Enhancing sustainable fit between corporate social responsibility and innovation: Implications for firm performance

Abstract

AbstractDespite several studies on corporate social responsibility (CSR) and innovation on firm performance, the extent to which different CSR practices interacts with distinct innovation types in enhancing firm performance remains underexplored. We draw on contingency theory to examine how internal and external CSR interacts with exploitative and explorative innovation to improve firm performance. We discuss the interaction effects using a panel dataset of 1156 publicly listed Chinese firms that disclosed CSR and innovation information from 2008 to 2019. The results indicate that firms with high‐internal CSR benefit to a greater extent from explorative innovation than from exploitative innovation as a means of enhancing performance. In contrast, firms with high‐external CSR benefit to a greater extent from exploitative innovation than from explorative innovation to improve performance. We contribute to strategy and CSR literature by revealing how firms match specific CSR practices with distinct innovation types to enhance firm performance.