Corporate Social Responsibility Strategy Practices,Employee Commitment,Reputation as Sources of Competitive Advantage

Abstract

Corporate social responsibility (CSR) and its relationship with corporate competitive advantage (CCA) have gained a tremendous interest among the researchers and practitioners over decades, as evident by the increasing surge of studies in this domain. This study examines how five types (legal, economic, philanthropic, ethical, and environmental) of CSR affect CCA in a developing country through the mediating roles of employee commitment and corporate reputation. Data was collected by survey questionnaires from a sample of 869 participants working at service, real estate, and manufacturing firms in Ho Chi Minh City and Binh Duong Province, Vietnam. SmartPLS 3.0 software and the partial least squares structural equation modeling method (PLS-SEM) were applied to evaluate the research model and test the hypotheses. The findings revealed that different dimensions of CSR have positive significant effects on employee commitment, corporate reputation and competitive advantage. Besides, employee commitment and corporate reputation were found to meditate the relationship between different types of CSR and CCA. These outcomes contributed to the extension of theory in the fields of CSR and offered some suggestions for managers in implementing CSR initiatives to gain and sustain CCA.

Plain Language Summary

This study examines how five types (legal, economic, philanthropic, ethical, and environmental) of CSR affect CCA in a developing country through the mediating roles of employee commitment and corporate reputation. Data was collected by survey questionnaires from a sample of 869 participants working at service, real estate, and manufacturing firms in Ho Chi Minh City and Binh Duong Province, Vietnam. The findings revealed that different dimensions of CSR have positive significant effects on employee commitment, corporate reputation and competitive advantage. Besides, employee commitment and corporate reputation were found to meditate the relationship between different types of CSR and CCA.

Keywords

corporate social responsibility employee commitment reputation competitive advantage competitiveness

Introduction

Corporate competitive advantage (CCA) is a critical factor of business success. Businesses are striving for market position and domination in an unstable environment, resultantly, the strategic advantage in practicing CSR is the foundation upon which this degree of success is constructed. Over decades, scholars have strived to explore factors that foster CCA and found that corporate social responsibility (CSR) acts as one of its most crucial drivers (Rasheed & Ahmad, 2022; Salam & Jahed, 2023). During the global recession, firms are under the pressure to act ethically, environmentally, morally, philanthropically, and economically responsible for the society and the environment where they operate in order to improve their reputation, employee commitment, achieve sustainable long-term development (El-Garaihy et al., 2014; Luo & Bhattacharya, 2006). According to stakeholder theory (Freeman, 1984), implementing CSR initiatives serves as useful signals that enable socially responsible businesses to create positive images and meet the expectations of stakeholders. Besides, CSR can also act as a form of strategy that can be leveraged to build corporate reputation (Le, 2023; Xu et al., 2022) and improve employee commitment (Bouraoui et al., 2019; De Silva & De Silva Lokuwaduge, 2021). Corporate reputation refers to the overall perception of stakeholders about a business and has become an intangible asset that strengthen firm competitiveness (Raj & Subramani, 2022). Employee commitment is the extent to which an employee is attached to the organization and is willing to contribute to the welfare of the organization (Bouraoui et al., 2019).

Despite a plethora of research on the CSR-CCA connection from different angles, the results are mixed and inconclusive, which causes high ambiguity in the understanding of the connection. While some studies revealed that the CSR-CCA relationship is positive, and socially responsible firms can obtain and sustain a competitive edge (McWilliams & Siegel, 2011; Nyuur et al., 2019), others argue that the cost for CSR implementation has caused collateral and financial damage to the company (Barauskaite & Streimikiene, 2021; Tencati et al., 2008). This results in a belief among scholars that there might be other factors that affect or mediate the CSR-CCA relationship (Bashir, 2022; Salam & Jahed, 2023). Unfortunately, there has been little research in this domain, which highlights a gap for future research. Added to this, most CSR research have concentrated on developed nations (Ahsan, 2023; Davidson, 2016), leaving questions and concerns related to the applicability and transferability of established CSR frameworks in developing countries (Jamali & Karam, 2016).

Therefore, the purpose of this study is to investigate the CSR-CCA relationship and examine whether employee commitment and company reputation mediate the association between CSR and CCA. Grounded in stakeholder theory (Freeman, 1984), our study postulates that CSR can lead to higher employee commitment, corporate reputation, and competitive advantage of firms. The results are expected to to shed light on CSR-related knowledge provide insights for CSR practitioners in Vietnam to comprehensively understand the concept and effectively put it into practice. This study aims to provide answers to the following questions:

RQ1. Does CSR improve corporate reputation and employee commitment?

RQ2. Do corporate reputation and employee commitment mediate the relationship between CSR and CCA?

RQ3. Is there any direct or indirect connection between CSR and CCA?

This study makes several contributions to the extant literature on CSR and CCA relationship. First, we broaden the scope of CSR research and contribute to the existing literature on CSR and CCA by integrating key ideas from stakeholder theory. While earlier scholars have mainly focused on the impact of CSR on firms’ performance and competitiveness (Al Sakkaf et al., 2023; Bashir, 2022; Nyuur et al., 2019; Rochayatun et al., 2023; Sharma et al., 2023), virtually no prior studies have touched on the mediating role of employee commitment and corporate reputation in the CSR-CCA relationship. This study complements this stream of research by investigating how employee commitment and corporate reputation can influence the connection between CSR and CCA. Second, while the majority of CSR and environment-related research were conducted in Western and developed countries (Ahsan, 2023; S. Ali et al., 2022; Davidson, 2016; Xu et al., 2022), we have studied CSR in the Vietnamese context. CSR is a relatively new concept in Vietnam, which is rapidly gaining attraction as a critical tool that enhances image, reputation, performance and competitive edge of businesses here (Chwistecka-Dudek, 2016; Tien, 2015; Tien & Anh, 2018). Therefore, this research looks into Vietnam as the subject and examines the role of employee commitment and CCA in enhancing the competitive advantage of businesses involved in CSR.

