Does Corporate Social Responsibility Drive Financial Performance? Exploring the Significance of Green Innovation, Green Dynamic Capabilities, and Perceived Environmental Volatility

Environmental success can only become a reality when the financial goals of firms are not compromised. Based on this proposition, the study aimed to investigate four relationships, including the effect of corporate social responsibility (CSR) on financial performance, mediation of green dynamic capabilities (GDCs) between CSR and green innovation (GI), mediation of GI between CSR and financial performance, and moderation of perceived environmental volatility in GI and financial performance nexus. A sample of 655 manufacturing firms was collected from Pakistan to test the proposed hypotheses, and structural equation modeling was conducted. The results demonstrate a positive significant influence of CSR on financial performance. In addition, the mediation of GDCs and GI has also been confirmed. Furthermore, the results demonstrate that high environmental volatility weakens the GI and financial performance nexus. The study results offer unique contributions to the literature and interesting suggestions for practicing emerging economy managers.