The impact of corporate social responsibility disclosure on corporate reputation: the moderating role of national culture in financial industries of MENA region

Eriqat, Ibrahim O.A.; Tahir, Muhammad; Zulkafli, Abdul Hadi Article The impact of corporate social responsibility disclosure on corporate reputation: the moderating role of national culture in financial industries of MENA region Cogent Business & Management Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Eriqat, Ibrahim O.A.; Tahir, Muhammad; Zulkafli, Abdul Hadi (2024) : The impact of corporate social responsibility disclosure on corporate reputation: the moderating role of national culture in financial industries of MENA region, Cogent Business & Management, ISSN 2331-1975, Taylor & Francis, Abingdon, Vol. 11, Iss. 1, pp. 1-24, https://doi.org/10.1080/23311975.2024.2391120 This Version is available at: https://hdl.handle.net/10419/326488 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Cogent Business & Management ISSN: 2331-1975 (Online) Journal homepage: www.tandfonline.com/journals/oabm20 The impact of corporate social responsibility disclosure on corporate reputation: the moderating role of national culture in financial industries of MENA region Ibrahim O.A. Eriqat, Muhammad Tahir & Abdul Hadi Zulkafli To cite this article: Ibrahim O.A. Eriqat, Muhammad Tahir & Abdul Hadi Zulkafli (2024) The impact of corporate social responsibility disclosure on corporate reputation: the moderating role of national culture in financial industries of MENA region, Cogent Business & Management, 11:1, 2391120, DOI: 10.1080/23311975.2024.2391120 To link to this article: https://doi.org/10.1080/23311975.2024.2391120 © 2024 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group Published online: 16 Aug 2024. Submit your article to this journal Article views: 1667 View related articles View Crossmark data Citing articles: 6 View citing articles Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=oabm20 Accounting, corporAte governAnce & Business ethics | reseArch Article Cogent Business & ManageMent 2024, VoL. 11, no. 1, 2391120 The impact of corporate social responsibility disclosure on corporate reputation: the moderating role of national culture in financial industries of MENA region ibrahim o.A. eriqata,b , Muhammad tahirc and Abdul hadi Zulkaflid aal-Quds university, Jerusalem, Palestine; bschool of accounting and Finance, asia Pacific university of technology and innovation, Kuala Lumpur, Malaysia; cDepartment of Management sciences, university of turbat, Balochistan, Pakistan; dschool of Management, universiti sains Malaysia, george town, Malaysia ABSTRACT this study explores the moderating role of national culture on the relationship between corporate social responsibility Disclosure (csrD) and corporate reputation within financial industries in the MenA region. utilizing a dataset of 96 financial firms listed in Jordan, palestine, Qatar, and Kuwait from 2016 to 2020, the study employs the generalized Method of Moments (gMM) to estimate dynamic corporate reputation models. the findings indicate a positive impact of csrD on corporate reputation. notably, individualism as a cultural dimension enhances this positive relationship, whereas generalized trust weakens it. this research contributes to the literature by developing a quantitative corporate reputation index using principal component analysis (pcA), addressing gaps in csrD research in developing regions, and highlighting the importance of national culture in influencing stakeholder perceptions of csr activities. the results underscore the need for MenA financial firms to engage in structured csr initiatives and transparent disclosures aligned with cultural values to enhance corporate reputation. Future research should consider qualitative aspects and expand the scope to other industries and regions. 1. Introduction researchers argue that a company’s corporate reputation is its most valuable intangible asset since it helps it gain an important competitive advantage (Kitching, 2021; Miranda & Miguel, 2024; roberts & Dowling, 2002). numerous benefits may result from having a favorable corporate reputation, including luring in investors, clients, and staff, as well as strengthening acceptability and public perceptions of the company (eriqat etal., 2023; roberts & Dowling, 2002). therefore, a growing number of academics have given corporate reputation considerable attention. corporate reputation (cr) refers to the perceptions held by different stakeholders about the ability of an organization to meet their needs (lange et al., 2011). thus, research agrees that corporate reputation should be evaluated in light of several dimensions representing the perceptions of various stakeholders (Jeffrey etal., 2019). Although there is consensus on the factors that may reflect a company’s reputation, there is no common approach yet to measure the entire result of corporate reputation (Baruah & panda, 2020). scholars, in this particular, develop several corporate reputation ranking models, such as reputation Quotient and Fortune’s World’s Most Admired companies (WMAcs), which are commonly exclusive to a group of developed-nation businesses (Khan & Digout, 2018). Furthermore, despite that reputation models handle the multidimensionality of corporate reputation, their application often faces criticism due to biased evaluations, as these reputation rating models only rely on ceo or analyst surveys, which may not accurately represent all stakeholder groups (ghuslan et al., 2021). © 2024 the author(s). Published by informa uK Limited, trading as taylor & Francis group CONTACT ibrahim o. a. eriqat [email protected] al-Quds university, Jerusalem, Palestine. https://doi.org/10.1080/23311975.2024.2391120 this is an open access article distributed under the terms of the Creative Commons attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. the terms on which this article has been published allow the posting of the accepted Manuscript in a repository by the author(s) or with their consent. ARTICLE HISTORY received 11 March 2024 revised 1 August 2024 Accepted 4 August 2024 KEYWORDS MenA; corporate social responsibility disclosure; corporate reputation; national culture; financial industries SUBJECTS Finance; Business, Management and Accounting; environmental economics JEL CLASSIFICATION CODES n25; M14; l14; g41 2 i. o. A. eriQAt etAl. however, in the case of developing countries, especially in the MenA region, where databases ranking corporate reputation are lacking, research on the phenomenon of corporate reputation remains relatively new and has not been extensively explored (li et al., 2020), current research in the MenA context often evaluates corporate reputation using qualitative methods, such as surveys (Al sakkaf etal., 2022; Bayoud et al., 2012). this has sparked the interest of the current study in quantitatively evaluating corporate reputation in the MenA context. in addition to the importance of evaluating corporate reputation, investigating the determinants or antecedents of corporate reputation is crucial for maintaining and managing reputation effectively (pérez‐cornejo etal., 2020). previous research has linked corporate social responsibility (csr) to corporate reputation (lin, 2024; Miranda & Miguel, 2024; rothenhoefer, 2019). csr is defined as the integration of social and environmental considerations into business activities (eu, 2002). According to Bukari et al. (2024) to lhutfi et al. (2024), csr involves a company’s dedication to ensuring the welfare of stakeholders through voluntary business practices. carroll (2016) suggests that csr is the stakeholders’ expectations about the firm’s behavior towards society based on four aspects: economic, legal, ethical, and discretionary. recently, the phenomenon of the adoption of csr practices has become widely acknowledged as a value-creating opportunity and not a burden on a company (Alatawi et al., 2023). nevertheless, the adoption of csr practices in developing countries is characterized as less extensive, less embedded in corporate strategies, and less structured than in most developed countries (Jamali & neville, 2011). however, researchers suggest that to enhance a company’s reputation through csr, companies first should adopt planned or structured csr initiatives that align with stakeholder priorities and needs (Bögel, 2019; Fatma et al., 2015). For example, job creation, poverty reduction, and improving the standard of living are the main challenges facing the MenA region, and therefore, should be the top priorities of csr initiatives in the region (shehadi etal., 2013). second, companies should provide high-quality disclosure of csr activities. corporate social responsibility disclosure (csrD) improves company’s reputation by enhancing csr visibility beyond internal stakeholders (islam et al., 2021; rothenhoefer, 2019). Furthermore, previous research demonstrated that national cultural attributes can influence the association between csrD and cr (pérez-cornejo etal., 2021). this is because national culture plays a pivotal role in influencing decisions related to the adoption and disclosure of csr practices (gallén & peraita, 2018). For instance, in the MenA context, researchers have claimed that charitable activities dominate the landscape of csr practices (Jamali & neville, 2011). this is because they are culturally embedded due to islamic instructions, such as the principle of Zakat (White & Alkandari, 2019). on the other hand, national cultural factors also impact how stakeholders perceive and interpret corporate activities, such as csrD, which ultimately affects how stakeholders view the organization (Deephouse et al., 2016). the literature on national culture determines the cultural values of a particular context in light of several cultural dimensions (hofstede, 2001), among which the current study focuses on individualism and generalized trust as national culture dimensions. individualism-collectivism pertains to the extent to which a societal orientation prioritizes either group or individual interests (gorodnichenko & roland, 2012), while generalized trust is the level of trust that members of a society place in others, especially those who are not in their immediate social circle (porta et al., 1996). however, previous research indicates that these cultural dimensions are relevant factors for csrD and corporate reputation. For example, Maignan (2001) showed that stakeholders from different countries attribute varying levels of importance to csr activities, based on their degree of individualism or collectivism. in addition, research has stated that the degree of generalized trust in a particular society could provide insights into trust in a firm’s activities (Mishler & rose, 2001), such as csrD, and its impact on corporate reputation. this discussion raises the study question of what is the impact of national culture on the relationship between csrD and cr in the context of the MenA region. therefore, this study aims to investigate the impact of national culture, specifically individualism and generalized trust, on the relationship between csrD and corporate reputation (cr) within MenA nations. utilizing data from 96 financial firms across four MenA nations, palestine, Jordan, Qatar, and Kuwait, the study reveals several key findings. Firstly, it confirms the positive effect of csrD on cr. Additionally; the study revealed that the interaction between individualism and csrD has a favorable effect on cr, while the interaction between csrD and generalized trust has a detrimental effect on it. cogent Business & MAnAgeMent 3 this study makes several contributions to the existing literature. Firstly, prior research on corporate reputation has typically employed three common approaches: using a single proxy, such as the firm’s market value (Kaur & singh, 2018), conducting surveys (Al sakkaf et al., 2022; Javed etal., 2020), or relying on reputation ranking models (Dell’Atti et al., 2017; Kitching, 2021). in contrast, this study develops a quantitative index for corporate reputation by integrating various corporate reputation indicators through principal component analysis (pcA). this methodology addresses two key challenges identified in previous research: (i) providing a broader perspective on the status of corporate reputation compared to the single-proxy approach, and (ii) mitigating potential biases that may influence the evaluation of corporate reputation when relying on surveys or reputation databases. second, while studies on the relationship between csrD and corporate reputation are becoming extensive, there is still a limited body of literature in the case of developing countries compared to developed Western countries. thus, the current study offers new insights into the relationship between csrD and corporate reputation in a unique context. Additionally, in the MenA context, it is particularly argued that csr and csrD are still not clearly understood, with unstructured csr activities dominating the landscape (Aqabna et al., 2023; Jamali & neville, 2011). therefore, the present study considers a quantitative measure for csrD that takes into account its four main aspects, including environment, community, human resources, products, services, and customers. this metric can provide a general assessment of firms’ commitment to disclosing strategic or planned csr activities, which adds to the body of knowledge on csrD in the region. Furthermore, this study expands the scope of the relationship between csrD and corporate reputation by investigating the influence of national culture on this relationship. this investigation can provide a wider understanding of the nature of the csrD and corporate reputation relationship. Finally, the current study is among the few that consider the dynamic nature of corporate reputation, supposing that the previous status of corporate reputation influences its present reputation. the remainder of this research is structured as follows: section two presents the background of the study. theoretical literature is discussed in the third section. the fourth section explores empirical literature and the development of hypotheses. research design, including data collection, sampling, study variables, analytical approach, and empirical models, is detailed in the fifth section. the research findings and discussion are the main focus of the sixth segment. Finally, the primary findings, implications, limitations, and suggestions for future studies are presented in the concluding section. 