A Proposed Model of the Relationship Between Corporate Social Responsibility and Firm Performance

The aim of this paper is to propose a model of the relationship between Corporate Social Responsibility (CSR) and firm performance through reviewing the related literature. One of the more significant findings to emerge from this review is that most studies in CSR have been carried out in developed countries and there is a paucity of such studies in developing countries. The second obvious finding is that the experimental findings are quite controversial, and there is no universal agreement about the actual impact of CSR on firm performance. This is because while the positive relationship between CSR and firm performance has been obtained in many studies, some studies have still found a negative or neuter relationship. Review of the related literature on CSR and performance leads us to establish a third conclusion, which is that the majority of studies have focused only on the monetary aspects of firm performance in measuring overall performance, and non-monetary aspects have been disregarded. Taken together, the lack of study in developing countries, lack of a comprehensive approach to firm performance, and inconclusiveness among findings create enough ground for future empirical studies on CSR and firm performance. Accordingly, based on the suggested association of these factors, this paper proposes a model that links CSR to both financial and non-financial performance for future empirical research which will be carried out in Malaysia as a developing country.