The CSR Cascade: Exploring Customer-centric Mediators in the Pathway to Financial Performance

Abstract

This study aims to investigate the effect of Corporate Social Responsibility (CSR) on Corporate Financial Performance (CFP) in relation to Customer Satisfaction (CST), Customer Loyalty (CLT), Customer Advocacy (CAD) and Corporate Reputation (CRP) as mediators in the case of Fast-Moving Consumer Goods (FMCG) firms in Pakistan. This study collected data via a structured questionnaire from a sample of 237 workers of various levels of management from fast moving consumer goods (FMCG) companies. Data analysis was performed using a two-phase structural equation modeling (SEM) approach. Measurement model evaluation was performed to determine the reliability and validity of the measurement instrument by testing the robustness of the constructs. Once the measurement model had been validated, the structural model was tested to assess the strength and significance of the relationships among the underlying variables in the proposed research paradigm. This study finds that there is a direct impact of CSR on CFP which is statistically significant. Moreover, the results support that CST and CLT mediate the effect of CSR on CFP. Also, the findings indicate that CAD and CRP are the other key mediators that significantly mediate the CSR–CFP relationship in the context of Pakistani Fast-Moving Consumer Goods (FMCG) organizations. This study is novel, as it investigates whether CSR impacts corporate financial performance in turn through the sequential mediating roles of customer satisfaction, loyalty, advocacy, and corporate reputation. It establishes a complete customer-centric pathway often neglected in previous studies. The result provides critical insights on the CSR strategy to be formulated in emerging markets, especially in the context of FMCG sector in Pakistan.