Received: 10 June 2019 Revised: 22 November 2019 Accepted: 6 December 2019

DOI: 10.1002/csr.1892

RESEARCH ARTICLE

The effects of corporate social responsibility on corporate

reputation and firm financial performance: Moderating role of
responsible leadership

Muzhar Javed, Assistant Professor1 | Muhammad Amir Rashid, Associate Professor2 |

Ghulam Hussain, Assistant Professor2 | Hafiz Yasir Ali, Lecturer1

1
Department of Management Sciences,
COMSATS University Islamabad, Sahiwal Abstract
Campus, Sahiwal, Pakistan Drawing on stakeholder theory and contingency theory, this study examines the
2
Department of Management Sciences,
effects of Corporate Social Responsibility (CSR) on corporate reputation and financial
COMSATS University Islamabad, Lahore
Campus, Lahore, Pakistan performance of Pakistani firms with a moderating role of responsible leadership. Per-
ceptual data on CSR, reputation, and performance were collected from 224 senior-
Correspondence
Hafiz Yasir Ali, Lecturer, Department of level Pakistani managers through a questionnaire survey. Structural equation model-
Management Sciences
ing was used to analyze the data. The results reveal that socially responsible initia-
COMSATS University Islamabad, Sahiwal
Campus, Sahiwal 57000, Pakistan. tives for disparate stakeholders significantly and positively influence corporate
Email: h.yasir206@yahoo.com
reputation and financial performance. Moreover, CSR–reputation and CSR–
performance direct relationships were found to be negatively moderated by responsi-
ble leadership. It suggests that when socially responsible firms have leaders with
strong stakeholder values, they practice excessive CSR that hurts performance.

KEYWORDS

contingency theory, corporate reputation, corporate social responsibility, financial

performance, Pakistan, responsible leadership, stakeholder theory

1 | I N T RO DU CT I O N (Margolis, Elfenbein, & Walsh, 2009; Orlitzky, Schmidt, & Rynes,

The phenomenon of Corporate Social Responsibility (CSR) that
dawned in 1950 now resonates vociferously on the global business
landscape (Jamali & Karam, 2018). More than 12,000 business organi-
zations across 170 countries have signed the United Nations Global
Compact where they have committed to reinventing their business
operations by adopting sustainable and socially responsible guidelines
(United Nations Global Compact, 2014). Similarly, a KMPG survey rev-
ealed that 79% of 4,900 global companies have started reporting their
CSR initiatives formally (Blasco & King, 2017). After conceptual under-
pinning in the 1960s, empirical research on CSR started in 1970s, and
initially, researchers tested CSR coupling with organizational perfor-
mance. A stream of studies has investigated the link between CSR
and organizational performance, and the bulk reported positive
(Arlow & Gannon, 1982; Lu, Chau, Wang, & Pan, 2014; Margolis &
Walsh, 2003; Pava & Krausz, 1996) that meta-analytic studies
2003) also approve. However, earlier studies were largely conducted
in developed Western economies (having strong institutions and
developed markets), and it seems inappropriate to generalize and
extend these findings to developing Eastern economies like Pakistan
that has a different business and institutional context (weak institu-
tions and underdeveloped markets). So, it stands a stronger rationale
to hypothesize the relationship between CSR and performance in
Pakistan.
Further, researchers argued that extensive research has been
conducted on financial perspective of performance, and they recom-
mend including nonfinancial outcomes also (Ameer & Othman, 2012;
Crifo & Forget, 2015; Ittner & Larcker, 1998; Zuriekat, Salameh, &
Alrawashdeh, 2011). Amid the prevailing uncertain and complex busi-
ness environment, corporate reputation has assumed an immense
importance for the businesses because information asymmetry
between an organization and its stakeholders (Healy & Palepu, 2001)

