Does corporate social responsibility drive financial performance? Exploring the significance of green innovation, green dynamic capabilities, and perceived environmental volatility

Abstract

Environmental success can only become a reality when the financial goals of firms are not compromised. Based on this proposition, the study aimed to investigate four relationships, including the effect of corporate social responsibility (CSR) on financial performance, mediation of green dynamic capabilities (GDCs) between CSR and green innovation (GI), mediation of GI between CSR and financial performance, and moderation of perceived environmental volatility in GI and financial performance nexus. A sample of 655 manufacturing firms was collected from Pakistan to test the proposed hypotheses, and structural equation modeling was conducted. The results demonstrate a positive significant influence of CSR on financial performance. In addition, the mediation of GDCs and GI has also been confirmed. Furthermore, the results demonstrate that high environmental volatility weakens the GI and financial performance nexus. The study results offer unique contributions to the literature and interesting suggestions for practicing emerging economy managers.

Green Process Innovation on Msmes Performance Moderate Perceived Environmental Volatility: Study on Food and Beverage MSMEs in Solo City

“…Green innovation refers to product and process innovation that involves energy savings, pollution prevention, waste recycling, and environmentally friendly product design (Aftab et al, 2023). A company produces environmentally friendly product innovations to comply with environmental regulations and increase competitiveness (Cicea et al, 2019).…”

“…Companies are limited by the possibility of environmental volatility which ultimately influences strategic actions (Kiyabo et al, 2020). Environmental volatility refers to the rate and amount of rapid change in a company's external environment (Ruzita, 2010;Aftab et al, 2023). These changes can occur in aggregate market demand and supply, customer preferences, and/or technology, thereby creating anxiety, anxiety, and risk for companies operating in such environments (Joshi et al, 2013;Cicea et al, 2019).…”

Does proactive boundary‐spanning search drive green innovation? Exploring the significance of green dynamic capabilities and analytics capabilities

“…Building dynamic capabilities is a precursor to proactive innovation (Nur & Kabadurmus, 2020). Green dynamic capabilities assist organizations to learn modern green innovation techniques (Aftab et al, 2024). Organizations with strong green dynamic capability possess the requisite skills and abilities to effectively develop novel environmentally beneficial products, services, and technologies (Dangelico et al, 2017;Li et al, 2023;Singh et al, 2022).…”

“…Green dynamic capability refers to a firm's ability to innovate and bring positive change in response to changing environmental conditions (Aftab et al, 2024). Firms engage in PBS because internal knowledge sources are often insufficient to generate the required capabilities for green innovation (Yang et al, 2021).…”

“…When firms engage customers, suppliers, research institutions and other stakeholders, they obtain relevant information that helps to develop new skills that are required to support green innovation development (Nassani et al, 2022). Since green dynamic capabilities stress integrating, producing, and regenerating internal and external resources to facilitate environmental actions (Aftab et al, 2024), PBS provides external knowledge resources that facilitate the development of green dynamic capabilities. On this premise, it is hypothesized that:H1a PBS is positively related to green dynamic capability.…”