Theoretical Foundation and Hypotheses Development

Stakeholder Theory

Stakeholder theory was developed by Freeman (1984) and deals with business ethics and addresses morals, norms, and values within organizations. This theory has become a notable theory frequently used to explain why organizations should consider the interests of stakeholders and conduct CSR practices (K. Gupta & Krishnamurti, 2016). According to M. E. Brown and Treviño (2006), stakeholder theory explains the moral obligation of a company and its engagement in CSR activities to discharge accountability toward stakeholders.

Studies in the fields of strategy and management followed Freeman's (1984) stakeholder theory and has been increasingly focusing on examining how CSR contributes to the creation of strategies that enable firms to achieve the objectives of critical stakeholders and improve their overall performance (Gu, 2023; Laplume et al., 2008; Sharma et al., 2023). By understanding the need to implement CSR initiatives, firms can develop suitable strategies to sustain their competitive advantage (Bridoux & Stoelhorst, 2022). For example, corporate reputation from firms’ environmental and social performance can create values for customers can enable firms to gain more customers and benefits (Hamidi et al., 2023).

This study followed earlier work and used Freeman’s (1984) stakeholder theory as a theoretical foundation to explain how different aspects of CSR, namely legal, economic, philanthropic, ethical, and environmental can strengthen employee commitment and corporate reputation, and then facilitate firms to have sustained competitive advantage.

Corporate Social Responsibility

Corporate Social Responsibility (CSR) has sparked increased interest among academics and practitioners as a mean of assisting firms in enhancing their competitive edge (McWilliams & Siegel, 2001; Porter & Kramer, 2006). CSR was essential to the company because it demonstrated organizations’ ability to demonstrate good citizenship and provided a source of competitive advantage (Porter & Kramer, 2006). Nowadays, numerous businesses around the world understanded the importance and the multifacet benefits of CSR and have implemented CSR to the company’s planning and operating strategy (A. B. Carroll, 2016). While being socially and environmentally conscious was critical for organizations of all sizes, according to Šontaitė-Petkevičienė (2015), businesses should first understand and then fully utilize the values associated with CSR to effectively apply them to their business strategies. Indeed, despite the advantages of CSR to organizations, both academics and professionals were increasingly mindful that companies were accountable to a wide range of stakeholders in addition to traditional ones (Griffin & Mahon, 1997).

There were numerous definitions and interpretations of CSR in the literature, ranging from company philanthropic endeavors to corporations’ strategic proposition in the social system (Nijhof & Jeurissen, 2010). However, CSR remained an abstract concept, and there was no such thing as a so-called definite right definition. According to Du et al. (2011), CSR was defined as an effective and useful competitive weapon, giving businesses competitive advantages against rival companies. Besides, according to Turker (2009), CSR was described as a method of showing company activities to create value for society, achieving criteria other than economic significance. CSR was an encompassing concept that referred to a range of corporate activities aimed at promoting the well-being of several stakeholder groups, including humankind and society (Sprinkle & Maines, 2010). McWilliams and Siegel (2001) described CSR as activities that advanced certain societal benefits outside the firm’s interests mandated by law. Indeed, CSR was a general term that encompasses a variety of natural, social, and ethical responsibilities, witnessed by several definitions being published throughout the years (Polonsky & Jevons, 2009). A. B. Carroll (1999) believed that in order to be socially responsible, organizations must adhere to economic, legal, ethical, and voluntary/philanthropic bases. Epstein (2008), on the other hand, recommended that CSR should focus on nine areas: transparency, ethics, financial performance, employment practices, community participation, governance, product value, business relationships, and environmental preservation. Following these perspectives, this study focus on five distinct dimensions of CSR, including ethical, legal, economic, philanthropic, and environmental aspects, and examine their relationships with CCA.

CSR and Employee Commitment

The term employee commitment refers to the relative strength of an employee’s identification within a particular organization (Mowday et al., 1979). Later, based on the work of Meyer et al. (1990), Meyer and Allen (1991, 1997), Mitonga-Monga and Hoole (2018) divided employee commitment into affective, normative, and continuance commitment. Recent meta-analyses revealed that all three categories of commitment are associated with employee turnover and intentions to leave the organization, but affective commitment appears to have a bigger impact on this relationship than the other two (Brammer et al., 2007; Mitonga-Monga & Hoole, 2018). In this study, affective commitment which refers to employee’s sense of emotional connection to the organization is employed to investigate its mediating role in the relationship between CSR and CCA (Meyer & Allen, 1997).

Various empirical studies have been conducted to examine the link between CSR and employee commitment. I. Ali et al. (2010) established a direct correlation between CSR and employee commitment, which resulted in increased organizational performance. Testa et al. (2018) also found a positive relationship between CSR and employee commitment. CSR has a positive effect on employee behavior (M. Gupta, 2017) and their commitment is higher when they perceive CSR as having a beneficial impact on society (Glavas & Godwin, 2013; Glavas & Kelley, 2014). While CSR can contribute to employees commitment (Turker, 2009), it is argued that various dimensions of CSR can serve a variety of functions, either directly or indirectly related to employee commitment (McWilliams & Siegel, 2001).