Corp Soc Responsib Environ Manag. 2019;1–15. wileyonlinelibrary.com/journal/csr © 2019 John Wiley & Sons, Ltd and ERP Environment 1
2 JAVED ET AL.
hampers their ability to anticipate the future (Rindova, Williamson,
Petkova, & Sever, 2005). Corporate reputation helps in controlling the
information asymmetry as stakeholders base their decisions on repu-
tation of the firm (Maden, Arıkan, Telci, & Kantur, 2012). They argued
that stakeholders' choice of firms to work with, depends generally on
reputation of a firm. So, this study will test CSR impact on both finan-
cial (performance) and nonfinancial outcomes (corporate reputation).
Preliminary research on CSR–performance links established that
CSR is not directly linked with performance (Husted, Allen, & Kock,
2015; Saeidi, Sofian, Saeidi, Saeidi, & Saaeidi, 2015). Researchers
argued that CSR–performance relationship is contingent on certain
firm and contextual factors that should be contemplated in determin-
ing this relationship. Overlooking these important situational contin-
gencies produced biased results as it overvalued the CSR effect on
performance (McWilliams & Siegel, 2000). Therefore, researchers
suggested to use a contingency perspective for exploring the CSR–
performance link (Barnett, 2007; Branco & Rodrigues, 2006; Carroll &
Shabana, 2010; Galbreath & Shum, 2012; Rowley & Berman, 2000;
Wang, Dou, & Jia, 2016). Bringing into moderators can help pinpoint
conditions that confer financial yields (Branco & Rodrigues, 2006) and
dissipate the obscurity facing the CSR–performance relationship
(Carroll & Shabana, 2010; Grewatsch & Kleindienst, 2017; Javed,
Rashid, & Hussain, 2016). Thus, the CSR–performance relationship
should be determined by including moderators (Lu et al., 2014; Wang
et al., 2016).
In today's intricate and uncertain business environment, leader-
ship conduct is highly important as corporate leaders play a key role in
planning and executing CSR initiatives (Waldman & Siegel, 2008). Fur-
ther, researchers observed that a leadership style significantly influ-
ences firm performance (Ogbonna & Harris, 2000). The success of a
firm, to a large extent, relies on the effectiveness of the leader. These
arguments lend credence to the assumption that the leadership style
moderates the CSR–performance relationship. But, till date, research
on CSR has overlooked leadership styles (Jones Christensen, Mac-
key, & Whetten, 2014). Therefore, scholars have suggested to explore
the relationship among CSR, leadership style, and organizational per-
formance (Carter & Greer, 2013; Orlitzky, Siegel, & Waldman, 2011).
The strategic management literature discusses different leadership
styles (Waldman & Siegel, 2008), and responsible leadership (RL) has
emerged as a contemporary style that considers the needs of multiple
constituencies. Responsible behavior of a leader can stimulate invest-
ment which, consequently, may affect performance. Responsible lead-
ership delineates the responsibility of current business leaders well
and complements research on CSR (Maak, 2007; Pless, Maak, &
Waldman, 2012). This style is more relevant and synchronized with
CSR as RL can dispense well with the emerging stakeholder challenges
(Maak, 2007). So, this study will incorporate RL as a moderator in
determining the CSR–performance relationship that (Grewatsch &
Kleindienst, 2017; Javed et al., 2016) call for.
Further, Pakistan is a developing economy where the corporate
sector plays instrumental role in economic development (PES, 2018).
The Securities and Exchange Commission of Pakistan (SECP) controls
and regulates the functioning of the corporate sector. In Pakistan,
CSR is at infancy stage, however, the interest in CSR is steadily grow-
ing in the corporate sector. In past, CSR used to be more mystified
with traditional charity and community-related activities, and there-
fore, organizations have been working generally for societal uplift
(Sajjad & Eweje, 2014). Amid globalization challenges, organizations
are redefining their orientation and portraying themselves as responsi-
ble citizens to outside world (Sajjad & Eweje, 2014). Now corporations
understand CSR as the corporate commitment to a broad set of stake-
holders, and thus, they are practicing CSR initiatives for multiple
stakeholders (Sajjad & Eweje, 2014). Among large-scale organizations,
public listed companies are the well-regulated and comparatively
resourceful form of business organization in Pakistan. These organiza-
tions are relatively active and well-aware of CSR and its implications.
In 2013, the SECP issued guidelines to govern CSR initiatives. Inter
alia, media, nongovernmental organizations, and other pressure
groups have persuaded corporations to actively assume socially
responsible activities. In Pakistan, business organizations practice CSR
primarily for business cases (Sajjad & Eweje, 2014), so, there is a
strong need to define boundaries and conditions when CSR provides
business benefits. Therefore, this study will empirically test the “Busi-
ness Case for CSR” (CSR provides business benefits, i.e., improved
corporate reputation and superior financial performance) with the
moderating role of RL in Pakistan.
This study contributes in many ways. First it embarks on deter-
mining the CSR–performance link in the developing Eastern economy
of Pakistan (unique economic, political, and sociocultural context).
Second, it measures CSR effects on both financial (performance) and
nonfinancial outcomes (reputation). Third, this study draws on highly
recommended and contemporary theoretical underpinnings (stake-
holder theory and contingency theory). Further, it incorporates RL
(contemporary leadership style) as a moderator for determining the
CSR–performance relationship. Lastly, it contributes to literature by
extending the debate on optimum level of CSR.
1.1 | Responsibility–performance nexus and
contingency perspective
The terms Corporate Social Responsibility, Corporate Social Performance,
Corporate Citizenship and Corporate Social Responsiveness are often
used interchangeably (Parmar et al., 2010) and are normally at the dis-
cretion of the organization (Barnett, 2007), whereas Parmar et al.
(2010) see subtle differences but also pinpoint a commonality in these
constructs, that is, the “responsibility of a firm goes beyond financial
gains” (p. 412).
CSR is relatively a new concept, and scholars have not yet
reached consensus on definition. In Bowen's seminal work, Social
Responsibilities of Businessman, he spelled out social responsibilities as
“the obligations of business to pursue those policies, to make those
decisions or to follow those lines of action which are desirable in
terms of the objective and values of our society” (Bowen, 1953). Later
on, different scholars delineated social responsibility differently for
example, Carroll (1979) expounded CSR as the economic, legal,
JAVED ET AL.
ethical, and discretionary expectations of a society pinned up with a
business organization. Jones (1980) defined CSR as a firm's obligation
toward multiple constituencies, that is, employees, customers, sup-
pliers, and communities. He contended that CSR is a process rather
than an outcome. Dahlsrud (2008) observed European Commission's
definition as the most cited one, as “a concept whereby companies
integrate social and environmental concerns in their business opera-
tions and in their interaction with their stakeholders on a voluntary
basis” (Commission of the European Communities, 2001). Researchers
contended that “the term CSR means something to everyone, but not
the same thing to everyone” (Birch & Moon, 2004; Votaw, 1973).
Empirical research testing the CSR–performance relationship
started back in 1970s, and the very first study of Moskowitz (1972)
observed a positive relationship between the constructs. The next
study (Bragdon & Marlin, 1972) approved the positive link. Research
on testing this relationship continued and subsequent studies
observed varying results ranging from positive (Shen & Chang, 2009;
Singal, 2014), to negative (Becchetti & Ciciretti, 2009; Moore, 2001),
and no (Sandhu & Kapoor, 2005; Tyagi, 1978). Earlier research mea-
sured CSR with different parameters ranging from disclosure
(Anderson & Frankle, 1980) to perception (Huang & Lien, 2012; Ruf,
Muralidhar, Brown, Janney, & Paul, 2001) and ratings (Cavaco & Crifo,
2014; Lee, Singal, & Kang, 2013). Likewise, performance has also been
measured with different parameters ranging from perception (Wang,
Lu, Kweh, & Lai, 2014) to accounting measures (Qiu, Shaukat, &
Tharyan, 2016) and market indicators (von Arx & Ziegler, 2014; Wag-
ner, 2010). However, CSR positive association with performance has
dominated across all the CSR measures (Ameer & Othman, 2012;
Andersen & Dejoy, 2011; von Arx & Ziegler, 2014) and performance
parameters (Lee et al., 2013; Lee, Cin, & Lee, 2016; Wang et al.,
2014). Further, this positive link dominantly prevailed across all the
contexts (Sun & Stuebs, 2013; Wang et al., 2014) as well. Review
studies concluded that positive association dominates overwhelmingly
that meta-analyses also substantiate (Orlitzky et al., 2003; Wang
et al., 2016). Wang et al. (2016) in his meta-analytic study observed a
significant and positive association, estimated with the help of
119 effect sizes from 42 research studies.
Failing to find a universal link between CSR and performance, a
stream of scholars emphatically proposed the contingency perspec-
tive. So, research moved beyond answering a simpler and straightfor-
