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Research in International Business and Finance 64 (2023) 101864
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Research in International Business and Finance

journal homepage: www.elsevier.com/locate/ribaf
Corporate social responsibility, industry concentration, and firm

performance: Evidence from emerging Asian economies
Asif Saeed a, *, Faisal Alnori b, Gohar Yaqoob c
a
Mahidol University International College, Mahidol University, Salaya, Thailand
b
Finance Department, Faculty of Economics and Administration, King Abdulaziz University, Jeddah, Saudi Arabia
c
FSM, National University of Computer and Emerging Sciences, Lahore, Pakistan
A R T I C L E I N F O A B S T R A C T
Keywords: Social and environmental performance are two pillars of corporate social responsibility that
Social responsibility integrate the desires of firms to enhance their competitive advantages and demonstrate their
Environment commitment to society. Based on a sample of eight emerging Asian markets, this study in
Firm performance
vestigates the role of firms’ social and environmental performance in their financial performance,
Emerging market
and how this may vary under different levels of industry competition. The results show that the
social dimension is more effective in increasing firm performance relative to the environmental
dimension. Further, the performance of socially oriented firms is more stable in highly compet
itive industries relative to environmentally oriented firms. Overall, this study supports the view
that socially responsible firms have a competitive edge over their rivals that leads to higher
profitability.
1. Introduction
Corporate social responsibility (CSR) has increasingly drawn the attention of both practitioners and scholars (Kim and Oh, 2019;
Long et al., 2020), in line with society’s ever-greater demands for firms to act in a socially responsible manner in addition to their
traditional role of providing goods and services. Exploring CSR is an ongoing concern relevant to economic and finance research
because of its importance to investors, stakeholders, and policy makers (Benkraiem et al., 2022; Boubaker et al., 2020).
Theories provide inconsistent predictions about the role of CSR activities in firm performance. More specifically, stakeholder theory
predicts that companies engaged in CSR activities establish good relations with their stakeholders, hence improving firm performance.
Further, the resource-based theory supports a positive linkage between CSR and firm performance because CSR helps firms to develop
internal resources for external benefits, a better reputation, and a better corporate culture (Lin et al., 2019). In contrast, neoclassical
theory suggests that CSR should decrease firm performance because it imposes additional costs on the firm and diverts funds from
profitable investments (Akben-Selcuk, 2019).
Existing literature shows that CSR is highly relevant to firm performance (Long et al., 2020; Ramzan et al., 2021). However, the
majority of studies that examine the relationship between CSR engagement and firm performance were performed in developed
economies (e.g., Ali et al., 2017; Orazalin, 2019), and there is relatively limited evidence from an emerging market context. Further,
prior studies report that an industry’s level of competition influences the relationship between a firm’s responsible behavior and its
performance (Boubaker et al., 2020; Long et al., 2020); however, prior studies on CSR and firm performance have tended to overlook
* Corresponding author.
E-mail addresses: asif.saeed@outlook.com (A. Saeed), falnore@kau.edu.sa (F. Alnori), goharyaqoob.11@gmail.com (G. Yaqoob).
https://doi.org/10.1016/j.ribaf.2022.101864
Received 11 May 2021; Received in revised form 22 December 2022; Accepted 28 December 2022
Available online 4 January 2023
0275-5319/© 2023 Elsevier B.V. All rights reserved.
A. Saeed et al. Research in International Business and Finance 64 (2023) 101864
this aspect.
This study advances this strand of CSR literature in the following ways. First, it incorporates two main dimensions of CSR (social
and environmental) and examines how these dimensions affect firm performance in emerging Asian countries (i.e., China, India,
Indonesia, Malaysia, the Philippines, South Korea, Taiwan, and Thailand). Second, and more importantly, it explores how the impact
of social and environmental performance on firm performance may vary across different levels of industry competition.
We focus on emerging Asian markets because it is becoming important for firms in these markets to adopt CSR disclosure activities
and related practices.1 Long et al. (2020) report that CSR has become standard practice in China; for example, about 80% of China’s
largest firms report on their CSR practices (Long et al., 2020). Further, emerging Asian markets have increasingly attracted foreign and
domestic investors (Zamir et al., 2020), suggesting the investment community will benefit from their improved market efficiency
(Nguyen et al., 2019). Therefore, Asian firms are being rewarded by their markets for improving their CSR performance (Yen and
André, 2019).
The present study expects that firms’ social and environmental performance are highly relevant to a firm’s overall performance in
Asian markets since CSR is now standard practice there (Long et al., 2020). There is increasing concern among stakeholders in Asian
markets about firms’ social and environmental issues (Zhang et al., 2020; Dilla et al., 2019). Firms that are more socially responsible
sustain their profitability by better serving their stakeholders. Therefore, a higher level of commitment by firms to socially oriented
practices positively contributes to their activities (Arda et al., 2019). Further, firms’ environmental initiatives (such as lowering energy
wastage and improving carbon emissions) have led to the adoption of a green culture (Arda et al., 2019). Such proactive environmental
responsibility distinguishes an organization from competitors and builds a platform for sustainability (Gilal et al., 2019). Thus,
continuous improvement of social and environmental responsibility helps organizations to retain their current customers, increase
their market share, and better their capability to respond to regulatory policies and demands (Gangi et al., 2019; Zhang et al., 2020).
Corporate decisions are influenced by competition, and managerial actions vary across different levels of competition (Moradi
et al., 2017). Prior studies have shown that competitive conditions influence corporate decisions including social and environmental
practices (Albuquerque et al., 2019). Accordingly, the present study hypothesizes that the level of competition is highly relevant to the
nexus between firms’ social and environmental dimensions in the context of CSR and firm performance. More specifically, the rela
tionship between firms’ social and environmental performance and firm performance should vary under different levels of
competition.
After controlling for a wide set of control variables and applying static (ordinary least squares [OLS]) and dynamic (generalized
method of moments [GMM]) models, we find that, in emerging Asian economies, a firm’s social dimension is more effective in
increasing firm performance than its environmental performance. Further, the present study explores whether an industry’s level of
competition plays a role in the associations between social and environmental performance and firm performance. More specifically, in
subsample analysis, results show that social performance during periods of high competition is more significant than during periods of
moderate or low levels of competition. As a result, firms maintain the competitive advantages that allow them to satisfy their customers
and society, and thus enjoy more diverse choices for innovative and sustainable development.
The remainder of this paper continues as follows. Section 2 presents the relevant literature and hypothesis development. Section 3
reports on the data and empirical methods. Section 4 presents the results, and Section 5 concludes the paper.
2. Literature review and hypothesis development
2.1. Nexus of CSR and firm performance
A plethora of studies have examined the nexus between CSR and firm performance. These studies mostly show a positive linkage
between CSR and firm performance because CSR engagement is an important element for a business to promote product differentiation
in its marketing strategy and increase customer loyalty (Ali et al., 2017; Chijoke-Mgbame et al., 2019). Further, stakeholders usually
evaluate the environmental, social, and corporate governance (ESG)2 performance of a firm when making investment decisions (Dilla
et al., 2019). This is because the firm’s contribution toward sustainable development is a major concern of investors, creditors,
governments, and environmental agencies (Atan et al., 2018). Therefore, CSR activities help a firm to meet stakeholders’ demands and
achieve better financial performance (Ferri and Pini, 2019). In contrast, several studies have shown a negative nexus between CSR and
performance since CSR initiatives impose additional costs on firms and divert funds away from profitable investments (Akben-Selcuk,
2019). In addition, the majority of the reviewed studies examining the CSR and performance nexus were performed in developed
markets, and studies in an emerging market setting, such as emerging Asian markets, are relatively lacking. The next section argues the
importance of examining CSR and firm performance in emerging Asian markets.
2.2. Asian markets
Existing literature demonstrates the importance of CSR for specific emerging Asian markets, confirming that these countries have a
noticeable tendency to adopt CSR activities. For example, CSR disclosure is promoted in Malaysia and China (Ali et al., 2017), while
South Korea is encouraging firms to adopt CSR initiatives for their sustainable development and India and Pakistan are considering
1
Section 2.2 discusses the importance of CSR in the emerging Asian market setting.
2
CSR and ESG are used synonymously in our study.
2
improvements in operations and performance (Chang et al., 2017; Khan et al., 2019b). Further, the introduction of CSR requirements is
important for firms in other emerging Asian markets, such as India, Indonesia, Malaysia, Pakistan, the Philippines, and Thailand, in
terms of their commitment to society and also to the environment (Boubakri et al., 2021). Moreover, evidence from Taiwan illustrates
that CSR is an external pressure during periods of competition for firms, creating a good signaling effect and improving a firm’s
reliability and reputation – the latter of which helps to achieve a competitive advantage and to increase capital, number of investors,
and number of employees (Lin et al., 2019).
2.3. Social and environmental dimensions of CSR
2.3.1. Social dimension of CSR

