CSR and appropriation potential of firm innovative knowledge

Abstract

The purpose of this paper is to study the moderating role of corporate social responsibility (CSR) in the knowledge asset–firm financial performance relationship. This paper first develops hypotheses based on multiple theoretical lenses and uses a sample of 3,030 US firms in 51 industries over 11 years to test these hypotheses. It is found that CSR positively moderates the relationship between research and development (R&D) investments and the firm's financial performance, and the moderating effect declines when firms mistreat their employees. This paper provides evidence that when firms allocate their resources, they should consider the synthetic effect among different activities such as R&D and CSR. First, this study offers a new and alternate mechanism for the appropriability literature and also extends the boundary of CSR research. Second, this work shifts the CSR performance thought by considering CSR as an enabler rather than a driver for performance.