Article
Corporate social responsibility, innovation and firm value
International Journal of Business, Governance and Ethics
(2020)
Abstract
This study argues that corporate social responsibility (CSR) and firm innovation have long term orientation and CSR is positively related to innovation. It explicitly recognizes the endogeneity of CSR and innovation and uses 2SLS instrumental variable regressions to estimate the impact of CSR on innovation. Using a sample of 841 large US companies and 3,246 firm year observations for the period 1995-2006 it finds that CSR is positively associated with firm performance in innovation measured by patents and citations. Results also show that CSR strengths (concerns) have positive (negative) impact on innovation. Additional tests indicate that firm performance in innovation is positively related to industry adjusted Tobin’s Q, suggesting that innovation is one of the channels through which CSR increases firm value. Overall, the empirical results indicate that CSR is a long term strategic investment and its impact on firm value should be measured through its impact on firm innovation which is a good indicator of long term value.
Keywords
- Corporate social responsibility; Innovation; Patents; Citations; Firm value; Research and development expenditures; Agency theory; Stakeholder theory
Disciplines
Publication Date
2020
DOI
DOI:10.1504/IJBGE.2020.10025378
Citation Information
Shahbaz A Sheikh. "Corporate social responsibility, innovation and firm value" International Journal of Business, Governance and Ethics Vol. 14 Iss. 3 (2020) p. 271 - 297 Available at: http://works.bepress.com/shahbaz_sheikh/28/