CSR and firm performance nexus in a highly unstable political context: institutional influence and community cohesion

We provide evidence of the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) in Palestine, a highly unstable political context. Annual reports of all firms listed on the Palestine Exchange (PEX) for the period 2016-2019 were manually content analysed. A checklist of reported CSR items is summarised into four areas: environmental information, human resources, community involvement, and product and customer service quality. Results indicate a robust positive connection between each of the four dimensions and the composite CSR index with three performance indicators: ROA, ROE, and Tobins Q. Results also find better performing companies with a higher degree of community involvement being greatly appealing, while the environmental dimension was the least resilient. We discuss the significance of community engagement for an unstable context like Palestine from a community cohesion standpoint. Keywords: corporate social responsibility; CSR; corporate financial performance; CFP; unstable economies; small economies; Palestine.