Good Enough! Are Socially Responsible Companies the More Successful Environmental Innovators?

43 Pages Posted: 24 Mar 2015

See all articles by Christiane Reif

Christiane Reif

ZEW – Leibniz Centre for European Economic Research - Environmental and Resource Economics, Environmental Management Research

Sascha Rexhauser

ZEW – Leibniz Centre for European Economic Research

Date Written: February 23, 2015

Abstract

The link between Corporate Social Responsibility (CSR) activities and financial performance of firms has been intensively examined and debated in academics and politics, but the connection to innovation has so far lacked research attention. This paper investigates whether CSR is complementary to environmental innovations, so that a joint introduction of both strategies generates a higher financial performance than the application of one or none of the strategies. We analyse if environmental innovators can generate higher financial performance by signalling their environmental engagement through CSR. For this purpose, we use panel data of environmental R&D activity together with a CSR variable on the Global Reporting Initiative (GRI) and analyse their effect on the financial performance of a firm. The novelty of our work is the complementary approach with which we examine the effect of a joint strategy of environmental R&D and CSR on financial performance. Although our results support the view of strategic complements for environmental R&D and GRI, we cannot conclude that this is also true for other types of CSR signalling environmental engagement.

Keywords: complementarity, environmental R&D, CSR, signalling, reputation, Global Reporting Initiative

JEL Classification: O32, Q56

Suggested Citation

Reif, Christiane and Rexhauser, Sascha, Good Enough! Are Socially Responsible Companies the More Successful Environmental Innovators? (February 23, 2015). ZEW - Centre for European Economic Research Discussion Paper No. 15-018. Available at SSRN: https://ssrn.com/abstract=2583666 or http://dx.doi.org/10.2139/ssrn.2583666

Christiane Reif (Contact Author)

ZEW – Leibniz Centre for European Economic Research - Environmental and Resource Economics, Environmental Management Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim
Germany

Sascha Rexhauser

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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