The current study considers two key pillars of CSR (i.e., social and environmental)3 to investigate its relevance to firm performance.
Firms’ social and environmental performance are considered as they integrate the desires of firms to enhance their competitive ad
vantages and demonstrate their commitment to society (Jang et al., 2019).
Studies show the importance of firms’ social performance in enhancing their financial performance (e.g., Atan et al., 2018; Gali
et al., 2020; Jang et al., 2019). This is because firms that are more involved in promoting social activities are better able to maintain
public relations (Ting et al., 2019), improving their image and reputation among stakeholders (Atan et al., 2018; Gali et al., 2020) and
indicating the firms’ loyalty and ethics, which improves perception of their business practices (Zhang et al., 2019). This improved
reputation creates an opportunity for sustainable profitability, and thus goodwill (Rehman et al., 2020). Further, strong social per
formance improves the firm’s efficiency and reduces bankruptcy risk (Chollet and Sandwidi, 2018; Feng et al., 2022; Galletta et al.,
2022). Moreover, firms’ social attitudes enable them to gain more opportunities in the market and be more competitive (Ramzan et al.,
2021).
In contrast, Friedman (1970) claims that social responsibility may represent an agency problem and decrease firm performance.
This is because managers use corporate resources to extract personal rents (Miralles-Quirós et al., 2019). Hence, firms’ social activities
could cause them to incur extra costs, reducing profits and hurting firm performance (Sial et al., 2018).
2.3.2. Environmental dimension of CSR

A firm’s environmental responsibility refers to its organizational behavior and commitment to the natural environment, which
symbolizes corporate environmental ethics (Dilla et al., 2019). Several studies have shown conflicting outcomes regarding firms’
environmental performance and financial performance. Some prior studies have suggested that firms’ environmental responsibility
improves their long-term performance (Arda et al., 2019; Gilal et al., 2019). Further, firms’ green knowledge and innovation promote
an environmental orientation, which allows them to improve performance (Atan et al., 2018). In contrast, it has been demonstrated
that firms’ environmental responsibility does not always lead to positive outcomes (Chollet and Sandwidi, 2018), mostly because
corporate environmental initiatives are expensive to introduce (Zhang et al., 2019).4
2.4. Hypothesis
2.4.1. Social and environmental dimensions and firm performance

The studies reviewed above mostly confirm the important role of firms’ social and environmental responsibility in financial per
formance. The present study hypothesizes that firms’ social and environmental initiatives should thus also be relevant to firms in
emerging Asian markets. In particular, emerging markets, such as Asian markets, have a noticeable tendency to adopt CSR as they
differ from Western counterparts in terms of social, cultural, and managerial practices (Ting et al., 2019).
Following the stakeholder theory perspective, firms operating in emerging Asian markets must satisfy internal and external
stakeholders’ demands to achieve sustainable development (Atan et al., 2018; Jia, 2020). Further, the social activities of firms in
emerging Asian markets can improve their reputation among stakeholders (Gali et al., 2020) and increase profitability (Rehman et al.,
2020).
Moreover, green theory stresses that taking care of society helps organizations with sustainable development. Hence, government
regulations and customer pressure are encouraging firms to adopt such practices in Asian markets. Environmental responsibility allows
firms to improve their competitive advantages and dynamic capabilities (Arda et al., 2019). The integration of environmental values
supports environmental business in the long term (Gilal et al., 2019). Overall, green knowledge and innovation promote an envi
ronmental orientation in firms and green resource management, which also allows them to improve their firm performance (Atan
et al., 2018; Zhang et al., 2019). Accordingly, the present study expects that, along with improving social performance, organizational
resources for environmental performance will improve the effectiveness of a firm.
2.4.2. The role of competition

Competitive conditions influence corporate decisions, including social and environmental practices (Albuquerque et al., 2019).
According to Jiang et al. (2019), different levels of competition influence a firm’s adoptation to competitive strategies to create a
3
The CSR literature demonstrates three pillars of CSR, related to firms’ environmental, social, and governance activities (Inoue and Lee, 2011).
4
Examples of firms’ environmental initiatives include innovation in technology to minimize waste, emissions treatment, global warming, and
remediation costs.
3
positive image of the company through, for example, improved product quality or an increase in customer loyalty. Further,
low-competition firms usually support ethical practices and philanthropic purposes to meet stakeholders’ interests (Khachatryan and
Vardanyan, 2019). This is because they pursue long-term sustainable development based on adhering to an ethical approach to
differentiate themselves from others.
Investments made in a highly competitive environment involve managerial efforts to increase firm performance and protect firms
from a high risk of failure (Chaudhry et al., 2021; Javeed et al., 2020; Long et al., 2020). This is because highly competitive firms prefer
to pursue a strategy based on value appropriation rather than value creation (Jia, 2020). Value appropriation implies organizing more
resources for branding activities and advertising to capture value from stakeholders (Gali et al., 2020).
The literature on moderate competition predicts that such firms have fewer resources and that the managers of those firms have
fewer opportunities to divert resources for their own benefit (Moradi et al., 2017). They are more concerned about their market
presence and maintaining their market share in the industry rather than being socially responsible to the firm, market, and community
(Jiang et al., 2019). Moderate competition motivates firms to act in socially responsible ways and helps to protect their reputation
(Chih et al., 2010; Graafland, 2018).
Driven by the fact that the intensity of competition influences firms’ CSR-related decisions (Jiang et al., 2019), the present study
expects that different levels of competition should influence firms’ social (environmental) performance relationship. We propose that
socially oriented practices and environmental ethics are intangible assets for a firm in emerging Asian markets and that these assets
vary with changes in the level of competition. More specifically, considering the role of competition, we postulate that the association
between social performance and financial performance changes with the level of competition. Similarly, the association between
environmental performance and financial performance changes with the level of competition.
3. Data and methodology
This section of the study discusses the procedures and techniques used to analyze the research along with the key variables of the
study. It explains the research design, sample, measurements, and econometric model of the study.
3.1. Sample selection
Our main data are comprised of three renowned databases: Asset4-ESG, Datastream, and Worldscope (Chollet and Sandwidi, 2018;
Naseem et al., 2020). Specifically, we obtained social and environmental (SOC and ENV) data from the Asset4-ESG database for nine
emerging Asian markets according to the MSCI list (i.e., China, India, Indonesia, Korea, Malaysia, Pakistan, the Philippines, Taiwan,
and Thailand).5 When we merged the dependent and independent variables, we realized that there were no observations from
Pakistan.6 We also deleted the observations in any of our main variables that had missing values. Our study sample consists of 435
listed firms from Asian economies over 11 years (2007–2017) because listed firms in China have been required to disclose their social
and environmental (SOC and ENVI) information since 2008 (Long et al., 2020) and other Asian firms have been disclosing such since
2007 (Syentia et al., 2019). Therefore, our final sample consists of 2218 observations from eight emerging Asian economies for the
period 2007–2017.
3.2. Asset4-ESG ratings
Asset4-ESG provides three main factors to measure (i.e., social, environmental, and governance).7 Some empirical studies exclude
governance because they do not consider governance practices an indicator of socially responsible behavior (Chollet and Sandwidi,
2018); in line with this, we also exclude governance factors from our study.8 Typically, Asset4-ESG measures nonfinancial voluntary
disclosure for firms handled by Thomson Reuters, a leading financial data provider around the world, and allows the use of a global
sample (Chollet and Sandwidi, 2018; Duque-Grisales and Aguilera-Caracuel, 2021). It gives systematic and relevant information for
key performance indicators and individual data points with data sources used by different firms as ESG indicators. It has been designed
to provide transparent and effective information to investors for their decision-making activities regarding a company or business
(Atan et al., 2018).
3.3. Model and measurement
The econometric model of the study is as follows:

