1 1 DEVELOPING A REPUTATION AND BUSINESS PERFORMANCE THROUGH CORPORATE SOCIAL RESPONSIBILITY I Gede Riana Universitas Udayana (UNUD), Bali, Indonesia Email: gederiana@yahoo.com I Wayan P. Wirasedana Universitas Udayana (UNUD), Bali, Indonesia Email: ochaw@live.com.au I Gede Rihayana Universitas Mahasaraswati, Bali, Indonesia Email:gderihayana@ymail.com Abstract Corporate social responsibility (CSR) is a concept whereby companies ideally run social functions in addition to its primary business function. The purpose of this study is to analyse the effect of CSR on business reputation and business performance. Using the banking industry population in Bali, the samples determined by using purposive sampling technique. Collected data were analyzed with Structural Equation Modelling (SEM) using the Partial Least Square (PLS) method. The result shows that CSR does not have a significant positive effect on business performance; but does have a significant effect on the business reputation. While the business reputation has significant positive effect on business performance this study found that CSR actually have an indirect effect on business performance through the business reputation. Key words: CSR, reputation, business performance Background The relation between corporate social responsibility (CSR) and firm performance has evoked much interest among researchers (Supriti & Damodar, 2010). Corporate social responsibility is predominantly considered as a western phenomenon due to strong institutions, standards, and appeal systems which are weak in developing countries of Asia (Chapple and Moon, 2005). Such weak standards pose considerable challenge to firms for practicing CSR in developing countries of Asia including Indonesia. The term Corporate Social Responisbility (CSR) has been widely used in the 1970s and getting even more popular thanks to the book Cannibals with Forks: the Triple Bottom Line in 21 st Century Business (Elkington, 1997). The books highlighted three important components for sustainable development (economic growth, environmental protection and social equity) which first coined in The World Commission on Environment and Development (Brundtland Report, 1987). CSR was build upon three main focuses called 3P (profit, planet and people) which means a company should not only pursue economic advantages in the mean of profit, but also need to care for the