**Abstract**

Corporate social responsibility (CSR) has been considered the materialisation of ethics in organisations. CSR practices reflect companies' non-financial aspects, such as social and environmental issues. The proposal of an integrated report that jointly presents financial and non-financial issues would provide a global view of business activity, which will allow for analysis of the relationships and interactions among financial and non-financial resources involved in value creation, including human, social and relational, natural, and intellectual capital. If these resources are related, a report that integrates all of them would facilitate analysis. In this research, the relationship between innovation and CSR is studied. Environmental commitment may be a source of innovation (in the process of production and types of products) and involves social, relational, and intellectual capital changes. Innovation has previously been analysed from a perspective of competitiveness, necessitating a change of approach towards stakeholders that could allow us to reach a conceptual understanding of these relations. The research is empirically verified by studying a sample of 590 firm-years across 118 European companies that are leaders in sustainability, in the five-year period of 2011–2015. The results obtained show that CSR is a benchmark for addressing innovation and justifies the interest in an integrated reporting model that provides a global view of business.

**Keywords:** Integrated Report, Corporate Social Responsibility, Innovation, Stakeholders, Sustainability

## **1. Introduction**

The concepts of corporate social responsibility (CSR) and business ethics have been used interchangeably in the existing literature [1]. While ethics is the set of principles and values that guides business behaviour, CSR is the set of socially and environmentally responsible practices of the company [2]. In recent decades, CSR has become an element to be integrated into the core of a business to allow the creation of value beyond the economic and ensure company longer term economic social viability of the company [3, 4].

Recent literature states that CSR could be oriented towards the search for value creation in terms of innovation [5, 6]. Numerous papers have suggested that CSR and innovation are related [7–10], but this relationship is not solidly proven and

more research on the issue is necessary [9]. Some of this research states that their relationship increases operational efficiency by using cleaner technologies [11]. Another part of the research points out that CSR (if it were properly embedded across an organization) could improve performance through the development of innovative practices, processes, and products that enhance a company's competitive advantage through differentiation and cost saving strategies [12, 13]. Finally, other research, unrelated to competitive and operational aspects, shows that CSR linked to stakeholder management drives innovation in response to stakeholder demands, by improving companies' social performance [14–16]. Our research is included in this last group of studies and aims to analyse whether innovation is the consequence of CSR combined with the demands of company stakeholders.

One of the difficulties presented by the analysis of the relationship between CSR and innovation is the framework in which to place this object of study. The intuitive idea is clear: innovation and the concern for sustainability must be related and promote value in companies. However, possibly the biggest problem so far has been the lack of a business model that covers both concepts. The development of integrated reporting could provide a framework for studying these elements. The proposal of this type of report would be considered essential, as it would link the different responsibilities that companies assume. But the relationship between the different resources should first be demonstrated to justify the necessity of an integrated report [17]. Europe and the International Accounting Standards Board (IASB) are studying the suitability of making this type of report mandatory.

Integrated reporting provides an appropriate framework for CSR because in value creation, companies employ different types of capital, including natural capital, human capital, and social and relational capital [18] that, in the literature, have been grouped under the term CSR, which includes the responsibility assumed by the company in relation to these resources. CSR is a part of sustainability [19]. According to the Brundtland Report (1987), sustainable development is development that meets the needs of the present without compromising the needs of future generations [20]. Sustainability rests on three pillars: economic growth, environmental balance, and social responsibility. CSR can be defined as a company's responsibility for its impact on society [21], which leads to the integration into its corporate strategy of social, environmental, ethical, and human rights, and consumer concerns and commitments [21]. Integrated reporting is based on an accounting model that considers the responsible use of different resources to ensure sustainability or long-term value creation. The report must take into account the effort and investments made in CSR. In an integrated report, the elements that compose intellectual capital are knowledgebased intangibles. Among them are intellectual property (patents, licences, rights of exploitation and use of symbols, etc.) and organisational capital (tacit knowledge, systems, procedure and protocols). The element that may be most closely related to CSR is industrial property, and so this will be the focus of this research. Industrial property is the result of a process of innovation. Innovation can be considered as a process of discovery and development that gives rise to new products and production processes [22, 23]. Innovation is the application of knowledge to gain new knowledge that may be disruptive or incremental [24]. Companies are currently making great efforts in the field of innovation; in fact, it can be considered an inevitable step for any company that wants to grow, maintain, or create competitive advantages and/or access to new markets [5, 6]. Its importance for the survival and success of companies is widely accepted in the literature.

The first objective of this work is to deepen the theoretical framework around the relationship and interaction between CSR and innovation, setting stakeholder orientation (as opposed to the usual orientation to the market) as the study's approach to sustainability [14, 25]. This will serve to justify the interest of

#### *The Desirability of a Future Integrated Reporting in the Study of Social and Innovative Practices DOI: http://dx.doi.org/10.5772/intechopen.98670*

considering all these elements in a single document: an integrated report that is currently being considered for promotion by international organisations.

The second objective is to study the relationship between CSR and intellectual capital, specifically intellectual property. The results will allow us to verify contrast the integration of CSR and stakeholder orientation into the core business as a means of fostering innovation in companies. This justifies the importance that the holistic approach of integrated reporting will have in the study of value creation. The aim is to find that a company's social and relational capital creates intellectual value. The previous research into integrated reporting has mainly focused on the analysis of its adoption and its extension, but qualitative research on the possibilities of this type of reporting is scarce [26]. This highlights the relevance of our research, as the findings on the relationship between non-financial elements will be highly relevant in deciding whether to make integrated reporting that offers a global view of companies a mandatory requirement.

To achieve these objectives, the study is focused on Europe, because of the interest and effort of the European Commission to promote the development and disclosure of financial and non-financial information as well as the fact that CSR programs have different content according to the geographical environment in which they are implemented [27, 28]. The study is carried out on a wide sample; a CSR measure that considers all dimensions is taken and uses panel data that allows for control of unobserved heterogeneity, giving robustness to the model.

The work is structured as follows: after reviewing the relevant literature, we present the theoretical framework and propose the hypotheses to be compared. Following this, we describe the methodology used and present and discuss the results and findings. Finally, conclusions are drawn.
