CSR Performance and the Economic Value of Innovation

33 Pages Posted: 8 Apr 2020 Last revised: 20 Nov 2020

See all articles by Hyun Joong Im

Hyun Joong Im

Peking University - HSBC Business School

Barry R. Oliver

University of Queensland - Business School; Financial Research Network (FIRN)

Kyojik Song

Sungkyunkwan University

Date Written: November 19, 2020

Abstract

This study examines the impact of corporate social responsibility (CSR) on the economic value of innovation. Using the stock market reaction to patent grants as a measure of the economic value of innovation, we find that a higher level of CSR leads to a higher value of innovation. In addition, we show that different types of stakeholders, such as employees, customers, and creditors, play important roles in determining these outcomes. In particular, we document that high CSR performance magnifies the degree to which innovation relaxes financing constraints; high CSR performance magnifies the role of innovation in expanding growth options or the set of positive-NPV investment opportunities; and high CSR performance increases not only the innovation output level but also innovation efficiency. These results are consistent after a series of robustness tests.

Keywords: value of innovation, corporate social responsibility, financing constraints, growth options, innovation efficiency

JEL Classification: D22, G30, O32

Suggested Citation

Im, Hyun Joong and Oliver, Barry Ross and Song, Kyojik, CSR Performance and the Economic Value of Innovation (November 19, 2020). Available at SSRN: https://ssrn.com/abstract=3549827 or http://dx.doi.org/10.2139/ssrn.3549827

Hyun Joong Im (Contact Author)

Peking University - HSBC Business School ( email )

University Town
Shenzhen, Guangdong 518055
China

Barry Ross Oliver

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Kyojik Song

Sungkyunkwan University ( email )

53 Myeongnyun-dong 3-ga Jongno-ju
Guro-gu
Seoul, 110-745
Korea, Republic of (South Korea)
82-2-760-0497 (Phone)

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