Various scholars point to a variety of factors that underpin organizations’ motives for engaging in CSR practices. Sprinkle and Maines (2010) stated that firms engaged in CSR programs for four primary reasons, one of which was the potential benefits of employee recruiting, motivation, and retention. Indeed, employees took pride in organizations that supported charitable activities (Porter & Kramer, 2006). Recent research on the impact of CSR on employees discovered that employees are strongly connected to their company when it engages in social welfare activities, and employees who received support from their organization while participating in CSR programs were more likely to feel strongly attached to the organization (De Roeck & Farooq, 2018). Wong and Gao (2014) discovered a direct association between CSR and employee affective commitment. Since employee commitment is a critical success factor for any organization and is a result of an effective CSR strategy, several studies on employee behavior and CSR have recommended implementing CSR to strengthen employee relationships with the organizations (I. Ali et al., 2010). The positive and significant relationship between CSR and employees’ affective commitment was also found in recent research (Bouraoui et al., 2019; De Silva & De Silva Lokuwaduge, 2021; Maqbool & Nazir, 2023; Silva et al., 2023). Therefore, we propose the following hypotheses:

Hypothesis 1 (H1): Legal CSR affects Employee Commitment

Hypothesis 2 (H2): Economic CSR affects Employee Commitment

Hypothesis 3 (H3): Philanthropic CSR affects Employee Commitment

Hypothesis 4 (H4): Ethical CSR affects Employee Commitment

Hypothesis 5 (H5): Environmental CSR affects Employee Commitment

CSR and Corporate Reputation

The term “reputation” referred to the way a company was perceived by its stakeholders. According to C. J. Fombrun et al. (2000), reputation was a cognitive representation of a business’s activities and results that demonstrated the organization’s capacity to offer valuable outcomes to its stakeholders. All stakeholders were influenced by reputation since it shaped how an organization was seen and contributed to the success or failure of the business. Corporate reputation has been conceptualized from a variety of perspectives and in various forms. This concept was defined as a collection of statements about a business that are based on an assessment of the business’s social, environmental, and financial influences over time (Barnett et al., 2006). The reputation of a business reflected its reliability and honesty in implementing positive CSR initiatives (McWilliams & Siegel, 2001). In this study, based on the work of Miles and Covin (2000), corporate reputation was defined as an indicator of a company’s integrity, trustworthiness, reliability, and transparency. Corporations that produced high-quality products and concerned about social and environmental responsibility, and fulfilled their obligations toward stakeholders can create good reputation.

Numerous studies have established an experimental connection between CSR and corporate reputation (Brickley et al., 2002; Lai et al., 2010). It was emphasized that corporate reputation was a critical outcome of the CSR initiatives and CSR strategies enhanced a company’s reputation across various stakeholder groups (Bhattacharya & Sen, 2004; Melo & Garrido-Morgado, 2012; Michelon, 2011). According to Story and Neves (2015), businesses that failed to engage in CSR initiatives can harm their reputation and other short-term and long-term outcomes meanwhile companies undertook CSR activities can improve their reputation (Zhou et al., 2012). Indeed, organizations that were able to leverage the reputational advantage associated with a good CSR strategy can increase revenue and profits (Taghian et al., 2015). According to Park et al. (2014), CSR was critical for developing and sustaining a positive corporate reputation, which was viewed as a critical strategic resource that contributes to a company’s competitive advantage. According to Hooghiemstra (2000), CSR was a communication tool utilized by the company to build and enhance its reputation. The firm’s reputation reflected how reliable and trustworthy it was when it came to implementing positive CSR initiatives (McWilliams & Siegel, 2000). Melo and Garrido-Morgado (2012) enriched the literature by noting that CSR was a heterogeneous concept that if it was broken down into qualitative dimensions, each of its dimensions had a distinct influence on business reputation.

Brammer and Millington (2005) showed that firms with a higher investment in charitable activities had a greater reputation than those with a lower investment. Park et al. (2014) indicated that philanthropic and ethical CSR practices fostered customer beliefs that a company adhered to high ethical standards and concerned about the well-being of society, which positively influenced customer perception of corporate reputation. A positive environmental record had various effects on company reputation, depending on whether the CSR initiatives aligned with what stakeholders were concerned about the environment (Pérez, 2015). Raj and Subramani (2022) surveyed 684 employees working at IT companies in India and found that CSR strengthened CR. Bashir (2022) found that CSR expenditure of a firm had a significant relationship with its corporate reputation. Recently, other studies also revealed a similar relationship between the two domains (Le, 2023; Xu et al., 2022). However, there has been little attention paid to the study of CSR dimensions in establishing a strong corporate reputation. This demonstrated a clear need for stronger clarification on the correlation between CSR dimensions and corporate reputation (Šontaitė-Petkevičienė, 2015). Therefore, the following hypotheses were developed:

Hypothesis 6 (H6): Legal CSR affects Corporate Reputation

Hypothesis 7 (H7): Economic CSR affects Corporate Reputation

Hypothesis 8 (H8): Philanthropic CSR affects Corporate Reputation

Hypothesis 9 (H9): Ethical CSR affects Corporate Reputation

Hypothesis 10 (H10): Environmental CSR affects Corporate Reputation

CSR and CCA

Nowadays, the majority of businesses rely on a variety of strategies to exceed their rivals. Despite being loosely defined and operationalized (Ma, 2000), the term “competitive advantage” is still the most widely used definition of strategic strategy. Earlier scholars posited that competitive advantage was a collection of an organization’s unique characteristics that allow it to outperform competitors (Hamadamin & Atan, 2019; Stutz & Warf, 2009). Therefore, to gain strategic advantages, most companies developed a corporate strategy that allowed them to exploit various resources internally and externally to create a competitive edge over their competitors (Hamadamin & Atan, 2019). In this study, competitive advantage was considered as a critical factor in determining superior performance. Companies attained competitive advantage in a variety of ways, including increased market share, expertise and know-how, employee commitment, brand reputation, and corporate image.

One long-debated topic in the CSR literature was whether or not CSR resulted in increased competitiveness (A. B. Carroll & Shabana, 2010). According to Melo and Galan (2011), CSR was a valid source of intangible competitive advantage. Firms effectively practiced CSR programs not only distinguished them from their rivals but also allowed them to establish a competitive edge over their rivals (Porter & Kramer, 2006). The world’s most forward-thinking businesses viewed CSR as more than an ethical obligation to humankind and society but a method of achieving strategic objectives while positively transforming the world (Porter & Kramer, 2006; Raghubir et al., 2010). However, there was limited empirical evidence on how, where, and why businesses might achieve their strategic objectives. As a result, while several management theories implied hat CSR resulted in competitive advantage, little was known about how to effectively leverage CSR as a strategic competitive lever (Du et al., 2011) and little attention has been paid to the conditions under which CSR can result in long-term competitive advantage (McWilliams & Siegel, 2011).

