Purpose: This paper, which is based on the idea of “strategic CSR,” examined how product market competition (PMC) affected the relationship between Indian companies’ financial performance (FP) and corporate social responsibility (CSR).

Methodology: The study was conducted on 534 manufacturing firms listed on India’s National Stock Exchange from 2016 to 2021. Based on the Hausman Specification test, this study used a fixed effects panel regression model to test the stated relationships.

Findings: A review of 3,204 firm-year observations revealed that CSR had a detrimental effect on firms’ FP. The relationship between CSR and FP showed a positive moderating influence of PMC, supporting the “strategic CSR” approach, which contends that CSR enhanced FP for businesses operating in a competitive market.Practical

Implications: This analysis validated empirical precedents that showed a favorable association between competition and company FP and a negative influence of CSR. The target audience for this study included academics, managers, stakeholders, and users of CSR data due to the importance of corporate responsibility in today's world.

Originality: In the Indian context, this study is the first attempt, as far as we are aware, to examine the moderating effect of PMC on the link between CSR and FP.

1. Ahamed, N., & Tripathi, N. N. (2023). Does mandatory corporate social responsibility expenditure by businesses help their stakeholders? Corporate Social Responsibility and Environmental Management, 30(5), 2292–2303. https://doi.org/10.1002/csr.2484
2. Anderson, M., Hyun, S., & Warsame, H. (2024). Corporate social responsibility, earnings management and firm performance: Evidence from panel VAR estimation. Review of Quantitative Finance and Accounting, 62(1), 341–364. https://doi.org/10.1007/s11156-023-01203-x
3. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
4. Bhatnagar, C. S., Bhatnagar, D., & Bhullar, P. S. (2023). Social expenditure, business responsibility reporting score and firm performance: Empirical evidence from India. Corporate Governance, 23(6), 1404–1436. https://doi.org/10.1108/CG-04-2022-0173
5. Chakraborty, D., & Biswas, W. (2020). Articulating the value of human resource planning (HRP) activities in augmenting organizational performance toward a sustained competitive firm. Journal of Asia Business Studies, 14(4), 62–90. https://doi.org/10.1108/JABS-01-2019-0025
6. Cordeiro, J. J., Galeazzo, A., & Shaw, T. S. (2023). The CSR–CFP relationship in the presence of institutional voids and the moderating role of family ownership. Asian Business & Management, 22, 137–163. https://doi.org/10.1057/s41291-021-00157-z
7. Dawson, J. F., & Richter, A. W. (2006). Probing three-way interactions in moderated multiple regression: Development and application of a slope difference test. Journal of Applied Psychology, 91(4), 917–926. https://doi.org/10.1037/0021-9010.91.4.917
8. Dupire, M., & M'Zali, B. (2018). CSR strategies in response to competitive pressures. Journal of Business Ethics, 148(3), 603–623. https://doi.org/10.1007/s10551-015-2981-x
9. Fernández-Gago, R., Cabeza-García, L., & Godos-Díez, J.-L. (2020). How significant is corporate social responsibility to business research? Corporate Social Responsibility and Environmental Management, 27(4), 1809–1817. https://doi.org/10.1002/csr.1927
10. Fernández-Kranz, D., & Santaló, J. (2010). When necessity becomes a virtue: The effect of product market competition on corporate social responsibility. Journal of Economics & Management Strategy, 19(2), 453–487. https://doi.org/10.1111/j.1530-9134.2010.00258.x
11. Flammer, C. (2015). Does product market competition foster corporate social responsibility? Evidence from trade liberalization. Strategic Management Journal, 36(10), 1469–1485. https://doi.org/10.1002/smj.2307
12. Freeman, R. E. (1994). The politics of stakeholder theory: Some future directions. Business Ethics Quarterly, 4(4), 409–421. https://doi.org/10.2307/3857340
13. Friedman, M. (1970). The social responsibility of business is to increase its profits. In W. C. Zimmerli, M. Holzinger & K. Richter (eds.), Corporate ethics and corporate governance. Springer. https://doi.org/10.1007/978-3-540-70818-6_14
14. Gatti, L., Vishwanath, B., Seele, P., & Cottier, B. (2019). Are we moving beyond voluntary CSR? Exploring theoretical and managerial implications of mandatory CSR resulting from the new Indian Companies Act. Journal of Business Ethics, 160(4), 961–972. https://doi.org/10.1007/s10551-018-3783-8
15. Graafland, J., & Smid, H. (2015). Competition and institutional drivers of corporate social performance. De Economist, 163, 303–322. https://doi.org/10.1007/s10645-015-9255-y
16. Gupta, K., Raman, T. V., Deol, O. S., & Gupta, K. (2022). Environment, social, and governance performance and firm risk : A study of the Indian consumer goods sector. Indian Journal of Finance, 16(8), 29–45. https://doi.org/10.17010/ijf/2022/v16i8/171373
17. Gupta, K., & Krishnamurti, C. (2021). Corporate social responsibility, competition, and firm value. Pacific-Basin Finance Journal, 68, 101622. https://doi.org/10.1016/j.pacfin.2021.101622
18. Hart, O. D. (1983). The market mechanism as an incentive scheme. The Bell Journal of Economics, 14(2), 366–382. https://doi.org/10.2307/3003639
19. Helm, R., & Mark, A. (2012). Analysis and evaluation of moderator effects in regression models: State of art, alternatives, and empirical example. Review of Managerial Science, 6(4), 307–332. https://doi.org/10.1007/s11846-010-0057-y
