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Exploring the relationship between corporate social responsibility and firm innovation

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Abstract

This research investigates the link between corporate social responsibility (CSR) and firm innovation. Drawing upon the literatures on CSR and the knowledge-based view, we conceptualize that a firm's CSR programs enable it to build broader and deeper relationship networks with its stakeholders, facilitating the sharing and exchange of external knowledge of its stakeholders; in turn, stakeholders' external knowledge complements the firm's internal knowledge and promotes firm innovation. Using a large scale data set compiled from various archival sources, our empirical results show that firms with greater CSR activities exhibit higher innovativeness capability and launch more new products. Furthermore, we show that this positive relationship between CSR and firm innovation is stronger for firms with higher R&D investment and firms operating in more competitive markets. This research broadens current understanding of the business returns to CSR, suggesting that CSR can be a catalyst for innovation.

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Notes

  1. For example, market instability for year 2001 is measured by the standard deviation of five-year (1996-2000) sales growth rates across firms in a given industry.

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Authors and Affiliations

  1. Department of Marketing and Supply Chain Management, Fox School of Business, Temple University, 1801 Liacouras Walk, Philadelphia, PA, 19122, USA

    Xueming Luo

  2. Peter Paul College of Business and Economics, University of New Hampshire, 10 Garrison Avenue, Durham, NH, 03824, USA

    Shuili Du

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  1. Xueming Luo
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  2. Shuili Du
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Correspondence to Shuili Du.

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Luo, X., Du, S. Exploring the relationship between corporate social responsibility and firm innovation. Mark Lett 26, 703–714 (2015). https://doi.org/10.1007/s11002-014-9302-5

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  • DOI: https://doi.org/10.1007/s11002-014-9302-5

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