ward question of business case for CSR, “Does it Pay to be Good” to
“When does it Pay to be Good?” There are potentially numerous fac-
tors that influence the CSR–performance relationship, so it is neces-
sary to define limits. Researchers have now started identifying when
CSR initiatives come up with business benefits (Husted et al., 2015).
This acknowledges the complexity of the CSR–performance relation-
ship and recognizes that the CSR–performance relationship is contin-
gent on situational factors (Carroll & Shabana, 2010) that hints at
incorporating situational contingencies. Situational contingencies
shape the CSR–performance relationship, and organizations practicing
CSR should take care of these contingencies to ensure business bene-
fits. This aspect of contingency theory is relevant for the current
study, and therefore, researchers emphatically recommended to
3
include situational contingencies in determining the CSR–performance
relationship (Barnett, 2007; Branco & Rodrigues, 2006; Carroll &
Shabana, 2010; Galbreath & Shum, 2012; Orlitzky et al., 2003; Wang
et al., 2016).
1.2 | Responsible leadership
Responsible leadership has gained considerable traction in academic
management discourse and has emerged as a major theme in contem-
porary management scholarship (Miska, Hilbe, & Mayer, 2014). Con-
temporary business environment has further precipitated the need
for RL as globalization challenges confronting the organizations call
for greater responsibility on leaders for better and equitable stake-
holder management. Moreover, RL, inter alia, has become a sine qua
non for organizational survival and success in stakeholders' regimes.
Business leaders are now accountable beyond the economic domains,
and their responsibility spreads out to social and environmental
spheres (Baranova & Meadows, 2017). In a contemporary global
stakeholders' community, financial sustainability and long-standing
business success relies on leadership to move responsibly. Further,
existing lexicon of leadership descriptors is devoid of responsibility
that is a fundamental element of effective leadership. In past, busi-
ness leaders have not lived up to stakeholders' expectations; thus,
disparate stakeholders are now pressing business leaders hard to
address their concerns (Voegtlin, Patzer, & Scherer, 2012). RL is also
instrumental in improving organizational performance (Waldman &
Galvin, 2008). Thus, the need for RL springs from criticism on existing
leadership theories and emerging business dynamics (Waldman &
Galvin, 2008).
Responsible leadership is distinct from other leadership styles in
that RL considers leadership as a leader–stakeholder relationship
whereas earlier forms treat leadership as a leader–follower dyadic
equation. Specifically, contrasting with other styles like authentic lead-
ership and ethical leadership, Voegtlin, Patzer, and Scherer (2010)
highlighted certain differences. For example, RL is philosophically
based on discourse ethics and deliberative democracy whereas
authentic leadership and ethical leadership do not have any explicit
philosophical foundations. RL is a discursive concept whereas authen-
tic leadership and ethical leadership are monological concepts.
Responsible leadership is a process model that is focused on consen-
sual solutions through discursive decision making whereas authentic
leadership and ethical leadership focus on ethical traits of a leader.
Responsible leader engages all the affected stakeholders whereas
authentic leadership and ethical leadership focus on followers only.
A unifying definition of RL has yet to emerge. However, there is
agreement among scholars that interaction with stakeholders consti-
tute an important part of RL (Doh & Quigley, 2014; Pless & Maak,
2011; Voegtlin et al., 2012). This study embarks on relational perspec-
tive where RL is “the art of building and sustaining good relationships
to all relevant stakeholders” (Maak & Pless, 2006). RL is a relational
phenomenon, developed through social interaction with stakeholders
while engaging them (Freeman & Auster, 2011). Cultivating and
4 JAVED ET AL.
nurturing inclusive and quality relationships is an important responsi-
bility of leaders (Maak & Pless, 2006). Responsible leadership is thus a
procedural conception that is demonstrated in the mobilization and
inclusion of stakeholders in a communicative process, where con-
flicting interests are weighed according to their legitimate arguments
and settled through rational discourse (Voegtlin, 2011).
Earlier RL research is more focused on conceptual understanding
and theoretical rigor (Maak, 2007; Maak & Pless, 2006; Pless, 2007;
Stahl & Sully de Luque, 2014; Waldman & Balven, 2014; Waldman &
Siegel, 2008) and is largely grounded on stakeholder theory (Doh &
Quigley, 2014; Maak, 2007). Relational perspective of RL in stake-
holders' regime (Maak & Pless, 2006) was a starting point where the
authors argued that leadership is a social–relational phenomenon that
occurs in leader–stakeholder interaction. They proposed a roles-
model delineating different roles of a leader amid a multitude of dispa-
rate stakeholders that enable him to foster stakeholders' interaction.
Premised on inherent relational nature of RL, Maak (2007) believed
that RL will help organizations generate social capital and conse-
quently sustain business and promote greater good. Drawing on net-
work analysis, Maak (2007) explained that through channeling the
energy of different constituencies, leaders create value networks
(Lord & Brown, 2001) and add to social capital.
Future research, inter alia, discussed divergent perspective (Miska
et al., 2014; Pless et al., 2012; Waldman & Galvin, 2008), RL anteced-
ents (Pless, 2007; Stahl & Sully de Luque, 2014), outcomes (Voegtlin
et al., 2012) and their implications for globalization (Voegtlin et al.,
2012), ethics (Freeman & Auster, 2011), strategy-making (Maritz, Pre-
torius, & Plant, 2011), CSR (Jones Christensen et al., 2014), and
corporate governance (Filatotchev & Nakajima, 2014). Empirical
research on RL started a bit late that concentrated on testing ante-
cedents and outcomes. These studies tested RL outcome on individ-
uals' attitude (Doh, Stumpf, & Tymon, 2011; Groves & LaRocca,
2011; Haque, Fernando, & Caputi, 2019; Voegtlin, Frisch, Walther, &
Schwab, 2019) and overlooked organizational-level outcomes. For
example, several scholars expect to see a relationship between RL
and organizational performance, but empirical evidence is limited.
Most scholars are merely offering theoretical arguments for why we
might see higher levels of organizational performance (Voegtlin
et al., 2012).
1.3 | Theory and hypotheses development
This study draws on stakeholder theory and contingency theory.
Stakeholder theory underpins the direct effect of CSR on reputation
and financial performance whereas contingency theory supports the
use of moderating variable for investigating CSR–corporate reputa-
tion and CSR–firm financial performance relationship. Stakeholder
theory explains the effect of stakeholders-oriented CSR on organiza-
tional performance. Clarkson (1995) explicated an organization as,
“a network of interrelated stakeholders.” Scholars posited that stake-
holder theory is the most relevant theoretical framework for CSR
research (Fassin, de Colle, & Freeman, 2017; Richter & Dow, 2017;
Vashchenko, 2017; Wang et al., 2016). Several authors used this the-
ory for examining CSR relationship with organizational performance
(Mishra & Suar, 2010; Moore, 2001; Rettab, Brik, & Mellahi, 2009;
Wang et al., 2016).
Donaldson and Preston, (1995) believed that stakeholder per-
spective can be applied in a number of ways. Consequently, they cate-
gorized stakeholder theory into four different theses: descriptive,
instrumental, normative, and managerial. This study uses instrumental
perspective of stakeholder theory. Instrumental thesis of stakeholder
theory establishes the link between stakeholders' management and
organizations' performance (Donaldson & Preston, 1995). Instrumen-
tal approach postulates that taking care of diverse stakeholders draws
positive stakeholders' response that results in superior performance
(Donaldson & Preston, 1995).
Contingency theory underpins the moderating role of RL. Contin-
gency theory explains that there is no single best set of CSR initiatives
and contextual variables for garnering business benefits. A CSR–
performance positive association relies on specific CSR initiatives with cer-
tain ancillary variables. Barnett (2007) believed that it is naïve to think that
CSR and performance will be related under all conditions. Accordingly,
CSR may improve performance in certain conditions and hurt perfor-
mance in others. He argued that all CSR initiatives of all the corporations
all the time cannot be financially rewarded. He revealed that some CSR
initiatives of some corporations can pay off financially sometimes, and it is
uncertain which and when among these initiatives actually pay off. He
argued that the impact of CSR varies across organizations, and such varia-
tions might be attributed to specific factors in each situation. So, drawing
on contingency theory, we used the factor of RL for determining the
CSR–performance relationship.
CSR gains rely on considering appropriate contextual variables
while determining the CSR–performance relationship. Researchers
have acknowledged the complexity of the CSR–performance relation-
ship and is contingent upon situational factors (Carroll & Shabana,
2010) that exhorts researchers to use moderating variables. Figure 1