ROAi,t = β0 + β1 SOCi,t + β2 ENV i,t + β3 SIZEi,t + β4 LEV i,t + β5 CAPi,t + β6 LOSSi,t + β7 TANGi,t + β7 Fixed Effectsi,t + εi,t (i)
5
The MSCI ESG Ratings was formerly known as the Kinder, Lydenberg, and Domini (KLD) data, which was acquired by MSCI in 2010.
6
We excluded Pakistan from our sample observations because complete data were not available. After applying all exclusion criteria, we
discovered that we had no observations from Pakistan.
7
Asset4 was a privately held firm with two institutional investors: Goldman Sachs and Bank of America Merrill Lynch. It was acquired by
Thomson Reuters in 2009.
8
We exclude the governance factor in our study while investigating ESG measures since it is different from CSR.
4
Specifically, we will use this model to test the hypothesis. In the above equation, ROAit represents a proxy to determine firm
performance, while β1 SOCit represents social factors and β2 ENV it is an environmental factor for measuring CSR dimensions (Schaefer
et al., 2020). The remainder represent the control variables for firm size (SIZE), firm leverage (LEV), capital intensity (CAP_I), loss
dummy (LOSS), tangibility (TANG), and control year and country effects (Fixed Effects), while εit is an error term (Lin et al., 2019; Long
et al., 2020).
3.3.1. Firm performance (dependent variable)

Firm performance (dependent variable) is measured by return on assets (ROA), which calculates a firm’s net income relative to its
total assets in the current year. ROA has been widely used in previous studies to explore the relationship between CSR and financial
performance (Kim and Oh, 2019; Lin et al., 2019). Because there is always a gap between a firm’s practices and policies to achieve
better financial performance, we use ROA to measure firm performance to determine the consistent effect of changes in social and
environmental performance (Kim and Oh, 2019; Long et al., 2020).
NetIncome
ROA =
TotalAssets
3.3.2. Social and environmental performance (independent variable)

CSR incorporates many different aspects (dimensions) that form its policies and practices, but the greatest impact on the evaluation
of a firm’s engagement comes from socially (SOC) and environmentally (ENV) oriented activities (Derchi et al., 2020; Schaefer et al.,
2020).
The socially oriented dimension captures the responsibility demonstrated by a firm to society. CSR is a philanthropic (social)
activity that contributes to society (Derchi et al., 2020). Social responsibility encompasses many aspects, such as how firms affect the
economy in terms of competition, community, employment quality, corporate governance, and training and development (Ramzan
et al., 2021). The social dimension is the key factor underlying the relationship between business and society, and thus engages those
who are involved in social practices and public relations in a firm’s performance (Atan et al., 2018; Schaefer et al., 2020).
The environmentally oriented dimension belongs to the company’s responsibilities to the natural environment via protecting
natural resources, and refers more generally to how resources are distributed within a social system (Lin et al., 2019). It includes
different conditions that are operating in an economy, such as human rights, health and safety, product responsibility, climate change,
emissions reduction, and promoting green technologies (Atan et al., 2018). Thus, the environmentally oriented dimension involves a
positive contribution to environmental quality, which also exerts an impact on a firm’s performance (Schaefer et al., 2020).
3.3.3. Industry competition by HHI

Industry competition is estimated via the Herfindahl–Hirschman index (HHI)9 – a measure of the size of the firms in an industry that
we consider an indicator of the amount of competition that exists among firms (Long et al., 2020). We use this tool to measure the level
of competition (HHI) and market concentration, calculated by squaring the market share of the firms in an industry within a given
country and then summing the resulting numbers (Jia, 2020).
HHI = S21 + S22 + S23 + … + S2nwhere Sn is the market share percentage of the firm (n) (rounded to the nearest whole number).
3.3.4. Control variables

Our study includes control variables including firm size, firm leverage, capital intensity, loss dummy, and tangibility to analyze
their possible effects on the relationship between social and environmental performance and firm performance. Firm size (SIZE) is
specified as the natural logarithm of the total assets of a firm (Long et al., 2020). Firm leverage (LEV) is represented as a ratio of total
debt over total assets for the time during which the effect exists (Akben-Selcuk, 2019). Capital intensity (CAP_I) is indicated by the ratio
of total assets to the total revenue of the firm (Sugeng et al., 2020). It measures a firm’s efficiency based on the amount of fixed or real
capital present concerning other factors of production. The loss dummy (LOSS) is a dummy variable that takes value 1 if a firm has had
negative earnings in the last two years and 0 otherwise. Tangibility (TANG) for this study is defined as the ratio of all tangible assets
over the total assets of the firm (Ramzan et al., 2021). Furthermore, we include HHI as a moderator for our study to measure market
concentration according to industry classification (Long et al., 2020). We also fix the effects of year and country (Fixed Effects) by using
multiple dummies.
4. Results
4.1. Sample distribution
Table 1 indicates the sample distribution for the period of investigation (2007–2017) year-wise and country-wise for eight
emerging Asian markets. Other firms were not included in our sample because new companies might be less profitable in comparison
to those already in the sample. Panel A presents year-wise descriptive statistics for 11 years. This table shows that, in 2008, firms were
9
We used HHI as a proxy to measure the existing level of competition since it is an indicator and a measurement tool to gauge the level of
competition among firms.
5
not able to enhance their performance due to the financial crisis. The year 2010 shows the lowest values of 46.77 for the social
dimension and 43.13 for the environmental dimension, covering 4.82% of the observations. However, the performance of firms started
to improve after 2012, with firms being required to disclose their social and environmental performance since 2008. The literature
supports these results, which suggest that firms started focusing on these dimensions and implementing strategies to improve their
social and environmental performance. The results show the highest-value observations for social performance at 81.00 and envi
ronmental performance at 76.56 in 2017. Overall, this table supports the reasoning that firms are becoming more concerned about
their social activities as a means to improve their financial performance.
In Panel B, country-wise descriptive statistics show the results from 2007 to 2017 for eight emerging Asian markets. India, sur
prisingly, has more observations after applying exclusion criteria, accounting for 29.17% or 647 of the observations. It has the highest-
value ROA (9.37) in comparison to other countries. Thailand is showing better social performance with a value of 73.24, while
environmental performance has also improved. On the other hand, Taiwan has higher values of 77.28 for environmental performance
and 74.95 for social performance. India has an HHI value below 1500 (1498.20), thus representing a high level of competition.
Meanwhile, the Philippines has a low level of competition, and lower values for social performance and environmental performance;
thus, it appears that this country is not yet concentrating on these dimensions to improve firm performance.
4.2. Descriptive statistics
Table 2 provides the descriptive statistics for all firms included in our sample. ROA has an average value of 6.8% and a standard
deviation of 7.2%. Overall, Asian firms are generating 7% profits on their invested capital. SOC, a measure of social performance that
predicts a firm’s involvement in social activities that contribute to society, has an average value of 57.6%. Environmental re
sponsibility (ENV) has an average value of 55.8% (lower than social responsibility) and a standard deviation of 29.5%. These two
dimensions are possible reasons for changes in firm performance. Firm size (SIZE) has an average value of 19.9, meaning that, on
average, our sample firms possess $439 million in assets. Firm leverage (LEV), the portion of total assets financed by debt, has a mean
value of 17%. Capital intensity (CAP_I), calculated by the total assets and total revenue of a firm, has an average value of 4.9% and a
standard deviation of 7.4%. The loss dummy (LOSS) has a standard deviation of 20% and an average value of 4%, indicating the
presence and absence of loss for the last two consecutive years (2016–2017) in the study period. TANG, the tangibility measure
calculated by considering all intangible assets over the total assets of a firm, has an average value of 31% and a standard deviation of
25%.
4.3. Correlation matrix
Table 3 presents correlations between the dependent and independent variables, which help to understand a relationship’s effect –
whether it is positive or negative in terms of direction and strength. The table also includes the variance inflation factor (VIF), which
indicates the multicollinearity for independent and control variables, to support correlation analysis. As none of the VIFs are above 5
for any of the variables – and in fact none of the correlations are above 0.4. Therfore, multicollinearity is not an issue in this study
Table 1
Sample distribution.
Year/Country N Percentage ROA SOC ENV HHI
Panel A: Year-wise descriptive

