Abstract
We examine how a firm’s productivity level is related to its potential corporate social responsibility (CSR) objectives for innovations, and whether this relationship is affected by firm size. Two CSR objectives for innovations are examined: a firm’s objective of reducing environmental impacts, and an objective of improving health or safety of the employees. Firm size is measured by the number of employees. A data set comprising Norwegian manufacturing firms with or without innovation activity is used. The estimation results show that the predicted probability of adopting the objective of reducing environmental impacts has a significant negative effect on the productivity level among large firms while this effect is not significant among small firms. The predicted probability of adopting the objective of improving health or safety of the employees has no significant effect on the productivity level of small or large firms. These results indicate that whether ‘it pays to be green’ or not, depends on firm size. The article offers a resource argument in order to explain the different results between small and large firms.
Highlights
Corporate social responsibility (CSR) has become an important issue for firms
Large firms included in the industrial group ‘manufacture of food products’ have a higher productivity level than large firms included in all other industrial groups, with one exception: there are no significant differences in the productivity level between those included in the group ‘manufacture of beverages’ and the reference group, and the same applies to all firms and small firms
We have examined how a firm’s potential CSR objectives for innovations are related to its productivity level, and whether this relationship is affected by firm size
Summary
Corporate social responsibility (CSR) has become an important issue for firms. As pointed out by Torelli et al (2012), CSR activities can contribute positively to longterm shareholder value. We consider the CSR model in McWilliams and Siegel (2001) as an analytical framework for this study Their analysis reveals that there is some level of CSR that will maximize a firm’s profit, while satisfying stakeholder demand for CSR. They emphasize that ‘this definition underscores that, to us, CSR means going beyond obeying the law’ Based on this CSR definition, we examine two CSR objectives for innovations: a firm’s objective of reducing environmental impacts, and an objective of improving health or safety of the employees.. As far as we are aware, no previous study has examined how a firm’s productivity level is related to the two CSR objectives for innovations, and whether this relationship is influenced by firm size.
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