Corporate Social Responsibility Initiatives and its Influence on Firm Performance: The Stakeholder’s Perspective

Abstract

The objective of the study is to measure the effect of different dimensions of CSR on the financial performance of the firm in the manufacturing industry of Pakistan. The socially responsible practices of the firm are divided into two categories: internal CSR practices and external CSR practices. Firm performance was measured in terms of market value and operational profitability. Using two-way fixed effects model, it is concluded firm’s financial value is affected when internal and external CSR practices are employed by the firm. Internal CSR practices have a strong positive effect on operating profitability but no effect on market value. External CSR has strong positive effect on firm market value but strong negative effect of operating profitability.