2. Background in recent years, the MenA region has witnessed rapid market growth, particularly in the financial sector (Amico, 2014). previous literature provides evidence of the essential role of a well-developed financial sector in promoting economic growth, poverty alleviation, and job creation (Awdeh, 2018), as the financial system mobilizes savings for productive investments that increase capital accumulation and income growth (ehigiamusoe & samsurijan, 2021). particularly in MenA countries, financial companies dominate the stock exchange landscape and contribute significantly to the gDp of these countries (Amico, 2014; Arezki & senbet, 2020). therefore, this study is interested in investigating the reputation of financial companies in the MenA region. A reputable organization can enjoy higher financial and non-financial performance, as it creates a competitive advantage for the organization, attracting investors, customers, suppliers, and employees (Kitching, 2021; Miranda & Miguel, 2024). Additionally, the phenomenon of corporate reputation in the MenA region is still new, primarily due to the complexity of assessing corporate reputation and the lack of databases considering corporate reputation in the region (li etal., 2020). As mentioned before, csr disclosure can enhance corporate reputation by considering the interests of various stakeholders, thereby favoring their perceptions of an entity (lin, 2024; Miranda & Miguel, 2024). over the last few decades, there has been increased pressure from governments, society, and public opinion for companies to engage in csr activities. nevertheless, it is argued that the density of csr activities in the MenA region has not reached a similar level as in Western countries (Jamali & neville, 2011). in addition, perceptions about the usefulness of csr in the MenA region vary. skeptics view csr as a burden on the organization, potentially hindering the company’s ability to focus on wealth creation. proponents, on the other hand, consider engaging in csr activities to play a key role in a 4 i. o. A. eriQAt etAl. company’s success. Addressing wider social concerns can create more business opportunities and enhance stakeholders’ perceptions (Jamali & neville, 2011). Although csr and csr disclosure in the MenA region are claimed to not be clearly understood, where philanthropy is largely adopted (Aqabna et al., 2023), the value of csr is recognized. previous literature has demonstrated that csr exists in MenA countries and is linked with higher financial performance (Barakat et al., 2015), higher market value (Al Amosh & Khatib, 2023), preferable reputation (Al sakkaf et al., 2022), and so on. Furthermore, previous research noted that csr activities are more applied in some countries, specifically in the gulf states, than in others in the region (Aqabna et al., 2023). however, Al‐Marri et al. (2019) stated that structured or planned csr can maximize its benefits for both an organization and an economy. particularly, the MenA region faces many political, economic, and environmental challenges, such as high unemployment rates, refugee issues, poverty, water scarcity, and so on (shehadi et al., 2013). in this light, policymakers and regulators encourage MenA companies to engage in strategic csr activities that help address such social needs (Al‐Marri et al., 2019). According to sekhar Bhattacharyya et al. (2008), strategic csr helps eliminate traditional problems related to the implementation of csr initiatives. on the other hand, csr can be applied within projects; when project management strategies, skills, and knowledge are employed, they facilitate achieving csr objectives (salazar et al., 2012). Despite the importance of structured csr in organizing csr practices, national culture is an important element that may influence both csr activities and the way stakeholders perceive these activities (gallén & peraita, 2018; pérez-cornejo et al., 2021). the literature suggests that csr is culturally embedded, particularly in developing countries (Jamali & neville, 2011). in the MenA region, White and Alkandari (2019) stated that cultural values are unique and strongly rooted in religious values, and thus, they may shape the choice of csr activities, as well as the way stakeholders perceive and interact with these activities. these arguments drive the authors’ motives to examine the impact of national culture on the relationship between csrD and corporate reputation in the context of MenA’s financial firms. 3.Theoretical literature review this study draws on stakeholder and institutional theories. stakeholders’ theory is used in this study to explain the direct relationship between csrD and corporate reputation, while institutional theory supports the investigation regarding the influence of national culture on the relationship between csrD and corporate reputation. 3.1. Stakeholders theory stakeholders are defined as any individuals or groups who can influence the company’s performance or the achievement of its objectives or who can be affected by the company’s behavior (Freeman, 2010). various stakeholders, including investors, employees, customers, suppliers, government bodies, communities, and others, exert influence on and are impacted by the activities of the company. therefore, stakeholder theory suggests that firms cannot achieve their objectives without considering and balancing the interests of the different groups of their stakeholders (russo & perrini, 2010). to apply stakeholder theory, firms should consider the interests of the different stakeholders while making decisions and strategic planning (Brin & nehme, 2019). the stakeholder theory stands as a prominent csr theory. researchers argue that csr and stakeholder theory are complementary concepts, as both concepts are concerned with the importance of incorporating social responsibility or societal interests within a business operation (Brin & nehme, 2019; Freeman, 2015). stakeholders theory assumes that engaging in socially responsible activities enables a company to foster favorable relationships with customers, cultivate customer loyalty, and consequently enhance both business performance and reputation (pérez‐cornejo et al., 2020). According to Miranda and Miguel (2024), csr helps organizations build a strong corporate reputation and gain the loyalty of customers, investors, and employees. therefore, much of the prior research has used stakeholder theory as an underlying framework to explain the relationship between csr and corporate reputation (islam et al., 2021; Javed et al., 2020; rothenhoefer, 2019). cogent Business & MAnAgeMent 5 3.2. Institutional theory the institutional theory argues that organizations are influenced by a range of institutional conditions, including cultural, economic, and political factors, which shape their behavior and their interactions with their stakeholders (Bukari et al., 2024). According to institutional theorists, organizations are required to conform to the contextual considerations of their business environment to survive (gallén & peraita, 2018). generally, institutional theories distinguish between formal and informal institutional factors. Formal factors are rules, such as regulations, laws, and constitutions, while informal factors are socially shared rules, such as religion, norms, and culture (north, 1990). From this perspective, culture is an institutional element that may influence the likelihood that an organization will behave in a way that is socially responsible, as well as how individuals view, interact with, and understand csr initiatives (pérez-cornejo et al., 2021). similarly, gjølberg (2009) argued that csr strategies are closely intertwined with contextual considerations, including cultural factors, as national environments shape csr practices. Furthermore, institutional factors, such as culture, play a role in shaping stakeholders’ perceptions and interactions with corporate activities, such as csr (Maignan, 2001). in this regard, previous research illustrates the impact of national culture on the relationship between csrD and corporate reputation within the framework of institutional theory (gallén & peraita, 2018; pérez-cornejo et al., 2021). 