CSRand Employee Performance
CSRand Employee Performance
CSRand Employee Performance
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RESEARCH ARTICLE
1
Department of Management Sciences,
COMSATS University Islamabad, Sahiwal Abstract
Campus, Sahiwal, Pakistan Past research proposes that corporate social responsibility (CSR) affects employees'
2
Department of Business Administration,
behaviors and attitude. However, the empirical evidence of this claim is limited par-
University of Sahiwal, Sahiwal, Pakistan
3
Department of Management Sciences, ticularly in the context of eastern developing economies like Pakistan. So, the study
COMSATS University Islamabad, Vehari in hand is an effort to extend the existing CSR literature by investigating the impact
Campus, Vehari, Pakistan
of CSR on employee performance using the lens of social identity theory. Addition-
Correspondence ally, the study also investigates the intervening role of employee engagement (EE) in
Muhammad Asrar-ul-Haq, Department of
Management Sciences, COMSATS University the above-mentioned association. To test the proposed model, data were collected
Islamabad, Sahiwal Campus, Pakistan. from employees of the manufacturing sector in two waves with an interval of
Email: [email protected]
4 weeks. The findings suggest that CSR has a significant impact on employees' per-
formance and engagement. Findings also confirm that EE partially mediates the asso-
ciation of CSR and employee performance. The study concludes with its theoretical
and practical implications and directions for future researchers.
KEYWORDS
Corp Soc Responsib Environ Manag. 2020;1–12. wileyonlinelibrary.com/journal/csr © 2020 ERP Environment and John Wiley & Sons Ltd. 1
2 ALI ET AL.
business goals. Organizations that fail to answer the queries of CSR literature also highlights that it is important to understand
employees about the meaning of tasks performed by them face diffi- the mechanism through which CSR leads to specific results (Rupp &
culties to retain an energetic and competent workforce (Bhattacharya, Mallory, 2015; Shin et al., 2016). EE plays a compelling role in
Sen, & Korschun, 2008; Farrukh et al., 2019). employees' performance and organizational output (Christian
Previous scholars have examined numerous outcomes of CSR for et al., 2011) as engaged employees know the objectives of organiza-
stakeholders. In the context of shareholders, studies documented the tions and perform their job outstandingly (Farrukh et al., 2019).
CSR association with the corporate image (Ali, Danish, & Asrar-ul- Employees consider their existence meaningful in a socially recog-
Haq, 2020), reputation (Branco & Rodrigues, 2006; Javed, Rashid, nized and responsible company, which motivates them to perform
Hussain, & Ali, 2020), and performance (Alafi & Hasoneh, 2012; extra tasks to achieve organizational goals (Aguinis & Glavas, 2019).
Galbreath & Shum, 2012; Margolis, Elfenbein, & Walsh, 2009). From CSR initiative is a significant predictor of EE (Rupp et al., 2018) as
the customer perspective, studies examined the association between employees are keen to be part of that organization which has a posi-
CSR and customer satisfaction (Lee & Heo, 2009; Saeidi, Sofian, tive impact on society. Furthermore, EE is a strategic resource
Saeidi, Saeidi, & Saaeidi, 2015; Xie, Jia, Meng, & Li, 2017) and cus- (Shuck & Reio, 2011) and a source of employee performance
tomer loyalty (Tingchi Liu, Anthony Wong, Rongwei, & Tseng, 2014). (Macey & Schneider, 2008) because EE is defined as a positive mental
Past studies have also reported evidence about CSR and employee state, which motivates employees to engage themselves emotionally
association through various behavior factors, that is, job satisfaction and cognitively with their job (Arslan & Roudaki, 2019). Moreover,
(Asrar-ul-Haq, Kuchinke, & Iqbal, 2017), organizational identification engaged employees realize the importance of their job and work hard
(Cheema, Afsar, & Javed, 2020), turnover intentions (Kim, Song, & to achieve organizational targets (Ismail, Iqbal, & Nasr, 2019), which
Lee, 2016; Lin & Liu, 2017), and organizational commitment (Mory, results in high performance. Therefore, we examine the intervening
Wirtz, & Göttel, 2016). role of EE between CSR-EP association, which has not been studied
Although many scholars have examined the association between previously.
