Corporate social responsibility and the impact on economic value added: the role of environmental innovation

Abstract

Purpose Corporate social responsibility (CSR) is a common strategy implemented by companies due to social, ethical and policy pressures to reduce its impact on society, economy and environment. However, whether CSR adds or decreases firms’ value remains little explored. Thus, this study aims to evaluate the impact of CSR adoption on companies’ economic value added (EVA). The authors also tested a mechanism of environmental innovation and the moderation role of a firm’s size. Design/methodology/approach The authors performed a regression analysis and a mediation process analysis using dataset from 4,287 largest companies worldwide to investigate this issue. The a dataset was collected from Eikon, a Thomson Reuters platform. Findings The results revealed four main findings. Companies with high CSR indexes decreased EVA; environmental innovation mediated the effect of CSR on EVA; the firm size positively moderated the effect of CSR on EVA and firm size positively moderated the effect of CSR on environmental innovation. Originality/value To the best of the author’s knowledge, this research is the first endeavor to analyze CSR’s effect on EVA and the mediation role of environmental innovation using the most prominent firms worldwide. Furthermore, the results highlight exciting implications for literature, managers and policymakers.