Although there existed a correlation between CSR and CCA, the exact nature of the correlation was unknown (Mackey et al., 2007; McWilliams & Siegel, 2001; Porter & Kramer, 2006). While the majority of research supported the idea that CSR and CCA were positively correlated (El-Garaihy et al., 2014; Melo & Galan, 2011; Rasheed & Ahmad, 2022; Salam & Jahed, 2023; Vilanova et al., 2009), some studies found the opposite correlation between the two factors (Cordeiro & Sarkis, 1997) and some confirmed a neutral relationship (Wagner, 2005). Orlitzky et al. (2003) proposed the idea that CSR was mutually reinforcing under some conditions. For instance, enhanced CSR resulted in greater competitiveness, and increased competitiveness facilitates the implementation of CSR strategy. However, since the intermediate variables and its role in creating this reinforcement were simply stated in a vague way, the following hypotheses related to CSR practices and CCA were established:

Hypothesis 11 (H11): Legal CSR affects CCA

Hypothesis 12 (H12): Economic CSR affects CCA

Hypothesis 13 (H13): Philanthropic CSR affects CCA

Hypothesis 14 (H14): Ethical CSR affects CCA

Hypothesis 15 (H15): Environmental CSR affects CCA

The Roles of Employee Commitment and Corporate Reputation in Improving CCA

A good company’s reputation was the expectations of its stakeholders and was what the company aimed to achieve (Lai et al., 2010). According to C. Fombrun and Shanley (1990), a strong reputation enabled a firm distinguish itself from rivals and was, therefore, a valuable competitive advantage for the firm because of its monetary values and intangible qualities. Competitive advantage established on corporate reputation was an intangible asset that provided a strategic edge and enhanced a business’s capability to develop long-term value (Caves & Porter, 1977). Additionally, intangible corporate features, such as corporate reputation, was considered to be more durable and resistant to competitive pressures than service and product qualities (Illia & Balmer, 2012). Therefore, corporate reputation can help organizations better achieve CCA (Sabate & Puente, 2003). According to Melo and Garrido-Morgado (2012), the benefits of a cumulative good reputation represented a path to prolonged competitive advantage since their intangible nature made corporate reputation difficult for competitors to imitate.

In today’s diverse and competitive market environment, where idea exchange was facilitated, a sustainable competitive advantage was anchored in the organization’s non-physical human resources rather than its physical resources. Barney (1991) examined the correlation between CCA and organizational resources and discovered that every organization that operated with implicit expertise, had the ability to strengthen its CCA. According to Hamadamin and Atan (2019), employee commitment positively enhanced Iraqi universities’ likelihood of attaining sustainable competitive advantage and was found to act as a partial mediator in the relationship between strategic human resource management practices and sustainable competitive advantage. Lockwood (2007) proposed that businesses should increase employee engagement to strengthen competitive advantage. Additionally, according to Hamadamin and Atan (2019), a sustainable competitive advantage was described as an employee’s commitment output.

Given that past research has elaborated on the positive (El-Garaihy et al., 2014; Melo & Galan, 2011; Vilanova et al., 2009) and negative (Cordeiro & Sarkis, 1997) or neutral (Wagner, 2005) relationship between CSR and CCA, examining the mediating influence of corporate reputation and employee commitment advances our knowledge of how diferent types of CSR affect CCA. In the study conducted by Sousa Filho et al. (2010), it has been argued that CSR was linked to competitive advantage through recruiting valuable employees and improving a company’s reputation. Some authors argued that examining the mediating roles of corporate reputation and employee commitment is critical to understanding the impact of CSR on CCA, because committed and reputable firms have been found to have greater social responsibility and competitiveness (El-Garaihy et al., 2014; Hamadamin & Atan, 2019; Hamidi et al., 2023).

Based on the above literature, the following hypotheses were developed:

Hypothesis 16 (H16): Corporate Reputation positively affects CCA.

Hypothesis 17 (H17): Employee commitment has a positive relationship with CCA.

Hypothesis 18 (H18): CCA is indirectly affected by Economic CSR (H18-1a, H18-2a), Environmental CSR (H18-1b, H18-2b), Ethical CSR (H18-3a, H18-3b), Legal CSR (H18-4a, H18-4b), and Philanthropic CSR (H18-5a, H18-5b) through the mediating roles of Corporate Reputation and Employee Commitment.

Methodology

Measurement of Constructs

In this study, legal CSR, economic CSR, philanthropic CSR, ethical CSR, and environmental CSR are measured with five, four, five, five, and seven items adapted from Alvarado-Herrera et al. (2017), El-Garaihy et al. (2014), Galbreath (2010), and Turker (2009). Employee commitment is measured with four items adapted from Shore et al. (1995). Four items used to measure corporate reputation were adapted from El-Garaihy et al. (2014). Competitive advantage was measured using scales adapted from Saeidi et al. (2015). The items in the research were measured using a 5-point Likert scale. The scales were included at the end of the study at Appendix A.

Sample and Data Collection

This study used survey questionnaire method to collect data. According to Dörnyei and Taguchi (2009), survey is critical for ensuring the research’s efficacy, which enables researchers to gather data more rapidly and analyze the findings more accurately. The survey were carried out in two ways: face-to-face and online. The respondents in this research included owners, managers, deputy managers, assistant managers, chief accountants, and legal managers of companies in the trade and service, real estate, and manufacturing industries in Ho Chi Minh City and Binh Duong. Convenience sampling method was used to approach the target respondents and collect data. Given (2008) stated that this is the approach that enables researchers to conveniently reach the most reliable participants. A total of 869 samples were obtained, which satisfied the generalizability requirement by Hair et al. (2019).

