Factors for Adoption of Corporate Social Responsibility (CSR) And Corporate Financial Performance: The Impact on Saudi Listed Companies' Performance

Abstract

Purpose - The purpose of this research is to enhance understanding of corporate governance (CG) in integration of corporate social responsibility (CSR) in order to improve the corporate financial performance that increase the adoption of CSR factors in Saudi listed companies. Design/methodology/approach - This research conceptualize the model of corporate governance and the associated factors influencing of CSR adoption. It concentrates on the integration of CSR into governance systems through a framework as a process-based CG system and examine the role of transformational leadership of CEO for socially responsible business. The research develops a comprehensive interview and survey that enable companies to evaluate their promise to integration of corporate social responsibility. Findings - The paper will demonstrate that diversity of board of directors has positive influence of integration of CSR into governance system. This is also well-matched with the new corporate social models, in which shareholder, the public, customers, employees and associated companies have a mutual impact on management. The role of transformational leadership plays a significant role in integration of corporate social responsibility into business strategy. In this respect, transformational leader seems to be more effective to improve the corporate financial performance, compared with manager in integration of CSR. The paper recommends that Saudi organizations should evaluate their CG capabilities towards CSR, based on a proposed interview and survey in order to drive excellence in CSR. Originality/value - The research provides a comprehensive study to assist understand essential factors of CG, CSR and leadership proposes a new interview and survey to Saudi companies for evaluating how far they are able to move towards socially responsible organizations.