The moderating role of product market competition on the relation between social responsibility and operational performance

Competition in the product market motivates managers to continuously improve, establish strong corporate governance, reduce agency problems between managers and shareholders, reduce information asymmetry, and reduce organizational management and control costs. This research examines the moderating role of product market competition on the relationship between social responsibility and operational performance of companies. In this research, competition in the product market is measured by the HHI, social responsibility is measured by the content analysis approach following Kurdestani et al (2018), and operating performance is also measured from the variables of return on equity and net profit margin. The information of 117 companies listed in the Tehran Stock Exchange from 2013 to 2021 was used. Multivariate regression panel data with fixed effects was used. The results show that social responsibility has a positive and significant relation with return on equity and with net profit margin. Therefore, social responsibility has a positive and significant relation with operational performance. Product market competition has a positive and significant effect on the relation between social responsibility and return on equity. Product market competition has a positive and significant effect on the relation between social responsibility and net profit margin. Therefore, product market competition has a positive and significant moderating effect on the relation between social responsibility and operational performance.