Corporate Social Responsibility and Firm Performance Moderating role of Corporate Governance

Abstract

            This study examines how Corporate Social Responsibility (CSR) influences firm performance, emphasizing the moderating effect of Corporate Governance. The research targets small and medium-sized enterprises (SMEs) registered in Khyber Pakhtunkhwa, Pakistan. Using stakeholder theory, a conceptual framework was constructed and tested empirically with data from a structured questionnaire. Structural equation modeling (SEM) and moderation analysis were conducted via SmartPLS 4. The results show that CSR exerts a positive and significant impact on firm performance. Furthermore, Corporate Governance significantly moderates the CSR–performance link, suggesting that strong governance systems amplify CSR’s effect on organizational outcomes. All proposed relationships were validated, underscoring the role of effective corporate governance in maximizing CSR’s performance benefits. This study advances CSR literature by supplying empirical evidence from SMEs in an emerging economy and offers actionable recommendations for managers and policymakers seeking to boost firm performance through strategic CSR and solid governance.

Keywords: Corporate Social Responsibility; Firm Performance; Corporate Governance; Small and Medium-Sized Enterprises (SMEs) Khyber Pakhtunkhwa; Pakistan