4. Empirical literature review and hypotheses development 4.1. Corporate social responsibility disclosure and corporate reputation the term corporate social responsibility refers to the voluntary integration of social and environmental issues by businesses into their business functions and stakeholder interactions (eu, 2002). According to elmghaamez et al. (2023), csr disclosure is the communication that businesses make about how they treat their customers, employees, community, and environment. recent research focuses on the implications of adopting csr practices and csrD (rokhayati et al., 2024), such as corporate reputation. theoretically, prior research elucidates the connection between csrD and corporate reputation within the framework of stakeholder theory (islam et al., 2021; Javed et al., 2020). stakeholder theory posits that companies consider the interests of all stakeholders, encompassing communities, suppliers, employees, investors, and customers (Brin & nehme, 2019). csrD is perceived as a mechanism through which companies convey their dedication to diverse stakeholders. By disclosing csr activities, companies can enhance their reputation among stakeholders when they become aware of companies’ efforts to address social and environmental concerns (rothenhoefer, 2019). in this regard, pham and tran (2020) argue that csr disclosure is one of the key drivers of the positive influence of csr on cr; without reporting on csr practices, it does not matter how many csr initiatives the company has undertaken. Accordingly, Javed etal. (2020) demonstrated that when csr is reported and made public, it improves cr and credibility. in light of these arguments, empirical studies have tested the relationship between csr disclosures and cr. For instance, Javed et al. (2020) examine the impact of csr disclosure on cr using a sample of 224 pakistani senior managers of manufacturing firms in pakistan. they argue that high-quality disclosure of csr activities enhances cr and credibility. their findings reveal a positive relationship between the disclosure of csr activities and corporate reputation. this implies that organizations that prioritize diverse stakeholders in their activities receive positive responses and favorable evaluations. Additionally, organizations can effectively manage their relationships with stakeholders by reporting their csr activities. similar findings were reported by Berber et al. (2022) for 73 siberian private companies. the findings indicate that firms should engage in csr initiatives and deliver them to different audiences because companies that consider the interests of an extensive variety of stakeholders in relation to economic, social, and environmental aspects are perceived as more valuable to society, which in turn enhances their cr. likewise, a study by Dell’Atti et al. (2017) aimed to explore the extent to which disclosure on csr contributes to enhancing a good reputation in the banking sector. this study examined 75 international banks listed on the reputation institute and Asset4 data during the period 2008–2012. the findings 6 i. o. A. eriQAt etAl. reveal a positive association between csr disclosure and cr. the study concluded that a bank’s commitment to csr activities improves its reputation, especially during a financial crisis. in MenA countries, Al sakkaf et al. (2022) investigated the correlation between csr disclosure (csrD) and corporate reputation (cr) within the uAe context. the study employed a questionnaire-based data collection method targeting 595 high-level managers in uAe companies. results indicated that managers engaging in csr activities were motivated by favorable cr. similarly, Bayoud et al. (2012) explored the csrD-cr relationship in libya, utilizing a sample of 149 financial managers. the findings revealed a strong association between high levels of csrD and cr. however, it is worth noting that researchers generally relied on qualitative approaches to gather cr data due to the limited coverage of MenA companies in cr databases, as mentioned earlier. nevertheless, the results regarding the csrD-cr relationship in the MenA context are consistent with findings from other contexts. H1: A positive relationship exists between csr practice disclosure and corporate reputation (cr). 4.2. Moderating role of national culture culture is defined as the standard criterion for evaluation, perception, interaction, communication, and belief among those who share a common language, history, and geographical location (ren & gray, 2009). institutional theory suggests that organizations are influenced by the cultural values, such as individualism and generalized trust, and institutional frameworks prevailing in their environment. therefore, the impact of national cultural values on the relationship between csrD and corporate reputation can be understood through the lens of institutional theory by considering how cultural norms shape organizational practices and stakeholder perceptions, ultimately affecting corporate reputation (gallén & peraita, 2018). in this regard, the present study examines the impact of individualism and generalized trust as national cultural dimensions on the relationship between csrD and cr. individualism and collectivism represent the degree to which individuals are integrated into a group. individuals in individualist societies focus on their own interests, so their ties with other individuals are fragile. in contrast, individuals in collectivist societies are more loyal to the group and appreciate goals that favor society as a whole (gorodnichenko & roland, 2012). in an individualistic culture, there is a strong emphasis on self-achievement, individual initiative, and personal goal orientation (hofstede, 2001). in the business world, this may translate into a focus on individual performance with rewards and promotions based on personal or business accomplishments. it also encourages entrepreneurship, business performance, and competition (Kueh & ho voon, 2007). researchers have pointed out that individualistic ideology is strongly interconnected with the Marxist (capitalist) concept of management and organization, which has proven to be an effective management style for business success (turner, 1988). in this context, Deephouse et al. (2009) argued that individualism