department, Penn State University, Greater Allegheny, McKeesport, Pennsylvania, USA)
Hyunwoo Lim (Penn State Erie, The Behrend College, Erie, Pennsylvania, USA)
JaeHwan Kwon (Marketing Department, Baylor University, Waco, Texas, USA)

European Journal of Marketing

ISSN: 0309-0566

Article publication date: 8 April 2019

Issue publication date: 22 August 2019

Abstract

Purpose

The authors use signaling theory in proposing a conceptual framework that simultaneously incorporates both the mediating effects of corporate reputation (CR) and the moderating effects of marketing capability (MC) into the corporate social responsibility (CSR)–corporate financial performance (CFP) link and theorize a single moderated mediation model. The empirical results of the research confirm the theorized moderated mediation model among the four variables, where a firm’s CR plays a mediating role in the relationship between CSR and CFP, and a firm’s MC moderates the effect of CSR on CR exclusively in the first link. Both theoretical and practical implications of the moderated mediation model are discussed.

Design/methodology/approach

This study uses structural equation model estimations with the relevant secondary datasets collected from publicly available databases.

Findings

The empirical results confirm the theorized moderated mediation model in the conceptual framework that uses signaling theory. Specifically, the results identify the moderating role of MC in only the CSR- CR link (but not in the CR and CFP link), such that CR plays a moderated mediation role in the CSR–CFP link.

Research limitations/implications

The current research is not without limitations. These limitations mainly stem from data sets used in the empirical analyses. More details are discussed in the limitations and future research directions section.

Practical implications

The empirical findings suggest that a firm needs to develop a consolidated CSR-marketing program, simultaneously satisfying stakeholders’ needs for both the firm’s socially desirable business practices and value-creating marketing programs to increase its CR, which will, in turn, lead to better profitability for the firm.

Originality/value

To the best of the authors’ knowledge, the current research is the first to use signaling theory in building a conceptual framework that theorizes a moderated mediation model regarding the simultaneous effects of CR and MC on the relationship between CSR and CFP and to empirically test this conceptual framework of the single moderated mediation model. By doing so, the current research clarifies an unanswered question in the literature of whether the underlying mechanism in the CSR–CFP link is based on a mediated moderation or moderated mediation of CR and MC.

Keywords

Citation

Yim, S., Bae, Y.H., Lim, H. and Kwon, J. (2019), "The role of marketing capability in linking CSR to corporate financial performance: When CSR gives positive signals to stakeholders", European Journal of Marketing, Vol. 53 No. 7, pp. 1333-1354. https://doi.org/10.1108/EJM-08-2017-0526

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited