The Effects of Corporate Social Responsibility on Service Innovation Performance: The Role of Dynamic Capability for Sustainability

Abstract

The effects of corporate social responsibility (CSR) on product and technological innovation have been thoroughly examined. However, the relationship between CSR and service innovation remains largely unexplored. We examined the relationship between community and environmental CSR and service innovation performance, with further exploration of the mediating mechanism between them. Based on social capital and dynamic capability theory, we developed a model revealing that CSR improves the performance of service innovation through an advanced dynamic capability to address rapidly changing environments. Through the use of structural equation modeling and hierarchical regression analyses, we tested the conceptual model with a data set of 298 small- and medium-sized enterprises in China. The results demonstrate that the positive influence of community CSR on service innovation performance is partially mediated by dynamic capability, whereas this effect of environmental CSR is fully mediated by dynamic capability. These findings have important implications for both CSR and service innovation practice and theory.

Does Social Capital Increase Innovation Speed? Empirical Evidence from China

“…Among these variables, sustainable innovation is widely recognized and supported mediator [60]. Much attention has been paid to innovation activities, innovation capabilities, and innovation decision making [24], but innovation efficiency-and in particular the most basic element of efficiency, innovation speed-remain understudied.…”

Responsible Innovation in SMEs: A Systematic Literature Review for a Conceptual Model

“…Some of the associated internal strategic and operational measures include learning orientation, training, regulation, market dynamism, public concern, competitive intensity, and innovation. Several studies related to CSR practices have shown a positive effect on performance and competitive advantage in SMEs [60,[64][65][66]. Importantly, attention has been given to issues related to environmental performance.…”

“…Values and motivations: SMEs' motivations for responsible innovation can be manifold [6], including, for example, motivations related to cost reduction practices [22], compliance with standards [46], consumerist or instrumental matters [66], competitiveness, legitimacy, and personal commitment [75]. Based on this ideas, the awareness of the role and power of business in society, mostly based on moral and ethical arguments [32,46], i.e., doing "the right thing", that "everyone has a responsibility to do what they can", is significant, because researchers have found that it leads to the recognition of the active and primary role of employees [66]. This moral and ethical culture encourages them to perform their tasks and responsibilities in a more committed and satisfying manner [53,92].…”

“…Likewise, see [98], which revealed that one research topic is innovation and impact on the sustainability of SMEs. Also, the effect of environmentally friendly activities influences the performance of service innovation only when it is mediated by advanced dynamic capacity, which is the "ability of the firm to integrate, build and reconfigurate internal and external competencies to cope with rapidly changing environments" [66], as well as social responsibility has a significant effect on learning orientation, innovation, and performance [64] and, sustainable innovation can be explained by different levels of sustainability embedded in innovation processes for new product development and cooperation with stakeholders [21]. Furthermore, the transfer of human resources from higher education institutions to SMEs has a significant positive effect on innovation capacity [1], which on one hand is positively related to the company's performance, and on the other hand supports the argument for sustainability.…”

“…Knowledge creation and development: While social responsibility activities in SMEs have been recognised as drivers of knowledge creation and exchange [66], it is also recognised that they have the potential to become operational and competitive benefits [93]. For instance, knowledge management and transfer, which together with capacity constitute an opportunity for improvement of employees' skills and knowledge [51,53,84].…”