presents the theoretical framework.
1.4 | CSR and reputation
Amid uncertain environment, stiff competition, increasing demand for
transparency, and social responsibility have gradually emerged as new
Corporate Reputation
H1
Corporate Social
Responsibility
H1.1
H2
Financial Performance
H1.2
Responsible Leadership
FIGURE 1 Theoretical framework
JAVED ET AL.
challenges of 21st century that have impelled firms to be increasingly
concerned about reputation. Signaling theory is specifically instrumen-
tal in explaining how CSR affects reputation of an organization
(Walker, 2010). Signaling theory explains the corporate reputation as
an outcome of CSR. Signaling theory (Boulding & Kirmani, 1993)
posits that when buyers and sellers face information asymmetry, they
look for signals that separate responsible organizations from irrespon-
sible ones. Signaling theory explains that different CSR initiatives of
an organization generate positive signals to uplift the image of an
organization (Basdeo, Smith, Grimm, Rindova, & Derfus, 2006). A
firm's socially responsible actions signal as positive toward stake-
holders. More specifically, when firms' CSR is reported and made pub-
lic, it improves reputation and credibility (Pfau, Haigh, Sims, &
Wigley, 2008).
Corporate reputation has been defined differently in different disci-
plines, and thus, literature lacks its common definition (Barnett, Jermier, &
Lafferty, 2006). Based on similarities, Fombrun, Gardberg, and Sever
(2000) presented a common definition, “a perceptual representation of a
company's past actions and future prospects that describe the firm's
overall appeal to all its key constituents” (p.72). A body of literature rev-
ealed that Fombrun's definition is generally accepted in a management
stream (Walker, 2010; Wartick, 2002). It suggests that corporate reputa-
tion is an organizational attribute that reflects the extent to which stake-
holders see the firm as “good”. However, Fombrun (2012) noted that
definition integrates both consequences and antecedents that compli-
cates the measurement of the construct. Therefore, he revised the defi-
nition where corporate reputation became “a collective assessment of
the attractiveness of a firm to a specific stakeholder group relative to a
reference group” (Fombrun, 2012). Accordingly, Eccles, Newquist, and
Schatz (2007) cautioned the managers that reputation is built from “a
strong positive repute among multiple disparate stakeholders” (p. 107).
Therefore, Highhouse, Brooks, and Gregarus (2009) defined reputation
as an “evaluative judgment of multiple constituencies about a firm”
(p. 1482). Firms' decision to engage or abstain from CSR activities makes
a difference to corporate reputation (Aqueveque, Rodrigo, & Duran,
2018; Rothenhoefer, 2019). Bhattacharya and Sen (2003) pointed out
that listening to stakeholders, engaging them in process, and reaching
mutually beneficial decisions provides organization with legitimacy and
trust. Branco and Rodrigues (2006) have argued that CSR helps organiza-
tions to develop reputation with a multitude of disparate stakeholders
ranging from customers to employees, creditors, suppliers, and communi-
ties. Fombrun and Shanley (1990) found that business organizations hav-
ing a charity foundation have good reputation. Fombrun and Gardberg
(2000) have argued that CSR also serves to control reputational damage.
We thereby advance the following hypothesis:
H1: CSR toward disparate stakeholders positively influences the cor-
porate reputation.
1.5 | CSR and financial performance
Different theoretical perspectives postulate that CSR influences orga-
nizational performance (Freeman, 1984; Friedman, 1970). Different
5
stakeholders have different set of expectations like shareholders
expect financial return, employees look for better pay and perks, cus-
tomers think of superior quality, suppliers expect timely payment,
creditors look for creditworthiness and communities expect contribu-
tion to its development. Business organizations are expected to bal-
ance out the competing interests of diverse stakeholders (van
Marrewijk & Werre, 2003). Thus, organizations' survival and success
largely depend on its ability to satisfy stakeholders' needs. If stake-
holders stop cooperating, business operations of the corporation are
badly affected (Clarkson, 1995). Extending that author posited that if
corporations would take care of diverse stakeholders, these disparate
stakeholders will respond positively toward a corporation, helping it
continue its operations efficiently and effectively (Donaldson, 1982).
Further, he explained that addressing problems facing the diverse
stakeholders will eventually spur financial performance and hence
suggested positive CSR–performance bonding. Stakeholders' manage-
ment controls stakeholder-inflicted costs and consequently leverages
performance (Post, 2002).
On the contrary, if organizations act irresponsibly and do not
bother about their stakeholders, distressed stakeholders react bitterly
(O'Donnell, 2013). These stakeholders stop buying the product of the
organization (Söderholm & Olofsson, 2014), mull over legal action
(O'Donnell, 2013) and start communicating bad word-of-mouth
(Antonetti & Maklan, 2016). Further, instrumental perspective of
stakeholder theory postulates that CSR is a strategic tool and organi-
zations use it as an instrument for improving performance. The instru-
mental perspective of stakeholder theory explains that having a
harmonious relationship with different stakeholders pays off. Differ-
ent theorists argued that protecting stakeholders' interests helps orga-
nization in boosting performance (Harrison & Wicks, 2013;
Waddock & Graves, 1997). Hence, it is hypothesized.
H2: CSR toward disparate stakeholders positively influences the orga-
nization's financial performance.
1.6 | Moderating role of responsible leadership
Corporate leaders have key role in planning and executing CSR initia-
tives (Waldman & Siegel, 2008). Contemporary researchers on CSR
considered leadership role essential to achieve better organization
and societal-level outcomes (Maak & Pless, 2006). RL helps link CSR
and performance to actions (Pless et al., 2012). A responsible leader
takes different initiatives for disparate stakeholders and finds satisfy-
ing solutions of the problems facing different constituencies. These
stakeholders in turn favorably evaluate organization that help in
improving reputation among disparate stakeholders.
Voegtlin (2011) explained that the responsible leader engages
himself with disparate stakeholders, deliberates on conflicting
demands, weighs up the competing interests, and produces legitimate
and largely accepted decisions that helps organizations gain legiti-
macy. Researchers propose that engaging with stakeholders, the
leader builds valuable relationships with them that, in due course,
evokes trust for leader and organization (Maak, 2007). When
6 JAVED ET AL.
stakeholders interact with a responsible leader, they generate positive
evaluation of the leader that increases their trust. Responsible leaders
are more likely to construct such quality relationship because they can
consider the diverse interests of multiple stakeholders and better pre-
dict the effects of their decisions. Maak (2007) argued that the
responsible leader frequently and harmoniously interacts with multi-
ple stakeholders, facilitates dialog among them, channels their ener-
gies, and creates value networks. These value networks add to social
capital and the goodwill inherent in social capital, improves corporate
reputation. Thus, we advance the following hypothesis:
H1.1: Responsible Leadership moderates the relationship between
CSR and the corporate reputation.
Leaders have a fundamental and leading role in strategizing CSR
initiatives (Waldman & Siegel, 2008). This role is considered an imper-
ative for achieving superior financial and nonfinancial outcomes
(Maak & Pless, 2006). Responsible leader helps organizations realize
CSR and performance into action (Pless et al., 2012). The responsible
leader uses an inclusive approach, engages all the disparate stake-
holders, initiates constructive dialogue, and reaches better decisions
(Voegtlin, 2011). Moreover, RL takes care of all the diverse stake-
holders through practicing different initiatives for them. These stake-
holders in turn cooperate with the firm and support its actions that
consequently help in improving financial performance.
Researchers have observed that the leadership style significantly
affects organizational outcomes (Boal & Hooijberg, 2000). Further,
they argued that different leadership styles influence organizational
performance differently (Carter & Greer, 2013). Explaining the fact,
researchers argued that a visionary leadership style has been
observed to positively affect organizational performance (Sashkin &
Sashkin, 2003), whereas autocratic leaders have not been found ancil-
lary and effective for augmenting organizational gains (de Luque,
Washburn, Waldman, & House, 2008). Moreover, leaders possessing
stronger stakeholder values will more probably achieve better out-
come for their organizations than those of organizations having
leaders with comparatively lower concern for these stakeholders
(Voegtlin et al., 2012; Waldman & Galvin, 2008). Theoretical rigor on
RL suggests RL has a positive influence on firm performance (Maak,
2007). A study conducted by Buysse and Verbeke (2003) observed
that organizations led by responsible leaders comparatively perform