Statistical Methods

The survey data were analyzed and evaluated using SPSS 22 and SMART-PLS 3.0 software. There are two fundamental categories of SEM methods: CB-SEM (covariance-based) and PLS-SEM (variance based on least-squares). According to Gefen et al. (2011), all methods have distinct benefits, and the researcher can select the methodology that is more appropriate for the analysis model and data characteristics. The study’s primary objective is to investigate the effect of CSR on corporate reputation, employee commitment, and CCA. To accomplish this aim, PLS-SEM method was used since it is optimal for complex models and aids in the successful identification of causes Hair et al. (2019). According to Anderson and Gerbing (1988) PLS-SEM is a rigorous and exhaustive methodology for analyzing and evaluating interactions between independent and dependent variables concurrently.

Results

Sample Characteristics

The survey was completed by the owners (16.6%), managers (23.7%), deputy managers (25.2%), assistant managers (20.6%), chief accountants (6.7%), and legal managers (7.2%). The study included a variety of sectors, including public (7.8%), private (59.3%), and FDI (32.9%); as well as three company types: trade and service (43.3%), real estate (17.0%), and manufacturing (39.7%). The survey was done on businesses with a size range of 10 to 200 workers (58.9%), 200 to 300 workers (26.8%), over 300 workers (14.2%), and over 400 workers (0.1%). The responses were from businesses with annual sales of between $1 billion and $10 billion (18.3%), 11 billion to $50 billion (38.7%), 51 billion to $200 billion (25.1%), and beyond $200 billion (18.0%). We received responses from two regions in Vietnam, including 542 questionnaires in Ho Chi Minh City (62.4%) and 327 questionnaires in Binh Duong province (37.6%).

Measurement Model Assessment

Evaluating the reliability and validity of the variables is the first step in the process. As Hair et al. (2014) mentioned that each variable or structure represents the relationship, association, or contains reflection indexes, so the consideration of reliability to remove the factors that are not validation is essential. Each variable will be considered to measure the reliability for the most objective and accurate results. The condition for a highly reliable structure is that factor loading must be >0.7; Composite Reliability (CR) and Cronbach Alpha are all >.7; Average Variance Extracted (AVE) should be >.4. The variables that meet the above conditions are continued to be used for analysis and evaluation in the next steps. According to the result, there are five items that do not meet the conditions, so it is excluded from the model, including one item of Competitive Advantage, three items of Economic CSR, and one item from Philanthropic CSR. Besides, according to the factor loading scale, there are eight items whose value factor loading is approximately 7, so they can still be accepted and used in the model (Comad1, EcoCSR1, EcoCSR2, EnviCSR1, EnviCSR2, EnviCSR3, EthcCSR1 and PhilanCSR1). Therefore, in the model, there will be a total of 36 items.

Based on the standardized level of PLS, CR is the value used to determine the reliability and consistency of the variables in the model. Besides, the CR implies that the items are of equal significance and importance. According to Hair et al. (2014), the review and assessment of consistency among the variables of the structure will be more objective and accurate when using the CR formula. And the condition for the conditional variables in the model is that the value of CR must be >0.4. Convergent and discriminant validity was tested in order to determine the system’s validity. Convergent validity is determined by the AVE. Fornell and Larcker (1981) say that the AVE should be >0.5. The AVE values (see Table 1) range from 0.507 and 0.622, which are greater than the threshold value.

Table 1.

Measurement Model Evaluation.

Constructs	Items	Factor Loading	Cronbach’s Alpha	CR	AVE
CCA (COCOMAD)	Comad1 Comad2 Comad3 Comad4	0.680 0.767 0.741 0.716	.702	0.817	0.528
Corporate Reputation (COREPU)	Corpu1 Corpu2 Corpu3	0.782 0.805 0.779	.697	0.832	0.622
Employee Commitment (EMCOM)	Emcom1 Emcom2 Emcom3 Emcom4	0.721 0.768 0.737 0.781	.744	0.839	0.566
Economic CSR (ECOCSR)	EcoCSR1 EcoCSR2 EcoCSR3 EcoCSR4	0.692 0.699 0.735 0.788	.707	0.819	0.532
Environmental CSR (ENVICSR)	EnviCSR1 EnviCSR2 EnviCSR3 EnviCSR4 EnviCSR5 EnviCSR6 EnviCSR7	0.687 0.692 0.693 0.738 0.714 0.730 0.728	.838	0.878	0.507
Ethical CSR (ETHCSR)	EthcCSR1 EthcCSR2 EthcCSR3 EthcCSR4 EthcCSR5	0.696 0.740 0.709 0.703 0.717	.758	0.838	0.508
Legal CSR (LEGCSR)	LegCSR1 LegCSR2 LegCSR3 LegCSR4 LegCSR5	0.735 0.777 0.714 0.723 0.732	.789	0.856	0.543
Philanthropic CSR (PHICSR)	PhilanCSR1 PhilanCSR3 PhilanCSR4 PhilanCSR5	0.700 0.728 0.773 0.739	.716	0.825	0.541

Note. CR = composite reliability; AVE = average variance extracted.

Discriminant validity quantifies the degree to which a construct differs from others. To assess discriminant validity, a construct’s variance should be greater than the variance of its measurements, as measured by the square root of the AVE (Hair et al., 2014). As can be seen in Table 2, the square roots of AVE for each construct were greater than the correlations between constructs, implying discriminant validity. According to Hair et al. (2014), each object should have a greater loading on its latent variable than the other items. The results showed that the discriminant validity was adequate. The legal CSR has the highest (mean = 4.102). Economic CSR has the second most adopted factors by many companies (mean = 4.033), followed by Ethical CSR (mean = 4.012), Environmental CSR (mean = 4.009), CCA (mean = 4.001), philanthropic CSR (mean = 3.991), corporate reputation (mean = 3.947), and employee commitment (mean = 3.937).

