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The Impact of Corporate Social Responsibility and Innovative Strategies on Financial Performance

Author

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  • Joana Costa

    (DEGEIT—Department of Economics, Management, Industrial Engineering and Tourism, University of Aveiro, Campus Universitário de Santiago, 3810-193 Aveiro, Portugal
    GOVCOPP—Research Unit on Governance, Competitiveness and Public Policies, Campus Universitário de Santiago, 3810-193 Aveiro, Portugal
    INESCTEC—Institute for Systems and Computer Engineering, Technology and Science, R. Roberto Frias, 4200-465 Porto, Portugal)

  • José Pedro Fonseca

    (FEP—Faculty of Economics, University of Porto, R. Roberto Frias, 4200-464 Porto, Portugal)

Abstract

The article aims to appraise the role of Corporate Social Responsibility (CSR) and innovation strategies as leverages of a company’s financial performance. The theoretical and empirical statement of this link aims to reinforce the importance of these strategical options in both the managerial and the public policy domain. Shedding light on the economic return of these practices will help managers make better strategic decisions. Policy makers will also grasp the required evidence to encompass CSR in policy packages. To address the research question, data were collected from the Thomson Reuters Eikon Datastream covering the 1000 largest companies listed on the stock exchange worldwide. Thereafter, hierarchical linear regressions were performed to produce the econometric results. Two time frames (2015–2019) were compared to address time–space trends. Enrolling in CSR activities entails additional costs which can undermine the company’s financial performance if not properly supported by public policies. Combining CSR and innovation appears to be the best strategy for companies seeking improvements in their financial performance while being socially responsible. The contribution of this study is threefold: first, the analysis covers the largest thousand firms in operation worldwide; secondly, the econometric results demonstrate that combining CSR with innovation positively impacts financial performance; and lastly, the time comparison evidences a positive but slow evolution in CSR adoption. The article provides an applied perspective, of use both for managers and policy makers, as to how they should approach and disseminate involvement in these types of activities.

Suggested Citation

  • Joana Costa & José Pedro Fonseca, 2022. "The Impact of Corporate Social Responsibility and Innovative Strategies on Financial Performance," Risks, MDPI, vol. 10(5), pages 1-20, May.
    • Handle: RePEc:gam:jrisks:v:10:y:2022:i:5:p:103-:d:814415
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    References listed on IDEAS

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    1. Ting-Kun Liu, 2020. "The Impact of Corporate Social Responsibility on Performance in the Financial Industry," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(9), pages 1037-1050.
    2. Ibrahim Sameer, 2021. "Impact of corporate social responsibility on organization’s financial performance: evidence from Maldives public limited companies," Future Business Journal, Springer, vol. 7(1), pages 1-21, December.
    3. Ting-Kun Liu, 2020. "The Impact of Corporate Social Responsibility on Performance in the Financial Industry," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(9), pages 1037-1050, September.
    4. Rizwan Ali & Muhammad Safdar Sial & Talles Vianna Brugni & Jinsoo Hwang & Nguyen Vinh Khuong & Thai Hong Thuy Khanh, 2019. "Does CSR Moderate the Relationship between Corporate Governance and Chinese Firm’s Financial Performance? Evidence from the Shanghai Stock Exchange (SSE) Firms," Sustainability, MDPI, vol. 12(1), pages 1-17, December.
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    Cited by:

    1. Joana Costa & Inês Amorim & João Reis & Nuno Melão, 2023. "User communities: from nice-to-have to must-have," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-35, December.
    2. Yongming Zhang & Mohsen Imeni & Seyyed Ahmad Edalatpanah, 2023. "Environmental Dimension of Corporate Social Responsibility and Earnings Persistence: An Exploration of the Moderator Roles of Operating Efficiency and Financing Cost," Sustainability, MDPI, vol. 15(20), pages 1-18, October.
    3. Minimol M. Chandrasekaran, 2022. "Does Corporate Social Responsibility Fuel Firm Performance? Evidence from the Asian Automotive Sector," Sustainability, MDPI, vol. 14(22), pages 1-12, November.
    4. Jianfei Zhao & Anan Pongtornkulpanich & Wenjin Cheng, 2022. "The Impact of Board Size on Green Innovation in China’s Heavily Polluting Enterprises: The Mediating Role of Innovation Openness," Sustainability, MDPI, vol. 14(14), pages 1-20, July.
    5. Rong Wu & Jian Zhang & Yubing Yu & Sajjad M. Jasimuddin & Justin Zuopeng Zhang, 2023. "The Impact of Value Cocreation on CSR Innovation and Economic Performance," Sustainability, MDPI, vol. 15(5), pages 1-22, February.
    6. Edward Fosu & Kaigang Yi & Deborah Asiedu, 2024. "The effect of CSR on corporate social performance: Mediating role of corporate image, green innovation and moderating role of corporate identity," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 69-88, January.

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