Innovation and CSR — Do They Go Well Together?

Abstract

In this study we use the attention-based view and the stakeholder theory to investigate two questions: Do investments in ecological and social environment yield comparable economic returns as investments in R&D? Are there any benefits to pursuing R&D, ecological and social investments simultaneously? Using a longitudinal sample of 5,999 Indian firms, we find that there is an ordering of implications such that R&D has a significantly larger impact on the sustainability of economic performance than contribution to the ecological environment, which in turn has a stronger effect than charitable and community contributions. Moreover, we find that ecological and social contributions weaken the effect of R&D, which suggests that managerial attention to innovation can be undermined by a greater emphasis on social responsibility. Our study contributes by elaborating the difficulty of establishing a balance between sustainability initiatives.

Keywords: Sustainability, R&D, corporate social responsibility, India, panel data