Table 2.

Discriminant Validity Coefficients.

	MEAN	SD.	COCOMAD	COREPU	ECOCSR	EMCOM	ENVICSR	ETHCSR	LEGCSR	PHICSR
COCOMAD	4.001	0.789	0.727
COREPU	3.947	0.790	0.528	0.789
ECOCSR	4.033	0.817	0.594	0.382	0.729
EMCOM	3.937	0.764	0.634	0.579	0.556	0.752
ENVICSR	4.009	0.784	0.517	0.517	0.555	0.525	0.712
ETHCSR	4.012	0.794	0.624	0.524	0.654	0.600	0.642	0.713
LEGCSR	4.102	0.765	0.563	0.470	0.571	0.500	0.534	0.642	0.737
PHICSR	3.991	0.778	0.564	0.504	0.562	0.556	0.609	0.664	0.489	0.735

Note. Bold values represent the square root of AVEs.

Structural Model Assessment

The next step is to assess the structural model’s predictive capacity and the relationship of the variables. Since the direction coefficient is calculated using the study of each dependent variable and its predecessor variables, collinearity in the structural model must be considered prior to determine the relationship between the constructs (Hair et al., 2014). If there is a high degree of collinearity between the predictor variables, the direction coefficients would be skewed. To evaluate the issue of multicollinearity, the variance inflation factor (VIF) is used. Any VIF must be fewer than five (Hair et al., 2014). In this study, the VIF values are all below five, which indicate that collinearity between predictor constructs is not an issue.

Hair et al. (2014) state that three considerations should be considered when evaluating model fit: coefficient of determination, predictive relevance, and effect size. These are the three elements that must be verified, analyzed, and evaluated before proceeding to the next phase in the procedure. The effect of the independent variables on the dependent variable is calculated and evaluated using a coefficient of determination (R square). This coefficient is often used to analyze and assess structural models; its value is between 0 and 1. The greater the magnitude of the R square, the more accurate the theories. According to Hair et al. (2014), there are three meaning points to consider: 0.25, 0.5, and 0.75. These values lead to three degrees of structure correlation: weak, moderate, or substantial level. As a result, the R square of the Competitive Advantage component is .553, indicating that the forecast would have a moderate degree of precision. Additionally, Corporate Reputation has an R square of .368, and Employee Commitment has an R square of .449; since both values are smaller than .5, the association would be weak. To evaluate the suitability and accuracy of the predictions or hypotheses, in addition to determining through the R square values of the dependent variables, Stone (1974) and Geisser (1975) recommended an additional way as an evaluation next to R square that would be able to determine the accuracy of the prediction via the value of the Predictive Relevance (Q square). According to Chin (2009), Q Square value >0 will represent the accuracy and relevance of the prediction. In addition, the study used the blindfolding procedure for an omission distance of five to find the Q square value. Based on the value of Q square in the result table below the values are all >0, satisfying the condition and showing the dependent variables in the model that are predictive relevant.

The next phase in the process is to establish the effect size (f square) between the independent and dependent structural factors, or endogenous and exogenous factors, in order to assess and continue evaluating the model fit. The correlation and impact of exogenous factors on endogenous variables in the proposed model are shown by the effect size. According to Hair et al. (2014), there are three degrees of effect between independent factors and dependent variables: small, medium, and large, with f square values of 0.02, 0.15, and 0.35 for each level. The table of effect sizes below demonstrates that if economic CSR, environmental CSR, ethical CSR, legal CSR, and philanthropic CSR variables are omitted, the exogenous potential variable has no influence. If the corporate reputation, economic CSR, environmental CSR, ethical CSR, legal CSR, and philanthropic CSR variables are omitted, the exogenous latent potential variable has a small effect.

According to Hair et al. (2014), to test the significance of the coefficients, the PLS method is based on the nonparametric bootstrap procedure. Besides, the t-value has been calculated to check if the path coefficient is significantly different from zero. As can be seen in Table 3, economic CSR → employee commitment (β = .188, p < .001), environmental CSR → corporate reputation (β = .223, p < .001), environmental CSR → employee commitment (β = .113, p < .05), ethical CSR → corporate reputation (β = .182, p < .05), ethical CSR → employee commitment (β = .212, p < .001), legal CSR → corporate reputation (β = .179, p < .001), legal CSR → employee commitment (β = .103, p < .05), philanthropic CSR → corporate reputation (β = .202, p < .001) and philanthropic CSR → employee commitment (β = .190, p < .001). Therefore, H1, H2, H3, H4, H5, H6, H8, H9, H10 are supported.

Table 3.

Path Coefficients—Direct Effect on Commitment, Trust, IORP.

Hypothesis	Relationship	Path Coefficient (β)	T-value	p-value	Decision
H1	LEGCSR → EMCOM	.103	2.351	.019	Supported
H2	ECOCSR → EMCOM	.188	4.503	.000	Supported
H3	PHICSR → EMCOM	.190	4.189	.000	Supported
H4	ETHCSR → EMCOM	.212	4.093	.000	Supported
H5	ENVICSR → EMCOM	.113	2.495	.013	Supported
H6	LEGCSR → COREPU	.179	4.301	.000	Supported
H7	ECOCSR → COREPU	-.077	1.659	.097	Not supported
H8	PHICSR → COREPU	.202	4.369	.000	Supported
H9	ETHCSR → COREPU	.182	3.238	.001	Supported
H10	ENVICSR → COREPU	.223	4.545	.000	Supported
H11	LEGCSR → COCOMAD	.141	3.471	.001	Supported
H12	ECOCSR → COCOMAD	.186	4.998	.000	Supported
H13	PHICSR → COCOMAD	.105	2.599	.009	Supported
H14	ETHCSR → COCOMAD	.127	2.653	.008	Supported
H15	ENVICSR → COCOMAD	−.007	0.196	.845	Not Supported
H16	COREPU → COCOMAD	.127	3.465	.001	Supported
H17	EMCOM → COCOMAD	.256	6.780	.000	Supported

