From responsibility to profitability: the ethical chain reaction of CSR on corporate finances via customer advocacy and corporate reputation

Purpose This study aims to explore the nexus between corporate social responsibility (CSR) and corporate financial performance (CFP) through the mediating roles of customer advocacy (CAD) and corporate reputation (CRP). Further, this paper also investigates the moderating role of corporate social responsibility information quality (CIQ) between the relationship of CSR and CFP. Design/methodology/approach Data collection for this study was done using a Structured Questionnaire from 237 employees of fast-moving consumer goods (FMCG) companies, with a Stratified Sampling technique based on three hierarchical groups: top-level management, middle-level management and lower-level management. Moreover, the two-step structural equation modeling approach was used, which involved the measurement model followed by the structural model as a method to check for the reliability and validity of the instrument, as well as the strength and significance of relationships between underlying variables. Findings The results of this study show that CSR has a positive and significant effect on CFP, CAD and CRP. Moreover, the findings of this study validate the mediating influences of CAD and CRP in the association between CSR and CFP. Additionally, this study establishes a positive and significant moderating role of CIQ on the CSR–CFP link. Originality/value This research fills an existing gap in the literature, as the mediating CAD and CRP and the moderating function of the CIQ in the CSR–CFP link has been unexplored in the context of the FMCG sector of Pakistan. This study is also a reminder that engaging with stakeholders on CSR issues and communicating clearly with them on these issues can enhance financial performance. The results have significant theoretical and managerial implications for improving firms’ CSR practices to achieve improved financial performance.