Abstract:
In the banking sector, besides the short-term internal business interests of financial companies, social, environmental and human rights objectives are gaining a dominant and interesting role. In this perspective, engagement in socially responsible activities can serve as a strategic tool for a firm’s to avail competitive edge. This evident that corporate social responsibility plays important role in determining bank performance and it convinced to examine the relationship between CSR and performance in the banking industry of Pakistan. Furthermore, this study examined the moderating impact of stakeholder pressure and mediating influence of innovation and corporate reputation in between the relationship of CSR and performance. There were total 405 responses analyzed for examining aforementioned relationships. Structural equation modeling was applied and the direct relationship indicated that there is a significant and positive relationship between corporate social responsibility and financial performance. These findings were supported by multiple studies, as they already tested the significant and positive relationship between these two factors. The direct relationship indicated that there is a significant and positive relationship between corporate social responsibility and non-financial performance. Corporate social responsibility directly influenced financial and non-financial performance. In other direct relationships, corporate social responsibility also influenced innovation and corporate reputation. The innovation influenced corporate reputation, financial and non-financial performance. Corporate reputation showed no significant influence on financial and non-financial performance. In research analysis, simple mediations indicated that innovation played significant mediation role in relationship between CSR, financial and non-financial performance. Moreover, corporate reputation also mediated among CSR, financial and non-financial performance. In case of sequential mediation, innovation and corporate reputation have strongly played role as mediating variable among CSR, financial and non-financial performance. Last but not least, stakeholder pressure moderated and established relation of CSR, financial and non-financial performance. This study contributes to existing knowledge, and beneficial to policy makers, corporate managers, and executives in establishing corporate strategies. As proposed that if the banking industry improves their socially responsible activities, it tends toward establishing trust among stakeholders and enhances their performance.