is positively associated with cr in the context of 405 firms worldwide. they suggested that organizations are increasingly perceived as places where individuals can seek resources to develop their personal interests and careers. individuals tend to favor corporations offering significant career benefits to their employees. thus, in an individualistic culture, organizations can be viewed as providers of such opportunities. Furthermore, researchers have argued that stakeholders’ perspectives on a company’s csr activities differ among countries based on the degree of individualism and collectivism (Maignan, 2001). For example, Matten and Moon (2008) assume that csr is an explicit function of corporations in individualistic societies. corporations in such societies usually voluntarily and individually engage in csr activities motivated by the perceived favorable expectations of different stakeholders. in this context, a study by peng etal. (2012) reported a positive relationship between individualism and csr using an international sample of 1189 firms. conversely, in collectivist ideologies, csr is seen as an implicit function of an organization motivated by cultural values and a sense of collectivism. For instance, in the MenA countries, White and Alkandari (2019) reported that firms in Kuwait voluntarily engage in csr practices due to a strong sense of corporate citizenship that reflects the collectivistic culture and islamic values. thus, in this study, we assume that individuals in individualistic societies value the firm’s efforts regarding csr activities and therefore positively influence the relationship between csrD and cr. cogent Business & MAnAgeMent 7 H2a: individualism has a positive impact on the relationship between the disclosure of csr practices and corporate reputation (cr). the concept of ‘generalized trust’ refers to the anticipation for consistent and honest behavior that develops when a society adopts moral principles in a way that establishes expectations for trustworthiness. in contrast, particularized trust is a type of trust that arises from face-to-face interactions with others and through previous social experiences with trusted people (porta et al., 1996). researchers widely recognize that trust in business activities, such as csrD, is particularized trust because it is linked to a specific organizational trait (Kumari et al., 2021). previous studies have focused on the influence of particularized types of trust on the relationship between csrD and cr. Bögel (2019) shows that disclosures on csr activities, along with student trust, are major factors in maintaining the reputation of a german university, using a sample of 232 students. likewise, Fatma et al. (2015) examined the effect of trust on the relationship between corporate social responsibility and corporate reputation in the context of indian banks. they used a sample of 303 bank customer respondents. the results showed a positive effect of trust on the relationship between csr activities and the bank’s reputation. the results indicate that when customers place their trust in the csr initiatives undertaken by the bank, it reinforces the positive relationship between csr and the bank’s reputation. generally, previous research has examined the impact of particularized trust, such as trust from employees, customers, and others, on csrD and cr, demonstrating the important role of such types of trust in enhancing the relationship between csrD and cr. however, very little research has investigated the impact of generalized trust on this relationship. generalized trust, as a cultural value in a specific context, can provide an indication of trust in business (Mishler & rose, 2001), but it may not necessarily translate into trust in formal business institutions (pirson etal., 2019). in some cases, it may even indicate low levels of trust in formal business institutions. previous research has linked generalized trust to trust in businesses. For instance, evans and van de calseyde (2018) assert that generalized trust could have negative reputational consequences. similarly, lomnitz (1988) showed that informal activities based on interpersonal relationships are not random or chaotic; on the contrary, they form a system of exchange based on personal trust and loyalty that operates alongside formal administrative rules. likewise, in the case of the MenA region, research has shown that people are more active in the informal financial sector and tend to have a higher level of trust in informal activities. this is because the overall level of trust in various institutions is low, leading individuals to prefer engaging in informal economic transactions (sami & lassassi, 2020). Figure 1 shows the conceptual framework of the study. H2b: generalized trust has a negative influence on the relationship between csr practice disclosure and corporate reputation (cr). 5. Research design 5.1. Data this study utilized secondary data to investigate the impact of national culture on the correlation between csrD and corporate reputation. Data were sourced from multiple outlets, with each indicator Figure 1. Conceptual framework. 14 i. o. A. eriQAt etAl. individuals in collectivist societies may perceive such activities as one of the implicit functions of the company (Matten & Moon, 2008; peng et al., 2012), which also supports the study’s hypothesis (h2a). citizens of a country with a high level of individualism give special weight to voluntary and unpaid groups as well as to personal initiative (husted, 2005). Because these traits serve as the cornerstone for status quo-challenging organizational behavior, members of these organizations are more likely to advocate for social and environmental change. Moreover, because group solidarity is less important in an individualistic culture, individuals from an individualistic society are more inclined to denounce social and environmental illegal activities (vachon, 2010). in the MenA context, the results suggest that the level of individualism in MenA countries, including palestine, Jordan, Qatar, and Kuwait, enhances stakeholders’ perceptions of csrD practices adopted by MenA financial firms, thereby strengthening the positive impact of csrD on their reputation. therefore, financial firms and policymakers in these MenA countries should take the individualistic ideology into account when planning and implementing csr activities to maximize the benefits of csr. Model (3) indicates that the moderation effect of generalized trust on csrD has a negative and significant impact on cr (p < 0.01). these findings align with the assumption of institutional theory, which suggests that organizations must take into account contextual factors, such as national culture in their business operations (gjølberg, 2009). indeed, this result reinforces our previous discussion regarding the role of national culture as an institutional factor in determining the relationship between csrD and cr, as evidenced by the utilization of another cultural attribute, i.e. generalized trust. the results suggest that generalized trust weakens the relationship between csrD and cr. previous empirical research has generally focused on the role of particularized types of trust, such as trust among customers and employees, in