Enhancing financial performance through corporate social responsibility: Mediating role of environmental innovation and environmental performance

Abstract

This study investigates the effects of corporate social responsibility (CSR) on environmental performance (EP) and environmental innovation (EI) in Bangladesh's manufacturing sector, as well as how these characteristics affect financial performance (FP). A survey-based quantitative technique was adopted, with data collected from 437 employees of manufacturing enterprises in Bangladesh via a standardized questionnaire. Convenience sampling was used to collect data from November 2023 to January 2024, which was then analyzed using structural equation modeling (SEM). The study found that CSR had a substantial impact on EP and EI. Furthermore, both EP and EI positively contribute to FP. Furthermore, EP and EI mediate the relationship between CSR and FP, implying that corporations investing in CSR can boost financial position through better environmental activities. The study demonstrates how CSR-driven environmental policies can promote sustainable growth, boost financial performance, and stimulate additional investment in responsible corporate practices. These findings have important consequences for industry, policymakers, and stakeholders. Policymakers in Bangladesh can use these insights to develop policies and incentives that encourage CSR adoption in the industrial sector, benefiting both firms and society.