Role of innovation in relationship between corporate social performance and corporate financial performance

Abstract

The focus of the thesis is an analysis of the influence of corporate social performance (CSP) on the corporate financial performance (CFP) of a firm and role of innovation in this relationship. The primary research problem is the fact that there is not established relationship between CSP and CFP and unspecified role of innovation in this relationship. Previous researches found mostly positive CSP-CFP relationship, but there is still lack of understanding in role of innovation, as most of studies, which explored role of innovation in CSP-CFP relationship, got a neutral result. To address this gap, the researched question formulated is: what is the effect of innovation and their interaction CFP? The data for this study was acquired from CSR Hub dataset, The Eikon datasetand Amadeus dataset, and it focuses only on 2017. The data includes 312 companies. The findings highlight that CSP has a positive impact on CFP; however, innovation shows negative influence in CSP-CFP relationship. The key theoretical contribution of the thesis is an attempt to build new theoretical framework to test CSP-CFP relationship, using currently established datasets such as CSRHub and The Eikon datasets. For practioners, it is concluded that it is more effective to a focus on either CSR or the innovation alone, or adjusting them to consider, include, and account for the complex interconnections and implications in both dimensions instead.