Corporate social responsibility and innovation: a comparative study

Publication Date16 Mar 2020
AuthorHaidi Zhou,Qiang Wang,Xiande Zhao
SubjectInformation & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems
Corporate social responsibility and
innovation: a comparative study
Haidi Zhou and Qiang Wang
School of Management, Xian Jiaotong University, Xian, China, and
Xiande Zhao
China Europe International Business School, Pudong, China
Purpose The purpose of this study was to examine how firmscorporate social responsibility (CSR)
strategies affect their innovationperformance via two mediating variables,employee involvement and supplier
collaboration, and compare how this mechanism works in the service and manufacturing industries.
Design/methodology/approach The conceptual model was built on stakeholder theory, the resource-
based view (RBV) and service-dominant logic (SDL). Based on survey data from 686 service firms and 1,646
manufacturing firms, the hypothesized relationships were tested using structural equation modeling (SEM).
Findings The empirical results showed that CSR positively affected service innovation and product
innovation in service firms and manufacturing firms, respectively, and that these effects were positively
mediated by employee involvement and supplier collaboration. However, compared with manufacturing firms,
the effect of CSR on innovation performance was greater for service firms. Supplier collaboration and employee
involvement also played a stronger role in service firms when mediating the relationship between CSR and
innovation performance.
Originality/value By analyzing and validating the direct and indirect effects of CSR on innovation
performance in both the service and manufacturing industries, this study addressed the strategic benefit of
CSR and extended research focused on the financial benefits of CSR. Therefore, its findings contribute to our
understanding of sustainability and innovation issues. From a theoretical perspective, this study extended the
RBV, SDL and stakeholder theory to the context of the CSR-innovation relationship, and showed that firms
could align CSR and innovation initiatives to achieve strategic synergy. It also revealed the similarities and
differences between service and manufacturing firms regarding the mechanism through which CSR affects
Keywords Corporate social responsibility, Service innovation, Manufacturing innovation, Resource-based
view, Service-dominant logic, Stakeholder theory
Paper type Research paper
1. Introduction
Over the last few decades, corporate social responsibility (CSR) has attracted global attention
and academic investigation. Further, stakeholders have made increased sustainability
awareness the status quo (Hengst et al., 2020). Based on this, integrating responsible social
actions into a firms strategy is likely to enhance its competitive advantage (Herrera, 2015). A
firms CSR orientation should play a key role in promoting its long-term and sustainable
growth in the dynamic environment (Martinez-Conesa, 2017) and be treated as a strategic
priority for integrating social and environmental goals into organizational activities
(Baumgartner, 2014). It should also be a firms strategic priority to improve the overall quality
of life in society and cultivate benign relationships with employees, customers, suppliers,
shareholders, creditors, communities and other stakeholders (Hillman and Keim, 2001).
CSR has been well studied in the literature, both theoretically and empirically. Much
research has examined its outcomes, with a recent shift in focus from accounting and
financial outcomes (e.g., Mcguire et al., 1988;McWilliams and Siegel, 2000) to non-financial
and social outcomes (e.g., Gomulya and Boeker, 2014;Jones et al., 2014;Petrenko et al., 2016).
and innovation
This research was supported by the National Natural Science Foundation of China (71602159,
The current issue and full text archive of this journal is available on Emerald Insight at:
Received 18 September 2019
Revised 31 December 2019
Accepted 25 January 2020
Industrial Management & Data
Vol. 120 No. 5, 2020
pp. 863-882
© Emerald Publishing Limited
DOI 10.1108/IMDS-09-2019-0493
The more recent literature has suggested that CSR can create added value in terms of
innovation (e.g., Husted and Allen, 2007). Herrera (2015), for example, proposed a preliminary
framework for corporate social innovation, relying on case studies to describe how firmsCSR
considerations (e.g., footprint, stakeholders and strategy) contribute to their process or
product innovations through institutional elements (e.g., stakeholder engagement,
sustainability and organization). However, there has been a dearth of empirical research
on whether CSR affects service and manufacturing firms differently, especially when it comes
to its effects on innovation performance. This has created a research gap that calls for further
understanding of the strategic decision-making underpinning CSR implementation and its
associated benefits in terms of future development. Indeed, as an important corporate
strategic consideration, CSR is related to the issue of corporate vitality. With corporate
vitality, firms can develop the foresight to act on future environmental uncertainty (Rohrbeck
et al., 2015) and enhance their innovation capacity (Rohrbeck and Gemunden, 2011).
From another perspective, some research has portrayed CSR as deficient, and merely a
matter of internal decision-making, whereas empirical investigations have generally focused
on firmsinternal socially responsible practices (Arend, 2014;Walker et al., 2014). Today we
live in a networked environment, and CSR issues should be analyzed in an open-system
environment rather than one that is internally focused or closed (Santana et al., 2009;Hengst
et al., 2020). Specifically, in addition to internal environmental practices and processes, firms
are advised to integrate network partners, such as suppliers, into their integrative processes
directed at systemically shared sustainability goals (Wang et al., 2018). CSR research
integrating both internal processes and external integrative processes is thus called for. This
study investigates the mechanism through which CSR strategies affect innovation
performance. It is based on a large sample of both manufacturing and service firms.
Several studies have suggested that CSR has a strategicrole to play in creating value for
firms. We expand on this insight by empirically substantiating the role of CSR in stimulating
innovation in both manufacturing and service firms. We also compare the influencing
mechanisms respectively.
From a theoretical perspective, this study enriches and extends service-dominant logic
(SDL), stakeholder theory and the resource-based view (RBV) by applying them to the context
of the CSR-innovation relationship. Both sides of this relationship are important to firms
long-term success. Specifically, this study reveals the similarities and differences between
service and manufacturing firms in terms of the mechanism through which CSR affects
innovation. Practically, our findings will help service and manufacturing firms to allocate
limited resources in more efficient ways.
The remainder of the paper is organized as follows. In the next section, a literature review
provides the theoretical background for the research. It is followed by a set of hypotheses
based on the theoretical framework. The research methodology section describes the
proposed study and research method. Thereafter, the empirical results are analyzed. Finally,
the results are presented and discussed, the managerial implications are explained and future
research opportunities are suggested.
2. Theoretical background and literature review
2.1 CSR and firm performance
CSR can be viewed from many perspectives, such as social performance, business ethics, and
corporate governance (Carroll, 1979;Freeman and Evan, 1990). Firms can maintain their
existing ties and create new ones by implementing CSR activities. For example, CSR can be a
bridge that connects firms with environmental organizations, government and other social
communities through environmental protection initiatives (Sharma and Vredenburg, 1998).
In terms of performance implications, at one time there was a debate over whether firms
should benefit financially from implementing CSR (e.g., Cochran and Wood, 1984;Mcguire

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