Effect of corporate social responsibility on nonfinancial organizational performance: evidence from Yemeni for-profit public and private enterprises

Abstract

Purpose This paper aims to explore the relationship between corporate social responsibility (CSR) and nonfinancial organizational performance (NFOP) of for-profit public and private enterprises in Yemen. It also aims to find whether there is a significant difference of the level of adopting CSR as a periodic activity between business-related public enterprises known as state-owned enterprises (SOEs) and private enterprises. Design/methodology/approach Empirical analyses were conducted on a sample comprising 103 for-profit public and private enterprises. Relationship between CSR and NFOP was examined using multiple regression analyses whereas t-test analysis was used to find any significant difference in adopting CSR activities between SOEs and private enterprises operating in Yemen. Findings The four components of CSR (i.e. economic, legal, ethical and philanthropic) have positive significant relationships with NFOP when measured separately in private enterprises and in both SOEs and private enterprises as a whole entity. Conversely, there was insignificant influence of CSR on NFOP when examined separately in only SOEs. Furthermore, there was no statistically significant difference between SOEs and private enterprises concerning the level of adopting periodically CSR activities. Research limitations/implications Having potential personal preferences among respondents was among the major limitations of this study. Moreover, using nonfinancial measures for assessing NFOP forms another key limitation. Practical implications Having potential personal preferences among respondents was among the major limitations of this study. Moreover, using nonfinancial measures for assessing NFOP forms another key limitation. Originality/value This is one of the first papers discussing the influence of CSR on NFOP which has been given less remarkable attention in the literature compared to financial organizational performance. Moreover, the paper investigates CSR effects on NFOP in Yemen which belongs to the Third World countries.