**2.1 The responsive CSR**

The responsive CSR concept has been used in recent studies. Porter and Kramer [14] considered CSR as responsive if it has two goals: good corporate citizenship and risk mitigation. Put differently responsive CSR has no specific plan and strategy that allow the firm to create a competitive advantage. Indeed, there is no specific study that provides a clear development of responsive CSR conception. Vishwanathan et al. [18] described the non-strategic side of CSR as a blind spot to CSR researchers. Indeed, investigations' focus has been oriented to the strategic CSR. Researchers consider that firms which do not apply CSR strategically are applying it responsively.

This narrow development of responsive CSR made the firms' classification absolute. From a theoretical perception, a company is whether strategic or responsive, while in reality, it can be both especially since responsive CSR versions can share some strategic CSR criteria. We should point out there is no sole definition of the strategic CSR, which makes the responsive CSR understanding more blurred. For instance, Visser [13] argued that responsive CSR is meant to orient its activities in specific areas that are not specifically related to the core business. He identified the following forms of non-strategic CSR: the defensive, charitable and promotional CSR strategies.

Bocquet et al. [9] found that responsive CSR lessens the different corporate innovation types while strategic CSR promotes them. In contrast, Bocquet et al. [17] underlined the positive effect of the responsive CSR on the technological innovation for the SMEs. Thus, to give better insights into these controversial results, we analyze the interaction between innovation and the responsive CSR version previously mentioned.

In the following, we address the different strategies of responsive CSR and their influence on innovation strategies.

#### *2.1.1 The defensive CSR*

As business requires creativity, it is assumed to be naturally innovative [29]. Yet, what makes the ages different is to which goal this business creativity is directed. The first age of the CSR development is the age greed, in which CSR was perceived as a tool to serve shareholders' interests by taking into account only aligned stakeholders' interests. During this age, and consistent with the

<sup>1</sup> An age refers to a prevailing culture or context Visser [26].

#### *CSR and Innovation: Two Sides of the Same Coin DOI: http://dx.doi.org/10.5772/intechopen.94344*

shareholder theory, CSR activities were defensive as they were undertaken only to protect the financial result.

For example, according to "Fortune" magazine, the American company Enron was one of the most innovative firm from 1996 to 2001. It was listed among the 100 best American companies by the same magazine. Enron practice of CSR was widely known, specifically its green model. It built a great image that hides the true nature of its practices. However, its collapse was unavoidable since it was the result of greed. Some studies considered the Enron scandal as a juncture in the CSR understanding [30, 31]. They analyzed the CSR evolution after the post-Enron era.

After the 2008 Crisis, economic actors realized that they misunderstood CSR conception. Miller [32] considered the confusion between legitimate economic rationality and greed, more specifically excessive desire, is the main trigger of crisis. It is straightforward to see that Enron only acted socially responsible when it is financially profitable. Hence its scandal has been one of the greatest examples of CSR in the age of greed.

Even though CSR activities also have to generate cash-flows, considering the financial performance as the sole gain could never foster sustainability and innovation. Indeed, enhancing financial performance provides more funds for innovation investments. Nevertheless, defensive CSR cannot provide a good understanding of multiple needs of different groups, which increases agency conflicts. Furthermore, it cannot rebuild the corporate reputation, which in return threatens innovation success, especially in casino economies2 where high-risk levels are taken. Bertrand et al. [33] described the defensive CSR as a "poor vector" of innovation.

### *2.1.2 The charitable CSR*

The second age of the CSR development is the philanthropic age, where CSR is presented as a charitable action. Carnegie [34] claimed in his article "The Gospel of Wealth" that wealthy investors have to use their fortune for the community's wellbeing and empowerment. In line with Stiglitz's [35], wealth should be distributed equally to avoid the inequality costs and, therefore, recession. Put differently, we need charities to drive growth. The charitable actions can help innovation improvement. Bereskin and Hsu [36] emphasized that the corporate philanthropy with universities and non-profit organization improves the corporate research partnerships and strengthen its network. Thus, innovation efficiency is increased. Charity and philanthropy are mobilized to establish collaborations. Yet, to take advantage of the corporate philanthropy and boost corporate creativity, a long-term strategy of charity should be elaborated [37]. Otherwise, the charity can lead to waste the financial resources and consequently limits innovation investments.

Despite the beatific view of charitable CSR, it has failed to face systemic problems and solve social and ecological matters. This failure was due to two main reasons.