Regarding the variables that impact on CCA, there are supported hypotheses: H13 (philanthropic CSR → CCA) with β = .104, p < .05; H11 (legal CSR → CCA) with β = .141, p < .05; H14 (ethical CSR → CCA) with β = .127, p < .05; H12 ( economic CSR → CCA) with β = .186, p < .001; H17 (employee commitment → CCA ) with β = .256, p < .001; and H16 (corporate reputation → CCA ) with β = .127, p < .001. In addition, there are two hypotheses that are not significant and evaluated as inappropriate in this research model, including: H7 (economic CSR → corporate reputation) with β = − 0.077, p > .05; and H15 (environmental CSR → CCA ) with β = −.007, p > .05.

Table 4 shows the mediating function of company reputation and employee commitment (H18) based on the particular indirect effects findings examined to determine the interaction impact between the exogenous and mediating factors. According to the findings of this research, corporate reputation has a mediating impact on four variables (ENVICSR with β = .028, t = 2.868, p = .004; ETHCSR with β = .023, t = 2.281, p = .023; LEGCSR with β = .023, t = 2.493, p = .013; PHICSR with β = .026, t = 2828, p = .005), which concluded that the sign of the relationship between environmental CSR, ethical CSR, legal CSR, philanthropic CSR and CCA were found to be affected by corporate reputation, so corporate reputation was mediating the relationship between environmental CSR and CCA (H18-1b). Similarly, corporate reputation has mediated the relationship between ethical CSR and CCA (H18-1c). Corporate reputation has mediated the relationship between legal CSR and CCA (H18-1d). Moreover, corporate reputation has mediated the relationship between philanthropic CSR and CCA (H18-1e). As a result of these exogenous variables’ positive indirect effect on commitment through corporate reputation, hypotheses H18-1b, H18-1c, H18-1d, and H18-1e were supported. The hypothesis H18-1a, on the other hand, was not significant (p > .05), therefore it was not supported.

Table 4.

Indirect Effect on Commitment, IORP.

Hypothesis	Relationship	Path coefficient-β	t value	p-value	Decision
H18-1a	ECOCSR → COREPU → COCOMAD	−.010	1.493	.136	Not Supported
H18-1b	ENVICSR → COREPU → COCOMAD	.028	2.868	.004	Supported
H18-1c	ETHCSR → COREPU → COCOMAD	.023	2.281	.023	Supported
H18-1d	LEGCSR → COREPU → COCOMAD	.023	2.493	.013	Supported
H18-1e	PHICSR → COREPU → COCOMAD	.026	2.828	.005	Supported
H18-2a	ECOCSR → EMCOM → COCOMAD	.048	3.998	.000	Supported
H18-2b	ENVICSR → EMCOM → COCOMAD	.029	2.311	.021	Supported
H18-2c	ETHCSR → EMCOM → COCOMAD	.054	3.614	.000	Supported
H18-2d	LEGCSR → EMCOM → COCOMAD	.026	2.144	.032	Supported
H18-2e	PHICSR → EMCOM → COCOMAD	.049	3.389	.001	Supported

The mediating role of employee commitment (EMCOM) on five constructs with ECOCSR with β = .048, t = 3.998, p = .000; ENVICSR with β = .029, t = 2.311, p = .021; ETHCSR with β = .054, t = 3.614, p = .000; LEGCSR with β = .026, t = 2.144, p = .032; PHICSR with β = .049, t = 3.389, p = .001, which concluded that the significance of the relationship between economic CSR, environmental CSR, ethical CSR, legal CSR, philanthropic CSR and CCA were found to affect by EMCOM, so EMCOM mediated the relationship between economic CSR and CCA (H18-2a). Similarly, EMCOM has mediated the relationship between environmental CSR and CCA (H18-2b). Morover, EMCOM has mediated the relationship between ethical CSR and CCA (H18-2c). EMCOM has mediated the relationship between legal CSR and CCA (H18-2d). Finally, EMCOM has mediated the relationship between philanthropic CSR and CCA (H18-2e). As a result of these exogenous factors’ beneficial effect on inter-organizational relationship performance through employee commitment, hypotheses H18-2a, H18-2b, H18-2c, H18-2d, and H18-2e were supported.

Figure 1 illustrates the path coefficients of hypotheses testing.

Figure 1.

Path coefficients of hypotheses testing.

Discussion

Most findings in this study indicate that CSR has a favorable influence on employee commitment, corporate reputation, and CCA across five dimensions: legal, economic, philanthropic, ethical, and environmental. The result, on the other hand, indicates that employee commitment mediates the relationship between CSR strategies and competitive advantage. Corporate reputation also serves as a mediating factor in the same relationship between CSR and CCA. The findings also confirm a direct relationship between CSR strategies and CCA. This means that five measured dimensions of CSR could influence the source of competitive advantage of firms in two ways: the first one is a positive direct relationship of CSR initiatives with a competitive advantage and the second one is a positive indirect relationship with competitive advantage through the mediating role of corporate reputation and employee commitment. However, it is worth noting that data collected for this study indicate that economic CSR confirms an unsupported relationship with corporate reputation and environmental CSR is reported to confirm an unjustified connection with CCA. Therefore, these two unsupported hypotheses need further research in other developing countries and Vietnam to clarify the relationship between them.

