**Abstract**

In this chapter, we analyze the association between CSR and innovation. We state that CSR concept has evolved over time and has changed the way innovation is conceived. The state of art shows that CSR activities have been responsively introduced to achieve the stakeholders' needs and standards, to become gradually more strategic activities. In fact, many firms have been involved in CSR projects dealing with the reputation enhancement, the stakeholders' reciprocation, the risk mitigation, and the improvement of the innovation capacity mechanisms. We show the presence of a virtuous dynamic between strategic CSR and innovation: firms have to present strategic CSR activities in the core of their innovative strategies. Sustainable innovations are effective tools to foster CSR activities and, therefore, social performance. Furthermore, we show that the CSR-innovation influence is driven by specific channels such as the company's competitiveness, strategies' developments, and framework. Besides, we shed light on the effects of board diversity, managerial cognition, and corporate cognitive-governance on CSR-innovation association. Finally, we provide an empirical evidence from the SBF120 French companies over the period from 2010 to 2016. We present the nonlinear effect of innovation on the current CSR scores, using a semi-parametric estimation. Our results confirm the divers perception of CSR and its components at the different innovation levels.

**Keywords:** innovation, responsive CSR, strategic CSR, managerial cognition, competitive advantage, penalized splines

## **1. Introduction**

Given the global grand challenges such as urban mobility, poverty alleviation, endemic violent conflict and the worsening of the ecological crisis, the current complex multidimensional corporate framework intensified the requirements of corporate social engagements. Thus, a common refrain of businesses nowadays is the necessity of adopting socially and ecologically responsible behaviours while ensuring their growth. Besides, since innovation is a key factor to heighten the company's growth and competitive advantage, firms should invest in innovative as well as social matters to gain legitimacy and to respond to the different interested actors' expectations. With the fourth industrial revolution, innovation has been the driver of sustainability. It shapes future production, strengthens competitiveness and improves human well-being as well as decreases the environmental damage [1]. Numerous examples of new innovative products and methods such as the BioMat project between Faurecia and Mitsubishi Chemical or the Flaxpreg project, developed in collaboration with PSA Peugeot-Citröen, Lineo and the French University

of Reims Champagne Ardenne, show the strong bonds between innovation and corporate social engagements. Moreover, it underscores the crucial role of collaborations and strategic partnerships in developing a competitive advantage.

Innovation could help to better satisfy the needs of different stakeholders' groups and to go beyond their expectations by getting involved in more strategic CSR policies. Innovation could, therefore, drive more socially responsible projects. According to [2] it is an urgent need to solve the socio-ecological problems. In a similar vein, [3] pointed out that innovation is commonly considered as the most viable path to support and strengthen the current standards of living while treating and overcoming environmental crises. Therefore, numerous studies assumed that innovation supports social practices [4–6], which complies with the circular economy (CE) plan launched by the European Commission in 2014. This plan aims to unlock the related growth while boosting the European Union competitiveness using new business opportunities as well as novel methods of production and consumption. Nevertheless, due to resources scarcity, conflicting interests, and the riskiness of innovative investments, firms might face difficulties to balance and define their priorities. For instance, [3] pointed out the lack of an innovative potential broad overview in the field of circular economic-related technological developments.

Due to the importance of the innovative and social strategies application, numerous investigations about these two crucial investments were conducted. Nevertheless, very few studies have explored the innovation-corporate social responsibility (CSR henceforth) association. These studies show mixed results. While certain studies tested the synergetic effect that might occur between innovation and CSR, others have debated their positive or deleterious linkage. For instance, London [7] claimed that understanding and analyzing community problems help to identify which efficient solutions should be applied and which resource can be used for social benefit. Through this identification, firms can generate new approaches and products that allow them to create new markets. Therefore, social needs are determinant factors of corporate innovation orientations and success, while innovation is the solution to solve social matters. Yet, according to Mithani [8], managers' engagement in CSR can weaken innovation investment initiatives. He argued that corporate innovation and social investment effects on economic growth follow a specific pecking order in the Indian market. This lack of convergent empirical evidence was explained in previous research by three main reasons:


behaviours and innovation success. Their findings show a mediating role of radical innovation in managers' social behaviours and innovation success relationship.

Due to the importance of the innovative and social strategies application, further investigations about the linkage between these two crucial investments have to be conducted. One explanation of this lack of interest is the intricacy of the CSR concept and its misunderstanding. Weller [20] pointed out that numerous managers who implement ethical strategies and socially responsible ones do not understand their meaning. Dahlsrud [21] provided in his study 37 different definitions of CSR. Despite the complexity of the various CSR descriptions and corporate frameworks, academic research and international organizations have shared five common CSR dimensions. Using coding schemes, he claimed that the different used terms refer generally to these dimensions, which are the stakeholder dimension, the social dimension, the economic dimension, the voluntariness dimension, and the environmental dimension. In fact, the divers' used dialects are the real reason beyond the lack of one universality definition. These confluent definitions enable us to understand the construction of CSR in specific contexts. Yet, they fail to give guidance on how to face CSR challenges and how to consider it while developing business strategies.

The current chapter contributes to this debate on CSR definition. Specifically, we focus on the development of CSR conception over time and how it does shape our understanding of the CSR-Innovation association. Then we analyze how taking into account the cognitive and individual characteristics of top managers, and board directors could help to set a more inclusive framework of this association.

Our chapter is organized as the following. Section (2) presents the evolvement of the CSR and innovation nexus based on the evolutionary CSR concept. In this section, we distinguish between the strategic and responsive CSR. We analyze the moderating effects of the managerial characteristics on CSR-innovation association in section (3). In the penultimate section, we present our empirical investigation. The last section concludes the chapter.
