Contents lists available at ScienceDirect International Journal of Hospitality Management journal homepage: www.elsevier.com/locate/ijhm Are you good enough? CSR, quality management and corporate financial performance in the hospitality industry Stefano Franco a, *, Matteo Giuliano Caroli a , Francesco Cappa a , Giacomo Del Chiappa b,c a Department of Business and Management, Luiss Guido Carli University, Viale Romania 32, 00197, Rome, Italy b Department of Economics and Business, University of Sassari, Via Muroni 25, 07100, Sassari, Italy c School of Tourism & Hospitality, University of Johannesburg, Johannesburg, South Africa ARTICLEINFO Keywords: Corporate social responsibility Corporate financial performance Quality management U-shaped Hospitality Stakeholder theory ABSTRACT Hospitality firms are increasingly investing in corporate social responsibility (CSR) to generate strong re- lationships with stakeholders while aiming to benefit their own performance. However, CSR may bring both costs and benefits to the focal firm. We analyze how corporate financial performance (CFP) is affected by CSR, finding that the impact of CSR on CFP has a U-shaped form, where CSR is a cost that translates into higher benefits only when it generates solid relationships between firms and their stakeholders. Furthermore, we adopt a contingency approach, assessing the role of quality management (QM) on the CSR-CFP relationship. We find that the simultaneous implementation of CSR and QM is less beneficial to CFP than the isolated implementation of CSR due to the redundancy of different activities aimed at similar goals, i.e., stakeholders’ satisfaction. In doing so, we advance academic understanding of the impact of CSR and QM on CFP. 1. Introduction Business strategies and regulations increasingly demand that firms enhance their social and environmental performance (Lubin and Esty, 2012; Meier and Cassar, 2018), assessed through corporate social re- sponsibility (CSR) practices (Theodoulidis et al., 2017). This is parti- cularly true in the hospitality sector, where initiatives like the Inter- national Tourism Partnership, or the companies’ annual CSR reports, demonstrate the increasing involvement of hospitality firms in re- sponsible business practices. Although there are many examples of successful CSR programs, there are also cases where companies’ claims do not correspond to virtuous behaviors. Recently, for example, cruise companies that have been blamed for the decline of some sea destina- tions (The Guardian, 2019) are facing reputational problems. These considerations drive research to deepen the understanding of CSR’s effects on corporate financial performance (CFP) by considering that the mere investment in CSR is insufficient to improve performance, recognizing that a more comprehensive view should be developed. According to the literature, the involvement in sustainability programs signals companies’ wealth (Eccles et al., 2014) and improves their re- lationships with stakeholders by increasing trustworthiness and re- ciprocity, consequently benefiting CFP (Barnett, 2007; Barnett and Salomon, 2012). Nevertheless, carrying out CSR activities also im- plicates costs that may lead to a competitive disadvantage compared to competitors that do not engage in them (Barnett and Salomon, 2006, 2012; Friedman, 1970). Despite the extensive literature on the CSR-CFP relationship, research is still far from finding a shared view on this relationship and previous articles have found mixed results (Garay and Font, 2012; Theodoulidis et al., 2017). In particular, the literature focuses on the linear relationship be- tween CSR and CFP, but very few studies try to assess the balance be- tween them (Font and Lynes, 2018) – considering both costs and ben- efits that characterize CSR – thus testing for a non-linear relationship. Indeed, according to stakeholder theory, the impact of CSR on CFP may be both positive and negative, because stakeholders may reward firms that perform well in CSR, but their reaction does not impact perfor- mance when firms achieve poor results in it. In other words, CSR-re- lated costs are not exceeded by gains in CFP until the CSR shows suc- cess. Previous research has argued that the impact of CSR on CFP may follow either a U-shape (Park and Lee, 2009; Barnett and Salomon, 2012) or an inverted U-shape (Bowman and Haire, 1975) trend relying on the stakeholder theory and on the theory of the firm respectively. However, these studies do not consider that companies with weak CSR performance may even be penalized by stakeholders, whose negative attitudes towards such firms may be detrimental to their performance (Carlos and Lewis, 2018). Hence, this study intends to contribute to fill this research gap by investigating whether such a CSR-performance “threshold effect” exists by using an updated database of businesses. https://doi.org/10.1016/j.ijhm.2019.102395 Received 7 May 2019; Received in revised form 12 August 2019; Accepted 27 September 2019 ⁎ Corresponding author. E-mail addresses: sfranco@luiss.it (S. Franco), mcaroli@luiss.it (M.G. Caroli), fcappa@luiss.it (F. Cappa), gdelchiappa@uniss.it (G. Del Chiappa). International Journal of Hospitality Management xxx (xxxx) xxxx 0278-4319/ © 2019 Elsevier Ltd. All rights reserved. Please cite this article as: Stefano Franco, et al., International Journal of Hospitality Management, https://doi.org/10.1016/j.ijhm.2019.102395