better. Therefore, it is hypothesized that:
H2.1: Responsible Leadership moderates the relationship between
CSR and the organization's financial performance.
2 | METHODS
2.1 | Sample and data collection
The present study was conducted to examine the impact of CSR on
firms' reputation and financial performance through the moderating
role of RL. For this purpose, data were collected from publicly listed
manufacturing firms working in Pakistan. Publicly listed companies are
the most regulated form of business organizations in Pakistan. These
organizations are regulated by the SECP under the Companies Ordi-
nance 1984. Moreover, these organizations also adhere to listing reg-
ulations of the stock exchange. the SECP monitors the working of
these business organizations and issues instructions and guidelines
from time to time. In 2013, SECP issued guidelines for publicly listed
companies to further promote and facilitate socially responsible busi-
ness practices. These guidelines help organizations in developing liai-
son and promoting collaboration with stakeholders (SECP, 2013).
Publicly listed companies are relatively resourceful and well-aware of
CSR and its implications for their businesses (Sajjad & Eweje, 2014).
They added that publicly listed companies are now active in attending
disparate stakeholders. Thus, publicly listed companies are the most
appropriate for the purpose of present study.
Total three hundred and ninety-two (392) manufacturing compa-
nies are listed on the Pakistan Stock Exchange. These companies have
been practicing CSR and we also cross-checked them from their
annual reports and web sites. Authors used a self-administered ques-
tionnaire for data collection. At the first stage, a questionnaire is
adopted after thorough review of literature. In December 2016, ques-
tionnaires were distributed among 15 executives of the companies, to
ensure the content validity and adapt measures of construct to suit
Pakistani organizations. These executives were not included in final
sample. A Pilot study led to a reduction in the number of items and
modification in statements of some questions that helped researchers
prepare a final version of questionnaire. The final version was distrib-
uted among managers in August 2017. Only middle and top-level
managers were chosen for responses as they are involved in the
decision-making process and also have firsthand information regard-
ing business policies and strategies. Further, only those managers
were chosen as respondents who were formulating and executing
CSR strategy at an organizational level. These managers were regu-
larly attending training on CSR planning and implementation. The
authors also added a cover letter to each questionnaire to explain the
purpose of the study. This cover letter offered the study's objective,
provided brief explanation of study variables, and ensured the confi-
dentiality of the responses.
Further, in order to address the issue of common method bias,
the authors adopted the preremedial strategy by following the guide-
lines suggested by Spector and Brannick (1995). For instance, the dis-
cretion to participate in the survey and to answer the question was
purely at the will of respondents. They were also told that there were
no right or wrong answers. Finally, following the psychological separa-
tion mechanism, the measure of independent, moderator, and depen-
dent variables were in separate section, and special attention was
paid to language of questionnaire. Researchers personally visited the
companies and administered questionnaires in 392 publicly listed
companies.
After many reminders and follow-up visits, managers of 256 orga-
nizations filled these questionnaires and returned them by the end of
March 2018. After scrutiny, questionnaires from 32 organizations
were found incomplete and thus were excluded from the final analy-
sis. Consequently, data from 224 organizations were used in the anal-
ysis. The age of 62% of respondents was between 46 and 50 years,
JAVED ET AL.
and the age of 20% of respondents was 35 to 45 years. Majority of
the respondents (90%) were male, and only 10% were female. Fifty-
seven percent respondents were holding a master degree in business
or commerce, and only 27% were holding professional certification.
3 | MEASURES
In this study, we adopted the measurement scales from earlier
research. All measurement scales were presented in English because
English is the business language in publicly listed companies of
Pakistan. Further, all respondents are university graduates where
English language is a mode of instruction. All variables are anchored
on a 5-point Likert scale, where 1 = strongly disagree and 5 = strongly
agree. Respondents were asked to respond the questions of the sur-
vey keeping own organization in mind. Further, we have modified the
language of items in order to better suit Pakistani organizations.
3.1 | Corporate social responsibility
CSR was measured using 61-item scale developed by Mishra and Suar
(2010). This scale measured CSR toward six stakeholders ranging from
“shareholder” to “employee,” “supplier,” “environment,” “customer,”
and “community.” Example items are: “Do your organization has policy
for the training and development of its employees?”, “Do your organi-
zation offer competitive prices and payment conditions for products
commensurate with quality?”, “Is your organization committed to
reporting on financial and non-financial issues?”, “Do your organiza-
tion help community through charitable donations, and educational
and cultural contributions?”, and “Do your organization prefer green
products in purchasing?”. As our objective was to examine the impact
of CSR on corporate reputation and financial performance, we treated
these six dimensions as higher order construct of CSR. The reliability
of construct was established through Cronbach's alpha (0.89) and
composite reliability (0.92). Convergent validity confirmed through
factor loading that was above the 0.60 of all items, and AVE (0.528)
was also above the threshold value. The model fitness indices
reported that confirmatory factor analysis is the best fit (incremental
fit index [IFI] = 0.91, Tucker-Lewis index [TLI] = 0.89, confirmatory fit
index [CFI] = 0.902, root mean square error of approximation
[RMSEA] = 0.053).
3.2 | Responsible leadership
We measured RL by using a 5-item scale developed by Voegtlin
(2011). Example items are: “I consider the consequences of decisions
for the affected stakeholders” and “I involve the affected stakeholders
in the decision-making process.” Reliability was established through
Cronbach's alpha (0.85) and composite reliability (0.90). Convergent
validity was confirmed through factor loading that should be above
0.50 (Hair, Black, Babin, & Anderson, 2010). The factor loading of all
7
five items was between 0. 75 and 0.80. Further, the value of average
variance extracted (AVE) was also above the threshold value. The
value of model fitness indices indicates that all five items fit the one-
dimensional model (IFI = .92, TLI = .95, CFI = 0.94, RMSEA = 0.068).
3.3 | Corporate reputation
Corporate reputation was measured through three-item scale devel-
oped by Fombrun et al. (2000). An example item of scale is “In general,
our organization has a good reputation.” Reliability was confirmed
through Cronbach's alpha (0.84) that was greater than acceptable
value recommended by George (2011). The factor loading of all items
(0.73–0.85) was above threshold value that established the conver-
gent validity and AVE value (0.67) was also greater than acceptable
range. Furthermore, the model fitness indices indicate that all three
items fit the measurement model (IFI = .93, TLI = .90, CFI = 0.90,
RMSEA = 0.067).
3.4 | Financial performance
Three-item scale was adapted from balanced scorecard developed by
Kaplan and Norton (1992) to measure financial performance.
Researchers considered Balanced Scorecard as the best instrument to
measure financial performance (Ali, Danish, & Asrar-ul-Haq, 2019;
Hoque & James, 2000; Saeidi et al., 2015). The value of Cronbach's
alpha (α = 0.92) was above the cut-off point. The factor loading range
(0.80–0.87) confirmed the convergent validity with 0.6819 value of
AVE. The statistics of confirmatory factor analysis (IFI = .90, TLI = .93,
CFI = 0.91, RMSEA = 0.065) showed that all items fit the one-
dimensional model.
Researchers controlled the size of the organization and type of
industry. However, the effect of the control variable was insignificant.
Many studies (Galbreath & Shum, 2012) confirm that control variables
are insignificant in CSR studies.
3.5 | Common method bias
In order to address the potential issue of common method bias, we
followed measures suggested by Spector and Brannick (1995). A
cover letter was attached with each questionnaire to assure the
respondents about confidentiality of data and asked them to respond
honestly. We used the well-established and accepted scales of each
variable. Further, independents, dependents, and moderators were
placed separately. Moreover, we refined the language of the question-
naire and assured respondents that there is no exact answer of each
question. Second, the single Harman test is also used to assure that
there is no issue of common method bias. The statistics from the test
reported that only 40.50% variance is explained by single factor. The
results revealed that the common method is not a problem for this
study. Third, the issue of common method bias is not pertinent in
8 JAVED ET AL.

