An empirical study on the relationship of corporate financial performance and human capital concerning corporate social responsibility: Applying SEM and Bayesian SEM

Figures & data

Figure 1. The hypothesis model.

Table 1. Industries of the sample

Mining	1
Construction	21
Manufacturing	134
Transportation & Information	18
Wholesale Trade & Retail	23
Credit & Leasing	6
Real Estate	6
Services	10
Total	219

Table 2. Basic statistics of the all indicators

	Average	Median	Standard deviation	Minimum	Maximum
Average annual salary (Yen)	6,546,455	6,509,000	1,194,068	3,494,350	10,911,000
Average age	40.48	40.80	2.67	30.4	46.9
Average length of service	15.24	15.90	3.82	1.80	22.00
Permanent employee rate	0.86	0.91	0.17	0.05	1
Employee retention rate	0.96	0.98	0.06	0.38	1
Employee retention in first 3 years rate	0.87	0.91	0.17	0	1
Environment	13.74	15	5.48	0	21
Social	9.54	10	5.19	0	19
Governance	20.80	21	3.34	7	26
Sales growth rate	1.04	1.03	0.16	0.42	2.37
Operating profit on Sales	0.09	0.04	0.17	−0.37	0.90

Table 3. The result of path values from observed variables to components for SEM

Components	Indicators	Value	P-Value
HC	Competence	0.793
	Attitude	0.971	<0.001
Competence	Average annual salary	0.494
	Average age	0.799	<0.001
	Average length of service	0.731	<0.001
Attitude	Permanent employee rate	0.334	<0.001
	Employee retention rate	0.413
	Employee retention in first 3 years rate	0.645	<0.001
CSRA	Environment	0.834	<0.001
	Social	0.887	<0.001
	Governance	0.683
CFP	Sales growth rate	0.773
	Operating profit on Sales	0.509	<0.001

Table 4. The result of path value between components for SEM

Hypotheses	Path			Value	P-Value	Hypotheses Testing
H1	CSRA	→	CFP	0.260	0.013	Support
H2	HC	→	CSRA	0.449	<0.001	Support
H3	HC	→	CFP	−0.014	0.905	Not support

Figure 2. The result of proposed SEM model.

Table 5. The result of path value from observed variables to components for BSEM

Components	Indicators	−2.5%	μβ	2.5%
HC	Competence	0.718	0.762	0.819
	Attitude	0.957	0.968	0.972
Competence	Average annual salary	0.445	0.478	0.499
	Average age	0.759	0.781	0.803
	Average length of service	0.706	0.743	0.762
Attitude	Permanent employee rate	0.285	0.314	0.351
	Employee retention rate	0.340	0.393	0.420
	Employee retention in first 3 years rate	0.609	0.637	0.674
CSRA	Environment	0.822	0.834	0.842
	Social	0.878	0.893	0.908
	Governance	0.651	0.666	0.686
CFP	Sales growth rate	0.768	0.778	0.787
	Operating profit on Sales	0.462	0.490	0.516

Table 6. The result of path value between components for BSEM

Hypotheses	Path			−2.5%	μβ	2.5%	Hypotheses Testing
H1	CSRA	→	CFP	0.286	0.317	0.346	Support
H2	HC	→	CSRA	0.382	0.412	0.430	Support
H3	HC	→	CFP	−0.044	−0.014	0.026	Not support

Figure 3. The result of proposed BSEM model.

Table 7. The result of path value between components for SEM in 2017

Hypotheses	Path			Value	P-Value	Hypotheses Testing
H1	CSRA	→	CFP	0.290	0.017	Support
H2	HC	→	CSRA	0.446	0.003	Support
H3	HC	→	CFP	−0.169	0.216	Not support

Table 8. The result of path value between components for BSEM in 2017

Hypotheses	Path			−2.5%	μβ	2.5%	Hypotheses Testing
H1	CSRA	→	CFP	0.189	0.337	0.493	Support
H2	HC	→	CSRA	0.255	0.460	0.632	Support
H3	HC	→	CFP	−0.429	−0.207	0.006	Not support

