Sustainability 10 03611

sustainability
Article
CSR Strategic Approach, Financial Resources and
Corporate Social Performance: The Mediating Effect
of Innovation
Pasquale Ruggiero 1,2, * and Sebastiano Cupertino 1
1 Department of Business and Law Studies, University of Siena, Piazza San Francesco 7, 53100 Siena, Italy;
cupertino@unisi.it
2 Brighton Business School, University of Brighton, Mithras House, Lewes Road, Brighton BN2 4AT, UK
* Correspondence: pasquale.ruggiero@unisi.it

Received: 12 September 2018; Accepted: 2 October 2018; Published: 10 October 2018
Abstract: Given the current undefined relational effect between corporate financial performance
(CFP) and corporate social performance (CSP) and the potentially myopic behavior of managers,
this paper answers the call from some scholars to contribute towards a better understanding of the
relationship between CFP and CSR. Different from other papers, it does so by analyzing the role
of innovation activities as a mediator between CFP and CSR, applying a regression and mediation
analysis between firms’ financial resources, innovation initiatives, and social and environmental
performance. The results demonstrate that innovation is a critical factor in the relationship between
CFP and corporate social performance (CSP) as it enables organizations to respond to new economic,
social and environmental challenges faster and better than organizations that are not able to innovate.
Therefore, the investment of financial resources in innovation initiatives is one of the most important
levers to pursue and to increase CSP.
Keywords: CSR; corporate social performance; innovation; global 100; mediation analysis
1. Introduction
Over the past few decades, the way in which companies conduct their business has changed
profoundly [1,2]. In order to compete on the global stage, companies have had to continuously
innovate and redefine their strategies, while contemporaneously taking into consideration their
local features [3]. Additionally, companies cannot currently adopt unethical business practices (e.g.,
environmental pollution, unfair labor practices, safety concerns, etc.) without exposing themselves to
a negative reaction from their markets and from society as a whole [4]. To be successful, companies
must be concerned not only about their profits, but also about all their stakeholders’ needs [5,6].
A responsible company should consider the social and environmental impact of its business processes,
collaborate with its customers and suppliers, and be supportive of its employees [7]. In particular,
Corporate Social Responsibility (CSR) implies that firms do something extra for their stakeholders
beyond their usual expectations and requirements [8,9]. CSR has become increasingly relevant for
managers at all levels and it is an attractive field of study with a number of research questions still to
be answered [10].
There are several good reasons for executives to engage in CSR. Legitimation and reputation
are frequently mentioned among the main reasons for declaring and implementing such initiatives.
In industries with intense competition, CSR initiatives may be a key factor in adding value to the
product and directing customers’ attention to important social and environmental issues that go
beyond product cost [11,12].
Sustainability 2018, 10, 3611; doi:10.3390/su10103611 www.mdpi.com/journal/sustainability

Sustainability 2018, 10, 3611 2 of 22
Companies are increasingly undertaking CSR activities to better align their internal processes with
their economic, social and environmental goals, to carry out successful innovation initiatives, and to
engage customers and employees. This change in perspective is due, in large part, to increasing societal
pressure on company leaders and managers to recognize the importance of social and environmental
activities. Socially responsible objectives are regarded as being among the most important CEO
priorities. Many are the reasons for this prioritization: consistency between CSR goals and firms’
financial interests, managers’ altruism and managers’ professional and/or personal reputation [13].
Therefore, firms adopt CSR-oriented strategies for various reasons, but scholars have focused mainly
on financial aspects, i.e., whether CSR activities enhance financial performance. Previous empirical
research has addressed the impact of CSR on corporate financial performance (CFP), but the results are
inconsistent [14]. Several studies show a positive relationship between CSR and CFP [15], while others
show the opposite [5,16–19]. Analyzing past and recent literature, as pointed out by Margolis and
Walsh [20] and Lu et al. [21], scholars have been devoted less attention to the relationship between
CFP and CSR and even less has been the interest toward understanding how to operationalize in
practice the aforementioned relationship. To have enough resources, especially financial resources,
could be a condition to adopt a socially responsible behavior, but limited are the studies researching
the way through which the relationship between CFP and CSR is operationalized. To fill this gap,
in this paper we focus on the relationship between corporate financial performance (CFP) and CSR
outcomes, or corporate social performance (CSP) [22], with a specific interest in understanding the role
of innovation. The adoption of new processes and technologies could be the way towards balancing
the potential conflicts existing between stakeholders’ economic and social purposes. The availability of
financial resources could be among the most important conditions for investment in CSR-innovation
initiatives [5,6,16]. Following this assumption, the achievement of higher CFP can be considered a
stimulus that boosts the implementation of socio-environmental and ethical activities geared towards
enhancing CSP.
Managers are more likely to use available resources on activities that are expected to be profitable
in the short-term [23] although they may sacrifice short-term performance to increase sales at a given
level of return [24]. Consequently, in times of declining financial results, managers might not invest
in CSR activities, since they generally require a longer period to positively affect a firm’s financial
performance [25]. This is especially true if the CSR activities in question result in, or stem from,
the implementation of innovative processes which themselves usually take some time to improve
financial performance [26].
Given the current lack of definition of the relational effect between CFP and CSR and the
potentially myopic behavior of managers, this paper answers Carroll and Shabana’s [27] call to
contribute to better understanding of the previously mentioned relationship. Adopting a strategic
approach to CSR, business resources are invested to produce both financial and non-financial
value, either internal or external to firms. Businesses need to create and capture value to make
investments with socially responsible objectives while enhancing financial performance in the longer
term. Much depends on managers’ motivations and behavior. The availability of resources is not in
itself enough to support the pursuit of socially responsible objectives. Resources have to be strategically
allocated and invested. Therefore, also to implement CSR activities and pursue CSP managers must
strategically allocate financial resources. To this end, this paper focus on the role innovation plays in
the relationship between CFP and CSP. The amount and quality of expenditures in innovation have a
strong relationship with company performance [28]. According to many scholars, innovation plays
a crucial role in the relationship between CFP and CSP [29–32]. This paper aims to contribute to
understanding whether innovation could play a role as moderator and/or mediator in the relationship
between CFP and CSP. To pursue this aim, we ran a regression and mediation analysis regarding firms’
financial resources, innovation intensity, and CSP.
When it first appeared on the academic and economic scenes, CSR theory was mainly focused on
firms’ obligation and accountability to society [33], but in this paper the concept of CSP is adopted
to emphasize the outcomes and results of CSR activities [22]. CSP is measured in terms of CSR
ratings, as these proxies offer the greatest credibility and transparency [34]. This study develops an
empirical analysis on a sample made up of the firms listed in the “Corporate Knights’ Index” (the
Global 100 Index), a CSR index. The annual Global 100 Index constituents list traditionally represents
group of large transnational companies that consciously aim to play crucial roles in society and
on the international market, maximizing corporate sustainable value to satisfy CSR stakeholders’
expectations. Companies ranked in the Global 100 Index can be identified as top CSP performers
worldwide, due to their high CSR standards, some of which foster the implementation of cleaner
production, focusing on specific key corporate performance intensity targets such as energy use,
carbon emissions, water consumption and waste produced. These management issues are particularly
determinant for those non-financial companies (NFCs), both manufacturing and nonmanufacturing,
which aim to improve their CSP.
This paper proceeds as follows. Section 2 proposes the existence of a link between CFP, innovation
and CSP, and presents the research hypothesis. In Section 3, the methodology used to develop
the statistical analysis is outlined, and in the following Section 4, the study findings are presented.
In Section 5, discussion and some final remarks are offered.
2. Theoretical Framework and Hypothesis Development

