Corporate social responsibility and firm financial performance: a case of sme's sector in Vietnam

Abstract

The topic of Corporate Social Responsibility (CSR) has acquired significant traction among academics and practitioners in recent years, resulting in a rise in its prominence. The Vietnamese market has a heightened awareness of corporate social responsibility, recognizing the significance of balancing economic development, social progress, and environmental sustainability. Consequently, this research aims to investigate the connection between CSR and the financial performance of SMEs in Vietnam. From 2017 to 2022, the survey examines a sample of 250 SMEs in Vietnam. "the two-step System Generalized Method of Moments (GMM) estimator" is used to analyze the data. CSR and its dimensions are used as predictors, whereas financial performance is used as an outcome. The analysis investigates the impact of CSR and its dimensions on financial performance, using stakeholder theory as the theoretical framework. This study provides strong evidence of a positive relationship between corporate social responsibility and financial performance. The findings indicate that CSR as a whole, as well as its specific facets, have a positive impact on financial performance. These results are consistent with the tenets of stakeholder theory, according to which firms that actively engage in CSR initiatives and resolve stakeholder concerns are more likely to achieve improved financial outcomes. The findings emphasize the importance of incorporating CSR into business strategies and the potential advantages of responsible and sustainable business practices.