The Role of Firm Strategy to Intervene the Influence of Corporate Social Performance on Corporate Financial Performance

Abstract

Objective – A Corporate Social Responsibility (CSR) implementation has been implemented since over 50 years ago. All of the CSR implementation divided into two categories, namely Strategic CSR and Non-Strategic CSR. A Strategic CSR implementation should consider the firm strategy based on the CSR concept and firm strategy. Some empirical studies have tested the influence of CSR on Corporate Financial Performance. The results of those studies are still inconclusive.

Methodology/Technique – The purpose of this study is to analyze firm strategy as intervening variable between Corporate Social Performance and Corporate Financial Performance. This study used capital intensity and product differentiation to measure the firm strategy. The samples were 33 companies of LQ-45, listed in Indonesian Stock Exchange.

Findings – The results did not indicate that firm strategy intervenes the influence of Corporate Social Performance on Corporate Financial Performance, both directly and indirectly.

Novelty – The research suggests future studies to employ the other ratios representing Firm Strategy that will strengthen the literature.