Exploring the relationship between corporate social responsibility and firm innovation
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Exploring the relationship between corporate social responsibility and firm innovation Xueming Luo & Shuili Du
Published online: 29 May 2014 # Springer Science+Business Media New York 2014
Abstract This research investigates the link between corporate social responsibility (CSR) and firm innovation. Drawing upon the literatures on CSR and the knowledgebased 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. Keywords Corporate social responsibility . Innovativeness capability . New product introductions . R&D . Market competitiveness Corporate social responsibility (CSR), defined as “the broad array of strategies and operating practices that a firm develops in its efforts to deal with and create relationships with its numerous stakeholders and the natural environment” (Waddock 2004, p. 10), has been widely adopted by firms. CSR activities reflect a firm’s stakeholder orientation and often range from community outreach, cause-related marketing, and employee well-being programs, to environmentally friendly sourcing and manufacturing practices (Smith 2003). X. Luo Department of Marketing and Supply Chain Management, Fox School of Business, Temple University, 1801 Liacouras Walk, Philadelphia, PA 19122, USA e-mail: [email protected] S. Du (*) Peter Paul College of Business and Economics, University of New Hampshire, 10 Garrison Avenue, Durham, NH 03824, USA e-mail: [email protected]
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Mark Lett (2015) 26:703–714
Can firms do well by doing good? Prior research has documented various business benefits of CSR. For example, CSR has been shown to positively affect consumer product responses (Brown and Dacin 1997; Du et al. 2011), customer satisfaction (Luo and Bhattacharya 2006), and brand evaluations during a product harm crisis (Klein and Dawar 2004). Recent research on branding suggests that warmth and competence are two key dimensions of brand/firm evaluation, and that perceptions of brand/firm warmth and competence influence consumer purchase and loyalty behaviors (Kervyn et al. 2012). Consistent with this view, prior CSR studies have implicitly theorized that a firm’s CSR programs enhance customers’ warmth perceptions about the firm (e.g., caring, trustworthy, have the public’s best interest in heart), and consequently lead to a var
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