Beyond “good company”: The mediating role of innovation in the corporate social responsibility and corporate firm performance relationship

Abstract

PurposeThe link between corporate social responsibility (CSR) and corporate firm performance (CFP) has been extensively studied, but a significant research gap remains when considering potential mediating factors that can provide a more comprehensive and complete picture of the CSR-CFP link. Among the possible mediators, innovation is one of the most noteworthy factors, but previous studies have found inconsistent results between CSR and innovation in the service industry context. Existing studies have reported an insignificant or negative relationship between CSR and innovation in the service industry, including the hospitality industry. To clarify this controversy, this study aims to propose the positive mediating role of innovation to explain the CSR-CFP link in the hotel and casino industry.Design/methodology/approachTo discover the relationship among CSR, innovation and CFP, a panel data analysis, the two-way fixed-effects model, is used with robust standard errors. Particularly, to examine the mediating role of innovation, this study conducts Sobel, Aroian and Goodman tests. The sample period is from 2000 to 2017, consisting of 342 firm-year observations.FindingsWith a sample of publicly traded US hotel and casino firms, this study confirms the mediating role of innovation and suggests a strategic direction of CSR, highlighting the importance of innovation in the hospitality industry.Practical implicationsThis study presents an important piece of evidence regarding non-technological innovation and proposes a strategic direction of CSR in the hotel and casino industry to achieve competitive advantages.Originality/valueAdopting a new measurement method of innovation using data envelopment analysis, this study serves as a reference for a better understanding of a role of innovation in the CSR-CFP link for hospitality scholars.