Research on CSR has grown significantly in recent years [35], and various theories have been
adopted to explain the framing, implementation and effects of CSR initiatives. Looking at their
objectives, theories on CSR could be classified into four categories: (1) instrumental theories, (2) political
theories, (3) ethical theories, and (4) integrative theories [36]. Apart from instrumental theories,
the other approaches highlight the concept of CSR as an area in which companies are no longer
merely expected to passively report results indirectly achieved through their core activities but must
manage CSR as a specific area of performance on its own [37]. CSR is a strategic area to manage to
increasingly satisfy the needs of a company’s stakeholders beyond their expectations. Adopting mainly
a resource-based view perspective, previous studies have focused on the effect CSP could produce
on CFP. In general, these studies have summarized the impact of CSP on CFP in the possibility of
firms with higher CSP to differentiate themselves from their competitors through the production of
internal and/or external benefit [38]. Internally, the achievement of superior CSP could be due to a
good corporate governance and the construction of those intangible resources related with employee
work environment, particularly useful to maintain motivate employees’ and to attract new talents as
well. The external benefits of CSR could be related to its effect on corporate reputation resulting in the
development of better relations with external key business supporters, such as public administrations
and investors. Furthermore, if managers foster the implementation of those CSR strategic initiatives
such as customer-oriented activities these managerial actions could affect the consumer behavior in
the medium-long term [39], as much as to achieve competitive advantages and sales improvements.
The study of the relationship between CSP and CFP could be also reversed. If the objective
of CSR strategies is to increase stakeholders’ satisfaction beyond expectations and regulations,
firms should exploit and invest in those activities that allow them to achieve that objective while
(re)creating capabilities resulting in a sustainable future financial situation to avoid potential failure [40].
CSR objectives are no more to be considered functionally to firms’ financial performance but have
to be pursued on their own as a constituent of the overall performance of a firm. To this end,
companies should merge the different “theatres” of reference of CSR initiatives and activities to build a
unified dimension consistent with the core financial strategy, leading to the development of an organic
company-wide strategy. The assumption of a strategic perspective implies not only the definition of the
business’ future direction and objectives, but also an understanding of the amount and apportionment
of available resources. Sufficient resources, especially financial ones, make any firm potentially more
flexible and able to develop strategies suitable for pursuing opportunities coherent with its current
and prospective environment and capacities [41].
The main problem linked to a strategic CSR management approach is, thus, related to the
possibility of making this dimension of strategy fit with other dimensions of company strategy.
Sustainability 2018, 10, x FOR PEER REVIEW 4 of 22
The CSR dimension of a strategy must necessarily fit, to the same degree as all others, with its financial
dimension [42]. This implies the need to correlate the two strategic dimensions to define company
dimension [42]. This implies the need to correlate the two strategic dimensions to define company
strategy and make it implementable. In fact, the direct or indirect availability of adequate financial
strategy and make it implementable. In fact, the direct or indirect availability of adequate financial
resources is of fundamental importance in evaluating the feasibility of any strategy. Hence, even a
resources is of fundamental importance in evaluating the feasibility of any strategy. Hence, even a
CSR-oriented strategy would require a proper fit with a firm’s financial situation. This means that good
CSR-oriented strategy would require a proper fit with a firm’s financial situation. This means that
CSP results—which, based on non-instrumental theories of CSR, should come about regardless of the
good CSP results—which, based on non-instrumental theories of CSR, should come about regardless
company’s financial conditions—could more readily be pursued and achieved in concomitance with
of the company’s financial conditions—could more readily be pursued and achieved in concomitance
good financial performance [16,17,43] and profitability in particular. The greater the profitability of a
with good financial performance [16,17,43] and profitability in particular. The greater the profitability
company,
of a company, the greater its financial
the greater flexibility,
its financial whichwhich
flexibility, strongly affects affects
strongly managerial decision-making.
managerial Within
decision-making.
the context of this discussion on the definition and implementation
Within the context of this discussion on the definition and implementation of a CSR-oriented of a CSR-oriented company strategy,
we must take
company into due
strategy, weconsideration
must take into the due
managers’ role, as they
consideration the can bring individual
managers’ role, as they interests
can to the
bring
table that might
individual interestsconflict
to the with
tablethosethatofmight
other stakeholders,
conflict with those especially
of otherin cases where managers
stakeholders, especially draw in
short-term remunerative advantages based on the company’s
cases where managers draw short-term remunerative advantages based on the company’s financial financial performance. This conflict of
interest is moreThis
performance. significant
conflictinofcompanies
interest iswithmoreless financial in
significant flexibility,
companies wherewith management
less financial consequently
flexibility,
has limited space for decision-making. In situations of scarce
where management consequently has limited space for decision-making. In situations of scarce financial resources, managers tend
to allocate resources to initiatives that are more remunerative in
financial resources, managers tend to allocate resources to initiatives that are more remunerative the short term, rather than CSRin
investments,
the short term, which
rathergenerally
than CSRprovide financial
investments, which advantages
generallyonly in the
provide mid- toadvantages
financial long-term only period.in
Orlitzky
the mid- et toal. [44], whoperiod.
long-term highlight that a et
Orlitzky positive
al., [44],relationship
who highlight between
that CFP and CSP
a positive works when
relationship firms
between
have and
CFP slackCSP resources,
worksconfirm
when firms this reason.
have slackThe achievement
resources, confirm of superiorthis financial
reason. The performance
achievement createsof
extra funds for investments in social and environmental activities
superior financial performance creates extra funds for investments in social and environmental non-contrasting with managers’
self-interests.
activities Differently—but
non-contrasting withthis proves the
managers’ rule that managers’
self-interests. self-interests
Differently—but conflict
this proves with
thearule
strategic
that
approach to CSR—managers could invest in activities coherent with a
managers’ self-interests conflict with a strategic approach to CSR—managers could invest in activities CSR-oriented outlook in periods
of weak financial
coherent performanceoutlook
with a CSR-oriented as well, inbut in such
periods cases,financial
of weak they would be motivated
performance as well, bybut
the inwill to
such
devise justifications for the company’s poor financial performance
cases, they would be motivated by the will to devise justifications for the company’s poor financial [45]. However, such a situation
is sustainable[45].
performance onlyHowever,
if one looks suchatathe currentis financial
situation sustainable year,onlyand not looks
if one the mid-to-long
at the current term. Thus,
financial
managers are interested in investing in CSR-oriented strategies
year, and not the mid-to-long term. Thus, managers are interested in investing in CSR-oriented only because the company already
enjoys good
strategies only financial
becauseperformance.
the company The alreadyimportance
enjoys good of financial
financialperformance
performance. and
Thethe flexibility of
importance it
provides increases in times of economic downturn, such as the period
financial performance and the flexibility it provides increases in times of economic downturn, such after the 2008 financial crisis.
According
as the period to Ullmann
after the [46],
2008 even the disclosure
financial crisis. Accordingof CSR expenditure
to Ullmann [46], information
even theisdisclosure
avoided by offirms
CSR
for keeping away complaints from their shareholders that could
expenditure information is avoided by firms for keeping away complaints from their shareholders see it as a way to redirect profit away
fromcould
that them.see it as a way to redirect profit away from them.
In summary,
In summary, the the availability
availability of of sufficient
sufficient resources
resources is is one
one ofof the
the most
most important
important elements
elements in in
defining and
defining and implementing
implementing successfulsuccessful strategies
strategies by by compromising
compromising the the interest
interest of of the
the different
different firms’
firms’
stakeholders with those of the shareholders and mangers. The
stakeholders with those of the shareholders and mangers. The availability of sufficient financial availability of sufficient financial
resources makes
resources makes any any firmfirm potentially
potentially more more flexible
flexible and and able
able to to develop
develop strategies
strategies suitable
suitable for for
pursuing opportunities coherent with its current and prospective
pursuing opportunities coherent with its current and prospective environment, which is increasinglyenvironment, which is increasingly
characterized by
characterized by aa strong
strong callcall toto implement
implement CSR CSR activities
activities resulting
resulting in in higher
higher CSPCSP [16,17,43].
[16,17,43].
Hypothesis 1 (H1). For this reason, we can assume that companies’ financial performance has a direct and
positive impact on their CSP.
CSP. (cf.
(cf. Figure
Figure 1).
1).
1. H1:H1:
Figure 1. Previous
Previous CFP a has
CFP has a positive
direct direct positive impact
impact on on subsequent
subsequent CSP.Authors’
CSP. Source: Source:
Authors’ elaboration.
elaboration.
In addition to the availability of sufficient resources, another important key to a good and
In addition
effective to the
business availability
strategy is theof appropriate
sufficient resources, another
allocation important
of these key to [47].
resources a good and effective
Research and
business strategy is the appropriate allocation of these resources [47]. Research and development
development (R&D) investments and their effective implementation are usually considered critical
for firms’ success, as they can increase a company’s uniqueness [28]. In particular, the investment of
financial resources in R&D activities could result in innovations leading to new or updated
organizational/production processes and products able to responding better to all internal and
external stakeholders’ social and environmental concerns coupled with financial ones [48,49].
However, as stated in previous studies [50,51], in order to boost R&D investments that sustain
(R&D) investments and their effective implementation are usually considered critical for firms’ success,
as they can increase a company’s uniqueness [28]. In particular, the investment of financial resources
in R&D activities could result in innovations leading to new or updated organizational/production
processes and products able to responding better to all internal and external stakeholders’ social
and environmental concerns coupled with financial ones [48,49]. However, as stated in previous
studies [50,51], in order to boost R&D investments that sustain corporate innovation, managers need to
cover suchinnovation,
corporate sunk costs, managers
and overcome
needinternal
to coverand external
such financial
sunk costs, andconstraints
overcome by utilizing
internal andavailable
external
resources. Such resources
financial constraints are most
by utilizing likely toresources.
available be produced
Suchwhen management
resources are mostperforms
likely to efficiently
be produced in
terms of profitability, thus generating a virtuous cycle that fosters new R&D activities and
when management performs efficiently in terms of profitability, thus generating a virtuous cycle that innovation
and leads
fosters new to R&D
increased future
activities profits.
and innovation and leads to increased future profits.
Hypothesis 22 (H2).
Hypothesis (H2). Therefore,
Therefore, we
we can
can assume
assume that
that corporate
corporate profitability
profitability could
could foster
foster the
the implementation
implementation of
of
innovation activities. (cf. Figure 2).
innovation activities. (cf. Figure 2).
Figure 2. H2: CFP have a positive impact on corporate innovation. Source: Authors’ elaboration.
Figure 2.
Furthermore, if management is strongly committed to developing innovation strategies, the firm

might invest moreif in
Furthermore, management
R&D activities. is strongly committed
Therefore, we agreeto developing innovation
with McWilliams strategies,
and Siegel [49] the firm
and
might invest more in R&D activities. Therefore, we agree with
Padgett and Galan [52] in assuming that the firm’s attitude to increase R&D expenses could fosterMcWilliams and Siegel [49] and
Padgett
process andand product
Galan [52] in assuming
innovations that the
because firm’s
of CSR attitudewhich
activities, to increase R&Dto
also serve expenses
enhancecould CSP. In foster
the
process and product
light of this, innovations
prior studies because
have adopted anof CSR activities,
instrumental which also
perspective serve to enhance
to investigating CSP. In the
the relationship
light
betweenof this, prior studies
innovation and haveCSR adopted
[14,25,52].anIn instrumental
particular, perspective
CSR has been to investigating
considered from the relationship
a business
between
perspective as a contributor to the development and marketization of innovative products business
innovation and CSR [14,25,52]. In particular, CSR has been considered from a that give
perspective
firms social as a contributorThis
legitimization. to the development
corporate and marketization
legitimization of innovative
should ultimately result products
in higher that give
turnover
firms social legitimization. This corporate legitimization should ultimately
and profitability. In the end, CSR-driven innovation should help a company to enhance its reputation result in higher turnover
and
in theprofitability.
market andIn theaend,
gain CSR-driven
competitive innovation
advantage shouldfrom
stemming helpproducts
a company tobetter
that enhancematch its reputation
its current
in the market and gain a competitive advantage stemming from
and prospective customers’ preferences and values [53]. This virtuous interaction, however, products that better match itsstrongly
current
and prospective
depends customers’
on managers’ preferences
behavior and values
and their [53]. This virtuous
decision-making attitudes interaction,
pro CSR.however,
In particular, stronglyas
depends on managers’ behavior and their decision-making attitudes
pointed out by Bocquet et al., [54], the managerial CSR activism may range from the strategic pro CSR. In particular, as pointed
to the
out by Bocquet
responsive et al. [54],
approach till tothe managerial
minimize CSR activism
or hinder may rangeprocesses.
firms’ innovation from the strategic
Gallego et to al.
the[48]
responsive
identify
approach till to minimize or hinder firms’ innovation processes. Gallego
several reasons, all related to managers’ behavior, to explain the negative relationship innovation et al. [48] identify several
and
reasons,
CSR. Because of the time lag effect associated with innovation, CSR projects entail an increaseCSR.
all related to managers’ behavior, to explain the negative relationship innovation and in a
Because of the time
firms’ expenses, lag effect
resulting, associated
at least in the with
shortinnovation, CSR projects
term, in decreasing entail
profits andan increase
stock value.inAnother
a firms’
expenses,
explanation resulting,
may beatthe least in the short
accidental term,ofinmost
origin decreasing profitsresulting
discoveries and stockinvalue. Another
innovation. explanation
Additionally,
may be the accidental origin of most discoveries resulting in
when innovative products prove to meet customers’ expectations and needs, management innovation. Additionally, when innovative
may see
products
little need to implement CSR projects and practices to be more appealing to their customers. need to
prove to meet customers’ expectations and needs, management may see little
implement
In thisCSR paper,projects
we adoptand practices
a different to perspective,
be more appealingfocusing to their
on the customers.
relationship between CFP and
In this paper, we adopt a different perspective,
innovation investments to understand their impact on CSP. This approach focusing on the relationship between
differs from CFP and
previous
innovation
analyses in that investments
it considers to understand
CSR as an area their impactactivity,
of firms’ on CSP.soThis approach
managers mustdiffers
manage fromit on previous
its own
analyses in that it considers CSR as an area of firms’ activity, so managers
jointly with all other managerial areas. To this end, the investment of the available financial resources must manage it on its
own jointly with
in innovation all othercould
processes managerial
give theareas. To this end,
opportunity to the investment
combine all theof different
the available financial
stakeholders’
resources
expectations in innovation
of a firm. processes could give the opportunity to combine all the different stakeholders’
expectations
Based on the of a firm.
above-mentioned arguments, our analysis also aims to investigate the following
Based on
research hypotheses: the above-mentioned arguments, our analysis also aims to investigate the following
research hypotheses:
Hypothesis 3 (H3). Corporate innovation produces a positive impact on subsequent CSP. (cf. Figure 3).
Figure 3. H3: Innovation have a positive impact on CSP. Source: Authors’ elaboration.
Hypothesis 4 (H4). There is a moderation effect between CFP and CSP driven by corporate innovation. (cf.
Figure 4).
in innovation processes could give the opportunity to combine all the different stakeholders’
expectations of a firm.
Based on the above-mentioned arguments, our analysis also aims to investigate the following
research hypotheses:
Innovation have
Figure 3. H3: Innovation have a positive impact on CSP. Source: Authors’ elaboration.
Hypothesis 4 (H4). There is a moderation effect between CFP and CSP driven by corporate innovation. (cf.
Figure 4). 4 (H4). There is a moderation effect between CFP and CSP driven by corporate innovation.
Hypothesis
(cf. Figure 4).
Figure 4. H4: Innovation is a moderating factor between CFP and CSP. Source: Authors’ elaboration.
Hypothesis
Hypothesis 5 (H5).
(H5). There
Thereis a mediation effect between CFP andand
CSP driven by corporate innovation. (cf.
Hypothesis 55 (H5). There isisa amediation
mediation effect
effect between
between CFP
CFP and CSPCSP driven
driven by corporate
by corporate innovation.
innovation. (cf.
Figure
(cf. 5).
Figure
Figure 5). 5).
Figure 5. H5: Innovation is a mediating factor of the relationship between CFP and CSP. Source:
H5: Innovation
Figure 5. H5: Innovationisis aa mediating
mediating factor
factor of
of the
the relationship
relationship between
between CFP
CFP and
and CSP.
CSP. Source:
Source:
3. Research Methods
3. Research Methods
This study presents an analysis carried out on 825 observations organized as a panel data that is
3. Research Methods
This study presents an analysis carried out on 825 observations organized as a panel data that is
multidimensional data involving measurements overtime. This panel data is strongly balanced as
multidimensional data involving measurements overtime. This panel data is strongly balanced as
each This
panelstudy presents
contains an analysis
the same carried
time points forout
all on
the825 observations
subjects includedorganized as a panel
in the sample. data that
The sample is
each panel contains the same time points for all the subjects included in the sample. The sample is
is multidimensional
composed of 165 NFCs datathat
involving measurements
were included at leastovertime.
once in theThis panel100
Global data is strongly
Index duringbalanced as
the period
composed of 165 NFCs that were included at least once in the Global 100 Index during the period
each to
2010 panel
2014.contains
Financialthedata
same fortime points for
the period all the subjects
2009–2013 included
was collected from inthe
theBloomberg
sample. The sample In
platform. is
2010 to 2014. Financial data for the period 2009–2013 was collected from the Bloomberg platform. In
composed
the of a165
analysis, NFCs that
time-lag were
effect included
of one at least
year was once in the
considered: CFPGlobal 100 Index
for a given yearduring the to
was used period
study2010
the
the analysis, a time-lag effect of one year was considered: CFP for a given year was used to study the
to 2014.on
impact Financial
CSP for data for the period
the following 2009–2013
year in was collected
terms of inclusion in orfrom the Bloomberg
exclusion platform.
from the Global In the
100 Index.
impact on CSP for the following year in terms of inclusion in or exclusion from the Global 100 Index.
analysis,
We afocused
time-lagour effect of one on
analysis yearNFCs
was considered:
due to theCFP for a given
different year was
tangible and used to study
material the
aspects
We focused our analysis on NFCs due to the different tangible and material aspects
impact on CSPpossible
characterizing for the following
improvement year in
of terms
the CSR of in
inclusion in orprocesses
production exclusionthrough
from theinnovation
Global 100for
Index.
this
characterizing possible improvement of the CSR in production processes through innovation for this
We focused
company our analysis
category, and due onto NFCs
the due
needto the
to different
develop tangible andinvestigations
statistical material aspects oncharacterizing
similar and
company category, and due to the need to develop statistical investigations on similar and
possible
comparableimprovement
accounting of the Table
data. CSR in production
1 below showsprocesses through
the industry sampleinnovation for this
distribution company
of companies
comparable accounting data. Table 1 below shows the industry sample distribution of companies
category, and
involved in thedue to the need
evaluation to develop
process statistical investigations
characterizing on similar
the annual definition of and comparable
the Global accounting
100 Index in the
involved in the evaluation process characterizing the annual definition of the Global 100 Index in the
data. Table 1 below
period 2010–2014. shows the industry sample distribution of companies involved in the evaluation
period 2010–2014.
process characterizing the annual definition of the Global 100 Index in the period 2010–2014.
Table 1. Sample industry distribution.
Industry Freq. % Cum.
Basic Materials 21 12.73 12.73
Consumer Goods 33 20.00 32.73
Consumer Services 9 5.45 38.18
Energy 17 10.30 48.48
Energy 17 10.30 48.48
Healthcare 16 9.70 58.18

Energy 17 10.30 48.48
Healthcare 16 9.70 58.18
Industrial 21 12.73 70.91
Technology 24 14.55 85.46
Telecommunication 14 8.48 93.94
Utilities 10 6.06 100
Total 165
The Global 100 Index is managed by the Canadian clean capitalism “Corporate Knights” magazine,
one of the most popular and influential CSR journals for managers, policy-makers, and stakeholders.
The Corporate Knights research unit periodically screens about 4000 listed mid-size and large
companies (about $2 billion of market value) to develop the annual ranking of the top 100 worldwide
corporate leaders in CSR. This ranking is announced every January during the World Economic
Forum in Davos. Like other CSR ratings (e.g., Bloomberg ESG Data Service, Dow Jones Sustainability
Index, FTSE4Good, ISS, MSCI ESG Research, Thomson Reuters Asset4, etc.), the Global 100 Index
aims to highlight companies’ socially responsible investments. It is built through the collection of
publicly disclosed data (i.e., financial filings, sustainability reports) and the gathering of information
directly from corporations for auditing purposes prior to their final evaluation. In particular,
all companies ranked in the Global 100 Index are scored on a maximum of 14 key performance
indicators (KPIs) covering environmental, socioeconomic and governance (ESG) factors, weighted
differently according to the industry. (for more details about the Global 100 methodology visit the
following weblink: https://www.corporateknights.com/wp-content/uploads/2017/01/2017-Global-
100_Methodology-Final.pdf)
In short, the Global 100 Index is a CSR rating that ranks mid-, large- and mega-capitalized
transnational companies and is less impacted by auditing biases than other such rankings because
it is scored using industry-specific weighed KPIs and takes into account public corporate data
and information. The ESG factors elaborated by the Global 100 are readily accessible to corporate
stakeholders (for more details about the Global 100 annual ranking list as well as for insights visit the
following website: http://www.corporateknights.com/reports/global-100/)through both Bloomberg
and Reuters databases. Furthermore, this rating gives its constituents great visibility, enhancing
their capacity to attract capital from socially responsible investors worldwide to support sustainable
business investments/programs and bolster innovation geared towards cleaner production.
In our analysis, we take the Global 100 Index companies as the “best in class”, respectively, for each
Global Industry Classification Standard (GICS) industry in terms of standards of CSR achieved in a
given year. In our model, we set a binomial dependent variable that considers a company’s inclusion
in the Global 100 Index because of highest annual CSP produced with respect to the overall mean.
We then developed our statistical analysis focusing on the highest overall CSP global performers to
find evidence that best emphasized the relationships stated in our research hypothesis.
In line with previous and recent studies [16–19], in our model we considered CFP as the
independent variable (IV). In particular, we used Return on Assets (ROA) to quantify CFP because
this measure is identified by the majority of studies as the cumulative accounting-based proxy for
measuring these type of firms’ performance [19,55]. As innovation is a key driver in sustaining
firms’ competitive advantage and growth [56], and in enhancing CSR and improving CSP in the
long run [43,48,49] and also as suggested in prior studies [16,55,57–59], we included in our model
firms’ R&D expenses scaled by Net Sales (such as the sum of gross sales and operating revenues
less discounts, returns and allowances) to measure firms’ “innovation intensity,”. We included this
composite variable as another explanatory variable in our analytical model because we assume that
any increase in R&D expenses generally depends on the availability of enough financial resources and
the company’s propensity to make this kind of investment. On the one hand, R&D expenses reflect
resources invested to activate business innovation programs, and on the other, this value, scaled by
Net Sales, determines the importance of R&D investments for a given business by expressing their
level of intensity.
In the literature, there are various alternatives to estimate firms’ R&D investments, such as the
price-to-research-ratio (PRR) [60], the price/growth flow [61] as well as the patents-per-R&D-expenses
ratio. However, none of these measures is in line with our research aim. Thus, we focused our
attention on the innovation intensity variable, as it measures how investments in R&D activities relate
to company operations activities. It is an accounting-based measure, like the other parameters that
characterize our analytical model, ROA and the book value of Total Assets. This is a proxy commonly
used by scholars examining CFP—CSP relationships, which can measure a company’s efforts and
strategic orientation to develop its business through the implementation of socially responsible
innovative processes and production instrumental to the achievement of higher CFP and CSP.
In order to control for differences between sectors and capture related qualitative effects which
may impact the analytical model, like the innovation intensity variable, we included industry dummy
control variables (CVs) as suggested by prior studies [62,63]. There are differences among industries in
terms of regulation and expected socially and environmentally responsible actions (i.e., each industry
has its own regulations regarding environmental protection) that must be considered. Like the GICS,
our model considers nine industrial sectors (energy, basic materials, industrials, consumer goods,
consumer services, health care, information technology, telecommunication services, and utilities).
Since some previous studies have shown the existence of a relationship between firm size and
CSP [62], we include in the analysis the “firm size” as another CV. In this study, firm size may
be a determinant as it could affect stakeholders’ expectations and concerns regarding socially and
environmentally responsible activities. Therefore, coherently with Waddock and Graves [16] we
suppose that the larger the company, the higher stakeholders’ expectations for CSR. However, as stated
by Dang et al. [64], by fine tuning the analysis, scholars have to identify a right measure of firm size
within different available market and accounting-based proxies coherently with the topic and the main
goal investigated. This is fundamental for avoiding possible biases in producing and interpreting
empirical results. To this end, in line also with previous studies [46,55], we identified the natural
logarithm of Total Assets, such as the proper measure of firm size to perform our analysis. In particular,
the inclusion of this proxy in our model is justified because the present study focuses on the capacity of
firms in producing CSP by generating and allocating appropriately its financial resources, i.e., boosting
innovation activities.
The inclusion in our model of CVs, namely firm size and industry, supports the analysis to check
for unobservable time-invariant firm/industry specific characteristics, e.g., firm culture, managerial
capabilities, technology, sector competitiveness intensity, etc.
Furthermore, as the passing of time could affect relationships among the model variables, we
include in the analysis a dummy CV to control for timing effects.
A sustainable organization implements long-term CSR strategies, as well as innovation activities
to achieve its main goal, which is to create shared value for a large proportion of stakeholders and
maintain it over time [6,12,48,49]. More specifically, in this analysis CSP (expressed in terms of
inclusion in or exclusion from the Global 100 Index) was considered as a dependent variable for the
years 2010–2014, while the independent variables—CFP and innovation intensity—and the control
variables (Total Assets and Industry) were considered for the period 2009–2013. We assumed that
each IV produces possible effects on CSP of subsequent years. Therefore, we set a one-year time
lag between the DV, the IVs and the control variables in the model. This model setting aims to
analyze the time-series lead-lag interactions between the predictor and the explanatory variables and
to examine the possible virtuous cycle between previous CFP and R&D investments and successive
CSP, as highlighted by prior studies [16–19,48].
Finally, we define our analytical model considering suggestions by [65] in order to mitigate
plausible endogeneity effects within the variables, which are often due to both the nature of firm level
data used and the probable reverse causal interactions between the predictor and the explanatory
variables. In particular, below we describe our analytical model which composed of lagged explanatory
variables (ROA and Innovation), the predictor computed as another lagged IV (Global100t −1 ), and the
CVs (such as lagged firm size, industry and timing), namely:
Pr ( Global100it = 1)
= F (α0 + α1 ROAit−1 + α2 Innovationit−1
+ α3 ROA ∗ Innovationit−1 + α4 SIZEit−1 + α5 Global100it−1 (1)
9 5
+α6 ∑ Industryit + α7 ∑ Timei + εit )
k =1 j =1
where:
n i identifies the companies which were Global 100 Index constituents for at least one year in the
period 2010–2014;
n t stands for the time covered by the analysis;
n Global100t is the dependent variable (DV), with a value of 1 or 0 depending on whether the firm
is listed in the index or not at time t;
n a0 is the value of the intercept characterizing the logistic regression line;
n a1 , a2 . . . a6 represent each coefficient for every independent variable (IV);
n ROAt −1 is an IV proxy for the CFP at time t − 1;
n Innovationt −1 is another IV that measures corporate innovation intensity defined as the ratio
between R&D expenses and Net Sales (or revenues) at time t − 1;
n ROA*Innovationt −1 is the composite IV included in the model to check for possible moderation
effects at time t − 1;
n SIZEt −1 is the control variable (CV) for firm size measured by the natural logarithm of Total
Assets at time t − 1;
n Global100t −1 , which accounts for possible effects produced on the DV and the IVs by the previous
inclusion/s in the index;
n Industry is a set of dummy variables included in the model to control for sector;
n Time is a set of dummy variables included in the model to control for the possible effect of
time; and
n ε, which represents the disturbance term.
The following Table 2 summarizes main variables included in the analytical model in line to
investigate the insights that emerged from both the prior research design and in the present section.
In order to test the main hypothesis defined in Section 2, we performed a logistic regression
analysis using the analytical model shown above. We adopted this regression technique due to the
binomial form of the DV, and to analyze whether the probability of a company’s inclusion in the Global
100 Index would be verified (DV is equal to 1) given the set of regressors included in the model.
Finally, to analyze whether innovation plays a mediating role in the relationship between
CFP and CSP, we used the Sobel-Goodman [66] and Judd-Kenny [67,68] test to measure indirect
mediation effects.
Table 2. Main variables investigated.
Role Played in
Variable Definition
the Regression
The dummy variable set to examine the firm’s inclusion
Global100t in the Global 100 ranking, as a proxy of higher CSP DV
produced annually.
The selected accounting-based proxy of corporate
Innovationt −1 IV
innovation measured by R&D Expenses/Net Sales.
The Return on Assets is the accounting measure used as
ROAt −1 IV
a proxy of CFP.
The composite variable useful to check for possible
ROA*Innovationt −1 moderation effects produced by the interaction between CV
CFP and Innovation on CSP.
The book value of Total Assets computed in natural
SIZEt −1 logarithmic form to normalize data, such as the CV
accounting-based proxy of firm size.
The lagged DV included in the model to control for
possible observable and unobservable effects produced
Global100t −1 CV
by past CSP on the predictor and the explanatory
variables.
A set of dummy variables useful to check for possible
Industry qualitative effects produced by industry differences on CV
the relationships between CFP and CSP.
A set
Sustainability 2018, 10, x FOR ofREVIEW
PEER dummy
annual variables defined in order to 10 of 22
Time CV
tackle possible timing unobservable effects in the model.
In order to test the main hypothesis defined in Section 2, we performed a logistic regression
analysis using the analytical model shown above. We adopted this regression technique due to the
Moreover, to analyze
binomial form ofthethe possible
DV, and tomediating role played
analyze whether by innovation
the probability in the inclusion
of a company’s relationship
in thebetween
Global 100
ROA and inclusion in Index would 100
the Global be verified
Index,(DVwe isadopted
equal to the
1) given the steps
causal set of approach
regressors included
definedinby theprevious
model.
studies [66–68]. This method is commonly used particularly in the social science literature to examine
Finally, to analyze whether innovation plays a mediating role in the relationship between CFP
possible mediation
and CSP, weeffects in Sobel-Goodman
used the a causal chain ofand
[66] variables
Judd-Kennyby[67,68]
means testof serial tests
to measure [69].
indirect In particular,
mediation
the mediation analysis carried out in our study uses four sequential tests identified by the causal steps
effects.
Moreover,
approach, as itemized andto reported
analyze the
inpossible
Figure mediating
6 below: role played by innovation in the relationship
between ROA and inclusion in the Global 100 Index, we adopted the causal steps approach defined
1. bytest
The first previous studies [66–68].
is a regression This method
analysis is commonly
investigating used the
whether particularly in the a
IV produces social
totalscience
effect on the
literature to examine possible mediation effects in a causal chain of variables by means of serial tests
potentially-mediated DV (the estimation of Path c, as shown in Figure 6);
[69]. In particular, the mediation analysis carried out in our study uses four sequential tests identified
2. The second test analyzes
by the causal possible
steps approach, correlation
as itemized between
and reported in Figurethe IV and the mediator (MV) (the
6 below:
estimation of Path a, as shown in Figure 6), using a regression equation in which M is the
1. The first test is a regression analysis investigating whether the IV produces a total effect on the
criterion variable and the IVDV
potentially-mediated is the
(the predictor;
estimation of Path c, as shown in Figure 6);
3. 2. test
The third Theanalyzes
second test analyzescorrelation
possible possible correlation
betweenbetween
the MV theand
IV the
and DV,
the mediator
commonly (MV) (the as the
known
estimation of Path a, as shown in Figure 6), using a regression equation in which M is the criterion
direct effect (the estimation of Path b in Figure 6);
variable and the IV is the predictor;
4. The last3. step
Theof thetest
third mediation analysis
analyzes possible involves
correlation a regression
between the MV andequation that estimates
the DV, commonly known asthe IV’s
possible effects on the
the direct effectDV
(thecontrolling
estimation of for
Paththe
b in MV 6); estimation of Path b and Path c’, as shown
(the
Figure
4. 6).
in Figure The last step of the mediation analysis involves a regression equation that estimates the IV’s
possible effects on the DV controlling for the MV (the estimation of Path b and Path c’, as shown
in Figure 6).
Path c
IV DV
Path
MV Path
a b
Path c’
IV DV
Figure 6. The four6.causal

Figure The foursteps
causalmethod for mediation
steps method for mediationanalysis. Source:
analysis. Source: Authors’
elaboration.
Finally, we performed Sobel-Goodman tests [66] to estimate the intensity of how the MV
mediates the total effect produced by the IV on the DV. These analyses elaborated findings produced
by the prior four sequential tests, with the final aim of quantifying the role played by the MV. In
particular, Sobel-Goodman tests highlight an aspect of performance that allows us to understand the
portion of total effect mediated. In particular, this is quantified by the ratio between indirect effects
Finally, we performed Sobel-Goodman tests [66] to estimate the intensity of how the MV mediates
the total effect produced by the IV on the DV. These analyses elaborated findings produced by the
prior four sequential tests, with the final aim of quantifying the role played by the MV. In particular,
Sobel-Goodman tests highlight an aspect of performance that allows us to understand the portion of
total effect mediated. In particular, this is quantified by the ratio between indirect effects on total effect,
specifically:
Indirect Effect ( path a ∗ path b)
IV → MV → DV : = (2)
Total Effect path c
4. Results
The study summarized in this paper was developed in four steps:
1. a descriptive statistical analysis of variables to better understand the composition of our sample;
2. a Pearson correlation test on the variables that defined the analysis model;
3. a logistic regression analysis followed by a collinearity diagnostic, useful to examine the sort of
interaction assumed in the research hypotheses H1, H2, H3 and H4; and
4. Judd-Kenny [67,68] and Sobel-Goodman [66] tests, aimed at investigating H5.
For the Pearson correlation test and the logistic regression analysis, the level of significance was
set at 5%. All statistical analyses were performed using STATA analytical software.
Table 3 reports the descriptive statistics for some of the relevant variables used in the study. Table 4
presents the correlation matrices of all the variables. Table 5 shows the level of correlations between
2010–2014 CSP data and the one-year-lagged financial data and other independent/control variables.
Table 3. Descriptive statistics.
Variable Mean Median SD Variance Max Min Skewness Kurtosis

GLOBAL100 0.4315152 0 0.4955881 0.2456075 1 0 0.2765458 1.076478
ROA 6.108953 5.273361 6.742166 45.4568 40.04038 −24.41184 0.5455895 6.621968
Innovation 0.2378246 0 0.3880432 0.1505775 0.9409684 0 1.024556 2.065619
SIZE 23.42814 23.47372 1.311754 1.7207 27.05026 19.74242 −0.0653461 2.713501
The findings of the Pearson correlation analyses indicate that CFP and CSP are significantly
(at ρ < 0.05) and positively (ROA, r = 0.1740) correlated. Results shown in Table 3 indicate that
innovation intensity is significantly (at ρ < 0.05) and positively correlated with both CFP (ROA,
r = 0.1423) and CSP (Global100, r = 0.2734). Therefore, these results indirectly support H1, H2,
and H3. Moreover, this test highlighted the interaction between CFP and innovation significantly (at
ρ < 0.05) and positively affect CSP (ROAInnovation, r = 0.2112), confirming what stated in H4. Further,
considering the output produced by Pearson analysis relatively to Global100t −1 it seems that prior CSP
positively affect subsequent CSR outcomes (Global100t −1 , r = 0.3156, at ρ < 0.05).
Finally, focusing on the possible unobservable effects produced by industry differences on CSP,
the Pearson correlation test produced some interesting significant results, even though the interactions
between variables performed weak coefficients. In particular, we observe that companies operating in
energy (Energy, r = 0.0992) and industrial (Industrial, r = 0.0785) sectors appear to be inclined to achieve
higher CSP. On the other hand, firms operating in industries such as basic materials (BaMat r = −0.0977)
and consumer services (ConsS r = −0.1015) seem to be worse performers of CSP respect to other sectors.
Table 4. Pearson correlation analysis.
Global 100 ROA Innovation ROAInnovation SIZE Global100t−1 BaMat ConsG ConsS Energy HealthCare Industrial Tech Telecom Utilities
Global 100 1.00
ROA 0.1740 * 1.00
Innovation 0.2734 * 0.1423 * 1.00
ROAInnovation 0.2112 * 0.4673 * 0.6983 * 1.00
SIZE 0.0714 * −0.1646 * 0.1042 * −0.0468 1.00
Global100t−1 0.3156 * 0.1412 * 0.6090 * 0.4264 * 0.0848 * 1.00
BaMat −0.0977 * −0.1375 * −0.0620 −0.0222 −0.1923 * −0.0918 * 1.00
ConsG −0.0257 0.0475 −0.0512 −0.0434 −0.0235 −0.0137 −0.1909 * 1.00
ConsS −0.1015 * 0.0386 −0.1358 * −0.0913 * −0.1559 * −0.1114 * −0.0917 * −0.1201 * 1.00
Energy 0.0992 * −0.0487 −0.1562 * −0.1253 * 0.2168 * 0.1021 * −0.1294* −0.1695 * −0.0814 * 1.00
HealthCare 0.0536 0.2060 * 0.1540 * 0.2536 * −0.0759 * 0.0618 −0.1251 * −0.1638 * −0.0787 * −0.1111 * 1.00
Industrial 0.0785 * −0.0761 * 0.1604 * 0.0312 0.1542 * 0.0726 −0.1458 * −0.1909 * −0.0917 * −0.1294 * −0.1251 * 1.00
Tech 0.0154 0.0289 0.1555 * 0.1004 * −0.0120 0.0130 −0.1576* −0.2063 * −0.0991 * −0.1398 * −0.1352 * −0.1576 * 1.00
Telecom −0.0018 0.0376 −0.0359 −0.0461 0.0273 −0.0259 −0.1163 * −0.1522 * −0.0731 * −0.1032 * −0.0998 * −0.1163 * −0.1256 * 1.00
Utilities −0.0469 −0.0981 * −0.1022 * −0.1022 * 0.0448 −0.0398 −0.0970* −0.1270 * −0.0610 −0.0861* −0.0832 * −0.0970 * −0.1048 * −0.0773 * 1.00
Note: * stands for significant at ρ < 5%.
However, to better understand the correlations shown in Table 4, it is necessary to compare

these preliminary results with the evidence produced by the logistic regression analysis (see Table 5).
Once correlation is demonstrated to exist between the variables, it can then be assumed, and regression
analysis can be performed in order to test whether and how CFP and innovation are linked to CSP.
Table 5. Logistic regression results.
Random-Effects Logistic Regression Number of Obs = 660

Group Variable: id Number of groups = 165
Random effects u_i ~Gaussian Obs per group:
min = 4
avg = 4.0
max = 4
Integration method: mvaghermite Integration pts. = 12
Wald chi2(16) = 98.68
Log likelihood = −374.00887 Prob > chi2 = 0.0000
Global 100t Coef. Std. Err. z P > |z| [95% Conf. Interval]
ROAt−1 0.0712359 0.0216042 3.30 0.001 0.0288924 0.1135794
Innovationt−1 1.175801 0.4297502 2.74 0.006 0.3335065 2.018096
ROAInnovationt−1 −0.0328445 0.0384909 −0.85 0.393 −0.1082854 0.0425964
SIZEt−1 −0.1019223 0.085746 −1.19 0.235 −0.2699814 0.0661367
Global100t−1 0.7228701 0.2741993 2.64 0.008 0.1854494 1.260291
BasicMaterials −0.5308388 0.5289605 −1.00 0.316 −1.567582 0.5059047
ConsumerGoods −0.1140233 0.4815713 −0.24 0.813 −1.057886 0.829839
ConsumerServices −1.029434 0.6720984 −1.53 0.126 −2.346723 0.2878545
Energy 1.099322 0.5311778 2.07 0.038 0.0582331 2.140412
HealthCare 0.0380103 0.5491803 0.07 0.945 −1.038363 1.114384
Industrial 0.7002438 0.5134865 1.36 0.173 −0.3061712 1.706659
Technological 0.0439347 0.5056498 0.09 0.931 −0.9471207 1.03499
Telecommunication 0.1883038 0.5451738 0.35 0.730 −0.8802171 1.256825
y2012 0.6365292 0.2522968 2.52 0.012 0.1420366 1.131022
y2013 −0.7945686 0.2677179 −2.97 0.003 −1.319286 −0.2698511
y2014 −0.5319664 0.2685604 −1.98 0.048 −1.058335 −0.0055977
_cons 1.063773 2.083159 0.51 0.610 −3.019144 5.146689
/lnsig2u −1.08605 0.8255747 −2.704146 0.5320471
sigma_u 0.5809882 0.2398246 0.2587034 1.304766
rho 0.0930545 0.0696747 0.0199379 0.3410091
LR test of rho = 0: chibar2(01) = 2.02 Prob ≥ chibar2 = 0.077
note: Utilities omitted because of collinearity.
As shown in Table 5, the findings of the regression analysis provide evidence that prior CFP
(2009–2013) has a positive effect on later CSP (2010–2014), thus supporting H1. In particular,
ROA is positively correlated with CSP considering a confidence level of 95% (ρ = 0.001; α1 ∼ = 0.07).
This first result of logit regression confirms findings of prior studies that highlighted the positive
interaction between CFPt −1 —CSPt literature being as well as an empirical evidence of slack resources
theory [16–19].
The results of the analysis also confirm H3. Evidence in Table 5 shows that innovation is
significantly and positively linked with the Global 100 Index (ρ = 0.006; α2 ∼ = 1.18) as a proxy
of CSP. This is another evidence perfectly in line with findings theoretically and empirically
highlighted by prior studies about the key role played by innovation in the relationship between
CFP-CSP [29–32,52,54,56].
A moderation analysis between ROA and Innovation on CSP was carried out, but similar with [30],
the result scored a negative coefficient but not statistically significant (ρ = 0.393; α3 = −0.03). Therefore,
we can reject H4 . Nevertheless, on the light of the regression results we can state that firm size scored a
negative coefficient but it is not a determinant able to affect DV (ρ = 0.10; α4 = −0.235), such as CSP,
diversely to what stated in prior studies [55,62]. We suppose that this result is due to the sample of our
analysis characterized by biggest corporations that are quietly different in terms of firm size.
On the other hand, considering the regression outcomes relatively to the variable Global100t −1
(ρ = 0.008; α5 = 0.72), we could state that the annual inclusion of a firm in the Global 100 Index
supposedly could be a driver to stimulate managers and stakeholder in supporting continue
improvements in firms’ CSP year by year.
The regression analysis also highlighted that being part of a given industry affects a firm’s financial
performance and, consequently, its socially and environmentally responsible activities. In particular,
as shown in Table 5, results indicate that operating in the Energy sector (ρ = 0.038) has a significant
effect on the dependent variable.
Regarding to the effect of time on the dependent variable, the overall trend is statistically
significant. In particular, as shown in Table 5, each year of the period analyzed is significantly
correlated with the Global 100 (ρ < 0.05) scoring different signs as well. This result evidences that
some of the variation in our data model due to unobserved events that took place those years critically
affected the inclusion of firms in the Global 100 ranking.
The robustness of these results was tested through a collinearity analysis that confirms, as shown
in Table 6a,b, the absence of multicollinearity within our model. The variance inflation factors (VIF) of
variables examined are very low [70] and equal about 1.
Table 6. (a,b) Collinearity diagnostics results.
(a)
Variable VIF SQRT VIF Tolerance R-Squared
Global
1.11 1.05 0.9018 0.0982
100
ROA 1.08 1.04 0.9251 0.0749
Innovation 1.10 1.05 0.9052 0.0948
SIZE 1.05 1.03 0.9512 0.0488
Mean VIF 1.09
(b)
Eigenval Cond Index
1 3.5156 1.0000
2 0.6246 2.3724
3 0.4443 2.8130
4 0.4140 2.9140
5 0.0015 48.7303
Condition Number 48.7303
Eigenvalues and the Cond Index are computed from scaled raw
sscp (with intercept) Det (correlation matrix) 0.8449
Finally, a Sobel-Goodman [66] test was performed to analyze the interaction between CFP (i.e.,
ROA) and Innovation, and the effect on CSP (i.e., inclusion in the Global 100 Index). The results, shown
in Table 7 and summarized in Figures 7 and 8, highlight that innovation plays an important partial
mediation role in the relationship between CFP and CSP.
Sustainability
Sustainability 2018,
2018, 10,10, x FOR PEER REVIEW
3611 15ofof2222
15
Table 7. Mediation analysis results.