2007 15 0.68% 11.23 64.37 56.77 5587.06
2008 44 1.98% 9.54 54.86 51.03 4031.92
2009 62 2.80% 8.02 56.46 48.76 3760.82
2010 107 4.82% 8.64 46.77 43.13 2540.33
2011 170 7.66% 8.03 50.32 47.54 2228.71
2012 210 9.47% 7.16 52.34 50.65 2194.36
2013 276 12.44% 6.91 54.41 52.50 1988.75
2014 294 13.26% 6.54 54.79 53.05 1928.14
2015 312 14.07% 5.72 62.33 62.01 1810.59
2016 321 14.47% 5.85 69.67 69.37 1858.96
2017 407 18.35% 4.21 81.00 76.56 6651.78
Total 2218 100% 6.83 57.60 55.85 2140.39
Panel B: Country-wise descriptive
CHINA 555 25.02% 4.40 38.81 41.70 1901.23
INDIA 647 29.17% 9.37 58.99 56.90 1498.20
INDONESIA 137 6.18% 9.66 63.43 50.56 3115.54
KOREA (SOUTH) 245 11.05% 4.76 71.64 75.65 2613.63
MALAYSIA 239 10.78% 7.31 57.05 47.56 2201.15
PHILIPPINES 46 2.07% 7.67 49.26 44.85 3697.09
TAIWAN 206 9.29% 4.62 74.95 77.28 2447.65
THAILAND 143 6.45% 7.66 73.24 63.71 3184.17
Total 2218 100.00% 6.83 57.60 55.85 2140.39
Note: This table provides descriptive statistics of the variables (ROA, SOC, ENV, and HHI). This shows mean, minimum, and maximum values along
with standard deviation. It reports year-wise and country-wise descriptive from 2007 to 2017 for eight Asian emerging countries.
6
Table 2
Descriptive Statistics.
Variable Mean Std. Dev Min P25 P50 P75 Max
ROA 6.83 7.29 -39.06 2.03 5.03 9.54 35.86

SOC 57.60 28.97 4.32 31.35 60.51 85.98 97.17
ENV 55.85 29.52 8.42 27.13 58.77 85.74 95.29
HHI 2140.39 1839.05 542.54 1057.40 1616.10 2592.25 10000.00
SIZE 19.93 2.30 13.97 18.30 19.68 21.59 23.75
LEV 0.17 0.16 0.00 0.03 0.13 0.26 0.82
CAP_I 4.99 7.49 0.29 1.15 1.90 4.95 83.99
LOSS 0.04 0.20 0.00 0.00 0.00 0.00 1.00
TANG 0.31 0.25 0.00 0.07 0.28 0.51 0.91
Abbreviations: ROA, return on assets; HHI, Herfindahl-Hirschman Index, SOC, Social dimension of CSR; ENV, Environmental dimension of CSR
*Significance at 10%
* *Significance at 5%
* **Significance at 1%
(Akben-Selcuk, 2019; Bugshan et al., 2021). ROA (firm performance) is positively related to the social and environmental dimensions,
HHI, firm size, firm leverage, capital intensity, the loss dummy, and tangibility. These findings are largely compatible with the
literature, which suggests that social and environmental performance affects firm performance.
4.4. Regression analysis
Table 4 shows the findings for four different model specifications. First, we perform an OLS regression to determine the regression
model. We use panel data for 2218 observations for the period 2007–2017 in our study.
In this table, column 1 shows the coefficient and t-value results for social performance by regression; the t-value for the social
dimension is 6.19, which is significant at the 1% level. This suggests that firms are usually responsible when participating in phil
anthropic and ethical activities. Since businesses are part of society, the firm’s social responsibility has a great impact on its profit
ability as social performance promotes public relations and supports good practices in society (Chollet and Sandwidi, 2018). However,
when we combine social and environmental dimensions to test the hypothesis, we acknowledge that the environmental dimension has
no significance in this regard in model 2. This indicates that Asian firms do not pay attention to improving their environmental
performance. Reasons for this may include their weaker economies, their lower emphasis on the environment, and that they are
primarily motivated toward societal performance (Atan et al., 2018). The results from the pooled OLS and fixed-effect models indicate
that F (f-stat) is 71.61 for the social dimension and 71.05 for the environmental dimension because social and environmental per
formance integrates with the bottom line of the firm’s activities (Atan et al., 2018; Ezzi and Jarboui, 2016; Ramzan et al., 2021). The
adjusted R2 for social and environment performance are 0.462 and 0.460, respectively, implying that the fixed-effect model is more
favorable, which means our regression model is fitted well and no changes are needed. R2 indicates variations of the independent
variable. Hence, the results for the social performance show highly positive significance for firm performance.
Column 2 shows environmental performance relative to firm performance, which is a dependent variable, since when we compare
the social factor with the environmental factor, there is no significance for the environmental dimension. The t-value is 1.87, which is
significant at the 10% level. Thus, environmental responsibility has a significant but weak impact on firm performance, suggesting that
firms are not focusing on the environmental dimension to improve their firm value and public value, but instead, focusing more on
social performance. Hence, these two variables (social and environmental responsibility) are not interrelated with each other and do
not have a combined impact on firm performance.
Table 3
Correlation.
Variable VIF (1) (2) (3) (4) (5) (6) (7) (8) (9)
ROA – 1.000
SOC 3.81 0.079* 1.000
ENV 3.97 0.020 0.828* 1.000
HHI – 0.160* 0.011 -0.033 1.000
SIZE 3.61 -0.238* 0.259* 0.267* -0.026 1.000
LEV 1.45 -0.162* -0.061* -0.071* -0.037 -0.026 1.000
CAP_I 1.89 -0.339* -0.075* -0.096* -0.180* 0.285* -0.099* 1.000
LOSS 1.03 -0.335* 0.019 0.049 -0.020 -0.030 0.074* -0.052 1.000
TANG 1.84 0.067* 0.167* 0.179* 0.185* -0.144* 0.350* -0.410* 0.098* 1.000
Note: Table 3 is showing the correlation coefficient matrix among the explanatory variables of the study. If the value is positive, it indicates that the
direction of variation between the two variables is the same. If the correlation is negative, it means the relationship between the variables is opposite.
While zero shows no relationship.
Abbreviations: ROA, return on asset; SOC (social); ENV (environment); HHI (Herfindahl-hirschman index)
*
P < 0.1 * *P < 0.05 * **P < 0.01
7
Table 4
Main Regression Analysis.
VARIABLES SOC ENV Main Cluster
(1) (2) (3) (4)

