Corporate Social Responsibility Engagement, Economic Policy Uncertainty, and Firm Financial Performance
The link between corporate social responsibility (CSR) engagement and firmfinancial performance has been examined in a variety of contexts. We extend thislink to an understudied but important context for strategic decisions: environmentaluncertainty. We draw on stakeholder theory to investigate the potential moderatinginfluence of an increasingly important measure of environmental uncertainty –economic policy uncertainty (EPU), on the CSR-performance relationship. Paneldata analysis of 484 firms using KLD data and the Compustat/Capital IQ databasereveal that EPU appears to moderate the relationship between CSR and financialperformance. Moreover, supplemental analysis reveals that this moderatedrelationship varies when considering individual components of CSR. Implicationsfor both research and practice are suggested regarding managers’ emphases amongvarious CSR initiatives in times of high policy uncertainty.