Doing well by doing good: unpacking the black box of corporate social responsibility

Businesses worldwide have increasingly embraced the corporate social responsibility (CSR) concept in their operations, and hence the popular saying 'doing well by doing good'. Previous literature has not yet reached a consensus on the nature of the relationship between CSR and corporate financial performance (CFP). To contribute to the resolution of the issue, this article examines the relationship through evidence from China's renewable energy enterprises. To evaluate the effect of CSR on CFP, this study takes CSR as a construct that consists of corporate responsibilities for (i) shareholders, (ii) employees, (iii) customers, suppliers, and consumers, (iv) the natural environment, and (v) social contributions. Based on data of the listed firms in China's renewable energy from 2010 to 2016, this study shows that overall CSR can enhance CFP. For China's renewable energy industry, shareholder and environmental dimensions of CSR positively affect CFP, while the responsibility for non-shareholder stakeholders, particularly for customers, suppliers and consumers, demonstrates a negative effect. No significant effect is identified between the responsibility for social contributions and CFP, and neither is between employee responsibility and CFP.