Beyond CSR: Evaluation of the concept of Corporate Social Innovation as an alternative to CSR.

Abstract

Traditionally, businesses respond to social and environmental risks through CSR activities and programs. In the process, businesses go beyond compliance with law and engage in actions that produce social values or societal benefits. However, the notion that there is a trade-off between business and social value persists. A new model of value creation known as Corporate Social Innovation (CSI) brings business leaders, impact investors, non-governmental organizations and local communities together to co-create new business models and implement social innovations that create both business and social values. This study adopted a mixed method approach to examine the influence of social innovations on the Corporate Social Performance (CSP) and Corporate Financial Performance (CFP) of a select group of companies engaging in CSI. A sample of eight companies from different sectors was selected drawn mainly from the existing studies on the concept of Corporate Social Innovation. The results of the evaluation of the performance of the eight samples based on ESG performance indicators show that corporate social innovation has greater positive effect on corporate social performance relative to CSR. On the other hand, the results of the trend analysis show that the selected financial performance indicators of the eight samples improved over the study period. However, when compared to peers or competitors in the same industry, the annual growth income rates of the eight samples were lower. Therefore, corporate social innovation does not have positive effect on corporate financial performance relative to CSR. This thesis contributes to the emerging literature on the concept of corporate social innovation in three ways. First, it proposes a basis of distinction between CSI and CSR and thereby presents evidence to support the proposition that CSI is a distinct corporate practice. Second, it proves the proposition that CSI has a positive effect on social performance and disproves the proposition that CSI has a positive effect on financial performance. Finally, it presents evidence to support the proposition that CSI could drive corporate social and environmental performance towards sustainable business and sustainable growth.