Does CSR foster innovation performance The moderating effect of ownership structure

Abstract

Based on the integration of stakeholder theory and the knowledge-based view, this paper seeks to investigate the effect of firms' active engagement in corporate social responsibility (CSR) on their innovation performance. It is proposed that socially responsible firms, due to their enhanced relationship with stakeholders, could foster innovation performance through the improvement of knowledge acquisition. The moderating effects of two aspects of ownership structure, namely, ownership-control separation and ownership concentration, are examined to highlight the influence of corporate governance over agency problems on the focal relationship. The research uses a longitudinal analysis on a sample of 11,021 observations, including 2,531 firms listed on the Shanghai and Shenzhen exchanges from 2011 to 2016. The results show that participation in CSR activities is positively related to a firm's innovation performance. The positive relationship is stronger when ownership is more concentrated and ownership rights are less separated from control rights.