Table 7. Mediation analysis results.
Model with dv Regressed on iv (path c) 7. Mediation analysis results.
Table
Model with dv Regressed on iv (path c)
Model with dv Regressed on iv (path c) Number of obs 825
Number of obs 825
Source SS df MS F (1, 823) 25.70
Source SS df MS Number of obs 825
F (1, 823) 25.70
Model 6.12730293 1 6.12730293 Prob > F 0.0000
Model Source SS 6.12730293 1MS
df 6.12730293
F (1, 823) Prob 25.70
>F 0.0000
Residual 196.253303 823 0.238460879 R-squared 0.0303
Residual Model 6.12730293 1196.253303 823
6.12730293 0.238460879
Prob > F R-squared
0.0000 0.0303
Total Residual 196.253303 202.380606
823 824 0.245607532
0.238460879 0.245607532 Adj R-squared
R-squared Adj R-squared
0.0303 0.0291
Total 202.380606 824 0.0291
Total 202.380606 824 0.245607532 Root MSE
Adj R-squared 0.48832
Root 0.0291
MSE 0.48832
Global 100 Coef. Std. Err. t P >
Root MSE
t [95% Conf. Interval]
Global 100 Coef. Std. Err. t P > t [95%0.48832
Conf. Interval]
ROA 0.01279 0.0025232 5.07 0.000 0.0078374 0.0177426
ROA Global 100 Coef. 0.01279
Std. Err. 0.0025232
t 5.07
P>t 0.000 0.0078374
[95% Conf. Interval] 0.0177426
_cons 0.3533814 0.0229485 15.40 0.000 0.308337 0.3984258
_cons ROA 0.01279 0.3533814 0.0229485
0.0025232 5.07 15.40
0.000 0.000 0.308337
0.0078374 0.0177426 0.3984258
Model with mediator regressed
_cons 0.3533814on iv (path a)
Model with mediator regressed on iv0.0229485
(path a) 15.40 0.000 0.308337 0.3984258
Model with mediator regressed on iv (path a) Number of obs 825
Number of obs 825
Source SS df MS Number of obs F (1, 823)
825 17.02
Model 2.51379406 1 2.51379406 Prob > F 0.0000
Model Source SS 2.51379406 1MS
df 2.51379406
F (1, 823) Prob 17.02
>F 0.0000
Residual 121.562103 823 0.147706079 R-squared 0.0203
Residual Model 2.51379406 1121.562103 823
2.51379406 0.147706079
Prob > F R-squared
0.0000 0.0203
Total 124.075897 824 0.150577545 Adj R-squared 0.0191
Total Residual 121.562103 823 0.147706079 0.150577545
124.075897 824 R-squared Adj R-squared
0.0203 0.0191
Total 124.075897 824 0.150577545 Root MSE
Adj R-squared 0.38433
Root 0.0191
MSE 0.38433
Innovation Coef. Std. Err. t P > t [95% Conf. Interval]
Innovation Coef. Std. Err. t Root MSE
P > t [95%0.38433
Conf. Interval]
ROA 0.0081922 0.0019858 4.13 0.000 0.0042944 0.0120901
ROA Innovation Coef. 0.0081922
Std. Err. 0.0019858
t 4.13
P>t 0.000
[95%0.000 0.0042944
Conf.0.1523275
Interval] 0.0120901
_cons 0.1877787 0.0180611 10.40 0.2232299
_cons ROA 0.0081922 0.1877787 0.0180611
0.0019858 4.13 10.40
0.000 0.000 0.1523275
0.0042944 0.0120901 0.2232299
_cons 0.1877787 0.0180611 10.40 0.000 0.1523275 0.2232299
Model with dv regressed on mediator and iv (paths b and c’)
Model with dv regressed
Model on mediator
with dv regressed and iv (paths
on mediator b and c’)
and iv (paths b and c’)
Number of obs 825
Number of FobsNumber825 of obs 42.33
825
Source SS df MS (2, 822)
Model Source SS 18.8975273
df 2 MS 9.44876365F (2, 822) Prob >42.33
F 0.0000
Model 18.8975273 2 9.44876365 Prob > F 0.0000
Residual Model 18.8975273 2
183.483079 9.448763650.223215424
822 Prob > F R-squared 0.0000 0.0934
Residual Residual 183.483079 183.483079 822
822 0.223215424 0.223215424
R-squared Adj R-squared
0.0934 0.0934
Total 202.380606 824 0.245607532 R-squared 0.0912
Total Total 202.380606 202.380606 824
824 0.245607532 0.245607532
Adj R-squared Adj R-squared
0.0912 0.0912
Root MSE 0.47246
Root MSE Root 0.47246
MSE 0.47246
Global 100 Coef. Std. Err. t P > t [95% Conf. Interval]
Global 100 Coef. Std. Err. t P > t [95% Conf. Interval]
InnovationGlobal 100 Coef. Std. Err.
0.3241158 t
0.0428512 P>t
7.56 [95% Conf.0.2400051
0.000 Interval] 0.4082264
Innovation
Innovation 0.3241158 0.3241158 0.0428512
0.0428512 0.0024663
7.56 7.56
0.000 0.000
0.2400051 0.2400051 0.4082264
0.4082264 0.0149758
ROA 0.0101348 4.11 0.000 0.0052938
ROA ROA 0.0101348 0.0101348 0.0024663
0.0024663 4.11 4.11
0.000 0.000 0.0052938
0.0052938 0.0149758
0.0149758 0.3388739
_cons 0.2925194 0.0236159 12.39 0.000 0.2461649
_cons _cons 0.2925194 0.2925194 0.0236159
0.0236159 12.39 12.39
0.000 0.000 0.2461649
0.2461649 0.3388739 0.3388739
IV: c: + 0.01279 DV:

IV: c: + 0.01279 DV:
ROAt-1 Global100t
ROAt-1 Global100t
Figure 7. The total effect produced by ROA on Global 100. Source: Authors’ elaboration.
Figure 8. The indirect effect of ROA on Global 100 partially mediated by innovation. Source:
Figure 8. elaboration.
Authors’ The indirect effect of ROA on Global 100 partially mediated by innovation. Source: Authors’
Figure 8. The indirect effect of ROA on Global 100 partially mediated by innovation. Source: Authors’
elaboration.
elaboration.
Furthermore, according to the results of the Sobel-Goodman [66] mediation tests shown in Table 8,
innovation partially mediates about 20% (∼ =0.20760143) of the total effect of CFP on CSP. The partial
mediation in our case is justified because the effect of ROA on Global 100 still exist but in a smaller
magnitude if we compare the total and direct effect. This result partially supports H5.
Table 8. Sobel-Goodman mediation tests results.
Coef Std Err Z P>Z

Sobel 0.00265523 0.00073314 3.622 0.00029265
Goodman-1 (Aroian) 0.00265523 0.00073806 3.598 0.0003212
Goodman-2 0.00265523 0.00072818 3.646 0.00026597
Coef Std Err Z P>Z
a coefficient 0.008192 0.001986 4.1254 0.000037
b coefficient 0.324116 0.042851 7.56375 3.9 × 10− 14
Indirect effect 0.002655 0.000733 3.62172 0.000293
Direct effect 0.010135 0.002466 4.10934 0.00004
Total effect 0.01279 0.002523 5.06904 4.0 × 10−7
Proportion of total effect that is mediated 0.20760143
Ratio of indirect to direct effect 0.26199117
Ratio of total to direct effect 1.2619912
5. Discussion and Conclusions

