Defender Strategy

This study investigates the impact of corporate social responsibility (CSR) in combination with distinct business strategies on future financial performance. CSR is recognized for enhancing public welfare and aligning organizational activities with core values, while companies seek to improve economic outcomes with suitable strategies. Financial data from 140 companies listed on the Tehran Stock Exchange over the period from 2008 to 2024 are analyzed using a multivariate regression model based on panel data. Additionally, data envelopment analysis is applied to assess the effectiveness of each company’s CSR practices, thereby providing an integrated perspective on the interplay between CSR and business strategy. Findings reveal that when a prospector strategy is adopted alongside strong CSR initiatives, there is a significant and positive effect on future financial performance. Conversely, companies employing a defender strategy show no substantial impact from CSR execution on subsequent financial success. The study concludes that CSR, when practiced in isolation, may not be sufficient to improve long-term financial results. Nevertheless, integrating CSR with a proactive prospector strategy generates beneficial financial outcomes. Unlike prior studies that typically evaluate the effect of CSR on financial performance in isolation, this research adopts an integrated approach by examining how CSR interacts with distinct business strategies. By comparing this combined CSR–strategy framework with the conventional standalone assessment of CSR, the study shows that the value of CSR is highly dependent on a firm’s strategic orientation and produces meaningful financial benefits only when aligned with a prospector strategy. This integrated perspective offers a more precise understanding of how CSR contributes to future financial performance and provides investors with a clearer foundation for assessing long-term value creation.