Corporate Social Responsibility as a Driver of Environmental Sustainability: Lessons from Industrial Provinces in a Developing Country

The four CSR dimensions examined in this study—community, employees, ethics, and legality—are grounded in classical CSR theory [10], particularly pyramid of corporate social responsibility and stakeholder theory [11]. Carroll’s framework outlines four fundamental roles that businesses should fulfill: legal, ethical, philanthropic, and economic responsibilities. This study focuses on the latter three (legal, ethical, and philanthropic) and adds employee-related CSR as a critical operational domain, aligning with the concerns of various stakeholder groups. In addition, stakeholder theory emphasizes that firms are accountable not only to shareholders as well as a wide array of other parties such as employees, community members, governmental bodies, and the broader society. Accordingly, the selected CSR dimensions reflect both external stakeholder engagement (community and legality) and internal responsibility (employees and ethics). These constructs are widely validated in prior CSR–performance and CSR–sustainability studies [12, 13], making them theoretically and empirically relevant for examining sustainability outcomes in industrial contexts.

2.1 CSR towards community

In relation to business outcomes, CSR has been found to contribute significantly to firm performance. CSR positively influences firm performance by shaping corporate reputation, which in turn affects consumers’ buying behavior [14]. Additionally, CSR initiatives are positively associated with firm efficiency and stronger effects observed in non-competitive industries. Local community-focused CSR initiatives significantly drive the overall effect [15]. Meanwhile, CSR contributes notably in enhancing both brand image and the firm's competitive position. Stakeholder influence significantly influences which CSR initiatives are adopted and helps build a positive organizational image. CSR performance in legal, ethical, environmental and philanthropic responsibility—excluding economic responsibility—has a significant influence on corporate reputation [16]. Moreover, clearly conveying and broadly disseminating CSR initiatives is recognized as a crucial strategy to enhance awareness and involvement among both employees and consumers. This type of communication enhances the performance of retail businesses while simultaneously contributing to their sustainability objectives [17]. Overall, the literature demonstrates that CSR initiatives targeting the community not only strengthen organizational performance and competitive advantage but also contribute meaningfully to social cohesion, public trust and long-term sustainability. Similarly, a recent study on Vietnamese enterprises finds that CSR programs implemented by state-owned enterprises significantly enhance the green performance of SMEs, regardless of external environmental uncertainty [18]. Hence, this research tests the following hypothesis and the search model is proposed as Figure 1.

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Figure 1. Conceptual framework (developed by authors)

H1. CSR towards community has a positive relationship with CSR.

2.2 CSR towards employees

Employee satisfaction and organizational commitment are among the most frequently studied outcomes of CSR activities. Using a multilevel cognitive approach, Khuong et al. [19] revealed that organizational CSR climate and employees’ CSR-induced intrinsic attribution could serially mediate the relationship between firms’ CSR adoption and employees’ organizational commitment.

Evidence also suggests that CSR contributes to enhancing innovation and the generation of new knowledge. Kraus et al. [20] argued that higher levels of employee-focused CSR are linked to greater innovation achievements. This relationship becomes stronger when employee contributions to innovation are critical, and when the tendency for individuals to benefit without contributing (free-riding) is more prevalent. Additional tests indicate that employee-related CSR encourages innovation by promoting workforce stability and improving the efficiency of innovative activities. The psychological mechanisms linking CSR and employee behaviors are varied. For example, Li and Cao [21] found that substantive CSR has been shown to enhance employees’ emotional attachment to the organization, a relationship that is mediated by their sense of meaningfulness at work and further reinforced by their level of embeddedness, while symbolic CSR is not. This is reinforced by Lin et al. [22], who write that only when employees perceive CSR efforts as genuine (i.e., substantive) do they exhibit more discretionary service behaviors, and this is driven by the meaningfulness they derive from their work. CSR initiatives also foster organizational citizenship behaviors (OCBs). The study by Liu et al. [23] reports that the relationship between CSR and employees’ organizational citizenship behaviors (OCBs) is moderated by task significance, with stronger effects observed among employees who perceive their work as more meaningful. Similarly, Malinauskaite and Jouhara [24] confirmed a strong relationship between perceived CSR directed toward employees and their likelihood to engage in positive discretionary behaviors within the organization.