Several studies have examined the relationship between CFP and CSP, showing a mixed
interaction [20,21]. These findings suggest that there is a need for further empirical analysis.
Although many studies support the idea that CSR activities could help companies to establish
a competitive advantage over their rivals, as these activities enhance reputation [12,22,56],
foster innovation, attract talents and increase customer and investor loyalty (among other things),
managers need reliable and valid evidence to adopt CSR practices. Managers implement CSR
activities only if this contributes to increase firms’ financial performance. In this paper, considering
the multidimensionality of firms’ performance we have adopted a different perspective. CSR is a
managerial area whose performance are as much relevant as financial performance. In managing firms,
it is important to allocate the limited financial resources in different investments able to satisfy all
stakeholders’ expectations and not only shareholders. Therefore, our main aim has been to understand
if and how availability of financial resources affects firms’ CSP. In particular, we have analyzed the
hypothesized positive relationship between CFP and CSP, and the potential impact of innovation
directly on CSP and as a mediator between CFP and CSP. The proxy measure for CSP was the listing
of firms in the Global 100 Index, which ranks the top 100 most sustainable listed companies in the
world each year based on twelve key performance indicators. The proxy measure for CFP was
ROA. Innovation was defined as the amount of money that companies are investing in R&D as a
percentage of their revenues. We tested the CFP-CSP relationship using the Pearson correlation test
and a logistic regression analysis on a sample built using companies listed at least once in the Global
100 Index. The study used extensive data covering a five-year period for both CFP (2009–2013) and
CSP (2010–2014).
The contribution of this paper is two-fold. Firstly, based on findings of the logistic regression,
we can state that there is a positive and significant correlation between CFP and CSP. Even if CSP are
many times immaterial, their production implies to consume resources, financial and non-financial,
which need to be coordinated along the production process. Therefore, firms need to dispose sufficient
financial resources and to manage them appropriately to pursue CSR objectives. Consequently,
CSR activities needs to be systematically planned as any other firm’s activity and adequately financed
to reach its objectives. In this way, to satisfy the different stakeholders’ needs managers have to put
more and more attention at the strategic level on CSR activities in order to make a selection of the CSR
activities to invest on and to manage adequately the available resources to reach both financial and
social objectives. According to Boesso and Michelon [71], a comprehensive CSR strategy addressing
all potential social issues could be too much expensive and result in the creation of tension within
firms between their financial and social performance. CSR has become pervasive at the social level,
firms cannot resist any more to the call for a CSR-oriented change of their set of activities, products,
and processes but this change must be strategically governed. Any resistance could result exclusively
in an increasing inefficiency in pursuing CSP. From our analysis is evident that a CSR-oriented
change in firms’ culture could be the way to step up the process for achieving CSP more easily. The
listing in the Global 100 enhance the probability of a firm to reach a certain level of CSP also the
next year. This confirms what is argued by Porter and Kramer [12,56]: that to be successful in the
long-term firms should learn to plan and implement policies able to create shared value rather than
focusing on the tension between financial and non-financial performance. From a practical point of
view, a CSR-oriented strategy should be supported by the implementation of a managerial reward
system that foster the balanced pursuing of both financial objectives and CSP. Managerial reward
system should consider financial and non-financial objectives as interdependent and not as mutually
exclusive [23].
Secondly, our analysis highlighted that the more profitable companies are, and the more available
resources they have invested in R&D, the more effective their innovative activities become in producing
social performance. This suggests that the firms that perform best in terms of CFP and invest their
slack financial resources in innovation are more likely to improve their CSP. Investments in R&D
can increase firms’ capacity and competence to develop processes and products able to contribute
directly or indirectly to the satisfaction of stakeholders’ needs at the highest possible level without
offending shareholders and managers’ interests. Thus, our analysis produced a result in line with the
findings of some prior studies [16–19]. In firms with higher levels of CSP, managers tend to pursue
profitability more than sales maximization, and to invest in innovation-oriented activities that could
increase companies’ market value in the long-term [72]. Managers seem more prone to meet more the
interest of the stakeholders and shareholders compared to theirs. A good manager could be perceived
as such not because of his capacity to increase firm profitability or firm market share but also because
of his capacity to pursue CFP and CSP jointly. The positive relationship between CFP and CSP sustains
the idea that in firms with a strong CSR approach and high CSP managers may be more oriented
to emphasize profit over sales maximization. The continuous call for a CSR-focused orientation
could lead managers to maximize companies’ profits in order to guarantee the availability of enough
resources to satisfy both shareholders’ financial expectations and stakeholders’ non-financial requests.
As our analysis shows, innovation is a critical factor in the relationship between CFP and CSP.
In particular, innovation has more of a mediating than moderating role between CFP and CSP.
This indicates that managers who implement CSR strategies should enhance their companies’ level of
innovation intensity to increase the probability of achieving a higher level of CSP. Innovation should
increase firms’ flexibility to better and more rapidly respond to requests from their stakeholders.
This is particularly true when companies try to engage stakeholders in defining innovation
policy [73]. Furthermore, the availability of financial resources and investments in innovation must be
appropriately managed in order to produce CSP over time. CSR activities need to be continuously
supported to produce effects. Therefore, it is possible to assert that in order to pursue higher CSP,
managers should invest available financial resources in innovation. The relevance of innovation in
mediating the relationship between CFP and CSP could support the idea to include KPIs of firms’
innovation activities to measure their level of CSR confidence. The joint evaluation of KPIs related to
firms’ financial results and their innovation activities could give the possibility to forecast future firms’
CSP. In this way, there would be the possibility to distinguish firms with a CSR strategic-oriented
approach from those just responsive [54].
An additional result coming from our analysis is related to the industries firms belongs. Differently
from Padgett and Galan [52] which stated that innovation affect CSR in manufacturing industries
compared to non-manufacturing, our analysis shows that the achievement of higher CSP does not
depend on the economic sector within which a company operates, apart from those in the energy
sector. The increasing call and rhetoric for a CSR-focused orientation of companies has permeated all
economic sectors. Companies in the energy sector could be more sensitive to a CSR rhetoric because of
their high potential impact on the availability of scarce resources (e.g., fossil fuels) and/or the necessity
to appropriately manage renewable resources to guarantee their regeneration (e.g., water).
There are some caveats to the results reported in this paper. First, the sample analyzed is made up
of companies listed in the Global 100 because of their high level of CSP, which could produce a selection
bias. Second, resources were measured using only accounting-based figures; further investigation
should consider market-based measures in order to widen the perspective on firm performance.
Another limitation relates to the specific period covered in the analysis, a period characterized by a
profound financial crisis. It would be worthwhile to analyze a different period to confirm whether the
relationship examined in the paper holds true in the anon-crisis period, and to check for any effects on
the strength of the linkage.
Although our analysis focused on a sample of the largest multinational NFCs, the insights
highlighted in this study suggest that not only a financial justification, but also an innovation-oriented
strategic CSR approach, may be necessary to maximize CSP. Managers and corporate stakeholders
can no longer neglect this important interaction if they intend to establish a virtuous cycle that is
determinant for firm growth. Corporate stakeholders should consider this a crucial management issue
not only for large companies, but particularly for small/medium enterprises (SMEs), which aim to
implement CSR strategies that enhance CSP and support sustainable development as well. The results
of our analysis highlight the need to govern the financial dimension of SMEs in such a way as to
increase their capacity to implement CSR-oriented activities and achieve higher CSP. SMEs are usually
more localized and, thus, sensitive to social issues, but this inclination may be hindered by a dearth
of available resources. This same lack of resources also makes it impossible to finance continuously
and systematically innovation processes. These factors, taken together, can impede the achievement of
good CSP. Therefore, in order to improve CSP, SMEs may need to rethink their financing in order to
have greater availability of financial resources and be more active in terms of CSR and, consequently,
achieve better performance with regard to social responsibility.
The results of this paper suggest some areas for further research. In particular, the analysis points
out that the role of innovation, although partial, is important in terms of mediation between CFP and
CSP. Innovation activities could be considered strategic management efforts geared towards catalyzing
firms’ resources to achieve higher sustainable-shared value, activating and sustaining a virtuous cycle
between CFP and CSP [16,74,75]. Therefore, managers have a strong indication to invest resources
in a manner that increases their likelihood to improve CSP in the long term. As some other scholars
suggest [76], future research should focus both on defining the types of innovation activities (or an
optimal mix of them) that could best drive financial resources to maximize the probability of higher
CSP, and on understanding what other drivers could mediate or catalyze virtuous cycles between
CFP and CSP. Another important aspect to investigate is the existence and strength of relationships
between CFP, innovation and CSP in SMEs.
Author Contributions: All authors contributed to the paper significantly. The research was designed and
performed by P.R. and S.C. In particular, P.R. has written Sections 2 and 5, while S.C. has written Sections 3 and 4.
Section 1 has been written by both authors.
Funding: This research received no external funding.
Conflicts of Interest: The authors declare no conflict of interest.
References
1. Scherer, A.G.; Palazzo, G. The New Political Role of Business in a Globalized World: A Review of a New
Perspective on CSR and its Implications for the Firm, Governance, and Democracy. J. Manag. Stud. 2011, 48,
899–931. [CrossRef]
2. Visser, W. The Age of Responsibility: CSR 2.0 and the New DNA of Business. J. Bus. Syst. Gov. Ethics 2010, 5,
7–22. [CrossRef]
3. Svensson, G. ‘Glocalization’ of business activities: A ‘glocal strategy’ approach. Manag. Decis. 2001, 39, 6–18.
[CrossRef]
4. Windsor, D. The Future of Corporate Social Responsibility. Int. J. Org. Anal. 2001, 9, 225–256. [CrossRef]
5. Donaldson, T.; Preston, L.E. The Stakeholder Theory of the Corporation: Concepts, Evidence, and
Implications. Acad. Manag. Rev. 1995, 20, 65–91. [CrossRef]
6. Freeman, R.E. Strategic Management: A Stakeholder Approach; Pitman: Boston, MA, USA, 1984;
ISBN 978-0-521-15174-0.
7. Kopnina, H. Sustainability: New strategic thinking for business. Environ. Dev. Sustain. 2015, 19, 27–43.
[CrossRef]
8. Doane, D. The myth of CSR-The problem with assuming that companies can do well also doing good
is that markets do not really work that way. Stanf. Soc. Innov. Rev. 2005, 21–29. Available online:
https://ssir.org/articles/entry/the_myth_of_csr (accessed on 7 February 2018).
9. Crane, A.; Matten, D.; Spence, L.J. (Eds.) Corporate Social Responsibility in a Global Context. In Corporate
Social Responsibility: Readings and Cases in a Global Context, 2nd ed.; Routledge: Abingdon, UK, 2014; pp. 3–26,
ISBN 978-0-415-68324-1.