enhancing perceptions regarding csrD. these studies have found a positive association between particularized trust and both csrD and cr (Bögel, 2019; Fatma et al., 2015). however, generalized trust as a cultural value may not necessarily translate into trust in business. Moreover, in some cases, a high level of general trust among people may indicate low levels of trust in formal businesses. in the case of the MenA region, the findings of sami and lassassi (2020) indicate that individuals in the MenA region place more trust in informal economic activities due to their low level of trust in various formal institutions. similarly, as noted by Antoci et al. (2006), generalized trust becomes effective in an economy only when organizations are perceived as trustworthy, meaning that they are considered integral to broader societal trust. consistent with these findings, the results suggest that in such MenA countries, a higher level of generalized trust may indicate a lower level of particularized trust toward formal financial firms, thereby negatively influencing the relationship between csrD and cr. consequently, the findings suggest that financial firms need to cultivate particular trust with their stakeholders to maximize the reputational benefits of their csr activities and raise awareness about their csr initiatives. these results confirm the study hypothesis (h2b). the findings of the lagged value of cr in relation to the study’s control variables demonstrate a substantial positive impact on cr (p < 0.05), Models (1 and 3), and Model (2) (p < 0.10). According to pérez‐ cornejo et al. (2020) and rothenhoefer (2019), the findings support the notion held by experts that cr has a dynamic nature that builds gradually over time. cr and Models (1, 2, and 3) are positively and statistically significantly impacted by firm size (p < 0.01). As expected, big businesses have greater market visibility and access to resources that help them establish their brands compared to small businesses (Delgado‐garcía et al., 2013). Further findings show that leverage significantly and negatively affects cr (p < 0.05) in Models (1) and (3) and (p < 0.01) in Model (2). this finding supports the hypothesis that investors favor businesses with sound financial plans since overusing loans puts the business under ongoing strain and raises the possibility of unpredictable dividend payments to shareholders (Adenugba et al., 2016). therefore, companies with higher leverage are expected to have a lower reputation because the future burden on them may affect their long-term survival (Jao et al., 2020). the relationship between gDp and cr is unclear. We expect this relationship to be positive, while the results show that a higher gDp does not necessarily improve cr, as a higher gDp is not necessarily associated with good practices and behaviors by companies that, in turn, will create a good reputation. however, some empirical studies have found similar results (Dell’Atti etal., 2017). Finally, the relationship cogent Business & MAnAgeMent 15 between the inflation rate and corporate reputation was found to be negative and statistically significant (p < 0.01) in Models (1 and 3) and (p < 0.05) in Model (2). this relationship meets expectations, as a high inflation rate can negatively influence country-level reputation, central bank reputation, confidence in the private sector, and its ability to maintain price stability (hwang, 2018). For all three models (1, 2, and 3), the results of the diagnostic tests needed for the gMM dynamic models are generally satisfactory. the results of the Ar1 test, which suggests there was no first-order serial correlation, have been rejected, while the results of Ar2 regarding the assumption that there was no second-order serial correlation have not been rejected. Finally, the fact that the hansen test of instrument overestimation was not rejected suggests that the instruments used were valid. 6.4. Alternative analysis A set of robustness checks was conducted to evaluate the sensitivity of the results to alternative estimation methods, such as pooled ordinary least squares (pols) and fixed effect model (FeM). As mentioned previously, roodman (2009) argued that the results of pols and FeM could be biased for dynamic regression models because the lagged dependent variable correlates with the error term. therefore, to employ these estimation techniques, we excluded the dynamic nature of this analysis to mitigate the potential for biased results. table 8 presents the results obtained by the pols estimation, which show a high level of consistency when compared to the results obtained from the gMM estimation. Furthermore, the fixed effect and random effect models offer more advantages than pols, as they are designed to address heterogeneity. the fixed effect model (FeM) is estimated using least squares dummy variables (lsDv), which involves creating dummy variables for each cross-sectional unit in the panel to capture individual effects. on the other hand, the random effect model (reM) assumes that the heterogeneity across individuals is stochastic and uncorrelated with the explanatory factors (nickell, 1981). in this context, the hausman test determines the better model between FeM and reM based on the nature of the analyzed panel data. the result was statistically significant, indicating that reM is rejected and FeM is the preferred model, as shown in table 9. therefore, FeM is employed in this paper as an alternative analytical approach for the study findings. however, the results presented in table 9 are consistent with those obtained from the gMM estimation, providing a form of robustness for the study results. 7. Summary and conclusion this study investigates the impact of national culture on the relationship between csrD and cr among financial firms listed in MenA stock markets. the main findings indicate a positive effect of csrD on cr. Moreover, the results reveal that individualism positively moderates the relationship between csrD and cr, whereas generalized trust exerts a negative influence on this relationship. this study provides several contributions. Firstly, it develops a quantitative corporate reputation index by amalgamating various dimensions of corporate reputation through pcA. such an index offers additional insights to the research community for assessing corporate reputation status. secondly, the study underscores the necessity for csr initiatives in the MenA region, aiding managers and policymakers in comprehending csr strategic planning better. thirdly, it addresses an empirical gap observed in previous research on corporate reputation, particularly in the context of developing countries like the MenA region, where few studies have been conducted. lastly, this study enhances understanding of the relationship between csrD and cr by examining the moderating influence of national culture on this relationship. Furthermore, the study’s findings provide several implications and recommendations. the results indicate that disclosing csr initiatives to different stakeholders helps organizations improve their reputation. stakeholders are more willing to react positively to organizations that regularly practice socially responsible initiatives. therefore, managers of the