SOC 0.031*** 0.024*** 0.024**
(6.19) (3.10) (2.35)
ENV -0.028* 0.010 0.010
(− 1.87) (1.29) (0.87)
SIZE -1.778*** -1.762*** -1.798*** -1.798***
(− 16.95) (− 16.70) (− 16.97) (− 7.54)
LEV -6.863*** -7.055*** -6.812*** -6.812***
(− 7.95) (− 8.18) (− 7.88) (− 3.97)
CAP_I -0.100*** -0.100*** -0.098*** -0.098***
(− 4.81) (− 4.79) (− 4.70) (− 3.23)
LOSS -11.914*** -12.003*** -11.942*** -11.942***
(− 21.18) (− 21.29) (− 21.21) (− 12.70)
TANG -0.922 -0.823 -0.960 -0.960
(− 1.50) (− 1.34) (− 1.56) (− 0.82)
Constant 45.259*** 45.079*** 45.520*** 45.520***
(18.80) (18.66) (18.85) (9.02)
Observations 2218 2218 2218 2218
Fixed Effects Year, Industry, Country Year, Industry, Country Year, Industry, Country Year, Industry, Country
Adj R2 0.462 0.460 0.462 0.462
F-stat 71.61 71.05 69.13 19.19
Note: This table reports results of main regression analysis for the required effect: social and environmental performance and firm performance
relationship, with fixed effect. Abbreviations: SOC, Social dimension of CSR; ENV, Environmental dimension of CSR
*
Significance at 10%
**
Significance at 5%
***
Significance at 1%
Meanwhile, column 3 shows the main regression for the dependent variable – firm performance (measured by ROA). Results
indicate that the social dimension has a strong relationship with competition and a significant positive impact on firm performance. As
is evident, the social dimension has a coefficient value of 0.024 (t-value = 3.10), while the environmental dimension has a coefficient
value of 0.010 (t-value = 1.29), which shows that social performance has a significant positive impact on firm performance but the
environment has no significant impact. Furthermore, the control variables (firm size, firm leverage, capital intensity, and loss dummy)
show a significant impact on social performance and environmental performance, but tangibility (TANG) has no significant effect.
Column 4 shows the cluster effect of the combined variables. The results are more or less the same. Social performance has a
relationship with firm performance that is significant at the 2% level, while environmental performance does not have a significant
relationship with firm performance. While the control variables are significant at the 1% level for various dependent and independent
relationships, except for tangibility (TANG), they do not have significant relationships. The R2 ranges from 0.460 to 0.462, which
shows that the model has a good fit and can explain the relationships between the dependent and independent variables.
Collectively, the results support the social performance dimension and reflect its positive association with firm performance. The
results also reveal that the higher the management efficiency, the greater the valuation effects (based on ROA and Tobin’s Q). The
evidence also indicates that the higher leverage represents the better stock market and financial performance. These results are
comparable to previous studies that investigate the relationship between CSR and firm performance (e.g., see Jia, 2020; Ting et al.,
2019).
4.5. Competition level
Competition generally relates to a firm’s efficiency and productivity and is affected by the concentration level. Specifically, market
competition can shape firms’ decision-making regarding risky activities, and can encourage them to adopt differentiation strategies,
such as those mentioned by Moradi et al. (2017). Our first hypothesis examines whether competition strengthens the relationship
between the social and environmental dimensions of CSR and firm performance. To test this hypothesis, we divided the competition
proxy into three levels (i.e., high, moderate, and low). Second, following prior studies, we use HHI as a proxy measure of the existing
level of market competition (Long et al., 2020). We further divide our subsample following the U.S. Federal Trade Commission’s
guidelines. Boubaker et al. (2020) stress that the association between a firm’s responsible policies and financial distress risk changes
with the level of competition. With this is mind, we split our sample into high (HHI ≤ 1500), moderate (1500 < HHI < 2500), and low
competition (HHI ≥ 2500) bands, which show when a firm is in a monopolistic situation, in a situation with higher market concen
tration, or in a situation with lower market competition. These subsamples based on HHI indicate how social and environmental
performance change based on the competition level.
Table 5 shows the results for the competition effect measured by HHI. Column 1 represents high competition, where social per
formance has a positive impact on a firm’s financial performance. It should be noted that the environment does not have a significant
impact on firm performance during high competition because firms are more anxious about philanthropic activities than environ
mental concerns. This result implies that the role of social performance is more important with a high level of competition. Firms in
8
such situation maintain their competitive advantage by satisfying customers and society at large; evidence from a previous study
supports our results in this regard (Chollet and Sandwidi, 2018). When firms face high competition within an industry, there is more
pressure on them to differentiate themselves from others as customers will have more diverse choices and will move toward innovative
and sustainable products that lead to improved firm performance (Jia, 2020).
Column 2 shows the effect of moderate competition. In this scenario, the social dimension has a significant (at the 1% level) but
weak impact on firm performance. However, the environmental dimension shows better performance during moderate competition.
This suggests that firms want to take the initiative by differentiating themselves through not only philanthropic activities but also
environmental performance. In addition, environmental strategies and green innovation improve environmental performance, and
firms show some responsibility in terms of behaving ethically. Moreover, customers prefer environmentally friendly firms (Kraus et al.,
2020). If firms only consider their financial performance, rather than focusing on nonfinancial performance, they will not survive
(Moradi et al., 2017). Thus, the results indicate that moderate market competition allows firms with environmental strategies to gain
benefits in terms of environmental performance (Kraus et al., 2020).
Column 3 shows results for a low-competition scenario, under which social responsibility has a significant (at the 1% level) but
weak impact but environmental responsibility has no direct significant influence on firm performance. During a low level of
competition, firms remain in a monopolistic position and experience no anxiety regarding gaining a competitive advantage by
differentiating themselves (Kasman et al., 2020). They thus focus on their financial attributes and not on green innovation and
environmental stability. However, a low level of competition leaves room for decision-making by managers that can lead to value
appropriation and value creation activities (Jia, 2020). But these results indicate that low competition does not strengthen the rela
tionship between firm performance and the environmental dimension. Hence, based on the overall results, we can say that social
performance has a greater impact on firm performance than environmental performance in emerging markets. It operates more in
high-competition environments than in market situations with moderate and low levels of competition, and people place more
importance on social philanthropic activities that improve a firm’s value.
4.6. Robustness analysis
To test the robustness of our findings, we use different settings for our competition econometric models. First, prior studies have
also used Tobin’s Q as a proxy for a firm’s financial performance (Lin et al., 2019; Long et al., 2020). In the Asian context, researchers
have used Tobin’s Q as a symbol of market power and a firm’s financial contribution to the overall economy (Lin et al., 2019). In
Table 6, the first three models show the results with Tobin’s Q as a dependent variable. Overall, our results are consistent with those in
Table 5.
To extend our robustness analysis, we use the interaction terms on different levels of competition rather than splitting the sample
into high, moderate, and low HHI subsamples (Javeed et al., 2020). We create three proxies for competition (high, moderate, and low)
using the U.S. Federal Trade Commission’s guidelines, as explained in Section 4.5. Table 6, columns 4, 5, and 6 show that the social
dimension is effective in reflecting a firm’s performance in the Asian context across all levels of competition but that its impact is
Table 5
Level of Competition (HHI).
VARIABLES High Moderate Low
(5) (6) (7)