20. Jamali, D., & Karam, C. (2018). Corporate social responsibility in developing countries as an emerging field of study. International Journal of Management Reviews, 20(1), 32–61. https://doi.org/10.1111/ijmr.12112
21. Jiao, Y., & Shi, G. (2014). Social preference, product market competition, and firm value. Available at SSRN. https://doi.org/10.2139/ssrn.2221384
22. Jyoti, G., & Khanna, A. (2021). Does sustainability performance impact financial performance? Evidence from Indian service sector firms. Sustainable Development, 29(6), 1086–1095. https://doi.org/10.1002/sd.2204
23. Kaoujiya, J., Abraham, R., Rastogi, S., & Bhimavarapu, V. M. (2023). Transparency and disclosure and financial distress of non-financial firms in India under competition: Investors' perspective. Journal of Risk and Financial Management, 16(4), 217. https://doi.org/10.3390/jrfm16040217
24. Leong, C. K., & Yang, Y. C. (2020). Market competition and firms' social performance. Economic Modelling, 91, 601–612. https://doi.org/10.1016/j.econmod.2019.12.002
25. Manimalar, R., & Sudha, S. (2016). Corporate ethical and legal responsibility: Effects of CSR on consumer trust and brand loyalty. Prabandhan: Indian Journal of Management, 9(6), 7–19. https://doi.org/10.17010/pijom/2016/v9i6/94957
26. Mishra, S., & Suar, D. (2010). Does corporate social responsibility influence firm performance of Indian companies? Journal of Business Ethics, 95(4), 571–601. https://doi.org/10.1007/s10551-010-0441-1
27. Mutuc, E. B., & Cabrilo, S. (2022). Corporate social responsibility, intellectual capital and financial performance: Evidence from developed and developing Asian economies. Review of Managerial Science, 16(4), 1227–1267. https://doi.org/10.1007/s11846-022-00542-8
28. Patro, B., & Pattanayak, J. K. (2017). Corporate governance as a moderating variable for identifying the relationship between CSR and earnings management : A study of listed Indian mining firms. Prabandhan: Indian Journal of Management, 10(10), 24–40. https://doi.org/10.17010/pijom/2017/v10i10/118812
29. Porter, M. E., & Kramer, M. R. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review, 80(12), 56–69. https://www.hbs.edu/faculty/Pages/item.aspx?num=46631
30. Rastogi, S., & Kanoujiya, J. (2022). Corporate disclosures and financial distress in banks in India: The moderating role of competition. Asian Review of Accounting, 30(5), 691–712. https://doi.org/10.1108/ARA-03-2022-0064
31. Sachdeva, S., Ramesh, L., Mathew, M., & Manu, K. S. (2023). Measurement of corporate social responsibility of financial companies in the Indian context. Indian Journal of Finance, 17(12), 56–72. https://doi.org/10.17010/ijf/2023/v17i12/172059
32. Sachin, N., & Rajesh, R. (2022). An empirical study of supply chain sustainability with financial performances of Indian firms. Environment, Development and Sustainability, 24, 6577–6601. https://doi.org/10.1007/s10668-021-01717-1
33. Sardana, D., Gupta, N., Kumar, V., & Terziovski, M. (2020). CSR 'sustainability' practices and firm performance in an emerging economy. Journal of Cleaner Production, 258, 120766. https://doi.org/10.1016/j.jclepro.2020.120766
34. Sharma, S., Durand, R. M., & Gur-Arie, O. (1981). Identification and analysis of moderator variables. Journal of Marketing Research, 18(3), 291–300. https://doi.org/10.2307/3150970
35. Shetty, R., & Ashalatha, K. (2022). Sustainability reporting of Indian companies and the adherence to GRI disclosure framework. Indian Journal of Finance, 16(9), 54–65. https://doi.org/10.17010/ijf/2022/v16i9/172160
36. Shukla, A., & Geetika. (2022). Impact of corporate social responsibility on financial performance of energy firms in India. International Journal of Business Governance and Ethics, 16(1), 88–105. https://doi.org/10.1504/IJBGE.2022.119356
37. Singh, A., & Verma, P. (2017). Investigating the nexus of corporate social responsibility and brand equity : A systematic review. Prabandhan: Indian Journal of Management, 10(2), 7–25. https://doi.org/10.17010/pijom/2017/v10i2/110625
38. Singhania, S., Arora, A., & Sardana, V. (2024). A win-win situation: Uncovering the relationship between CSR reporting and financial performance in Indian companies. International Journal of Law and Management, 66(2), 216–235. https://doi.org/10.1108/IJLMA-05-2023-0126
39. Singla, M., & Singh, S. (2019). Board monitoring, product market competition and firm performance. International Journal of Organizational Analysis, 27(4), 1036–1052. https://doi.org/10.1108/IJOA-07-2018-1482
40. Singla, H. K., & Samanta, P. K. (2019). Determinants of dividend payout of construction companies: A panel data analysis. Journal of Financial Management of Property and Construction, 24(1), 19–38. https://doi.org/10.1108/JFMPC-06-2018-0030
41. Wang, Q., Dou, J., & Jia, S. (2016). A meta-analytic review of corporate social responsibility and corporate financial performance: The moderating effect of contextual factors. Business & Society, 55(8), 1083–1121. https://doi.org/10.1177/0007650315584317
42. Waris, M., & Din, B. H. (2024). Nexus of the CSR disclosures and corporate financial performance: Evidence from Asian countries climate policy uncertainty. Environmental Science and Pollution Research, 31(2), 1995–2008. https://doi.org/10.1007/s11356-023-31307-9
43. Yu, S.-H., & Liang, W.-C. (2020). Exploring the determinants of strategic corporate social responsibility: An empirical examination. Sustainability, 12(6), 2368. https://doi.org/10.3390/su12062368