Doing good to be green and live clean! - Linking corporate social responsibility strategy, green innovation, and environmental performance: Evidence from Maldivian and Moroccan small and medium-sized enterprises

Walid Simmou, Kannan Govindan*, Ibrahim Sameer, Khaled Hussainey, Samira Simmou


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Corporate social responsibility (CSR) approaches are becoming increasingly widespread as environmental performance (EP) continues to be a significant aspect of developing a firm's socioemotional wealth, such as legitimacy, trustworthiness, and image. We draw on stakeholder and natural-resources-based view theories to investigate how CSR strategies may improve environmental performance via the underlying mechanism of green innovation (GI), especially in developing countries. Useable data was collected from 367 Maldivian and Moroccan service enterprises and analyzed using partial least squares (PLS-SEM) methodology. The findings indicated that external (Environment and Community) and internal (Employees) CSR-related approaches significantly impact environmental performance. Furthermore, the study suggests a mediation effect of GI on the CSR-EP nexus. Finally, this paper opens significant directions, enriches existing theories, and provides fascinating implications for SMEs professionals.

TidsskriftJournal of Cleaner Production
StatusUdgivet - 15. jan. 2023

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This study relies on stakeholder theory (Freeman and David, 1983) and natural-resources-based theory (Hart, 1995). The stakeholder theory gained recognition and legitimacy by highlighting that firms might “do well by doing good” (Garay and Font, 2012; Kortetmäki et al., 2022). According to the theory's proponents, stakeholders are a firm component that drives techno-leaders' enterprises to act for their advantage in economic and non-economic areas. Drawing on this conceptualization, we analyzed CSR encompassing employees as internal stakeholders and community, environment, and consumers as external ones. However, stakeholders do not address firm environmental strategies equally (Channa et al., 2021; Menguc and Ozanne, 2005; Tang and Tang, 2012). For instance, according to recent Moroccan research, employees are more devoted to their jobs when their employers are involved in the environment and civic society (Chakra et al., 2021). Furthermore, CSR to the community is more vital for individualistic than collectivist employees (Farooq et al., 2014). Similarly, Tang and Tang (2012) argue that competitors, media firms, and government power differences determine SMEs' environmental performance. However, this theory does not provide a holistic view because of the impact of the natural environment on organizational behavior beyond the interest of shareholders and stakeholders (Freeman et al., 2021; McGahan, 2021). In summary, EP is very much connected to CSR in many forms, such as producing an environment-friendly product, reducing carbon emissions, incorporating clean energy, and promoting recycling (Alamsyah et al., 2020; Fan et al., 2020; Sarkar et al., 2021).As an extension of RBV theory (Barney, 1991), natural RBV theory acquired prominence. Hart (1995) confirmed that “one of the most important drivers of new resources and capability development for firms will be the constraints and challenges posed by the natural (biophysical) environment” (p. 989). Therefore, from a natural RBV, businesses should address natural (biophysical) environmental challenges by establishing particular resources and capabilities (Alt et al., 2015).Concretely, many developing economies, in particular, are today beleaguered by environmental issues that have significant implications for the climate and human life; as a result, CSR and GI capabilities may be leveraged as resources to mitigate the negative industrial impacts (Tan et al., 2021), improving financial performance (Vasileiou et al., 2022). Given this, both resources could attain sustained competitive advantage (Chang, 2011), which improves EP (Channa et al., 2021; Menguc and Ozanne, 2005). Nevertheless, few studies explored EP through CSR using the natural RBV theory. Both theories support and test the CSR-EP nexus, specifically in developing countries.The hypotheses are subsequently tested for significance using the 5000-bootstrapping approach at a significance level of 0.01. Referring to Table 5, the results shown that the EP is positively and significantly predicted by CSR to the environmental (β = 0.413), employees (β = 0.477), community (β = 0.141), supporting H1, H2, and H3 fully. However, the causal impact of CSR to the consumer on EP is insignificant (β = −0.033), rejecting H4 (See Fig. 3).In this study, the considerable effect of CSR approaches on GI and GI on EP sheds light on a mediating effect. Consequently, this study employs the non-parametric bootstrapping method (Hair et al., 2017; Preacher and Hayes, 2008) at significant levels of 1%, as well as variance account for (VAF) to calculate the magnitude of the mediating impact (Hair et al., 2014), respectively (see Table 6 and Fig. 3). The findings demonstrated an indirect effect of CSR approaches on EP via GI, specifically for CSR-ENV (β = 0.115, p < 0.01), supporting H5a. Surprisingly, the findings revealed no evidence of GI mediation on the link between CSR-EMP, CSR-COM, CSR-CON, and EP (See Table 6). Thus, H5b, H5c, and H5d were rejected. It is noteworthy that modeling confirms the use of stakeholder and natural-resources-based view theories to explain EP through CSR strategies and GI.Except for CSR to the consumers (H4), the findings showed that CSR initiatives positively impacted EP (H1, H2, and H3), particularly in developing nations. These results are consistent with prior studies supporting the CSR relevance to firm performance (Bahta et al., 2021; Martinez-Conesa et al., 2017; Surroca et al., 2010). In addition, these findings align with (Al-Abdin et al., 2018; Herrera Madueño et al., 2016), who confirm that enterprises involved in CSR exhibit significant EP. These findings should be considered when endeavoring to reconcile contradictory evidence suggesting no causal effect of CSR approaches on EP (Kraus et al., 2020; Singh et al., 2019; L. Wang and Juslin, 2013).

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