CSR and certain employee-related outcomes, yet there is a need to The current study extends the literature in many ways. First, the
study it from employee performance perspective, particularly devel- present study examines the influence of CSR on employee individual
oping eastern countries like Pakistan. Past studies have ignored the performance especially in the context of the Eastern developing con-
possible effects of organizational CSR practices on employees' indi- text, that is, Pakistan (unique socioeconomic culture). Second, the
vidual performance (Aguinis & Glavas, 2012; Shin, Hur, & study introduces a unique mediator (EE) to understand the CSR-EP
Kang, 2016). Furthermore, the majority of organizations are not yet association. Finally, it helps to understand the utility of CSR to satisfy
familiar with the role of CSR to increase employee engagement employees and encourage them to play a significant role in the suc-
(EE) and individual performance (Story & Castanheira, 2019). So, it cess of their respective organizations.
requires researchers' attention to examine the association of CSR
with employee individual performance that plays a key role in all
types of business and which is necessary for organizational success 2 | CORPORATE SOCIAL RESPONSIBILITY
(Jones, 2010; Shin et al., 2016). Story and Castanheira (2019) stud-
ied the relationship between CSR and employee performance Organizations have increasingly acknowledged the CSR's strategic sig-
through the intervening role of job satisfaction. Story and nificance to improve the quality of their business decisions and prac-
Neves (2015) have reported intrinsic and extrinsic CSR as predictors tices across the world (Newman, Nielsen, & Miao, 2015; Porter &
of employee performance. However, previous studies were generally Kramer, 2006). CSR means that organizations opt those policies and
held in Western countries (having strong regulatory agencies and strategies, which pay off to key stakeholders, that is, customers and
efficient markets), and it is not appropriate to extend the outcomes employees. It also helps organizations to build positive repute in soci-
of these studies to developing countries like Pakistan (with relatively ety (Ali et al., 2020; Galbreath & Shum, 2012), decrease the negative
weak control of regulatory agencies and less efficient markets). effects of business activities on the environment and societies
Hence, it is logical to examine the association of CSR with (De Roeck & Delobbe, 2012; Newman et al., 2015). Although, scholars
employee performance in Pakistani organizations. have extensively examined CSR and made it widely studied topic
The current study also aims to examine the association of CSR around the world (Nejati & Ghasemi, 2012), yet consensus has not
with EE, which is a significant aspect of CSR practices (Davies & been developed on a single definition (Wood, 2010). It is difficult to
Crane, 2010; Farrukh et al., 2019). Furthermore, the role of engaged conceptualize CSR as a unified construct (Saeidi et al., 2015;
employees for employee performance and organizational success is Wood, 2010) as everyone has perceived CSR from a different per-
well established (Christian, Garza, & Slaughter, 2011; Rupp spective (Van Marrewijk, 2003). This leads to multiple definitions of
et al., 2018). Globally, limited numbers of employees (only 13%) are CSR (Talaei & Nejati, 2008). Bowen (1953) has defined it as “the obli-
engaged and just the United States is facing a financial loss of around gations of business to pursue those policies, to make those decisions
USD 500 billion yearly because of the low productivity of disengaged or to follow those lines of action which are desirable in terms of the
workers (Gao, Zhang, & Huo, 2018). Therefore, it is worthwhile to objective and values of our society.” Subsequently, Carroll (1979) has
hypothesize the association of CSR with EE. explained the range of organization's responsibility in his research and
ALI ET AL. 3
defined CSR as “the social responsibility of business encompasses the Stinglhamber, & Swaen, 2014). Therefore, in the light of SIT, it is pos-
economic, legal, ethical, and discretionary expectations that society tulated that being a member of a socially responsible and well-reputed
has of organizations at a given point in time.” According to Lee (2008), organization that has strong ethical and moral values that confirmed
Carroll's study is “one of the most widely cited research in the field of by their care and concerns for the welfare of all stakeholders,
business and society.” However, CSR's definition “a concept whereby enhances employees' self-pride and increases their affiliation with the
companies integrate social and environmental concerns in their busi- organization. As affiliations of employees with organization increases,
ness operations and their interaction with their stakeholders on a vol- they engage themselves with their job and perform extra duties to
untary basis” has been top-ranked by Dahlsrud (2008). improve organizational performance.