SOC 0.032*** 0.011* 0.033*
(3.23) (1.81) (1.75)
ENV -0.008 0.039*** 0.000
(− 0.82) (2.69) (0.01)
SIZE -1.517*** -2.018*** -2.556***
(− 11.55) (− 8.80) (− 9.26)
LEV -4.732*** -7.734*** -7.753***
(− 4.49) (− 4.52) (− 3.47)
CAP_I -0.109*** -0.086*** -0.228**
(− 4.04) (− 2.74) (− 2.19)
LOSS -11.734*** -12.443*** -11.212***
(− 15.38) (− 13.15) (− 8.32)
TANG -2.346*** -0.468 1.040
(− 3.08) (− 0.39) (0.68)
Constant 37.396*** 46.949*** 59.489***
(13.74) (10.28) (10.73)
Observations 984 669 565
Fixed Effects Year, Industry, Country Year, Industry, Country Year, Industry, Country
Adj R2 0.491 0.524 0.410
F-stat 42.19 29.24 15.02
Note: This table shows the results for the competition effect measured by the Herfindahl-Hirschman index (HHI). It presents different levels of
competition (such as high, moderate, and low) with an association of social and environmental performance.
*
Significance at 10%
**
Significance at 5%
***
Significance at 1%
9
Table 6
Robustness analysis.
VARIABLES Tobin’s Q ROA ROA
High Moderate Low High Moderate Low
(8) (9) (10) (11) (12) (13) (14) (15) (16)

SOC 0.012*** 0.010*** 0.009** 0.026** 0.016* 0.039**
(2.69) (3.12) (2.10) (2.55) (1.91) (2.03)
ENV 0.003 -0.002 0.000 -0.002 0.037*** 0.004
(1.36) (− 0.74) (0.08) (− 0.20) (2.67) (0.23)
SOC×High 0.020*
(1.88)
ENV×High -0.014
(− 1.30)
SOC×Moderate 0.020*
(1.90)
ENV×Moderate 0.030**
(2.29)
SOC×Low 0.024*
(1.79)
ENV×Low -0.019
(− 1.35)
Country level control:
Recession -2.738** -4.291*** -0.460**
(− 2.34) (− 3.03) (− 2.20)
TAX -0.002** -0.041*** -0.064***
(− 2.47) (− 4.30) (− 2.75)
GDP -0.059 0.405* 0.624***
(− 0.20) (1.77) (2.64)
Constant 7.652*** 10.341*** 13.348*** 43.292*** 42.554*** 42.156*** 40.491*** 40.524*** 55.652***
(12.01) (10.02) (10.79) (17.77) (17.87) (17.62) (10.46) (9.41) (9.20)
Observations 1008 684 566 2218 2218 2218 899 608 516
Firm level control Yes Yes Yes Yes Yes Yes Yes Yes Yes
Fixed Effects Yes Yes Yes Yes Yes Yes Yes Yes Yes
Adj R2 0.307 0.446 0.342 0.454 0.455 0.454 0.477 0.554 0.417
F-stat 20.41 22.14 11.51 66.81 67.07 66.75 33.82 27.88 13.28
Note: This table reports the results for robustness analysis. First three regressions show results with TobinsQ as dependent variable. Second, three
regressions show results with HHI interactions. Last, three regressions present findings with country level control variables.
*
Significance at 10%
**
Significance at 5%
***
Significance at 1%
reduced with a reduction in the competition level. These findings are consistent with our main results.
Last, we also add country-level controls to check the consistency of our results. We consider the key economic factors (e.g., the
economic recession of 2007–2008, tax rates, and gross domestic production) that may positively or negatively influence a firm’s
financial performance (Anon, 2015). In the last three models, we add country-level controls to our main regressions. Our results are
robust after controlling for these country-level factors.
4.7. Endogeneity
Prior literature shows that a firm’s CSR efforts and financial performance may be endogenous (Gangi et al., 2020). Specifically, in
the presence of continuous endogenous variables, we apply a system GMM with instruments for further regression to resolve the
endogeneity problem under the pressure of a lagged dependent variable (ROA). Table 7 presents results of the regression of the system
GMM model. Further, we used two relevant variables to measure their effect on ROA (social performance and environmental per
formance in a current year within a country). Our main regression results show that social performance has a positive effect on ROA,
while environmental performance has a weak effect on ROA. The literature supports this, as it suggests that social performance affects
firm performance because firms are more socially oriented toward people, promoting public relations, and enhancing their image and
reputation. On the other hand, environmental performance has been shown not to be a consideration for firms when they are making
choices about their sustainable development (Ferri and Pini, 2019).
To extend our analysis, we employ a system GMM model separately with a high, moderate, and low level of competition. Column 2
of Table 7 presents the high competition case. The results show that social performance has a highly positive effect on firm perfor
mance during high competition because firms are more committed to socially oriented practices and philanthropic activities to not
only compete in the market but improve their reputation. Meanwhile, environmental performance shows a positive but not significant
effect on firm performance for emerging Asian markets because the extent of environmental disclosure adoption depends on man
agement’s opinion; for example, whether they are more committed toward environmental development but are not focusing on
environmental performance (Alipour et al., 2019). Columns 2 and 3 present the results for moderate and low competition. They show
that social performance has a positive effect on firm performance during moderate and low competition. This is not as significant as
10
Table 7
Endogeneity.
VARIABLES Main High Moderate Low
(17) (18) (19) (20)

LAG_ROA 0.458*** 0.479*** 0.248*** 0.670***
(11.96) (12.96) (11.17) (37.87)
SOC 0.018* 0.035*** 0.024* 0.038***
(1.74) (2.87) (1.87) (3.84)
ENV -0.015 -0.021** -0.006 0.001
(− 1.36) (− 1.77) (− 0.57) (0.19)
SIZE_W 0.216 -0.226 -1.176*** -0.363
(0.78) (− 0.81) (− 3.03) (− 1.53)
LEV_W -12.923*** 0.468 -20.181*** -7.070***
(− 6.57) (0.23) (− 5.78) (− 5.57)
CAP_W -0.337*** -0.061 -0.291*** -0.142**
(− 4.34) (− 0.98) (− 8.48) (− 2.12)
Loss -8.735*** -10.915*** -12.230*** -6.561***
(− 10.03) (− 7.85) (− 8.35) (− 23.49)
TANG_W -0.763 0.242 2.516 -5.725***
(− 0.34) (0.09) (0.76) (− 5.45)
Constant 4.042 0.000 27.547*** 0.000
(0.15) (.) (3.91) (.)
Observations 1749 817 535 397
Number of NID 389 222 197 121
Chi2 p-value 0 0 0 0
AR1 p-value 0.001 0.032 0.039 0.032
AR2 p-value 0.618 0.393 0.120 0.612
Sargan p-value 0.299 0.132 0.682 0. 178
Hansen p-value 0.756 0.402 0.841 0.450
Difference-in-Hansen p-value 0.701 0.436 0.805 0.402
Note: This table reports the results for endogeneity with standard errors in parentheses. This instrumental relevance confirms the results by using
system GMM (n = generalized method of moments). Sargan test for the over-identification restriction on GMM, no significance means to not reject the
hypothesis of endogeneity of the instrumental variables.
*
Significance at 10%
**
Significance at 5%
***
Significance at 1%
under high competition because firms tend to perform more social activities to compete in the market. Environmental performance has
no effect on firm performance over the period.
Serial correlation tests (AR1 and AR2) support the GMM findings. (AR1) is a lag variable for ROA for a year-to-year effect, which
indicates the significance of the result by accepting the null hypothesis. Meanwhile, (AR2) is the second lag variable effect for ROA.
The null hypothesis of second-order (AR2) serial correlation must not be accepted but rather rejected, and it represents the lack of
significance for the required effect. The estimation results were further analyzed using the instrument validity test: using the Sargan P-
value to indicate the validity of the instruments (Ferri and Pini, 2019). Sargan’s P-value test illustrates results for the dependent
variable (ROA), where the rejection of the null hypothesis indicates that it affects the independent variables (SOC and ENV) but does
not directly affect the ROA, which means the instruments are valid for this model. Collectively, this table shows that our findings are
robust and not caused by potential endogeneity.
4.8. CSR characteristics
Table 8 shows the firm characteristics that affect the relationship. We created indicator variables for the measurement of firm
performance,10 focusing particularly on CSR-intensive firms, CSR-nonintensive firms, and firms with or without CSR committees
(Hawn and Ioannou, 2016). Column 1 presents the results for CSR-intensive firms. It shows that social performance has a positive
impact on firm performance with a coefficient significance of 2.8% (t-value = 2.09), which means companies are philanthropy oriented
and focus on their social performance to improve their market value. CSR has increased the need to conduct business in different ways,
to improve social and environmental performance in terms of actions and strategies for business activities (Kraus et al., 2020).
Therefore, CSR-intensive firms are well-organized and people-oriented to satisfy their customers, employees, and investors, and this
focus helps them to improve their firm value (Schaefer et al., 2020).
Second, we undertook an equivalent analysis for CSR-nonintensive firms. Column 2 reveals the results for the indicator created
10
We further employ CSR characteristics as an indicator to measure the impact of CSR dimensions on firm performance. The literature supports the
results: CSR implications and societal benefits can help to maintain their long-term stability and sustainable development.
11
Table 8
CSR characteristics.
VARIABLES Intensive Non-intensive Committee= 1 Committee= 0
(21) (22) (23) (24)