Other studies also underscore the importance of contextual factors and mediators. For example, the study by Mubushar et al. [25] reports a positive correlation between digitalization and employees’ CSR commitment. However, this relationship is found to be conditional upon the type of Human Resource Management (HRM) system in place and the extent to which employees’ need for autonomy is satisfied in the workplace.

Perceptions of CSR authenticity among employees also play a significant role in shaping outcomes. According to the study by Muliati et al. [26], when employees perceive their company’s CSR initiatives as authentic, it leads to both organizational benefits—such as increased employee loyalty, trust in management, and positive word-of-mouth—and personal benefits, including enhanced job satisfaction and emotional well-being. Moreover, CSR initiatives can contribute to a greater sense of meaning in employees' work. Building upon the preceding discussion, the following hypothesis is proposed.

H2. CSR towards employees has a positive relationship with CSR.

2.3 CSR towards ethics

CSR and ethical practices have been found to exhibit a strong and positive relationship with multiple dimensions of organizational performance. Specifically, CSR and ethics are positively associated with product innovativeness, brand equity, and customer trust. To capitalize on these benefits, organizations are encouraged to adopt transparent practices and demonstrate strong adherence to ethical and CSR strategies [13]. Likewise, Nejati and Shafaei [27] argued that CSR initiatives help build an ethical and reputable corporate image, which, in turn, enhances the credibility of the firm’s research and development (R&D) projects. Notably, this positive relationship between CSR efforts and R&D valuation tends to be more pronounced in highly competitive industries. These findings suggest that CSR initiatives not only reinforce brand value and foster innovation but also play a crucial role in enhancing the legitimacy of R&D efforts.

The importance of leadership and internal organizational dynamics is also emphasized. The study by Newman et al. [28] concludes that ethical leadership affects CSR positively. Social responsibility in turn affects corporate ethical values and behaviors positively.

The partial mediating role of CSR has also been identified in the study. Similarly, Ong et al. [29] emphasized the importance of alignment between employees’ perceptions of CSR and ethical leadership, as this consistency enhances their willingness to contribute to social good through relationship-building activities within the organization. These findings underscore the pivotal role of ethical leadership and the congruence between leaders and employees in fostering socially responsible behaviors.

On a broader level, the study by Schaefer et al. [30] suggests that ethics can act as a foundation for voluntary corporate self-regulation initiatives, with CSR playing a central role. This perspective positions CSR not only as an internal organizational instrument but also as an external mechanism for corporate governance. Based on these findings, the following hypothesis is proposed.

H3. CSR towards ethics has a positive relationship with CSR.

2.4 CSR towards legality

Several studies underscore the foundational role of national legal systems in shaping CSR practices. Extending this perspective, the study by Shahzad et al. [31] shows that legal frameworks influence corporate responsibility (CR) in both social and environmental dimensions. Corporations are more inclined to behave in environmentally responsible ways when robust and well-enforced regulations are in place. Furthermore, firms with a higher proportion of publicly held shares and lower debt levels tend to be more committed to social and environmental initiatives. A rights-based legal tradition is further illustrated in the study by Shahzad et al. [31], which argues that, as the UK constitution adopts a rights-based approach, corporate and business law safeguards individual and community rights on a case-by-case basis. It also enforces both criminal and civil liability on corporations and their leaders. Importantly, the law supports voluntary action but prohibits personal or proximate benefit, as well as actions carried out under legal compulsion. These findings collectively affirm the significant influence of national legal traditions and regulatory structures in shaping and reinforcing CSR engagement.

Another key area of scholarship focuses on the evolving relationship between soft law and hard law in driving CSR adoption. The study by Sharma-Nepal and Isce-Taylor [32] emphasizes that soft law being flexible has helped in many ways to make the CSR approach accessible to the consumer, shareholder and the stakeholders as well. However, the softness that this ideology of the soft law provides in some cases has posed itself to be a challenge in the path of developing CSR. Similarly, hard law and its strictness and binding factor is an effective way to make CSR a prominent factor to enhance various factors in business. Supporting this transition, Sheehy et al. [33] observed that there is a global policy shift moving CSR from a voluntary, organisation-based initiative to a practice mandated by law. This shift provides an opportunity to investigate the phenomenon of motivation in law. Based on an analysis of the programs of 12 firms in Indonesia, the authors find that CSR hard law appears to motivate CSR without displacing voluntary moral initiatives. Together, these contributions suggest that a hybrid legal architecture — combining the incentives of soft norms with the enforceability of hard laws — may offer a more effective foundation for CSR. From the previous studies, the following hypothesis is proposed.