Literature has documented numerous internal and external SIT proposes that the company's CSR practices directly affect
rewards of CSR for organizations. For instance, CSR escalates employees' identification with organizations. Employees consider their
employee loyalty (Zhu, Yin, Liu, & Lai, 2014), motivation (Kim & work more worthwhile, purposeful, and valuable in socially responsi-
Scullion, 2013; Skudiene & Auruskeviciene, 2012), satisfaction ble organizations. Thus, organizational CSR activities build strong
(Barakat, Isabella, Boaventura, & Mazzon, 2016; Bauman & identification of employees with the organization (Chaudhary, 2018)
Skitka, 2012), commitment (Collier & Esteban, 2007), and turnover which positively influence their attitude, that is, EE (Chaudhary &
intentions (Kim et al., 2016). On the other hand, limited studies Akhouri, 2019; Hur, Moon, & Choi, 2019; Rupp et al., 2018) and lead
(Edwards & Kudret, 2017; Farrukh et al., 2019;Rupp et al., 2018; to high job performance. So, the present study used SIT to understand
Story & Castanheira, 2019) have been found on the association of the mechanism, how organizational CSR activities increase EE, and
CSR with employees performance and engagement, which is not lead to high performance which in turn increases organizational pros-
enough to elucidate theoretically and empirically (Rupp et al., 2018; perity, productivity, and performance (Dutton, Dukerich, &
Story & Castanheira, 2019), particularly in the context of developing Harquail, 1994).
countries.
4 | HY P O T H E S E S D EV E L O P M EN T
3 | THEORETICAL FOUNDATION
CSR practices have a strong association with beneficial employees'
This study is an effort to figure out the association of CSR with EE attitudes and behaviors (Albinger & Freeman, 2000; Shen &
and performance through social identity theory (SIT). Based on past Benson, 2016; Valentine & Fleischman, 2008). We infer from the lit-
studies of CSR and employee behavior (Chaudhary, 2018; Zhang, Di erature that this association is a function of SIT (Chaudhary, 2018;
Fan, & Zhu, 2014), scholars claim that CSR practices develop Story & Castanheira, 2019) and studies (Blader, Patil, &
employee behavior through organizational identification as an Packer, 2017; Riketta, 2005; Stinglhamber et al., 2015) also docu-
employee feel proud to be a part of such value-driven organizations. mented the strong positive association of employees affiliation with
SIT suggests that individuals see themselves as a member of a organizations and their behaviors. Korschun, Bhattacharya, and
social group (Abrams & Hogg, 1988; Tajfel & Turner, 1985). It also Swain (2014) reported that the strong affiliation of employees with
states that an individuals' self-evaluation and concept are affected by their organization encourages them to own it and demonstrate posi-
the membership of social organizations as well as the organization in tive behaviors for its success. Furthermore, CSR practices promote
which they do the job (Ashforth & Mael, 1989; Brammer, Millington, & employee affiliation with their organizations (Chaudhary, 2018;
Rayton, 2007). Furthermore, individuals try to create or increase their Korschun et al., 2014).
positive self-concept through comparison of their group attributes Limited studies (Ong, Mayer, Tost, & Wellman, 2018; Rupp,
with other groups and persons (Ashforth & Mael, 1989; Tajfel & Shao, Thornton, & Skarlicki, 2013; Story & Castanheira, 2019) have
Turner, 1985). This comparison boosts individuals' positive self-con- examined the CSR association with employee workplace behaviors.
cept. Therefore, SIT postulate that individuals tend to become a mem- The association between CSR and in-role employee performance of
ber of such organizations attributed with positive social standing and multinational organization has been analyzed in certain studies
reputation (Tajfel & Turner, 1985), as such affiliation boosts their self- (Edwards & Kudret, 2017; Story & Neves, 2015) and it is found that
esteem and concept (Abrams & Hogg, 1988; Tajfel & Turner, 1985). CSR is a strong predictor of employees' performance. However,
In order to be distinguished and honored, individuals try to iden- they reported that CSR initiatives escalate employee performance
tify themselves with a social group that possesses unique characteris- only when employees perceive those initiatives favorable and valu-
tics, values, and a positive reputation (Chaudhary, 2018). So, able for them. Newman et al. (2015) extended literature on CSR
individuals aim to identify themselves with a socially responsible and and employee behaviors by examining its impact on extra-role
well-reputed organization as members of such organizations may ful- behavior along with in-role behavior (employee performance). Fur-
fill their psychological needs of uniqueness (Turker, 2009) and keep thermore, Chaudhary (2018) stated that CSR has a strong impact on
them in a positive light (Turker, 2009). Furthermore, identification the performance of only those employees who consider it more
with socially reputed organizations make employees pride and build important. Story and Castanheira (2019) also examined the influence
their self-image as well (Chaudhary, 2018; De Roeck, Marique, of internal and external CSR on employee performance.
