Corporate social and financial performance: Revisiting the role of innovation

Timo Busch and Maximilian Schnippering

Corporate Social Responsibility and Environmental Management, 2022, vol. 29, issue 3, 635-645

Abstract: R&D intensity has been highlighted as an important factor in analyzing the relationship between corporate social (CSP) and corporate financial performance (CFP). However, the underlying mechanisms of how R&D intensity influences the CSP‐CFP relationship have caused a great deal of confusion: first, while controlling for R&D intensity, studies have continued to report ambiguous results and, second, many studies have found R&D intensity to be negatively related to CFP. Motivated by insights from the innovation literature, we revise the functional relationship and examine moderation effects of R&D intensity. Accordingly, we find a u‐shaped relationship between R&D intensity and CFP. We conclude that this functional relationship is an essential finding for future CSP‐CFP studies in order to avoid misspecifications. Further, we cannot find empirical support for a moderation effect of R&D intensity. Thus, we conclude that R&D intensity and CSP should not be considered to be mutually reinforcing drivers of CFP.

Date: 2022
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https://doi.org/10.1002/csr.2225

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Persistent link: https://EconPapers.repec.org/RePEc:wly:corsem:v:29:y:2022:i:3:p:635-645

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