Indexing CSR as determinant of firm's economic performance in nonfinancial companies of Pakistan with

Abstract

This dissertation has conveyed that research regarding the impact of CSR on firm’s economic performance needs a disciplined but not strict inquisition. It has unfolded the multifaceted issues surrounding the field of inquiry by following a pragmatic stance. The need for a systematic inquiry that gives due consideration to such theoretical notion of CSR well connected with the empirical logic is identified. Such effort, it is emphasized, necessitates itself to determine the conceptual and empirical meanings of CSR to facilitate the verification of its business case. Recognizing this challenge, the present study has applied the logic of formative measurement to build an Index of CSR in Pakistan. An exhaustive list of sixty one indigenous themes is observed inside ten mutually exclusive kinds of CSR to index the extent of a firm’s social initiatives. In this way, required consideration is given to the socio-cultural and politico-economic circumstances of Pakistan in shaping the perception of CSR. The developed index of CSR is, subsequently, used as an exogenous manifest variable to determine its likely impact on the firm’s economic performance in context of Pakistan. Several theoretical orientations are explored to address the business case of CSR from multiple lenses for the purpose of an empirically adequate scheme. The schematic account on the developed theoretical framework is thereupon transformed into structural equations to specify four regression models. The regression specification mainly included the lagged CSR Index to determine its impact on four endogenous approximations. Despite the best effort, it is highlighted that the limited spatial units and time series observations suggests an imbalance between explanatory variables and the collected cases. Thus, the application of pooled regression is justified to model the intricacy of the impact of CSR, in presence of extraneous variables, on firm’s economic performances. Raison d'être is that the main antecedent together with the extraneous variables might exceed the degree of freedom required to model the economic viability of CSR at firm level. The results of the estimated models empirically confirmed what might have assumed by mere a priori reasoning. It has been found that the impact of CSR on the employed approximations of firm’s economic performance is positive and significant. The findings revealed significant support to infer that CSR directly complements the economic performance of nonfinancial firms embedded in the national context of Pakistan. If corporate directors are persuaded that CSR has a positive impact on firm’s economic performance, in light of findings, they may increase the scale of their efforts to address the societal