Corporate social responsibility and financial performance: the strategic role of intellectual capital

Abstract

This study analysed the impact of corporate social responsibility (CSR) on a firm's financial performance and also examined the mediating effects of intellectual capital. The study comprises 253 non-financial listed companies on the (PSX). Data was collected via surveys, and SmartPLS was used to test the study's hypotheses using structural equation modelling (SEM). The study found that consumers, employees, and the community affect a company's financial performance. It also showed that all three components of intellectual capital significantly mediate the relationship between CSR and financial performance. This study contributes to advancing stakeholder theory in the context of CSR. The findings may help corporate management, stakeholders, and government entities in formulating effective CSR policies. The study highlights that CSR activities can generate financial benefits for stakeholders and organisations by fostering loyal customers, supportive communities and motivated employees. This study demonstrates that intellectual capital, consisting of human, structural and relational capital, plays a significant mediating role between CSR and financial outcomes.