Corporate social responsibility, agency costs and green innovation: Evidence on financial sustainability from Vietnamese SMEs

This study examines how corporate social responsibility (CSR) relates to financial sustainability, agency costs, green innovation and perceived macroeconomic outcomes in Vietnamese small and medium-sized enterprises (SMEs). Survey data from 115 owners, executives, managers and employees of Vietnamese SMEs were analysed with partial least squares structural equation modelling (PLS-SEM) in SmartPLS 4. CSR was positively associated with financial sustainability (? = 0.874, p < 0.001), green innovation (? = 0.228, p = 0.008) and perceived macroeconomic outcomes (? = 0.347, p = 0.003). Financial sustainability was positively associated with green innovation (? = 0.688, p < 0.001) and agency costs (? = 0.558, p < 0.001), and green innovation was positively associated with perceived macroeconomic outcomes (? = 0.594, p < 0.001). Contrary to expectations, CSR was positively rather than negatively related to agency costs (? = 0.277, p = 0.044). CSR was also indirectly associated with green innovation through financial sustainability (indirect effect = 0.601, 95% CI [0.432, 0.783]). The results suggest that, in SMEs where owners and managers have wide discretion, CSR spending and accumulated financial resources can raise agency costs even as they support financial stability and green innovation. SME owners should pair CSR programmes with simple controls over discretionary spending, and policymakers can link green credit and SME support to basic disclosure requirements.