SOC 0.028** 0.000 0.062*** 0.009
(2.09) (0.01) (4.11) (1.00)
ENV 0.013 -0.007 -0.001 0.016 *
(1.10) (− 0.73) (− 0.04) (1.83)
SIZE -1.791*** -2.010*** -1.947*** -1.978***
(− 11.71) (− 13.38) (− 9.12) (− 15.45)
LEV -12.998*** -2.101** -5.083*** -6.791***
(− 9.21) (− 2.01) (− 3.45) (− 6.30)
CAP_I -0.047 -0.120*** -0.139 * ** -0.050*
(− 1.14) (− 5.27) (− 4.15) (− 1.82)
LOSS -11.278*** -11.939*** -12.437*** -11.428***
(− 11.63) (− 18.34) (− 10.79) (− 17.72)
TANG -0.594 -1.723** -4.469*** -0.233
(− 0.62) (− 2.23) (− 3.60) (− 0.32)
Constant 47.324*** 47.716*** 51.315*** 47.338***
(13.93) (13.79) (11.29) (15.77)
Observations 1181 1037 569 1649
Adj R2 0.479 0.492 0.531 0.447
F-stat 39.76 36.81 24.80 48.55
Note: This table reports the results with alternate proxies of CG characteristics (CSR intensive and non-intensive, and CSR committee) to measure the
relationship effect.
*
Significance at 10%
**
Significance at 5%
***
Significance at 1%
(Hawn and Ioannou, 2016), showing that the social dimension has no impact on firm performance. This means that corporations do not
contribute toward sustainable development, which is a major concern of investors, creditors, governments, and environmental
agencies (Atan et al., 2018). It also shows no impact for the environmental dimension, which means that CSR-nonintensive firms are
not able to sustain their value in the market over the long run. Because CSR allows companies to revamp their policies and practices,
the better a company performs in terms of social and environmental engagement, the better it may maintain feelings of pride in its
Table 9
Additional analysis.
VARIABLES Natural Rest IOWN= 1 IOWN= 0 SOWN= 1 SOWN= 0
(25) (26) (27) (28) (29) (30)