MenA’s financial firms are recommended to engage in csr activities and csr disclosure to enhance the company’s reputation among stockholders. this involves not only engaging in socially responsible practices but also effectively conveying these efforts to 16 i. o. A. eriQAt etAl. stakeholders. A clear and transparent disclosure can enhance the perceived value of these activities. in this regard, policymakers can promote the adoption of standardized csr reporting frameworks and guidelines for financial companies in the MenA region. clear and consistent reporting standards can enhance transparency, comparability, and credibility in csr disclosures, enabling stakeholders to make informed decisions. the results also show that culture is an important institutional aspect that influences how stakeholders view a company’s csr activities and, consequently, how different cultural values affect the Table 8. Results of alternative estimation method (PoLs). Variables (PoLs) (PoLs) (PoLs) Model 1 Model 2 Model 3 CsRD 0.143*** 0.0961*** 0.136*** (0.0238) (0.0244) (0.0236) CsRD-iD – 2.428*** – (0.482) iD – −0.151 – (0.112) CsRD-t – – −1.888*** (0.296) t – – 0.185* (0.0976) Fs 0.0706*** 0.0624*** 0.0678*** (0.00875) (0.00854) (0.00860) FL −0.00563*** −0.00444*** −0.00596*** (0.00173) (0.00167) (0.00166) gDP −0.0114 0.0331* −0.0318 (0.0185) (0.0196) (0.0194) in −0.00212* −0.00132 −0.00178* (0.00109) (0.00105) (0.000985) industry Yes Yes Yes Constant −0.0280 −0.315* 0.198 (0.174) (0.174) (0.189) observations 480 480 480 R-squared 0.405 0.455 0.456 Note: standard errors in parentheses. ***p < 0.01, *p < 0.1. Table 9. Results of alternative estimation method (Fe). Variables (Fe) (FeM) (FeM) Model 1 Model 2 Model 3 CsRD 0.0932*** 0.0718** 0.105*** (0.0297) (0.0296) (0.0289) CsRD-iD – 2.324*** – (0.602) iD – −0.197 – (0.154) CsRD-t – – −1.818*** (0.369) t – – 0.211 (0.134) Fs 0.0784*** 0.0666*** 0.0721*** (0.0122) (0.0116) (0.0116) FL −0.00691*** −0.00560*** −0.00692*** (0.00224) (0.00213) (0.00210) gDP 0.00136 0.0384 −0.0263 (0.0257) (0.0260) (0.0262) in −0.00117 −0.000850 −0.00113 (0.000998) (0.000983) (0.000985) industry Yes Yes Yes Constant −0.126 −0.296 0.199 (0.244) (0.232) (0.255) observations 480 480 480 number of firm iD 96 96 96 Hausman test (FeM vs. ReM) 25.65*** 10.74*** 16.78** (0.000) (0.009) (0.010) Note: standard errors in parentheses. ***p < 0.01, **p < 0.05. cogent Business & MAnAgeMent 17 relationship between csrD and cr. As a result, decision-makers and managers need to understand the national culture of the nation in which they do business. in particular, the results indicate that individualism strengthens the positive relationship between csrD and cr. in this light, financial firms in the MenA region are recommended to align their csr initiatives with the values and expectations of individualistic cultures. this may involve prioritizing initiatives that emphasize personal freedom, individual achievement, and self-expression. on the other hand, the results showed that generalized trust weakens the relationship between csrD and cr. therefore, financial firms in the MenA region should conduct thorough assessments of the cultural context in which they operate, including levels of generalized trust, to better understand how their csr initiatives may be perceived by stakeholders. in addition, managers should proactively work to build particular types of trust with different stakeholders through consistent and transparent behavior. however, from a theoretical perspective, the results of this study support the assumptions of the stakeholder and institutional theories that were used in this study as underling theories to explain the study’s hypotheses. the study faces some limitations that offer avenues for future research. the study relied on quantitative data gathered from secondary sources for this investigation. Qualitative components of cr may potentially be the subject of future investigation, such as product quality, employee morale, and customer satisfaction. similarly, qualitative aspects of csrD, including interviews with higher management regarding their perceptions, planning, and aims of adopting csr practices and csrD are important domains that could be examined in further research. Moreover, the current study faced some limitations regarding data availability. the primary challenge was missing data, which hindered the expansion of the sample to include more countries in the region and extend the study period, particularly due to the lack of databases necessitating manual data collection. therefore, it is not possible to generalize the findings of this study to other industries or nations in the region. in particular, it would be valuable to conduct further research to explore these relationships in the context of other industries and MenA nations. Additionally, the study relied on the World values survey database to collect data for national culture variables, including individualism and generalized trust. hofstede’s dimensions of national culture are also commonly used databases for national culture. this database includes more cultural traits, such as masculinity, power distance, and uncertainty avoidance, but it didn’t cover all the countries included in the study sample. Further research could explore the moderating impact of such cultural attributes in other contexts where the data are available. Finally, in Middle eastern societies, where the islamic religion is most prevalent, csr can be viewed as an act of obedience to god. therefore, it would be noteworthy to investigate the implications of csr from an islamic perspective. Additionally, it is important for further research to conduct a comparative analysis of different types of trust, including generalized trust and particularized trust, and their impact on the relationship between csrD and cr. Ethical approval the ethical approval statement is not applicable because the research paper does not include animals or humans as subjects. Authors contributions ibrahim o. A. eriqat: conceptualization, methodology, data collection, data analysis, results interpretation, and writing the first draft of the paper. Muhammad tahir reviewed the data analysis, results interpretation, data curation, and revised the study critically for intellectual content. Abdul hadi Zulkafli contributed to conceptualization, supervision, administrating the research team, and revising the study critically for intellectual content. All authors agree to be accountable for all aspects of the work. All authors have read the contents and agreed with the publication of the study. Disclosure statement no potential conflict of interest was reported by the author(s). 