First, charitable activities' goals do not incorporate the improvement of the financial performance and since companies are for-profit organizations, increasing their gain, and using their cash flows to create a competitive advantage should be out of the question. Therefore, non-strategic social actions can damage the corporate competitive position. Protecting and improving financial results should be neither out nor the core of the CSR scope. In other words, companies should capture

<sup>2</sup> An economic framework that fosters high risk taking in the quest for higher profit which might lead to crises, for example, the Asian crisis of 1997, the Argentine 1999 to 2002 economic crisis and 1998 the wall street market during the 2007–2008 financial crisis.

#### *Corporate Social Responsibility*

private benefits from their social strategies while responding to the philanthropic criterion, which is one of the strategic CSR dimensions, named 'specificity' [38].

The second reason is the limited capacity of firms to respond to all social and ecological needs. Non-strategic philanthropy is like trying to fill a bucket, which is leaking from the inside. Porter and Kramer [14] underlined that no business is able to solve all of society's challenges or bear its costs. Therefore, each company has to select issues that cross its business and field of knowledge. Furthermore, CSR actions must fit the corporate missions and goals. Investing in generic social issues with no dynamic effects and which are neither significantly influenced by the enterprise's operations nor affect its long-term competitiveness is a waste of corporate wealth. De Silva and Wright [39] indicated that strategic philanthropy is most often associated with open innovation. Accordingly, profit companies are likely to collaborate and co-create value with non-profit organizations through open innovation approaches.

#### *2.1.3 The promotional CSR*

The Marketing CSR also called promotional CSR is another form of responsive CSR. A promotional CSR is a reputation-building CSR. It encompasses social practices public relations' opportunities with the aim of enhancing corporate reputation and brand image. It focuses generally on the stakeholders' perception of the company and tries to find an optimal strategy that satisfies the interested actors and gives the firm a sound depiction. Therefore, it improves the financial result, provides more environmental support, reduces reputational risk, and builds a greater trust level [40–44]. The main aim of promotional CSR is to guarantee and promote more 'Visibility'. Singh and Dhir [45], cause-related marketing has become an emerging field of research.

According to the founder of Virgin Group Richard Branson, "Young people today want to see change. They want a better world"3 . Hence, being socially responsible is the best promotional way used by firms to achieve stakeholders' satisfaction. Promotional CSR should start from the inside with an integrated marketing model. Moreover, it is likely to promote exploratory innovation, especially with the reputational risk mitigation. Lefebvre [46] underlined that social marketing is an evolutionary concept planned to foster innovation. Responsible marketing is most often positively associated with more marketing innovation. However, in practice, markets-makers and practitioners face challenges to align social/human and business issues. Hence, the spread of innovation that aims to solve the relative concerns become harder Lefebvre [47].

This CSR version might look sound. Nevertheless, it has several deficiencies. According to Singh and Dhir [45], around two-thirds of customers believe that companies' spending on marketing is quite large compared to the social matters spending. They are not focusing much on real social issues. With limited knowledge of social or environmental matters, firms might apply CSR actions for greenwashing. Indeed, without a real social goal, using chaotic and disordered actions in a responsive way can only have a short-term impact. Thus, ensuring a corporate gain from the applied action might be harder. In the worst cases, CSR leads to antithetical results. Esper and Barin Cruz [48] discussed how CSR could be a hypocrisy tool to influence the market perception. With the presence of a large gap between the way in which a company shows off and the way in which it acts, stakeholders could

<sup>3</sup> Deborah MacDonald Consulting (2018) The Shift Towards Social Entrepreneurship https://www. deborahmacdonald.com/the-shift-towards-social-entrepreneurship/

#### *CSR and Innovation: Two Sides of the Same Coin DOI: http://dx.doi.org/10.5772/intechopen.94344*

be manipulated and suffer manoeuvering hypocrisy, which leads to social scandals and trust collapse.

This CSR's poor understanding and active talking about CSR commitment while covering profitable practices that are socially and environmentally dubious trapped not only small businesses but also multinationals. Volkswagen test cheating, Siemens bribe scandal, BAE corruption scandal, General Motors defective ignition switches, Mitsubishi products falsified data, as well as Wells Fargo account fraud scandal and so on, are businesses that have gone responsibly astray. Brenkert [49] pointed out that we need to rethink CSR efforts to close the immoral gaps.

To conclude, a large body of research has highlighted the negative results of cosmetic CSR practices. In fact, CSR can be considered as a double-edged sword. It could generate extra costs that hamper corporate survival and innovativeness. Hence, firms have to select the appropriate social practices that foster the firm's position and enhance its profit and growth. In other words, companies should view CSR strategically.