TABLE 1 Validity and reliability statistics TABLE 3 Descriptive Statistics

Construct AVE COR Range of loadings Cronbach's alpha Variables Mean SD CSR RL FP CR
CSR 0.53 0.92 0.60–0.80 0.89 CSR 3.48 .62 (0.73)
RL 0.59 0.90 0. 75–0.80 0.85 RL 3.42 .69 .694** (0.77)
FP 0.68 0.86 0.80–0.87 0.92 FP 3.40 .74 .611** .566** (0.82)
CR 0.67 0.83 0.73–0.85 0.84 CR 3.64 .73 .595** .672** .615** (0.81)

Abbreviations: AVE, average variance extracted; COR, composite
reliability; CR, corporate reputation; FP, financial performance; RL,
responsible leadership.
Note: Diagonal values in parentheses represent square root of AVE.
Abbreviations: CR, corporate reputation; CSR, corporate social
responsibility; FP, financial performance; RL, responsible leadership; SD,
standard deviation.
**Significant at 0.01.

TABLE 2 Fit indices

Construct IFI TLI CFI RMSEA

CSR .91 .89 .902 .053 4 | RE SU LT S
RL .92 .95 .94 .068
FP .90 .93 .91 .065 The descriptive statistics are reported in Table 3. The correlation
CR .93 .90 .90 .067 results showed that CSR has positive and significant relationship with
corporate reputation and financial performance (.595 and .611).
Abbreviations: CFI, confirmatory fit index; CR, corporate reputation; CSR,
corporate social responsibility; FP, financial performance; IFI, incremental
Responsible leadership has also positive and significant relationship
fit index; RL, responsible leadership; RMSEA, root mean square error of with financial performance and corporate reputation (.67 and .56).
approximation; TLI, Tucker-Lewis index.

