Socially responsible engagement and firm performance in emerging markets: Testing the mediating effect of intellectual capital

Abstract

This study investigates the interaction between firm performance (FP) and corporate social responsibility (CSR) in emerging markets, with a focus on how intellectual capital (IC) mediates this interaction. The analysis covers 380 companies from 24 emerging countries between 2015 and 2021. The findings reveal that increased CSR results in lower FP. Furthermore, a significant association between IC and FP is observed. The study further determines that IC mediates the relation between the aggregate CSR and FP, as well as between some CSR sub-dimensions and FP. These results suggest that market reactions to CSRare not always positive and support the view that ICgives firms an advantage in FP to create added value. This research addresses a gap in the literature regarding the role of IC in the CSR–FP relationship in emerging markets.