Impact of Corporate Social Responsibility on Smes Performance: A Mediating Role of Innovation

Abstract

Corporate Social Responsibility (CSR) has increased substantially over the past decade, but existing research usually focus on a single dimension of CSR. This dissertation extends previous studies on CSR by measuring different dimensions of CSR in a single integrative construct. In addition, although the link between CSR and business value have been investigated, a significant research gap remains when considering the relationship between CSR and innovation. There is little work on whether and how CSR can support organizational innovation. To cover the above-mentioned gaps in the literature, this research focuses on the measurement of four main dimensions of CSR and, then, assesses its relationship with organizational innovation and firm performance in a single integrative model by using structural equation modelling on a data set of 135 Bahraini SMEs. Results showed that CRS is positively associated with organizational innovation and firm performance and that organizational innovation mediates the relationship between CSR on firm performance. These findings indicate that CSR is an important driver for firm performance mainly by enhancing organizational innovation.