When Does <scp>CSR</scp> Pay Off? The Role Media Coverage and Internal Controls Play in Turning <scp>CSR</scp> Into Sustainable Performance

ABSTRACT While the majority of extant studies often view corporate social responsibility (CSR) as a singular concept and examine its impact on firm performance, the distinct effects of internal and external CSR on firms' sustainable performance (SP)—environmental performance (EP) and financial performance (FP) remain underexplored in business strategy and sustainability literature. To address these gaps, this study adopts stakeholder theory to examine the impact of internal and external CSR on firms' EP and FP, as well as the moderating roles of media coverage and internal control quality (ICQ). Using a dataset of 602 Chinese‐listed firms from 2012 to 2020, our analysis indicates that both internal and external CSR strategies positively influence EP and FP. Furthermore, media coverage and ICQ enhance these effects, highlighting their critical role in maximizing the strategic impact of CSR on SP outcomes. These findings remain robust across various alternative measures and endogeneity tests, including propensity score matching analysis, Heckman two‐stage model, and a two‐year lagged analysis. Overall, this study contributes to the business strategy and sustainability literature by offering insights into how different CSR strategies and governance mechanisms affect SP. The findings suggest that policymakers should design regulatory frameworks and incentive schemes that encourage balanced investments in internal and external CSR, strengthen monitoring mechanisms such as media transparency and internal control systems, and promote multi‐stakeholder collaboration to enhance firms' SP outcomes.