Original scientific paper
https://doi.org/10.1080/1331677X.2020.1828130
How does CSR enhance the financial performance of SMEs? The mediating role of firm reputation
Dawit Bahta
Jiang Yun
Md Rashidul Islam
Kuyon Joseph Bikanyi
Abstract
This study investigates the link between corporate social responsibility (CSR) and the performance of small and medium enterprises
(SMEs) and the mediating role of firm reputation from a developing country perspective. Empirical research was carried out, and
data were gathered using a questionnaire from 402 owners/managers of SMEs in Eritrea, a country in East Africa. Smart-Partial
Least Squares structural equation modelling was employed. The
results showed that CSR significantly influences the performance
of SMEs, and this relationship is partially mediated by firm reputation. This research contributes to the knowledge of how CSR
activities lead to SMEs’ financial performance. This strengthens
prior evidence on the impact of CSR on business performance
while also contributing significantly to the literature on the mediating role of reputation between social and financial performance.
The application of the relationship to SMEs in developing nations
reinforces the originality of this study. It makes substantial contributions to the literature in terms of theory, practice, and policy.
Keywords
Corporate social responsibility; developing country; financial performance; firm reputation; small and medium enterprises (SMEs)
Hrčak ID:
301235
URI
Publication date:
31.12.2021.
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