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The authors aim to develop and test a theory of dual responsibility to explain the relationship between corporate social responsibility (CSR) and firm performance. The authors empirically examine whether firms that meet their economic and social responsibilities simultaneously perform better than firms that fail to do so. In doing so, the authors theoretically extend and empirically test Barney's (2018) call to incorporate the stakeholder perspective with resource-based view (RBV). The authors also examine the moderating effects of firm status on this relationship.

The authors use a longitudinal panel sample of 137 S&P 500 firms and data for the years between 2004 and 2013 collected from multiple data sources. The authors use stochastic frontiers analysis to measure firm capabilities in the areas of R&D, operations and marketing. These capability measures are then used along with CSR measures and a measure of firm status to test the hypotheses of this study. The authors also conducted several robustness checks and various supplementary analyses using different econometrics techniques and different operationalizations of the key variables of interests.

The results show that firm CSR is positively related to firm performance and that the effect of CSR on performance is stronger for firms with higher levels of R&D capability and operational capability. The authors also find support for the three-way interaction between CSR, economic responsibility and firm status, suggesting that firms high in both social and economic responsibilities and status will enjoy the highest levels of performance.

The findings of this study are based on large, publicly listed firms in North America. Therefore, their generalizability to other contexts and other types of firms require additional research. The reliance on KLD measures is also a limitation, especially because they have not reported CSR ratings after 2013.

For practicing managers, the main implication of this study is that an optimal balance between market and nonmarket strategies is key for superior performance.

The continued debate regarding the firm's purpose can be understood by focusing equally on the two main responsibilities of firms: nonsocial responsibility and social responsibility toward all stakeholders.

The study answers the call to incorporate stakeholder theory into the RBV of the firm by highlighting the critical role of firm capabilities in the relationship between CSR and performance. The study also highlights the role that firm status plays in the relationship between market and nonmarket strategies and firm performance.

This study aims to investigate how the association between corporate social responsibility (CSR) and firm performance, documented in prior research, is affected by the joint effects of managerial ability and attributes of the firm's governance structure.

Unbalanced panel contains the essence of cross-sectional time-series data. A significant F-test proves the inappropriateness of pooled OLS regression to the sample. Further, the rejection of the Hausman test null favors fixed-effects over random-effects. However, statistically significant results from Shapiro–Wilk test, Breusch–Pagan test and Wooldridge test reveal non-normal distribution of the dependent variable, the presence of heteroscedasticity and the existence of first-order autocorrelation, respectively. Thus, this study applies feasible generalized least squares with panel-specific autocorrelation structure (hence, a slightly smaller sample) controlling for heteroskedasticity to all models after lagging all the explanatory variables by a year.

This study finds that higher levels of managerial ability enable firms to benefit more/less from their CSR investments depending on the presence/absence of appropriate governance devices. While CEO ability may be seen as an indicator of how well the CEO might serve the firm in the market-domain strategies, the results suggest that this may not be the case in the non-market domain in the absence of appropriate governance mechanisms.

The arguments and analyses in this study support two important contributions to the growing literature on CSR. First, the current study is one of the few to identify CEO ability as an important factor that may influence the dynamics of the firm's CSR (see also Garcì-Sànchez et al., 2019 and Yuan et al., 2019). Second, this study examines whether governance robustness minimizes the potential for opportunistic behavior of more able CEOs or constraints the effectiveness of more able CEOs in decisions pertaining to CSR.

The purpose of the current study is to revisit the relationship between CSR and firm market performance. The authors examine whether a gap between the firm's internal and external CSR moderates the CSR-firm market performance relationship. Additionally, the authors propose that the moderating effect of the CSR gap on this relationship is mediated by firm visibility.

The initial sample is the Fortune 500 firms during the years 2004–2013. The final panel data sample consisted of 1,300 firms and 6,128 observations from 2004 to 2013. The authors obtained data from five different sources: Compustat North America Fundamental Annual, GMI Ratings, Execucomp, IBES and KLD Stats.

The results of this research find evidence that both internal CSR and external CSR were positively related to firm market performance, but that the relationship was stronger for firms with equal emphasis on external and internal CSR activities. Furthermore, the negative moderating effect of the CSR gap was mediated by the firm visibility.

The findings of the study advance our understanding of the CSR-FP relationship. First, the theoretical arguments and the empirical evidence highlight that the CSR-FP relationship exists and that its magnitude is contingent upon the gap between internal and external CSR investments. Second, the authors enhanced theoretical understanding of how and why CSR relates to firm performance by exploring firm visibility as a mediator. Specifically, the authors introduced firm visibility as a mechanism which explains the effect of the interaction of overall CSR with the CSR gap on firm performance.