4.1 | Path analysis

studies testing moderating effects as it is not easy for respondents to
predict this effect that mitigated the probability of biased findings
(De Clercq, Dimov, & Thongpapanl, 2013; Simons & Peterson, 2000).
Thus, these measures effectively address the potential issue of com-
mon method bias.
3.6 | Confirmatory factor analysis
Confirmatory factor analysis is used to test the validity and reliability
of the construct used in the study. The standardized regression
weights are reported in Table 1. Researchers tested the reliability
and validity of measures to ensure the credibility of research (Ping,
2004). Researchers tested the convergent validity through factor
loading that was above the threshold value (0.5) recommended by
Hair et al. (2010). The statistics of the average variance extracted
was also above the recommended value (0.5) by Hair et al. (2010).
Further, discriminant validity was measured through square root of
AVE that was greater than paired correlation (Hair et al., 2010) and
is provided in Table 3. Researchers also tested the construct reliabil-
ity by calculating the composite reliability for each construct using
Fornell and Larcker's (1981) procedure to calculate the Composite
Reliability scores. The reliability was further substantiated by calcu-
lating Cronbach's Alpha. Table 1 reflects the reliability and validity
of the constructs.
Researchers evaluated the model fit using a two-indices strategy
encompassing absolute and incremental fit indices (Hu & Bentler,
1999). These indices included the IFI, CFI, TLI, and the RMSEA are
presented in Table 2.
In order to test the formulated hypotheses of direct and moderating
effects, researchers used path analysis in AMOS to estimate the effect
of exogenous variables on endogenous variables and also for testing
the moderating effect. The structural model is shown in Figure 2.
Table 4 reports the results regarding CSR and RL effects on orga-
nization's reputation. This table shows that reputation is also signifi-
cantly associated with CSR. CSR has a significant positive impact on
corporate reputation (B = 0.184, p < .05). The findings regarding the
direct effect of RL on reputation revealed that RL positively and
strongly influences organization's reputation (B = 0.49, p < .01). When
we entered the interaction term in the model, it reveals that RL signifi-
cantly moderates CSR–corporate reputation relationships (B =
−0.17, p < 0.05).
Table 5 reports the results regarding CSR and RL effects on finan-
cial performance, it shows that performance is significantly associated
with CSR. CSR has a significant positive impact on financial perfor-
mance (B = 0.376, p < 0.01). The findings regarding the direct effect
of RL on organizational financial performance revealed that RL posi-
tively influences the organization's financial performance (B = 0.27,
p < .01). When we entered the interaction term in the model, it
reveals that RL does moderate CSR–financial performance relation-
ship significantly (B = −0.123, p < .05).
We have also plotted the significant interaction effect of
CSR and RL on financial performance and corporate reputation. In
Figure 3, interaction plots depict that a less responsible leader
strengthens CSR-corporate reputation' s direct relationship, and
high RL weakens this association. Figure 4 shows that the less
responsible leader reinforces CSR-financial performance links, and
JAVED ET AL. 9

FIGURE 2 Structural model Corporate Social

Responsibility (CSR)
.18*
Corporate Reputation
.37*
.49*

Responsible Leadership
(RL)
.27*
-.17* Financial Performance

-.12*
Interaction Term (CSR*RL)

*= Significant effect

-------- shows moderation effect

TABLE 4 CSR and RL Effect on Corporate Reputation

Variable Estimate SE P
CSR CR 0.184 0.078 .020
RL CR 0.49 0.075 .000
CSR × RL CR −0.17 0.037 .031

Abbreviations: CR = corporate reputation; CSR, corporate social

responsibility; RL, responsible leadership; SE, standard error.

TABLE 5 CSR and RL Effect on Financial Performance

Variable Estimate SE P
CSR FP 0.376 0.084 .000 F I G U R E 3 Interactive effect of corporate social responsibility
RL FP 0.27 0.081 .001 (CSR) and responsible leadership (RL) on corporate reputation
CSR × RL FP −0.123 0.040 .047

