The Role of Stakeholder Heterogeneity in the Corporate Social Responsibility – Corporate Financial Performance Relationship

Simon Cadez , Adriana Galant


Empirical evidence on the relationship between corporate social
responsibility (CSR) and corporate financial performance (CFP)
remains contentious in terms of both its direction and causality.
The presented study explores the intervening roles of stakeholder
heterogeneity and the time dimension in the CSR–CFP relationship. We posit that there is a positive relationship between CSR
activities towards market stakeholders (employees, customers,
competitors) and future CFP and a negative relationship
between CSR activities towards non-market stakeholders (NGOs,
society, natural environment) and future CFP. A conceptual model is analysed using a sample of 115 Croatian companies.
Countering expectations, a positive relationship is observed for
all stakeholder groups considered (market and non-market),
showing that CSR is a coherent construct regardless of the stakeholder group being studied. The key managerial implication is
that socially responsible action is also in a company's economic


corporate social responsibility; financial performance; stakeholders; stakeholder pressures; PLS-SEM; Croatia

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Print ISSN 1330-0288 | Online ISSN 1848-6096