Impact of CSR Activities Towards Different Stakeholders on Indian Firms’ Performance

Abstract

This article investigates the subtle interplay between Corporate Social Responsibility (CSR) activities aimed at distinct stakeholders and their detectable impacts on both financial and non-financial components of organisational performance. This study leverages the sophisticated analytical framework of Structural Equation Modelling to clarify a comprehensive model using a robust dataset covering 600 Indian enterprises. The empirical findings of this study provide crucial insights with significant significance for managerial decision-making and regulatory issues. Notably, the findings highlight the strategic importance of adapting CSR initiatives to specific stakeholder groups. A strong positive link develops between CSR efforts directed at suppliers and investors and the achievement of improved overall organisational performance, spanning both financial and non-financial domains. Furthermore, the study identifies a compelling possibility for enterprises to improve their financial performance by implementing customer-focussed CSR efforts. This discovery reveals a previously unknown option for increasing financial prowess. Concurrently, the study advises caution, demonstrating a varied trend in terms of CSR targeting of employees and the community. While such programmes initially have good connections, there is a threshold beyond which the proclivity for negative effects on financial performance becomes obvious. Notably, by diving into the deep fabric of stakeholder-targeted CSR activities and their numerous repercussions on both financial and non-financial dimensions of organisational performance, this study makes a pioneering contribution.