4 ALI ET AL.
Based on SIT assumptions (Tajfel & Turner, 1985), employees H2: CSR has a positive association with employee engagement.
build strong affiliation with organizations when they perceive its
activities according to their beliefs, desirability, and values. Organi-
zations use CSR practices for recognition in society and demon- 6 | M E D I A TI N G R O L E OF E E
strate certain values for the well-being of employees. So, employees
strongly identify value-driven, socially recognized, and responsible EE has become an interesting topic for researchers since 2006
organizations. This encourages them to perform better and do extra (Welch, 2011) Engagement means the connection and commitment of
work for organizational prosperity, success, and achievements. workers with their organization. Engaged, committed, and involved
Based on the above arguments, we hypothesize in the context of employees are the most useful asset for any organization to get a
Pakistan that: competitive advantage in the market (Anitha, 2014). A company's
strength is measured through EE (Baumruk, 2004) as an engaged
H1: CSR has a positive association with employee performance. employee knows his/her responsibilities and do extra work for organi-
zational success (Anitha, 2014). EE is defined as “the harnessing of
organizational members” selves to their work roles; in engagement,
5 | CSR AND EE people employ and express themselves physically, cognitively, and
emotionally during role performances (Kahn, 1990).
Existing CSR literature highlights different research trends. In early CSR literature highlights that employees consider their existence
studies of CSR, scholars reported CSR association with the financial meaningful in a socially recognized and responsible company, which
performance of a company (Abu Bakar & Ameer, 2011; Alafi & encourages them to work beyond their duties (Aguinis &
Hasoneh, 2012; Wang, Dou, & Jia, 2016). Subsequently, the focus Glavas, 2019). CSR plays a significant role to satisfy employees' desire
was shifted from financial to non-financial performance, that is, cus- for purposeful existence (Rupp et al., 2013) as they address their
tomer loyalty (Cuesta-Valiño, Rodríguez, & Núñez-Barriopedro, 2019; moral responsibility for others (Rupp et al., 2018). The organization's
Servera-Francés & Piqueras-Tomás, 2019), corporate reputation CSR initiatives attract skilled employees and increase their commit-
(Javed et al., 2020), and corporate image (Saeidi et al., 2015). How- ment (Jones, Willness, & Madey, 2014). CSR activities are positively
ever, limited studies are available on CSR association with employee correlated with EE (Caligiuri et al., 2013; Glavas, 2012; Rupp
behavior. et al., 2018) as employees happy to do work for organizations that
Recently, few studies examined the impact of CSR on EE and invest their resources for the welfare of society and employees
reported a significant association between them (Duthler & (Albinger & Freeman, 2000; Barrena-Martínez, López-Fernández, Már-
Dhanesh, 2018). Potdar, Guthrie, Gnoth, and Garry (2018) reported quez-Moreno, & Romero-Fernández, 2015). Alonso-Almeida and
that CSR activities boost EE. This positive association of CSR with EE Llach (2019) reported that a socially responsible organization is an
was validated by Caligiuri, Mencin, and Jiang (2013). Farrukh attractive and favorite workplace for millennials. Glavas (2016) docu-
et al. (2019) examined the association of CSR and EE with an explana- mented the positive impact of CSR on EE and validated the findings
tion of gender differences. They reported that CSR increases the of Claxton, Ferreira, and de Oliveira (2014). He also explained that
engagement of female employees as compared to their male counter- CSR activities increase employees' self-esteem and also strengthen
parts. Furthermore, internal CSR activities have a strong effect on EE employees' identification with the organization which leads to high
as compared to external CSR (Ferreira & Real de Oliveira, 2014). The engagement (Chaudhary, 2017). Employees of those organizations are
reason for this positive association is that organizational engagement happier, committed, satisfied, and do extra work that involves in the
in CSR activities boost employees' self-image and build their identifica- welfare of society while workers of less responsible organizations are
tion with organization. This strong identification positively influences less satisfied and engaged with their work (Jones, 2010; Zhou, Luo, &
their engagement (Chaudhary & Akhouri, 2019) as suggested by SIT Tang, 2018). Thus, the organization's CSR initiative is one of the key
(Tajfel & Turner, 1985) and they feel proud being part of the socially predictors of EE (Aguinis & Glavas, 2019) as employees are enthusias-
well-reputed organization (Turker, 2009). They also consider their exis- tic to be part of that organization which has a positive impact on
tence in organization meaningful and demonstrate strong identification society.
