Does corporate social responsibility impact firms' innovation capacity? The indirect link between environmental social governance implementation and innovation performance

David C. Broadstock, Roman Matousek, Martin S. Meyer, Nickolaos G. Tzeremes

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

Firms' choices on corporate social responsibility (CSR) and on environmental, social and governance (ESG) implementation strategies can arguably have a positive impact on their value and performance. This ?doing well by doing good? view remains debated in the literature. Our study contributes to this debate by investigating the impact of firms? engagement on ESG policies on their innovation capacity levels. More specifically, we apply a nonparametric frontier analysis framework to a sample of 320 Japanese firms over the period 2008-2016. Our study provides evidence of a nonlinear relationship between ESG policy adoption and firms? innovation capacity. In other words, our findings are consistent with a process of ?indirect value-creation? under which firms? CSR/ESG policy adoption initially enhances their ability to pursue innovation activities and, then, eventually affects positively their value creation and financial/operational performance.
Original languageEnglish
JournalJournal of Business Research
Early online date26 Jul 2019
DOIs
Publication statusE-pub ahead of print - 26 Jul 2019

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Innovation capacity
Governance
Innovation performance
Corporate Social Responsibility
Value creation
Japanese firms
Frontier analysis
Innovation activities
Business performance
Nonparametric frontier
Nonlinear relationships
Strategy implementation

Keywords

  • Corporate social responsibility (CSR)
  • Environmental, social and governance (ESG)
  • Corporate social performance (CSP)
  • Innovation capacity
  • Efficiency and productivity
  • Nonparametric analysis

Cite this

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abstract = "Firms' choices on corporate social responsibility (CSR) and on environmental, social and governance (ESG) implementation strategies can arguably have a positive impact on their value and performance. This ?doing well by doing good? view remains debated in the literature. Our study contributes to this debate by investigating the impact of firms? engagement on ESG policies on their innovation capacity levels. More specifically, we apply a nonparametric frontier analysis framework to a sample of 320 Japanese firms over the period 2008-2016. Our study provides evidence of a nonlinear relationship between ESG policy adoption and firms? innovation capacity. In other words, our findings are consistent with a process of ?indirect value-creation? under which firms? CSR/ESG policy adoption initially enhances their ability to pursue innovation activities and, then, eventually affects positively their value creation and financial/operational performance.",
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