Exploring the effects of prospective corporate social responsibility on firm performance: the mediating role of innovation

Abstract

ABSTRACT When corporate social responsibility (CSR) plays not only the role of respondent to consumer expectations and government policy, but further connects to innovation output and operating performance, it is likely that prospective CSR will become a forward-looking strategy and operating guideline of the firm. Given the social commentary on enterprise strategic arrangements in relation to environmental protection, green investment, labour rights, and the global concern over CSR, this study integrates a firm’s prospective CSR, innovation, and operating performance into a conceptual framework, taking firms in Taiwan’s technology and manufacturing industry as its survey target. Structural equational modelling is adopted in this research to analyse the response data (n = 230) by applying stakeholder theory, the value chain concept, and the resource-based view. The test results of the conceptual model show that internal CSR, external CSR, and environmental and social CSR benefit firms’ innovation performance through different levels of influence. The effects of CSR initiatives on firm operating performance vary, mediated by the degree of innovation. The importance of knowledge management (KM) related to CSR is identified and explored in this study. KM helps generate innovation and sustainability through distinct integrative CSR implementation practices.