18 i. o. A. eriQAt etAl. Data the study utilized secondary data sources, including firms’ annual reports, the World Bank database, and the World value survey database. these sources are available to the general public. Data collection was conducted manually. the size of the dataset comprises 480 observations for each variable. Funding there was no financing for the study. About the authors Ibrahim O.A. Eriqat has a phD in Accountingcorporate governance and corporate Finance from the school of management, universiti sains Malaysia. his research area is interested in the fields of corporate governance, sustainability, corporate social responsibility, corporate reputation, financial sector, and financial inclusion. currently, he is working as a lecturer at the accounting, taxation, and audit department, school of accounting and finance, Asia pacific university of technology and innovation, Kuala lumpur, Malaysia. Muhammad Tahir is an Assistant professor at the Department of Management sciences, university of turbat, Balochistan pakistan. he earned his phD in international Finance from the school of Management at universiti sains Malaysia. his area of research is international finance, corporate finance, and corporate governance. Abdul Hadi Zulkafli is a senior lecturer and the chairperson of Finance and islamic Finance at the school of Management, universiti sains Malaysia. he was conferred the Doctor of philosophy (Finance) from the university of Malaya. he teaches principles of Finance, corporate Finance, entrepreneurial Finance, Analysis of Financial statements, and enterprise risk Management. he has published and reviewed articles in the areas of corporate Finance corporate governance and sustainability. ORCID ibrahim o.A. eriqat http://orcid.org/0000-0002-6777-9472 Abdul hadi Zulkafli http://orcid.org/0000-0001-6087-1746 Data availability statement the authors confirm that data supporting the findings of this study will be available upon reasonable request. References Adenugba, A. A., ige, A. A., & Kesinro, o. r. (2016). Financial leverage and firms’ value: A study of selected firms in nigeria. European Journal of Research and Reflection in Management Sciences, 4(1), 14–32. 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Appendix A. sample characteristics Population of the study Country of exchange insurance Banking oFs total Jordan 20 15 29 64 Palestine 8 6 0 14 Qatar 6 9 4 19 Kuwait 7 9 31 47 total population of the study 41 39 64 144 initial sample Country of exchange insurance Banking oFs total Jordan 10 15 12 37 Palestine 8 6 0 14 Qatar 6 9 4 19 Kuwait 2 8 20 30 total initial sample 26 38 36 100 Final sample Country of exchange insurance Banking oFs total Jordan 10 15 12 37 Palestine 7 6 _ 13 Qatar 4 8 4 16 Kuwait 2 8 20 30 total final sample 23 37 36 96 Notes: to fairly represent the two groups of countries, the study sample consisted of all insurance, banking and other financial services companies listed in Qatar and Palestine (the Palestine stock exchange does not have an oFs industry) while the study considered the 37 and 30 largest financial companies in Jordan and Kuwait, respectively, based on the market capitalization in the last year of the analyzed period (2020). thus, the initial sample consisted of 100 financial firms, with 50 companies from Jordan and Palestine (non-oil exporting countries) and 50 companies from Qatar and Kuwait (oil-exporting countries). after data collection, companies with a significant amount of missing data were excluded; therefore, the final sample comprised 96 companies distributed across sectors and countries as described above. Appendix B.summary of the study variables Construct Variable symbol Definition source of information Dependent variable: corporate reputation Return on assets Roa net income before tax to total assets Firm’s annual report Return on equity Roe net income before tax to total equity Firm’s annual report Market share Ms total revenue of a firm to total revenue of all firms in the same industry Firm’s annual report Human capital efficiency HCe Revenue − (total cost − employee cost)/employee cost Firm’s annual report Price to earnings ratio Pe net income after tax/weighted average number of common shares Firm’s annual report Market to book value ratio MB Market capitalization/book value of a company assets Firm’s annual report independent variable: CsRD index Corporate social responsibility disclosure CsRD index includes 37 items in relating to CsR aspects Firm’s annual report Moderate variables: national culture individualism iD a question rating from 1 to 10 from the world value survey. Where 1 indicates that you totally agree with collectivism. 10 indicate you totally agree with individualism. ‘How would you place your views on this scale? 1 means you completely agree with the statement on the left; 10 mean you agree completely with the statement on the right; and if your views fall somewhere in between, you can choose any number in between: Incomes should be made equal? We need larger income differences as incentives for individual effort’ World values survey generalized trust ta question from the world value survey. about to what extent you trust people. ‘Generally speaking, would you say that most people can be trusted or that you need to be very careful in dealing with people?’ World values survey Control variables Firm size Fs Log of a firm total assets Firm’s annual report Financial leverage FL total liabilities/total equity Firm’s annual report industry dummy iallocating a number for each industry included in the study stock exchanges gross domestic product gDP Country annual gDP World bank database inflation rate in Country annual inflation rate World bank database cogent Business & MAnAgeMent 23 Appendix 3.csr items checklist number CsRD index sub index a environmental disclosure (eD): 1the company policy concern environment/environmental issues 2the company concerns to environmental management 3Participation in environmental/pollution protection programs 4Conservation of natural resources 5Recycling products/services waste 6Compliance with environmental regulations 7Joint projects with other organizations providing environmental protection and management 8Reduction, preventing or repairing environmental damage 9Disposal of waste in proper manner 10 support actions designed to protect environment sub index B Human resource disclosure (HRD): 1the company concerns to health and safety of employees 2the company concerns to employee wages and salary level 3the company adopts compensation/pension system 4number of employees in the company 5talented employees received incentives, benefits, and rewards 6the company concerns to the safety of workplace 7Human resource development (training programs and education) 8establishment of training centers of employees 9Remuneration/package system. 10 Management/company efforts to improve employees’ satisfaction and motivation 11 Holidays and vacations system 12 Providing information on job stability, workers stability and the company’s future sub index C Product and consumer disclosure (PCD): 1Product/service safety 2High product/service quality 3the company concerns to customer satisfaction 4Concern/responsiveness to customers complaints 5Providing information related to improving product/service quality 6Customer service improvement sub index D Community involvement disclosure (CiD): 1Donations to the charity activities 2establishment of parks and gardens 3social welfare/sponsoring social activities 4support public health 5Providing job opportunities/help in reducing unemployment rate and job creation 6support educational institutions 7support culture and arts 8Participate or contribution in community serving programs, such as eliminate crimes, corruption, and illiteracy 9sponsoring students ‘education and scholarships total 37 items of CaRD index