with the workplace (Glavas, 2012). CSR enables companies to work On the other hand, EE is a strong predictor of his/her perfor-
beyond their financial responsibility and prescribed value statements mance (Cesário & Chambel, 2017) which ultimately leads to organiza-
for the welfare of all stakeholders (Glavas, 2016). It motivates tional success (Anitha, 2014; Bedarkar & Pandita, 2014) because
employees to own their workplace and work hard for accomplishing engaged employees are more happy, committed toward work and
organizational goals (Rosso, Dekas, & Wrzesniewski, 2010). Similarly, have a strong affiliation with organization (Robertson-Smith &
when employees get aware of CSR initiatives of their organization and Markwick, 2009). EE is positively associated with his/her performance
its contribution to the welfare of society, they become happy and (Demerouti, Cropanzano, Bakker, & Leiter, 2010). Many studies have
agree to exert extra effort for organizational success (Grant, Dutton, & validated these results (Mone & London, 2018). Research also
Rosso, 2008). So, the common opinion in literature is that CSR has reported that job performance, productivity, and commitment of
strong association with EE. engaged employees are higher than unengaged (Anitha, 2014;
ALI ET AL. 5
Bakker & Leiter, 2010; Macey & Schneider, 2008). Many studies 83% response rate. After 4 weeks, only those 282 respondents were
(Anitha, 2014; Christian et al., 2011; Macey & Schneider, 2008) contacted who provided data at the first stage and 223 questionnaires
reported EE positively associated with employee performance, satis- were received back with a 79% response rate. Six responses containing
faction, and commitment because engaged employees know the sig- incomplete information were not included in the analysis. Thus,
nificance of their role for organization success and also have a good 217 responses were used for data analysis and testing hypotheses.
relationship with co-workers which motivate them to do extra work The demographic section of the questionnaire consisted of ques-
(Anitha, 2014; Macey & Schneider, 2008). Previous literature tions about experience, age, gender, and education level of respon-
suggested that EE has a significant association with CSR (exogenous dents. The results showed that more than 50% of respondents were
variable) and employee performance (endogenous variable). Thus, working in the same company for a minimum of 6 years which shows
conditions of Baron and Kenny (1986) have been satisfied to establish that respondents were having enough information about CSR prac-
mediation (Figure 1). Therefore, we hypothesized that: tices of the company. The detail of demographic information is given
in Table 1.
H3: Employee engagement mediates CSR-EP association.
6.2 | Measures
6.1 | Sample The variables of the present study were measured through validated
and verified scales which are widely used in literature. All measure-
The sample of the present study consisted of employees working in ment scales were in English as it is the corresponding language (the
the manufacturing companies of Pakistan. The employees were asked language of communication) in Pakistani companies, that is, for infor-
to fill the survey containing questions regarding CSR practices of their mation (financial and non-financial) disclosure (Javed et al., 2020). All
organization, their engagement, and performance. Employees of only respondents were graduated from university where the mode of
those companies were included in the sample that was practicing teaching is English. So, it was easy for respondents to understand the
CSR. We also confirmed it from companies' websites and annual survey, designed in the English language. Furthermore, respondents
reports. Researchers personally visited the manufacturing companies were asked to give a response on the 5-Likert scale, ranging from “1=
located in big cities (Karachi, Lahore, Faisalabad, and Peshawar) of strongly disagree” to “5= strongly agree” to overcome respondent's
Pakistan. The higher authorities of companies permitted us to distrib- frustration and enhance the quality of data (Dawes, 2008; Nauman,
ute the survey among their employees. Questionnaires were randomly Malik, & Jalil, 2019). In order to ensure reliability and validity, we con-
distributed among employees within a company to get the maximum ducted Cronbach alpha and CFA for each variable.
representation of the population. However, data were collected only
from those employees working at any (first, middle, and top) level of
management, as they have first-hand information about company pol- 6.3 | Corporate social responsibility
icies & strategies and directly involved in the decision-making process.