Table A1. The list of ESG indicators

Environment Department in charge of environment (Dedicated) Department in charge of environment (Concurrent) Officer in charge of environment Documentation of environmental policies Preparation of environmental accounting Aggregation of total amount of CO2 emission by Scope 3 Implementation status of environmental audits (Obtained ISO 14,001 certification) Implementation status of environmental audits (Implemented original internal EMS) Implementation of Environmental Management System (EMS) Medium-term plan for CO2 (or greenhouse gas) emissions cuts, etc., established at companies Measures of green procurement (Implemented in line with GPN Guidelines) Measures of green procurement (Implemented in line with original internal guidelines) Green procurement of raw materials (Implemented based on comprehensive guidelines) Green procurement of raw materials (Implemented based on partial guidelines) Provisions for possible future expenses in the environmental field, such as environmental improvement, emissions and incidents Monitoring of quantitative data on pollution of soil, groundwater, etc., within business site premises (Quantitative data are monitored and disclosed) Monitoring of quantitative data on pollution of soil, groundwater, etc., within business site premises (Quantitative data are monitored but not disclosed) Status of climate change mitigation measures Status of introduction of renewable energy (solar, wind and geothermal, etc.) to business sites and headquarters building, etc. Environmental impact assessment measures Environmental business measures

Social Establishment of department in charge of CSR (Dedicated) Establishment of department in charge of CSR (Concurrent) CSR officer (Dedicated) CSR officer (Concurrent) Definition of the materiality of activities Documentation of CSR policy Third-party involvement Implementation of information-exchange meetings and other forums for interactive communication mainly with stakeholders Policies on anti-corruption and anti-bribery measures Use of ISO 26,000 Establishment of department in charge of corporate citizenship (Dedicated) Establishment of department in charge of corporate citizenship (Concurrent) Collaboration with NPOs and NGOs in conjunction with CSR activities Implementation of CSR procurement Existence of CSR procurement audit and evaluation at business partners Dealing with conflict minerals Base of pyramid (BOP) business measures Implementation of community investment Implementation of pro bono support measures

Governance Establishment of department in charge of legal compliance (Dedicated) Establishment of department in charge of legal compliance (Concurrent) Establishment of internal whistleblower hotlines Establishment of external whistleblower hotlines Establishment of rules on protection for whistleblower Guideline for Whistleblower Protection Act Establishment of internal control committee Establishment of internal audit division independent of operating divisions Evaluation of internal controls Appointment of Chief Information Officer (CIO) Appointment of Chief Financial Officer (CFO) Formulation of information system-related security policy Implementation status of internal audits related to information system security (Implemented regularly) Implementation status of internal audits related to information system security (Implemented irregularly) Implementation status of external audits related to information system security (Implemented regularly) Implementation status of external audits related to information system security (Implemented irregularly)

Information Security Management System (ISMS) certification Establishment of privacy policy Establishment of risk and crisis management system. Establishment of risk and crisis management policy Documentation of risk and crisis management policy Construction of Business Continuity Management (BCM) Establishment of Business Continuity Plan (BCP) Disclosure and documentation of business ethics (Documentation/Disclosure) Disclosure and documentation of business ethics (Documentation/Not Disclosed) Code of conduct

Table A2. The result of path values from observed variables to components for SEM in 2017

Components	Indicators	Value	P-Value
HC	Competence	0.628
	Attitude	0.654	0.044
Competence	Average annual salary	0.490
	Average age	0.671	<0.001
	Average length of service	0.908	<0.001
Attitude	Permanent employee rate	0.557	0.003
	Employee retention rate	0.331
	Employee retention in first 3 years rate	0.464	0.004
CSRA	Environment	0.842	<0.001
	Social	0.930	<0.001
	Governance	0.670
CFP	Sales growth rate	0.284
	Operating profit on Sales	0.995	<0.001

Table A3. The result of path value from observed variables to components for BSEM in 2017

Components	Indicators	−2.5%	μβ	2.5%
HC	Competence	0.425	0.616	0.893
	Attitude	0.389	0.692	0.909
Competence	Average annual salary	0.409	0.485	0.603
	Average age	0.565	0.658	0.733
	Average length of service	0.818	0.884	0.952
Attitude	Permanent employee rate	0.376	0.528	0.723
	Employee retention rate	0.218	0.320	0.435
	Employee retention in first 3 years rate	0.265	0.442	0.615
CSRA	Environment	0.791	0.855	0.917
	Social	0.837	0.896	0.948
	Governance	0.527	0.607	0.696
CFP	Sales growth rate	0.184	0.294	0.417
	Operating profit on Sales	0.994	0.995	0.996