SOC 0.044 0.023*** 0.002 0.034*** 0.070*** 0.016*
(0.80) (2.96) (0.12) (3.86) (4.90) (1.76)
ENV -0.047 0.010 0.029* -0.001 -0.013 0.020**
(− 0.61) (1.35) (1.84) (− 0.14) (− 0.96) (2.13)
SIZE -1.746* -1.793*** -2.019*** -1.640*** -1.778*** -1.970***
(− 1.84) (− 16.56) (− 10.00) (− 12.89) (− 9.46) (− 14.69)
LEV 29.632*** -7.012*** -3.828** -8.116*** -0.746 -8.987***
(3.50) (− 7.99) (− 2.58) (− 7.74) (− 0.52) (− 8.46)
CAP_I -0.546** -0.097*** -0.115* -0.105*** -0.001 -0.154***
(− 2.09) (− 4.63) (− 1.81) (− 4.68) (− 0.02) (− 6.36)
LOSS -6.701* -12.042*** -10.822*** -11.948*** -8.881*** -12.746***
(− 1.77) (− 21.11) (− 9.46) (− 18.64) (− 8.16) (− 19.54)
TANG -22.797*** -0.711 -4.254*** -0.070 -2.062* -0.878
(− 3.64) (− 1.13) (− 3.19) (− 0.10) (− 1.67) (− 1.22)
Constant 42.870** 45.374*** 48.957*** 42.357*** 39.748*** 49.640***
(2.62) (18.50) (11.28) (14.28) (8.82) (16.73)
Observations 43 2175 573 1636 513 1696
Fixed Effects Year, Industry, Year, Industry, Year, Industry, Year, Industry, Year, Industry, Year, Industry,
Country Country Country Country Country Country
Adj R2 0.778 0.463 0.504 0.476 0.423 0.490
F-stat 10.18 67.88 21.80 36.81 14.39 59.17
Note: This table presents the results of additional control variables used to measure the relationship between ROA and CSR dimensions. It reports the
effect of natural & rest industry, institutional, and state ownership on dependent and independent variables. The list of variables, definitions, and data
sources is provided in Appendix A.
*
Significance at 10%
**
Significance at 5%
***
Significance at 1%
12
employees and customers (Syentia et al., 2019). People prefer firms that are value-creating and have higher levels of emotional and
intellectual contributions to the efforts and prospects of their businesses (Schaefer et al., 2020). Hence, CSR-intensive firms see better
performance than CSR-nonintensive firms in emerging Asian markets.
Columns 3 and 4 show the results for the presence and absence of committees in firms. The findings reveal that social performance
has a highly significant impact on firms that have a CSR committee. This means that these firms have policies and procedures to enforce
a code of conduct and other relevant standards to improve their firm performance. On the other hand, the results illustrate no impact
on the relationship when a committee is present, even if the firms are socially responsible, because committees offer benefits to firms
(such as task division efficiency, knowledge efficiency, and accountability). In addition, environmental performance reflects no sig
nificance for firms when a committee is present, and has a weak significance (at the 10% level) for the firms that do not have com
mittees. Hence, the results suggest that emerging Asian firms are not committed to their environmental performance and pay more
attention to social performance (Chen and Wu, 2016).
4.9. Additional analysis
Table 9 presents additional analysis to test the hypothesis for the dependent (firm performance) and independent (social and
environment) variables. This table has two industry characteristics (i.e., for the natural-resources industry and other industries) and
two corporate governance characteristics (i.e., institutional ownership and state ownership). These characteristics are operationalized
as a dummy variable that takes the value 1 in the presence of the attribute and 0 otherwise.
Columns 1 and 2 show the results for the natural industry and the rest of the industry. The results suggest that natural industries
have no significant impact on social and environmental performance because they are not “friendly” in terms of society or the
environment. Many practitioners and scholars agree that natural industries under the manufacturing umbrella can cause air pollution,
climate change, and air emissions, and thus, stakeholders exercise heavy pressure on organizations in these industries to minimize such
production activities (Kraus et al., 2020). Meanwhile, firms that are not natural show a significant impact on social and environmental
dimensions because researchers have switched their attention more toward green human resource management practices and supply
chain competition (Kraus et al., 2020). Companies with higher natural resource depletion indicators usually have lower market value,
thus leading to a significant negative impact on the company’s share price (Atan et al., 2018).
Columns 3 and 4 reveal the results for institutional ownership. The findings show a strong positive influence on the social
dimension (at 1% significance) for firms that do not have institutional ownership. On the other hand, there is no impact for firms that
enforce institutional ownership because institutional ownership helps corporations to sustain their business by adopting professional
practices and behaviors that are compatible with sustainable development (García-Sánchez et al., 2020). The results also show that the
environmental dimension has a significant but weak impact on firms that have institutional ownership, and no significance for firms
with a non-institutional-ownership concentration. These findings reveal that firms are not particularly concerned about innovating
when they are self-sustained; however, institutional ownership influences a firm’s strategies and decisions regarding innovation and
sustainability (García-Sánchez et al., 2020).
Columns 5 and 6 present firms’ state-ownership concentration. State ownership is operationalized as a dummy variable that takes a
value of 1 in the presence of the attribute and 0 otherwise. Table 9 suggests that state ownership strengthens the relationship between
social performance and financial performance, while a significant but weak impact exists for non-state ownership. This may be because
governments implement policies for these firms to operate and enhance social stability when they have a stake in them (Khan et al.,
2019a, 2019b). They maintain a good relationship with employees and stakeholders by providing job security, training and devel
opment, and financial support (Khan et al., 2019a, 2019b; Long et al., 2020). On the other hand, non-state ownership weakens the
relationship between environmental performance and firm performance, and has a moderate significance in the presence of state
ownership, because the state takes the initiative to enhance green innovation within firms and the industry by reducing the con
sumption of dangerous materials, energy usage, and air emissions. These results suggest that state ownership is important for firms to
improve their sustainable development by supporting social and environmental activities (Khan et al., 2019a, 2019b; Kraus et al.,
2020).
5. Conclusion
This study examined the impact of social and environmental responsibility on firm performance – an association that was shown to
vary with changes in competition level. The present study complements two main strands of prior research by investigating key di
mensions (i.e., social and environmental aspects) of CSR. First, how do social and environmental performance improve firm perfor
mance? Second, how are these relationships reshaped at different levels of competition?
To answer the above questions, we used a sample of 2218 year-industry observations for eight emerging Asian markets over the
period 2007–2017. We used an OLS regression to measure the relationship’s effect, and ROA was the main proxy for firm performance.
Consistent with the investigation of CSR dimensions, we found that the social dimension is more effective at increasing firm perfor
mance in this region. We employed HHI as a proxy for industry competition levels. From our subsample analysis, the results show that
social performance during a high level of competition is more significant during scenarios with moderate and low levels of compe
tition. As a result, firms maintain their competitive advantages by satisfying customers and society at large, and thus have more diverse
choices and move toward innovative and sustainable development. These results are mainly driven by social performance attributes
(such as CSR-related actions, community and diversity, employee relations, customer preferences, and society at large).
Further, to mitigate endogeneity concerns, we employed GMM, and our results remained consistent. We applied CSR
13
characteristics, with results only supporting social performance for CSR-intensive firms in situations where CSR committees exist.
Moreover, the additional analysis contributes to our results by considering industry characteristics for the rest of the industry. The
findings also refer to social performance for firms where institutional ownership does not exist, though state ownership also supports
social performance. Thus, the overall results illustrate that improved social performance has a positive impact on firm performance as
people and society are served first in the emerging Asian economies.
This study has several implications for managers and policy makers. It suggests that firms should adopt socially responsible be
haviors as these come with improved profitability. Firms that are more interested in investing in social activities are stronger and more
stable in competitive markets. This study shows that socially responsible firms can generate greater economic benefits since stake
holders support firms that search for opportunities to make their strategies more comprehensive via their actions. Policy makers in
emerging Asian markets could regularize such CSR practices that focus on employees’ benefits, community relations, diversity, human
rights, and so forth. These policies will help organizations to improve their profits in highly concentrated markets within the region.
Besides the abovementioned implications, this study has some limitations that could serve as the basis for future research in this
area. First, we considered the social and environmental dimensions of CSR and their impact on firm performance in emerging Asian
markets. However, future research could focus on European or other developing countries. Second, the current research was conducted
with the social and environmental dimensions of CSR. Future studies may consider other aspects of CSR performance (such as CSR
communication, environmental management initiatives, green motives, carbon footprints, and societal preferences; Hawn and
Ioannou, 2016; Saeed et al., 2022). Last, this study explored the association between CSR dimensions and firm performance at different
levels of market competition. In the future, researchers may study these relationships by taking into account product market
competition.
Data availability
No data was used for the research described in the article.
Appendix A. Variable definition and measurement
Definition Label Measurement Description
Dependent variable
Firm performance ROA Net profit scaled by total assets
Independent variable.
Social dimension SOC Asset4-ESG social rating scores in the current year (rating 0–100).
Environmental ENV Asset4-ESG environmental rating scores in the current year (rating 0–100).
dimensions
Control variables
Firm size SIZE Natural.logarithm of total assets of the firm.
Financial Leverage LEV Measured by the ratio of total debt over total assets for the current period.
Capital intensity CAP_I The ratio of total assets by total revenue of the firm.
LOSS dummy LOSS Loss dummy refers to 1 if a firm has negative earnings in the last two consecutive years and 0 for the absence of the attribute.
Tangibility TANG Defined as the ratio of all tangible assets by total assets of the firm.
Other variables
Industry competition HHI The calculation is made by following Herfindahl-Hirschman Index (HHI = s21 + s22 + … + s2n ). Where s is the market share
percentage of each firm as a whole number.
This table is presenting a quick summary of all the dependent variables, independent variables, control variables, and other variables, included in the
study along with sources and definitions.
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Research in International Business and Finance 64 (2023) 101864

Contents lists available at ScienceDirect

Research in International Business and Finance

Corporate social responsibility, industry concentration, and firm

2. Literature review and hypothesis development

2.1. Nexus of CSR and firm performance

2.2. Asian markets

2.3. Social and environmental dimensions of CSR

2.3.1. Social dimension of CSR

2.3.2. Environmental dimension of CSR

2.4.1. Social and environmental dimensions and firm performance

2.4.2. The role of competition

3. Data and methodology

3.1. Sample selection

3.2. Asset4-ESG ratings

3.3. Model and measurement

The econometric model of the study is as follows:

3.3.1. Firm performance (dependent variable)

3.3.2. Social and environmental performance (independent variable)

3.3.3. Industry competition by HHI

3.3.4. Control variables

4.1. Sample distribution

4.2. Descriptive statistics

4.3. Correlation matrix

Panel A: Year-wise descriptive

ROA 6.83 7.29 -39.06 2.03 5.03 9.54 35.86

4.4. Regression analysis

(1) (2) (3) (4)

4.5. Competition level

4.6. Robustness analysis

(5) (6) (7)

(8) (9) (10) (11) (12) (13) (14) (15) (16)

(17) (18) (19) (20)

4.8. CSR characteristics

(21) (22) (23) (24)

(25) (26) (27) (28) (29) (30)

4.9. Additional analysis

No data was used for the research described in the article.

Appendix A. Variable definition and measurement

Definition Label Measurement Description

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