Furthermore, we also ensured that only those employees were chosen Twenty-nine-item CSR scale was adopted from Carroll (1979). This
as respondents who were directly involved CSR activities. A cover let- scale consisted of four dimensions: economic, discretionary, ethical,
ter was attached to each questionnaire to make respondents aware of and legal. The scale is widely used in CSR studies (Ali et al., 2020;
the purpose, scope, and confidentiality of the study. Participation in Saeidi et al., 2015). Questions include, “top management establishes
the survey was voluntary. Researchers collected data in two stages long-term strategies for our business”, “a program is in place to reduce
with an interval of 4 weeks. At the first stage, respondents were asked the amount of energy and materials wasted in our business”, “fairness
to provide data regarding their demographics and CSR practices in the toward coworkers and business partners is an integral part of our
organization. At the second stage, information about mediator employee evaluation process”, and internal policies prevent discrimi-
(EE) and the outcome variable (employee performance) was collected. nation in employee compensation and promotion. The statistics of
At the first stage, researchers personally distributed 340 question- Cronbach's alpha was (0.91). Both factor loading (0.60–0.68) of all
naires among employees and received 282 questionnaires back with an items and the value of AVE (0.51) were greater than the acceptable
Experience 0–2 35 16
3–5 56 26 MacKenzie, Lee, and Podsakoff (2003) to overcome the potential
6 or above 6 126 58 problem of common method bias (CMB). Respondents were told
that participation is voluntary; data would remain confidential and
would be used for research purposes only. The statistics of the
value which confirmed the validity of the construct. The fitness indi- Single Herman test (39.50%) confirmed that there is no issue
ces showed that higher-order CFA is best fit (CMIN/df = 3.24, of CMB.
SRMR = .067, GFI = 0.90, RMSEA = 0.078). To examine the effect of control variables (age, experience, and
gender), one-way analysis of variance was used. The result indicated
an insignificant effect and was in line with previous researches
6.4 | Employee performance (Galbreath & Shum, 2012). Thus, the present study did not control
these variables.
Five-item scale was adopted from Janssen and Van Yperen (2004) to
measure employee performance. Questions include “employee
(I) always complete the duties specified in my job description” and 6.7 | Confirmatory factor analysis
“employee (I) fulfill all responsibilities required by my job.” The
Cronbach alpha (α = 0.81). We confirmed convergent validity through Validity (discriminant and convergent) and reliability of variables were
factor loading which must be more than 0.5 (Hair, Black, Babin, & confirmed through CFA by following the guidelines available in the lit-
Anderson, 2010). All items were having the factor loading (0.63–0.79) erature (De Clercq et al., 2013; De Clercq, Bouckenooghe, Raja, &
more than the threshold value. The statistics of AVE (0.53) were also Matsyborska, 2014). The factor loading of all items and the value of
more than the threshold range. The fitness indices of CFA confirmed AVE were above the threshold value (0.50) as suggested by Hair
that all five items yielding best fit model (CMIN/df = 3.23, et al. (2010). This confirmed the convergent validity. The detailed
SRMR = .057, GFI = 0.93, RMSEA = 0.053). results are given in Table 2. The square root of AVE was above the
correlation of variables (Table 2) which proves the discriminant valid-
ity (Hair et al., 2010). Reliability is proved through composite reliability
6.5 | Employee engagement by following the process of Fornell and Larcker (1981). The model fit-
ness indices showed that the model is best fit (SRMR = .67, CMIN/
Nine-item scale was adopted from Soane et al. (2012) to measure df = 2.87, GFI = 0.90, RMSEA = 0.074).