Abbreviations: CSR, corporate social responsibility; FP, financial

performance; RL, responsible leadership; SE, standard error.
highly responsible leader weakens CSR-financial performance
relationship.
5 | DISCUSSION
This study examined how organization's CSR initiatives concerning
disparate stakeholders impinged on corporate reputation and financial
performance. This study further investigated the moderating effect of
RL between CSR–reputation and the CSR–performance link.
Results of the study revealed that CSR initiatives for disparate
stakeholders help organizations improve their reputation. Our findings
are consistent with the earlier research (Mishra & Suar, 2010; Saeidi
et al., 2015) that reported a positive effect of CSR on corporate repu-
tation. When organizations take care of disparate stakeholders, they
respond positively and have favorable evaluation of organization
(Chen & Kelly, 2015). Companies' engagement in CSR activities is pos-
itively interpreted by these stakeholders. Stakeholders rate socially
responsible organizations higher vis à vis its competitors. Stakeholders
admire the organizations that regularly practice socially responsible
initiatives. Stakeholders identify themselves with socially responsible
organizations, and such identification becomes stronger with passage
of time. Enduring loyalty of stakeholders transform them into brand
ambassadors of these organization. CSR develops positive attitude
toward the firm and its products, which strengthens its reputation,
because stakeholders are not only concerned with production of
goods but also with how these products are manufactured. When
socially responsible activities of the firms are communicated to inter-
nal and external stakeholders, they favorably evaluate the firm. Thus,
CSR helps firms build a reservoir of goodwill and create a reputational
dividend.
The findings also revealed that stakeholders related CSR rewards
organizations financially. Our study findings are similar to the findings
of the earlier studies (Maden et al., 2012; Mishra & Suar, 2010;
Papasolomou-Doukakis, Krambia-Kapardis, & Katsioloudes, 2005) that
reported the positive effect of CSR on financial performance. Organi-
zations properly managing their significant stakeholders are well-
placed to mitigate stakeholder-inflicted costs and leverage perfor-
mance (Barney & Hansen, 1994). Different researchers have observed
10
F I G U R E 4 Interactive effect of corporate social responsibility
(CSR) and responsible leadership (RL) on financial performance
an increase in shareholders' wealth for organizations that were con-
cerned about stakeholders' satisfaction (Barnett, 2019; Hillman &
Keim, 2001). Different favorable CSR initiatives toward disparate
stakeholders helps an organization gain efficiency in business opera-
tions. Stakeholder-related CSR supports organizations in different
ways. Socially responsible initiatives help organizations charge pre-
mium prices for their products, retain and attract more customers, and
boost sales and consequently revenue. Moreover, practicing CSR
attracts tax incentives and concessions in government duties. These
incentives result in lower cost of doing business.
Further, CSR generates happy and satisfied stakeholders who
respond positively and help organizations to improve efficiency. Better
efficiency and lower cost result in improved organizational performance.
Happy employees recompense organization through higher productivity
and decreased turnover (Huang & lien, 2012); contented customers rec-
ompense organizations through repeat buying behavior and higher sales
(Tilakasiri, 2012); pleased investors provide organization capital at a com-
petitive rate that helps the organization decrease their cost of capital;
delighted communities pay back to organization in form of lower cost of
maintaining public relations (Chang, Kim, & Li, 2014), and happy suppliers
reciprocate organization's responsible initiatives through decreasing cost
of quality certification (Inoue & Lee, 2011). Above arguments reflect how
stakeholder-related CSR improves financial performance.
The results of moderating effects revealed that RL significantly
and negatively moderated CSR–reputation links. These findings are
consistent of the earlier findings (Bowman & Haire, 1975). This
showed that when organizations practicing CSR have leaders of
strong stakeholder values and socially responsible orientation, it gen-
erally results in overemphasis on CSR that negatively affects reputa-
tion of the organization. Stakeholders perceive it as undue focus on
socially responsible activities that results in unnecessary diversion of
business resources toward nonbusiness use. Stakeholders expect
firms to be socially responsible up to a certain level that may not hurt
business operations. When firms are more inclined toward social
agenda, stakeholders start evaluating them unfavorably. Every stake-
holder has a stake in a firm, and different stakeholders provide
JAVED ET AL.
different resources to organization. Shareholders provide capital;
employees provide time, energy, and effort; customers provide reve-
nue; suppliers provide raw material, and communities provide legiti-
macy. When these stakeholders fear nonbusiness use of their
resources, they start evaluating unfavorably.
Testing the moderating effects of RL on CSR and firm financial per-
formance revealed that RL significantly and negatively moderated. Our
findings are consistent with the findings of earlier studies (Han, Seo,
Yoon, & Yoon, 2016; Lankoski, 2008). RL weakens CSR–financial per-
formance's relationship because when an organization with a socially
responsible organization has a responsible leader (leader with strong
stakeholder values), it generally results in overemphasis on CSR. This
overemphasis on CSR negatively affects financial performance. This
relationship is naturally convincing because excessive emphasis on CSR
becomes extremely costly and damages an organization's profitability
(Salzmann, Ionescu-Somers, & Steger, 2005). In this relationship, the
dividends of CSR would increase first by encouraging stakeholders'
response coupled with the effect of organizational learning in practicing
CSR. However, a rise in dividends, after a certain level, would gradually
start decreasing for different reasons. First, despite stakeholders' enthu-
siasm to support organization's CSR initiatives, there is a limit to the
amount and type of resources that these socially conscious stake-
holders possess and can potentially support the organization.
Second, even if it is assumed that the stakeholders have unlimited
resources and provide unlimited support to the organization, still, a
linear increase in the dividends is unlikely because when an organiza-
tion invests excessively in CSR, it transfers some part of their spend-
ing on to stakeholders raising product price, controlling wages, or
decreasing returns on their financial investment (McWilliams & Siegel,
2001). With a continuous increase in CSR, these stakeholders, at a
certain point, resist to accept lower financial returns and thus begin to
withdraw their support. The marginal benefit of CSR eventually starts
decreasing as the spending on CSR increases.
When CSR spending becomes excessive, concerns about likely
misuse of corporate resources are raised by these stakeholders. As
CSR helps an organization secure necessary resources possessed by
disparate stakeholders. As CSR spending increases beyond an opti-
mum level, this rewarding effect will start disappearing due to con-
straints on stakeholders' support for the organization and higher
direct costs and agency costs.
A responsible leader is obliged to balance out the competing
demands of multiple stakeholders. Therefore, he takes care of all the
disparate stakeholders, and these stakeholders cooperate with the
firm and support it in its business operations. In the role of a steward,
a responsible leader is understood as a custodian of organizational
resources. He protects and enriches these resources whenever possi-
ble. In this role, he steers the business responsibly and successfully.
6 | IMPLICATIONS OF THE STUDY
This study has significant theoretical and practical implications. This
study contributes to CSR literature by testing the CSR effect on
JAVED ET AL.
corporate reputation and organizational performance in Eastern con-
texts, that is, Pakistan as most of the earlier research on CSR and per-
formance is in Western contexts. Contextual factors play an
important role in determining the CSR–performance relationship. Fur-
ther, it contributes to the literature by furthering the contingency per-
spective on CSR–performance and CSR–reputation links by
investigating the unique moderating role of RL.
This study has also significant practical implications for business
organizations in Pakistan. This study is conducted in specific context
of Pakistan, and its findings recommend business managers to practice
socially responsible activities as these activities will help them uplift
corporate reputation and improve performance. But, results also cau-
tion managers to abstain from practicing excessive CSR as it causes
overspending that harms firm's reputation and also hurts financial per-
formance. So, managers need to be careful and calculated in CSR
spending.
6.1 | Conclusion and future research directions
This study has established that stakeholder-related CSR uplifts repu-
tation and improves financial performance of business organizations.
Further, the study determines that RL weakens the CSR–reputation
and CSR–performance links. It also observes that a CSR–performance
positive association is contingent not only on different types of con-
tingencies but also on size and extent of these contingencies.
This study has certain limitations that provide opportunity for
future research. Like, study collected data from the manufacturing
sector only whereas the services sector is the vibrant and leading sec-
tor in Pakistan considering its contribution to economy. So, in the
future, researchers can collect data from services sector and can com-
pare results with manufacturing sector. Data can also be collected for
longer time periods to add more credibility to results. A cross-cultural
study on comparing Eastern context with the Western can be impor-
tant avenue for research. Moreover, the contingency perspective on
the CSR–performance relationship is still underexplored, and other
moderators can also be used. Similarly, researchers should explore the
CSR and organizational performance relationship by using other
important contingencies of personality traits of a responsible leader
and different orientations of RL.
ORCID
Muzhar Javed https://orcid.org/0000-0002-7854-576X
Hafiz Yasir Ali https://orcid.org/0000-0001-9350-2824
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How to cite this article: Javed M, Rashid MA, Hussain G,
Ali HY. The effects of corporate social responsibility on
corporate reputation and firm financial performance:
Moderating role of responsible leadership. Corp Soc Responsib
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