10. Aguinis, H.; Glavas, A. What We Know and Don’t Know About Corporate Social Responsibility: A Review
and Research Agenda. J. Manag. 2012, 38, 932–968. [CrossRef]
11. Kemper, J.; Schilke, O.; Reimann, M.; Wang, X.; Brettel, M. Competition-motivated corporate social
responsibility. J. Bus. Res. 2013, 66, 1954–1963. [CrossRef]
12. Porter, M.E.; Kramer, M.R. Strategy and Society: The Link between Competitive Advantage and Corporate
Social Responsibility. Harv. Bus. Rev. 2006, 78–93. Available online: https://hbr.org/2006/12/strategy-
and-society-the-link-between-competitive-advantage-and-corporate-social-responsibility (accessed on
16 January 2018).
13. Borghesi, R.; Houston, J.F.; Naranjo, A. Corporate socially responsible investments: CEO altruism, reputation,
and shareholder interests. J. Corp Financ. 2014, 26, 164–181. [CrossRef]
14. Goyal, P.; Rahman, Z.; Kazmi, A.A. Corporate sustainability performance and firm performance research.
Literature review and future research agenda. Manag. Decis. 2013, 51, 361–379. [CrossRef]
15. Alshehhi, A.; Nobanee, H.; Khare, N. The impact of sustainability practices on corporate financial
performance: Literature trends and future research potential. Sustainability 2018, 10, 494. [CrossRef]
16. Waddock, S.A.; Graves, S.B. The corporate social performance financial performance link. Strateg. Manag. J.
1997, 18, 303–319. [CrossRef]
17. Preston, L.E.; O’Bannon, D.P. The corporate social-financial performance relationship: A typology and
analysis. Bus. Soc. 1997, 36, 419–429. [CrossRef]
18. Testa, M.; D’Amato, A. Corporate environmental responsibility and financial performance: Does bidirectional
causality work? Empirical evidence from the manufacturing industry. Soc. Responsib. J. 2017, 13, 221–234.
[CrossRef]
19. Melo, T. Slack-resources hypothesis: A critical analysis under a multidimensional approach to corporate
social performance. Soc. Responsib. J. 2012, 8, 257–269. [CrossRef]
20. Margolis, J.D.; Walsh, J.P. Misery loves companies: Rethinking social initiatives by business. Adm. Sci. Q.
2003, 48, 268–305. [CrossRef]
21. Lu, W.; Chau, K.; Wang, H.; Pan, W. A decade’s debate on the nexus between corporate social and corporate
financial performance: A critical review of empirical studies 2002–2011. J. Clean. Prod. 2014, 79, 195–206.
[CrossRef]
22. Wood, D.J. Corporate Social Performance Revisited. Acad. Manag. Rev. 1991, 16, 691–718. [CrossRef]
23. Merchant, K.A.; van der Stede, W.A. Management Control Systems. In Performance Measurements,
Evaluation and Incentives, 2nd ed.; Pearson: London, UK, 2007; ISBN 978-0-273-73761-2.
24. Baumol, W.J. On the Theory of Expansion of the Firm. Am. Econ. Rev. 1962, 52, 1078–1087. Available online:
https://www.jstor.org/stable/1812183 (accessed on 17 January 2018).
25. Boesso, G.; Kumar, K.; Michelon, G. Descriptive, instrumental and strategic approaches to corporate social
responsibility: Do they drive the financial performance of companies differently? Account. Audit. Account. J.
2013, 26, 399–422. [CrossRef]
26. Berkhout, G.; van der Duin, P.; Hartmann, D.; Ortt, R. Innovation Takes Time: The Role of Futures Research
in CIM. In The Cyclic Nature of Innovation: Connecting Hard Sciences with Soft Values; Berkhout, G., van der
Duin, P., Hartmann, D., Ortt, R., Eds.; Emerald: San Diego, CA, USA, 2007; pp. 71–85, ISBN 978-0-7623-1336-5.
27. Carroll, A.B.; Shabana, K.M. The Business Case for Corporate Social Responsibility: A Review of Concepts,
Research and Practice. Int. J. Manag. Rev. 2010, 12, 85–105. [CrossRef]
28. Gobble, M.M. Innovation and strategy. Res. Technol. Manag. 2012, 55, 63–67. [CrossRef]
29. Martinez-Conesa, I.; Soto-Acosta, P.; Palacios-Manzano, M. Corporate social responsibility and its effect
on innovation and firm performance: An empirical research in SMEs. J. Clean. Prod. 2017, 142, 2374–2383.
[CrossRef]
30. Blanco, B.; Guillamón-Saorín, G.; Guiral, A. Do Non-socially Responsible Companies Achieve Legitimacy
Through Socially Responsible Actions? The Mediating Effect of Innovation. J. Bus. Ethics 2010, 117, 67–83.
[CrossRef]
31. Guiral, A. Corporate social performance, innovation intensity and their impacts on financial performance:
Evidence from lending decisions. Behav. Res. Account. 2012, 24, 65–85. [CrossRef]
32. Surroca, J.; Tribo, J.A.; Waddock, S. Corporate responsibility and financial performance: The role of intangible
resources. Strateg. Manag. J. 2010, 31, 463–490. [CrossRef]
33. Valor, C. Corporate Social Responsibility and Corporate Citizenship: Towards Corporate Accountability.
Bus. Soc. Rev. 2005, 110, 191–212. [CrossRef]
34. Gjølberg, M. Measuring the immeasurable? Constructing an index of CSR practices and CSR performance in
20 countries. Scand. J. Manag. 2009, 25, 10–12. [CrossRef]
35. Wang, S. Literature Review of Corporate Social Responsibility. In Chinese Strategic Decision-Making on CSR;
Wang, S., Ed.; Springer: Berlin, Germany, 2015; pp. 7–28, ISBN 978-3-662-44996-7.
36. Garriga, E.; Melé, D. Corporate Social Responsibility theories: Mapping the Territory. J. Bus. Ethics 2004, 53,
51–74. [CrossRef]
37. Maon, F.; Lindgreen, A.; Swaen, V. Designing and Implementing Corporate Social Responsibility:
An Integrative Framework Grounded in Theory and Practice. J. Bus. Ethics 2009, 87, 71–89. [CrossRef]
38. Branco, M.C.; Rodrigues, L.L. Corporate Social Responsibility and resource-based perspectives. J. Bus. Ethics
2006, 69, 111–132. [CrossRef]
39. Du, S.; Bhattacharya, C.; Sen, S. Corporate Social Responsibility and Competitive Advantage: Overcoming
the Trust Barrier. Manag. Sci. 2011, 57, 1528–1545. [CrossRef]
40. Teece, D.J.; Pisano, G.; Shuen, A. Dynamic capabilities and strategic management. Strateg. Manag. J. 1997,
18, 509–533. Available online: https://links.jstor.org/sici?sici=0143-2095%28199708%2918%3A7%3C509%
3ADCASM%3E2.0.CO%3B2-%23 (accessed on 23 January 2018). [CrossRef]
41. Greenley, G.E.; Oktemgil, M. A Comparison of Slack Resources in High and Low Performing British
Companies. J. Manag. Stud. 1998, 35, 377–398. [CrossRef]
42. Gray, C.S. Modern Strategy; Oxford University Press: Oxford, UK, 1999; ISBN 978-0198782513.
43. Artiach, T.; Lee, D.; Nelson, D.; Walker, J. The determinants of corporate sustainability performance.
Account. Financ. 2010, 50, 31–51. [CrossRef]
44. Orlitzky, M.; Schmidt, F.L.; Rynes, S.L. Corporate social and financial performance: A meta-analysis.
Organ. Stud. 2003, 24, 403–441. [CrossRef]
45. Surroga, J.; Tribò, J.A. Managerial Entrenchment and Corporate Social Performance. J. Bus. Financ. Account.
2008, 35, 748–789. [CrossRef]
46. Ullmann, A.A. Data in search of a theory: A critical examination of the relationships among social
performance, social disclosure, and economic performance of US firms. Acad. Manag. Rev. 1985, 10,
47. Grant, R. Contemporary Strategy Analysis, 7th ed.; Wiley: London, UK, 2010; ISBN 978-0-470-74710-0.
48. Gallego-Alvarez, I.; Prado-Lorenzo, J.M.; Garcıa-Sanchez, I.-M. Corporate social responsibility and
innovation: A resource-based theory. Manag. Decis. 2011, 49, 1709–1727. [CrossRef]
49. McWilliams, A.; Siegel, D. Corporate social responsibility and financial performance: Correlation or
misspecification? Strateg. Manag. J. 2000, 21, 603–609. [CrossRef]
50. Stiglitz, J.E. Learning to Learn, Localized Learning and Technological Progress. In Economic Policy and
Technological Performance; Dasgupta, P., Stoneman, P., Eds.; Cambridge University Press: Cambridge, MA,
USA, 1987; pp. 125–153, ISBN 978-0521022217.
51. Mañez, J.A.; Rochina-Barrachina, M.E.; Sanchis, A.; Sanchis, J.A. The Role of Sunk Costs in the Decision to
Invest in R&D. J. Ind. Econ. 2009, 57, 712–735. [CrossRef]
52. Padgett, R.C.; Galan, J.I. The effect of R&D intensity on corporate social responsibility. J. Bus. Ethics 2010, 93,
53. Brammer, S.; Millington, A. Does it pay to be different? An analysis of the relationship between corporate
social and financial performance. Strateg. Manag. J. 2008, 29, 1325–1343. [CrossRef]
54. Boucquet, R.; Le Bas, C.; Mothe, C.; Poussing, N. Are firms with different CSR profiles equally innovative?
Empirical analysis with survey data. Eur. Manag. J. 2013, 31, 642–654. [CrossRef]
55. Callan, S.J.; Thomas, M.J. Corporate Financial Performance and Corporate Social Performance: An Update
and Reinvestigation. Corp Soc. Responsib. Environ. Manag. 2009, 16, 61–78. [CrossRef]
56. Porter, M.E.; Kramer, M.R. Creating shared value. How to reinvent capitalism—And unleash a wave of
innovation and growth. Harv. Bus. Rev. 2011, 1–17. Available online: https://hbr.org/2011/01/the-big-idea-
creating-shared-value (accessed on 13 March 2018).
57. Kim, T.H.; Kim, B. Firm’s Environmental Expenditure, R&D Intensity, and Profitability. Sustainability 2018,
10, 2071. [CrossRef]
58. Garcia-Castro, R.; Ariño, M.A.; Canela, M.A. Does Social Performance Really Lead to Financial Performance?
Accounting for Endogeneity. J. Bus. Ethics 2010, 92, 107–126. [CrossRef]
59. Barnett, M.L.; Salomon, R.M. Does it pay to be really good? Addressing the shape of the relationship between
social and financial performance. Strateg. Manag. J. 2012, 33, 1304–1320. [CrossRef]
60. Fisher, K.L. Super Stocks; Dow Jones-Irwin: New York, NY, USA, 1984; ISSN 0-07-149981–4.
61. Murphy, M. Every Investor’s Guide to High-tech Stocks & Mutual Funds: Proven Strategies for Picking High-Growth
Winners, 2nd ed.; Broadway Books: Portland, OR, USA, 1998; ISBN 978-0767903301.
62. Andersen, M.L.; Dejoy, J.S. Corporate social and financial performance: The role of size, industry, risk, R&D
and advertising expenses as control variables. Bus. Soc. Rev. 2011, 116, 237–256. [CrossRef]
63. Hull, C.E.; Rothenberg, S. Firm performance: The interactions of corporate social performance with
innovation and industry differentiation. Strateg. Manag. J. 2008, 29, 781–789. [CrossRef]
64. Dang, C.; Li, F.; Yang, C. Measuring firm size in empirical corporate finance. J. Bank. Financ. 2018, 86, 159–176.
[CrossRef]
65. Li, F. Endogeneity in CEO power: A survey and experiment. Investig. Anal. J. 2016, 45, 149–162. [CrossRef]
66. Sobel, M.E. Asymptotic Confidence Intervals for Indirect Effects in Structural Equation Models.
Sociol. Methodol. 1982, 13, 290–312. [CrossRef]
67. Judd, C.M.; Kenny, D.A. Process analysis: Estimating mediation in treatment evaluations. Eval. Rev. 1981, 5,
68. Judd, C.M.; Kenny, D.A. Estimating the Effects of Social Interventions; Cambridge University Press: Cambridge,
UK, 1981.
69. MacKinnon, D.P.; Lockwood, C.M.; Hoffman, J.M.; West, S.G.; Sheets, V. A comparison of methods to test
mediation and other intervening variable effects. Psychol. Methods 2002, 7, 83–104. [CrossRef] [PubMed]
70. Diamantopoulos, A.; Siguaw, J.A. Formative versus reflective indicators in organizational measure
development: A comparison and empirical illustration. Br. J. Manag. 2006, 17, 263–282. [CrossRef]
71. Boesso, G.; Michelon, G. The Effects of Stakeholder Prioritization on Corporate Financial Performance:
An Empirical Investigation. Int. J. Manag. 2010, 27, 470–496. Available online: https://www.questia.
com/library/journal/1P3-2184287391/the-effects-of-stakeholder-prioritization-on-corporate (accessed on
15 March 2018).
72. Xueming, L.; Bhattacharya, C.B. Corporate Social Responsibility, Customer Satisfaction, and Market Value.
J. Mark. 2006, 70. [CrossRef]
73. Steiner, G. Supporting sustainable innovation through stakeholder management: A systems view. Int. J.
Innov. Learn. 2008, 5, 595–616. [CrossRef]
74. Xiong, B.; Lu, W.; Skitmore, M.; Chau, K.W.; Ye, M. Virtuous nexus between corporate social performance:
A study of construction enterprises in China. J. Clean. Prod. 2016, 129, 223–233. [CrossRef]
75. Lee, Y.; Hu, J. Integrated approaches for business sustainability: The perspective of corporate social
responsibility. Sustainability 2018, 10, 2318. [CrossRef]
76. Javed, M.; Rashid, M.A.; Hussain, G. When does it pays to be good—A contingency perspective on corporate
social and financial performance: Would it work? J. Clean. Prod. 2016, 133, 1062–1073. [CrossRef]
© 2018 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access
article distributed under the terms and conditions of the Creative Commons Attribution
(CC BY) license (http://creativecommons.org/licenses/by/4.0/).

Sustainability 10 03611

Uploaded by

Copyright:

Available Formats

Sustainability 10 03611

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sustainability 10 03611

Uploaded by

Copyright:

Available Formats

sustainability

Sustainability 2018, 10, 3611; doi:10.3390/su10103611 www.mdpi.com/journal/sustainability

2. Theoretical Framework and Hypothesis Development

Furthermore, if management is strongly committed to developing innovation strategies, the firm

Table 1. Sample industry distribution.

Industry Freq. % Cum.

Table 2. Main variables investigated.

Figure 6. The four6.causal

Table 3. Descriptive statistics.

Variable Mean Median SD Variance Max Min Skewness Kurtosis

Table 4. Pearson correlation analysis.

However, to better understand the correlations shown in Table 4, it is necessary to compare

Table 5. Logistic regression results.

Random-Effects Logistic Regression Number of Obs = 660

Table 6. (a,b) Collinearity diagnostics results.

Table 7. Mediation analysis results.

IV: c: + 0.01279 DV:

Table 8. Sobel-Goodman mediation tests results.

Coef Std Err Z P>Z

5. Discussion and Conclusions

You might also like