EE. This scale included the dimension of “intellectual,” “social,” and
“affective engagement.” This scale has been validated by certain
researchers (Mañas-Rodríguez, Alcaraz-Pardo, Pecino-Medina, & 6.8 | Descriptive analysis
Limbert, 2016). Questions include “employee (I) pay a lot of attention to
my work”, “I share the same work attitudes as my colleagues”, and “I am The results of the descriptive analysis are given in Table 3. The statis-
enthusiastic in my work.” Cronbach alpha for this scale was (.79) which tics show that CSR is positively associated with EE and performance
is also above the threshold value. The factor loading (0.65–0.73) of all (r = .374, .325). EE is also positively associated with employee perfor-
items above the threshold value and confirmed the convergent validity mance (r = .30).
of the variable. The fitness indices showed that higher-order CFA is best
fit (CMIN/df = 2.68, SRMR = .074, GFI = 0.91, RMSEA = 0.068).
6.9 | Hypotheses results
6.6 | Common method bias Researchers used the multiple regression to test hypotheses
(Figure 2). The results show that CSR has positive and significant
Researchers followed the guidelines of De Clercq, Dimov, and effect on EE and performance (β = .77, p = .000, LLCI = .464,
Thongpapanl (2013) and Podsakoff, MacKenzie, Lee, and Podsakoff, ULCI = .945 and β = .82, p = .000, LLCI = .719, ULCI = .934). EE has
ALI ET AL. 7
also significant effect on performance (β = .41, p = .001, LLCI = .215, 7 | DI SCU SSION
ULCI = .618).
In order to assess the intervening effect of EE between CSR-EP The objective of the present study was to examine the impact of CSR
relationship, we followed three different methods (Baron & on EE and performance. Additionally, this study analyzed the mediat-
Kenny, 1986;Hayes, 2013; Preacher & Hayes, 2004). Results show ing role of EE in CSR-EP relationship. We found that CSR has a direct
that CSR has a significant effect on the mediator (engagement) and impact on employee performance and engagement. Furthermore, EE
the outcome variable (performance) as shown in Table 4. Results also partially mediates the CSR-EP relationship as EE has a direct link with
show the significant effect of the mediator on the outcome variable. CSR and employee performance. So, it works as an influential media-
The direct effect of CSR on performance (β = .82) becomes weak tor between CSR-EP relationship.
when the mediator (engagement) is included in the regression equa- The direct impact of CSR on employee performance indicated
tion (β = .50). This indicates that EE partially mediates CSR-EP rela- that employees of Pakistani manufacturing companies consider CSR
tionship. Bootstrapping technique is also used to confirm the practices more relevant to increase their identification with companies
intervening effect of EE (Hayes, 2013; Preacher & Hayes, 2004). The and is a significant predictor of their performance. These results veri-
results show that the positive effect of CSR on employee perfor- fied the previous literature of CSR-EP relationship (Chaudhary, 2018;
mance through EE is significant (β = .27) and confidence interval of Newman et al., 2015; Story & Castanheira, 2019). Employees feel
this indirect effect is significantly different from zero (LLCI = .077, proud, work harder and become more productive in those companies
ULCI = .58). which follow CSR practices (De Roeck, El Akremi, & Swaen, 2016;
Story & Castanheira, 2019) and consider them more reputable in soci-
TABLE 3 Descriptive statistics ety (Saeidi et al., 2015). Employees feel that they must perform well in
Abbreviations: CSR, corporate social responsibility, ENG, employee engagement, EP, employee performance.
8 ALI ET AL.
companies consider CSR as a strong predictor of work engagement This study may help the managers of manufacturing companies in
which increases their loyalty and commitment toward the job. Studies Pakistan to understand the value of CSR for increasing EE and perfor-
also indicated that engaged employees become more committed, hap- mance. For instance, companies might be thinking to invest their
pier, healthier, and more productive (Kinjerski & Skrypnek, 2008; financial resources for employees' friendly workplace practices and
Rupp et al., 2018). Gao et al. (2018) reported engagement as a strong donate for the welfare of general society and especially for
predictor of employee performance. So, it is logical that engaged employees' families. Furthermore, managers may understand that CSR
employees work beyond their limits, feel pride, work more effectively, plays a vital role to make employees happier, healthier, and increase
efficiently, and become more productive in those organizations who their commitment toward the organization which increases their pro-
involve in CSR practices. These firms have also positive repute and ductivity and performance. The findings of this study may also
image in society (Ali et al., 2020; Saeidi et al., 2015). encourage managers to participate in such activities that are initiated
Researchers also found that CSR-EP relationship is partially medi- for employees' welfare to increase their performance. For instance,
ated by EE, as engagement has a direct correlation with both predictor the HR department may update the employees about the firm's
(CSR) and outcome (EP). Although CSR has a positive and strong impact involvement in CSR activities and share it with new employees in their
on employee performance, EE makes this association stronger as orientation sessions. This would also help the companies to hunt the
engaged employees work beyond their duties and are committed to their best talent and gain a competitive advantage, as employees prefer to
job. Furthermore, engaged employees work effectively and efficiently. do jobs in socially responsible companies (Albinger & Freeman, 2000;
Alonso-Almeida & Llach, 2019; Barrena-Martínez et al., 2015).
