Integrating corporate social responsibility into business functions and its impact on company performance: evidence from the Indonesian manufacturing industry

Purpose – This study aims to investigate the integration of corporate social responsibility (CSR) at a functional level and examine its impact on company performance. Design/methodology/approach – Using data from 435 Indonesian manufacturing companies, 11 hypotheses were tested on direct, indirect and total effects of the relationship between functional CSR integration and its impact on company performance. The stakeholder and contingency theories were applied. Findings – The findings of this study reveal that functional CSR integration has a significant impact on customer, employee, operational and financial performances. The findings show that the relationship between functional CSR integration and financial performance can be mediated by customer, employee and operational performances. The results of this study also highlight that functional CSR integration has a stronger total effect on both customer and financial performances in environmentally non-sensitive industries than in environmentally sensitive ones. Research limitations/implications – This study expands the prior studies by providing a theoretical framework for the relationship between CSR integration and company performance, as well as testing the framework using quantitative research. Practical implications – The findings can encourage managers to effectively integrate CSR into business functions to achieve superior social and financial performance, particularly in a developing country context. Originality/value – To the best of the authors’ knowledge, this study is one of the first to empirically investigate the performance implications of integrating CSR into business functions and reveals new findings on how such integration can substantially improve company performance.