H4. CSR towards legality has a positive relationship with CSR.

To test the main hypotheses, this study also proposes an additional hypothesis, which is that:

H5. CSR has a positive relationship with environmental sustainability.

H6. CSR implementing behaviors have a positive relationship with environmental sustainability.

H7. Interaction between CSR and CSR implementing behaviors has a positive relationship with environmental sustainability.

4.1 Validity and convergent 

Table 2 and Figure 2 present construct reliability and validity results of the measurement model. Most constructs exhibit strong internal consistency, with Cronbach’s Alpha values exceeding the acceptable threshold of 0.70. All constructs demonstrate both strong reliability and convergent validity with Average Variance Extracted (AVE) values exceeding 0.50, the accepted number suggested by Subramaniam et al. [34]. For instance, CSR implementation behavior reports a CR of 0.922 and an AVE of 0.746, indicating robust construct validity. Similarly, CSR towards community, employees, ethics and legality each reflect high CR and satisfactory AVE levels. Environmental sustainability also demonstrates satisfactory reliability with AVE of 0.679 (CR = 0.894).

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Figure 2. Measurement model from SmartPLS 3

Table 2. Construct reliability and validity

Source: Authors’ calculation based on PLS-SEM analysis using SmartPLS 3.

Note: CR and AVE stand for composite reliability and average variance extracted.

Table 3 presents the Fornell-Larcker criterion to assess discriminant validity among the study’s constructs. Discriminant validity ensures that each construct is distinct from the others. According to the Fornell-Larcker rule, the square root of the AVE for each construct, shown on the diagonal, should be higher than its correlations with other constructs [35]. The results show that BE (Implementation Behaviors), CO (CSR Orientation), EM (CSR towards Employees), ET (CSR towards Ethics), CSR (Corporate Social Responsibility) and ES (Environmental Sustainability) all have diagonal values higher than their correlations with other variables. This indicates that these constructs have good discriminant validity and are distinctly separated from each other.

The Heterotrait-Monotrait Ratio (HTMT) is shown in Table 4, which is used to test discriminant validity. For good discriminant validity, all HTMT values should be below 0.85 (or in some cases, 0.90). Most constructs in the table meet this criterion. For example, the HTMT value between BE (Implementation Behaviors) and other variables like CSR (0.499), EM (0.583) and LE (0.580) are all below 0.85, showing good discriminant validity. Similarly, EM (CSR towards Employees) has HTMT values below 0.85 with all other constructs, such as CSR (0.768), CO (0.408) and ET (0.293), indicating that EM is clearly distinct.

The factor loadings for each indicator within their respective constructs demonstrate strong internal consistency and reliability in Table 5. The indicator loadings of all questions are more than the threshold value of 0.708 suggested by Tran et al. [36] and as a result, no items are eliminated from the composite constructs. For example, for CSR towards employees, all items (EM1–EM5) have high loadings, ranging from 0.780 to 0.875, indicating that these statements reliably measure employee-related CSR activities.

Table 3. Fornell-Larcker criterion

Source: Authors’ calculation.

Note: CSR, corporate social responsibility; BE, implementation behaviors; EM, CSR towards employees; ET, CSR towards ethics; LE, CSR towards legality; ES, Environmental sustainability.

Table 4. Heterotrait-Monotrait Ratio (HTMT)

Source: Authors’ calculation. HTMT values calculated using SmartPLS.

Note: CSR, corporate social responsibility; BE, implementation behaviors; EM, CSR towards employees; ET, CSR towards ethics; LE, CSR towards legality;  ES, Environmental sustainability; Beha, Moderating Effect CSR*Behaviors.

Table 5. Convergent validity and reliability for outer loading model

Source: Authors’ calculation. Based on original survey.

Note: CR and AVE stand for composite reliability and average variance extracted.

