Corporate Social Responsibility, Innovation Capabilities, and Firm Performance: A FinTech Perspective

Abstract

In the evolving landscape of business sustainability, Corporate Social Responsibility (CSR) has emerged as a critical strategic tool, especially in the financial sector. This study investigates the impact of CSR on firm financial performance (FP) within the banking industry of Pakistan, while examining the mediating role of innovation capabilities (IC) and the moderating role of financial technology (FinTech). CSR is conceptualized through environmental, social, and governance (ESG) dimensions, and its influence on performance is assessed through both direct and indirect pathways. Drawing on dynamic capability’s theory, stakeholder theory, and the resource-based view, the study employs a quantitative, cross-sectional research design using data from 366 top management respondents from commercial banks. The findings indicate a significant positive relationship between CSR and firm performance, underscoring the strategic value of responsible business practices. Innovation capabilities were found to partially mediate this relationship, highlighting that CSR fosters internal knowledge sharing, stakeholder collaboration, and learning, which in turn stimulate innovation and lead to enhanced performance outcomes. However, contrary to expectations, FinTech did not significantly moderate the CSR–FP relationship. Although FinTech adoption showed a positive association with performance, its interaction with CSR lacked statistical significance, suggesting that the integration of CSR and FinTech is not yet strategically aligned in the sample firms. These results suggest that while CSR and FinTech individually contribute to firm performance, the synergy between them may require more deliberate organizational alignment. The study contributes to CSR literature by clarifying the internal mechanisms linking CSR to performance and calls for greater emphasis on innovation and technological coordination in CSR strategies. The findings offer practical insights for bank managers and policymakers seeking to leverage CSR for sustainable financial success through innovation-led initiatives.