7.1 | Implications
7.2 | Limitation and future directions
This study has several theoretical and practical implications. It has dis-
cussed how CSR shape employee behavior (performance) and enhance The present study has few limitations. Firstly, the present study col-
behavioral predictor of employee performance especially in the con- lected data through self-reported measures of EE and employee per-
text of Pakistani manufacturing companies which were ignored in the formance, which might be a cause of CMB (Podsakoff et al., 2003).
previous studies. Firm's intangible resources are considered one of the However, it is assumed that respondents answered the questions
most significant drivers of competitive advantage and sustainable honestly (Gao et al., 2018). Furthermore, researchers have used many
growth (Du et al., 2015). Human capital is considered a vital intangible pre-remedial strategies to overcome the potential issue of CMB
resource, as engaged, capable, experienced, and skilled employees play (Podsakoff et al., 2003), such as clearly explain the purpose of the
a significant role in sustainable growth. Earlier researches have also study with the help of a cover letter, ensure the confidentiality of
indicated that CSR increases organizational performance by improving responses and perform CFA. The results of CFA stated that the
vital intangible assets (Surroca, Tribó, & Waddock, 2010). So, this study hypothesized model has better model fitness as compare to other
extends literature through empirical evidence on how CSR plays a sig- models. Therefore, future studies may use time-lagged or longitudinal
nificant role to increase employee performance and engagement. This design and use peer-reported measures in order to mitigate the
would help to achieve the ultimate goal of every organization. potential issue CMB and social desirability.
This study also extends the literature on CSR and EE in certain Secondly, we used data of only manufacturing companies to
aspects. Earlier scholars studied the impact of CSR on limited study the effect of CSR on EE and performance. Future studies may
employee behaviors, like organizational citizenship behavior, organiza- collect data from other sectors like the service sector that has a major
tional identification, and commitment (Abdullah & Rashid, 2012; role in Pakistan's economic growth and producing employment oppor-
Brammer et al., 2007; Lin, Lyau, Tsai, Chen, & Chiu, 2010). Limited tunities to increase the reliability of findings. Thirdly, the present
studies have focused on EE which is a significant predictor of study did not consider cultural heterogeneity. So, future studies may
employee performance, productivity, and organizational performance, also collect the data from different cultures for comparative studies to
especially in developing countries like Pakistan (Esmaeelinezhad, increase the generalizability of findings. Finally, we have introduced a
Boerhannoeddin, & Singaravelloo, 2015; Gao et al., 2018; unique mediator to understand the mechanism that how CSR boots
Glavas, 2016). According to Gao et al. (2018), a very limited number employees' performance by using the assumption of SIT. Future stud-
of employees (13%) across the world are engaged and just the United ies may also use other mediators (organizational identification, organi-
States is facing a financial loss of around USD 500 billion yearly just zational commitment) moderator (different leadership style) in the
because of the low productivity of disengaged workers. It is useful to lens of different theories (contingency theory, stakeholder theory) to
examine the effect of CSR on EE, especially in developing countries. further explain this mechanism and explore the role of CSR in
So, these countries can overcome financial loss and use this amount employees' performance.
for increasing the capabilities, skills, and life standard of their people.
This study extends the literature by examining the impact of CSR on OR CID
EE. It also contributes to the literature by examining the mediating Hafiz Yasir Ali https://orcid.org/0000-0001-9350-2824
role of EE between CSR-EP relationship. Muhammad Asrar-ul-Haq https://orcid.org/0000-0003-3639-0234
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