4.2 Structural model and path analysis

The empirical models estimated using SmartPLS 3 before bootstrapping as in Figure 3. Table 6 and Figure 4 report the effects among constructs based on a bootstrapping analysis with 5,000 resamples. This procedure tests the structural relationships among the model’s variables. The findings indicate that all direct effects from CSR to its components are statistically significant at p < 0.001. Specifically, CSR has significant positive relationships with CSR towards community (H1, β = 0.786, f² = 1.614), employees (H2, β = 0.689, f² = 0.904), ethics (H3, β = 0.765, f² = 1.411), legality (H4, β = 0.795, f² = 1.722) and environmental sustainability (H5, β = 0.589, f² = 0.521). These results confirm that CSR significantly influences all key areas, with medium to large effect sizes, particularly in legality and community-related activities.

In addition, CSR implementation behaviors also show a significant positive impact on environmental sustainability (H6, β = 0.184, p < 0.001), although the effect size is small (f² = 0.049). However, the moderating effect of CSR * Behaviors on environmental sustainability is not statistically significant (H7, β = 0.056, p = 0.231, f² = 0.009), indicating that the interaction does not boost the influence of CSR implementation behaviors on environmental sustainability.

Table 6. Bootstrapping

Source: Bootstrapping analysis with 5,000 samples using SmartPLS.

Note: P < 0.001. CSR, corporate social responsibility; BE, implementation behaviors; EM, CSR towards employees; ET, CSR towards ethics; LE, CSR towards legality;  ES, Environmental sustainability; Beha, Moderating Effect CSR*Behaviors.

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Figure 3. PLS-SEM path model (SmartPLS 3 output)

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Figure 4. Moderating effect of CSR implementation behaviors

Table 7. Correlation among variables

Source: Authors’ correlation analysis based on original data.

Note: CSR, corporate social responsibility; BE, implementation behaviors; EM, CSR towards employees; ET, CSR towards ethics; LE, CSR towards legality;  ES, Environmental sustainability.

The model explains 47.4% of the variance in environmental sustainability (R² = 0.474), showing a moderate level of explanatory power.

Table 7 also expresses the correlation coefficients among key constructs in the study all less than 0.85. CSR has strong positive correlations with all outcome variables, particularly with legality (LE, r = 0.795), community (CO, r = 0.786) and ethics (ET, r = 0.765). CSR also correlates moderately with environmental sustainability (ES, r = 0.668) and employee-related CSR (EM, r = 0.689). CSR implementation behaviors (BE) show moderate correlations with EM (r = 0.516), LE (r = 0.520) and ES (r = 0.440), but weak correlations with CO and ET.

This study empirically confirms that CSR plays a pivotal role in supporting environmental sustainability, especially in the context of fast-growing industrial regions like Bac Ninh and Bac Giang in Vietnam. By analyzing CSR dimensions—community, employees, ethics, and legal compliance—this research demonstrates that legal adherence and proactive community engagement are key drivers of environmentally responsible behavior among enterprises.

More importantly, the findings highlight the practical relevance of CSR for regional environmental planning and sustainable industrial development. For policymakers and planners, integrating CSR into regional development strategies can help balance economic growth with environmental protection and social responsibility. From a governance perspective, the study suggests that stronger legal frameworks, localized CSR practices, and institutional support are essential to ensuring that corporate activities align with national sustainability goals. The findings are particularly relevant to developing countries undergoing rapid industrialization, where aligning corporate conduct with environmental planning is both urgent and necessary.

6.1 Limitations and future research

While this study provides valuable insights into the relationship between CSR and environmental sustainability in Vietnam’s industrial provinces, several limitations should be acknowledged. First, the research focuses only on two provinces—Bac Ninh and Bac Giang—which may limit the generalizability of the findings to other regions or industries. Second, the use of self-reported data may introduce potential biases due to social desirability or subjective interpretation. Third, the study employs a cross-sectional design, which restricts the ability to infer causality between CSR practices and environmental outcomes.

Future research could address these limitations by expanding the geographic scope to include more provinces or countries with similar development patterns. Longitudinal studies are also encouraged to track changes in CSR implementation over time and their effects on sustainability outcomes. Additionally, incorporating qualitative methods such as interviews or case studies could help deepen the understanding of internal CSR dynamics within firms.