The results also indicate that legal, philanthropic, ethical, and environmental CSR have positive effects on corporate reputation which is consistent with the result of Brammer and Pavelin (2004), Park et al. (2014), Šontaitė-Petkevičienė (2015), Hooghiemstra (2000), Melo and Garrido-Morgado (2012). According to Chun et al. (2019), continuously engaging in “doing good” allows companies to maintain their competitive advantage by encouraging stakeholders to consider certain “doing good” practices, and corporations can “look even better” over time. Flanagan and O’Shaughnessy (2005) agreed with the above idea that CSR has a favorable influence on corporate reputation and if corporate reputation is established properly and effectively, it may become one of the company’s most significant sources of competitive advantage. Employee commitment also has the same positive relationship with five measured dimensions of CSR which is in line with the idea of I. Ali et al. (2010), Turker (2009), Wong and Gao (2014). Employees tend to be committed to companies that are highly socially responsible. They believe that these firms are more constructive in terms of community contributions to ultimately establish a long-lasting competitive advantage.

Conclusion, Implications, Limitations and Future Research Directions

This study aims to identify statistical evidence on the relationship between CSR and CCA, as well as on the mediating roles of corporate reputation and employee commitment on the CSR-CCA connection. According to results, engagement in CSR dimensions such as Economic CSR, Environmental CSR, Ethical CSR, Legal CSR, and Philanthropic CSR has a profound impact on employee commitment and corporate reputation, which eventually leads to CCA for the business. The study findings also confirmed that CSR dimensions have a significant direct effect on CCA. Multiple and positive relationships were founded, which assisted in giving advice for management level. With this emphasis, leaders and administrators in all sectors would increase the likelihood of practicing CSR effectively. The potential benefits of CSR are seen as crucial elements in increasing organizational reputation, employee commitment, and CCA in the future.

Theoretical Implications

The findings in this study have several theoretical implications. First, this study illustrates and enriches the applicability of stakeholder theory to analyze a firm’s CCA through the lens of CSR, accompanied by the two mediators, namely employee commitment and corporate reputation. This sets forward a new pathway to apply stakeholder theory in analyzing CSR role in the achievement of competitive advantage through these two domains.

Second, CSR refers to how businesses manage their market practices in order to have a meaningful effect on society. However, CSR is defined differently by each firm, since there have been differing expectations on the nature of firms’ responsibilities to society. According to prior studies, there appears to be a correlation between CSR and competitive advantage (El-Garaihy et al., 2014; Melo & Galan, 2011; Vilanova et al., 2009), however, the exact nature of the correlation is unknown (Mackey et al., 2007; McWilliams & Siegel, 2001; Porter & Kramer, 2006). The findings of this study added to the literature by indicating that legal, economic, philanthropic, and ethical CSR dimensions have a direct positive relationship with a CCA in a developing country. The results of this study also demonstrated the applicability and usefulness of these Western-developed concepts in the context of emerging markets and developing economies.

Third, the findings of this study are significant because they shed light on some of the ambiguity surrounding the relationships between all measured factors, most notably the impact of CSR strategies on establishing a CCA and the nature of their relationship, which is found to be favorable. This is one of the few studies that connected CSR with corporate reputation, employee commitment, and CAA and therefore contributes to the existing body of literature by introducing a more comprehensive model including several variables.

Practical Implications

The findings of this study also offer some practical implications for practitioners. First, corporates globally are confronted with the problem of demonstrating corporate responsibility in a socially responsible manner. Therefore, by providing evidence on the responsible behavior of corporations considering this investment on CSR not as an opportunity cost or just for make-up purposes only, will provide insightful ideas about practicing CSR programs. According to the research findings, CSR is considered a critical strategic objective. As a result, corporate leaders must view CSR as a means of developing intangible assets such as employee commitment and company reputation. According to Taghian et al. (2015), the most powerful stakeholder groups in CSR decision-making are the “public” and “employees.” Both of them, together with corporate responsibility programs, play an active role in establishing long-term comparative advantage. As a result, corporations must make every effort to participate in CSR activities and incorporate them into all strategic spheres, reflecting a powerful policy, especially in an increasing market of social interests. Indeed, Porter and Kramer (2006) stated that CSR programs could be a new battlefield for achieving competitive advantage. The findings clearly stated that legal, economic, philanthropic, ethical, and environmental CSR activities improve employee commitment, corporate reputation, and competitive advantage. As a result, corporations, especially SMEs in Vietnam, are encouraged to engage in corporate social responsibility initiatives but under an effective strategy to fully exploit the potential of CSR initiatives (Šontaitė-Petkevičienė, 2015).

Second, companies that adopted CSR strategies have demonstrated increased success in job recruiting and relationship building with employees (De Grosbois, 2012; Turban & Greening, 1997). When human capital was regarded as limited yet a fundamental component of competitive advantage, employee commitment has becomes important to a firm’s existence (Guthridge et al., 2008; Spreitzer & Porath, 2012). For example, most, if not all, tourist and hospitality service companies believe that attracting and retaining high-quality personnel is vital to their strategic advantage (Greening & Turban, 2000; Guthridge et al., 2008). Employees may view CSR as more crucial if businesses focus on social responsibility activities that directly benefit employees and the surrounding community, rather than on activities that benefit other types of stakeholders (e.g., customers and the government) because they are much relevant to their self-interest (Tsai et al., 2012). This means that managers must examine the distinct effects of CSR components on employees when developing effective strategies for CSR initiatives. As a result, CSR professionals and administrators at all levels must strategically incorporate CSR practices that could maximize employee commitment to the organization.

Limitations and Future Research

This study has few limitations. First, while this study contains valuable suggestions with significant statistics, it only describes the situation in Vietnam. It would be more useful and beneficial if the literature is established in other countries, especially developing ones such as Southeast Asia. Second, data in this study was collected from certain industries, which led to the exclusion of other types of firms that may give different results. Future studies should test the final model of the research in other industries and compare the results with this study. Third, a qualitative approach may be useful for future researchers to gain more insights and explanations for the rejected relationships in this study. Finally, since corporate reputation is a factor that might take a long time for companies to build and grow, future researchers can conduct a longitudinal study to gain more interesting insights in this regard.

Footnotes

Appendix A

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iDs

Ngoc Khuong Mai

Thanh Tung Do

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