How does corporate internationalization affect the link between social responsibility and financial performance? Evidence from China

Using evidence from 667 Chinese enterprises over the period 2013 to 2018, this study examines whether corporate internationalization improves the impact of corporate social responsibility (CSR) on corporate financial performance (CFP). Specifically, we define CSR along the dimensions of shareholder, employee, supply chain, environment and society. The change in the relationship between CSR and CFP in the context of internationalization was studied systematically using regression analysis. The study’s results indicate that corporate internationalization exercises a significant and negative moderating effect on the relationship between shareholder-oriented CSR and CFP across the whole sample. In addition, corporate internationalization significantly moderates the relationship between different dimensions of CSR and CFP when the sample is further divided into labor-intensive, capital-intensive and technology-intensive enterprises; and that such moderating impacts vary across the three subsets of enterprises. The findings can suggest to managers in different industries which dimensions of CSR activities are likely to improve CFP in the context of corporate internationalization.