The interaction impacts of corporate social responsibility (CSR) and service quality (SQ) on customer satisfaction, job satisfaction, and financial performance are investigated in the context of shipping. Interviews were conducted, and surveys were administered on 156 shipping firms with operations in Singapore. The collected data were analysed using structural equation modelling. The results showed that: (1) customer and job satisfaction fully-mediate the link between corporate level associations (i.e. CSR and SQ) and shipping firms’ financial performance; (2) CSR and SQ complement each other in driving job and customer satisfaction; (3) the interaction between CSR and SQ produces synergistic effects on customer satisfaction but compensatory effects on job satisfaction. The results suggest that the decision to implement CSR is contingent on the motivation of a firm as well as its current SQ capability. This paper contributes to the literature by reconciling the conflicting views on managing SQ performance and corporate social performance based on stakeholder theory, economic theory of complementarities and perceived value theory.

Introduction

In view of rising competition and demand for green or socially responsible services, shipping firms are inclined to implement corporate social responsibility (CSR) and service quality (SQ) concurrently in an attempt to boost their business performances (Lagoudis et al., 2006; Shin and Thai, 2015). There is sufficient evidence to show that delivering superior quality in shipping services leads to a chain of organisational benefits such as customer satisfaction, customer loyalty, and improved financial performances (Cheng and Choy, 2013; Panayides, 2003; Yuen and Thai, 2015). However, the relationship between CSR and a firm’s financial performance has been mixed and subjected to numerous debates (Drobetz et al., 2014; Margolis et al., 2009). The key objective of this study is therefore to examine the interactions between CSR and SQ, and their effects on performance outcomes through the theoretical lenses of stakeholder theory, economic theory of complementarities and perceived value theory. Scholars who are averse to CSR practice argued that CSR dilutes the primary purpose of conducting businesses and drains valuable resources from an organisation as it confers little financial benefits (Friedman, 2007). Sprinkle and Maines (2010) pointed to opportunity costs that are often neglected by existing correlational studies and argued that this would result in erroneous and inflated positive correlations. Hong et al. (2012) drew attention to financial expenditure on CSR disclosure alone that equates to hundreds of millions in the US which would outweigh or negate the finite contribution of CSR.