Enterprise risk management and firm performance: The mediating role of corporate social responsibility in the European Union region

Abstract This study's aim is to examine the impact of enterprise risk management (ERM) on firm performance when aligned with firm strategy, with a particular emphasis on the mediating role of corporate social responsibility (CSR) in this relationship. Previous studies established a connection between ERM and firm performance, as well as between CSR and firm performance. However, the ERM effect on firm performance via CSR remains unexplored. Structural equation modeling (SEM) was used to assess how the ERM affects the firm's performance, both directly and indirectly, through the influence of CSR strategy. The ERM is represented through risk indicators collected from 222 companies in the European Union. The data were gathered from 2015 to 2019 and applied to a structural equations‐based model to analyze how CSR acts as a mediator between ERM and firm performance. The findings suggest that ERM has a significant impact on firm performance, both directly and indirectly, through the effect of the CSR strategy.