Corporate social and financial performance: Revisiting the role of innovation. (10th January 2022)

• Record Type: Journal Article
• Authors: Busch, Timo; Schnippering, Maximilian
• Is Part Of: Corporate social responsibility and environmental management. Volume 29:Number 3(2022)
• Page Start: 635
• Page End: 645
• Publication Date: 2022-01-10
• Subjects: corporate financial performance (CFP) -- corporate social performance (CSP) -- innovation and sustainability -- R&D management; Environmental management -- Periodicals; Environmental auditing -- Periodicals; 658.408
• DOI: 10.1002/csr.2225
• Languages: English
• ISSNs: 1535-3958

Abstract

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.