Helping managers to understand how investments in CSR contribute to current and future organizational strategy | Researcher: Cláudia Costa and Luis Lages
Cláudia Costa, PhD graduate from Nova SBE has published a paper which was part of her doctoral dissertation, co-authored by Nova SBE’s Professor Luis Lages and Paula Hortinha which debates whether Corporate Social Responsibility (CSR) and innovation is beneficial or deleterious to firm performance in a technological exporting context. Their findings reveal that while CSR enhances the impact of “new to the world” products on export performance, it is detrimental for “me too” innovation on export performance. These findings help managers to understand how investments in CSR contribute to current and future organizational strategy.
CSR, innovation and performance
The study presents a deeper understanding on how CSR relates to innovation activities and firm performance by studying nearly 200 Portuguese technological exporters. Findings reveal that CSR can be used to enhance corporate abilities, namely exploratory innovation (“new to the world” products). Technological exporters operate in highly complex environments, characterized by high levels of technological and market uncertainties and highly diverse and dispersed customers. The problem arises when organizations get stuck in a technology that formed the basis for their initial success, eventually becoming a liability.
CSR - the good and ... the bad?
The researchers show that CSR principles are beneficial for organization progress if the organization is willing to change old routines and develop new competencies. Managers should allow CSR principles to permeate the organization as they are a subtle way of forcing companies to pursue new knowledge, and are thus regarded as an innovation related investment. Understanding the pay-off of CSR is important. Not only is CSR a competitive tool in itself, but as the authors demonstrate it enhances explorative innovation capabilities.
Unexpectedly, the study reveals an important trade-off in terms of innovation capabilities to compete in international markets. CSR principles do not foster efficiency, cost reduction, or superior delivery of customers’ needs in international markets (exploitation). A possible explanation is that CSR may not be easily addressed with existing technology, and therefore may not be able to leverage internal information specific to the firm and unique to its product line offerings. Second, CSR principles may relate more to process innovation than to product innovation. For example, Nike solved employees’ safety issues regarding material hazard by investing in new technology. Although the adoption of the new technology led to numerous changes, at the product level this yielded incremental innovations (namely through higher quality) that might have passed unnoticed to the consumer.
This article is based on the paper “The bright and dark side of CSR in export markets: Its impact on innovation and performance” authored by Claudia Costa (Nova SBE), Luis Filipe Lages (NovaSBE) and Paula Hortinha (Jerónimo Martins Group), published in 2015 in International Business Review, Vol. 24 No. 5, pp. 749-757.