Navigating sustainable growth : green innovation as a mediator between CSR Engagement and firm value in emerging markets

Overview

This study examines the relationship between corporate social responsibility engagement, green innovation, and firm value in emerging markets by integrating attention-based view, stakeholder theory, and institutional theory. The research addresses theoretical debate regarding whether CSR functions as a value-creating mechanism or imposes costs on firms. The framework posits green innovation as a mediating variable through which CSR engagement translates into enhanced firm value.

Methods and approach

The study employs a mediation analysis framework to test the theoretical model linking CSR engagement to firm value through green innovation. Boundary conditions are examined including financial constraints, executive compensation incentives, and ownership structure (state-owned enterprises versus privately-owned enterprises). The analysis incorporates institutional and organizational factors specific to emerging market contexts to identify moderating mechanisms that strengthen or weaken observed relationships.

Results

Empirical findings confirm that CSR engagement significantly enhances firm value through the mediation of green innovation. Financial constraints emerge as a critical moderating factor that significantly attenuates the CSR-green innovation relationship, suggesting liquidity pressures constrain firms' capacity to translate responsibility commitments into innovation activity. Executive compensation incentives significantly strengthen the same linkage, indicating alignment of managerial incentives with sustainability objectives enhances innovation outcomes. Ownership type substantially moderates all examined relationships, with differential effects observed between state-owned and privately-owned enterprises.

Implications

The findings reconcile theoretical disagreement regarding CSR's value implications by establishing green innovation as the operative mechanism through which responsibility engagement creates shareholder value. The identification of financial constraints and incentive structures as critical boundary conditions indicates that CSR-value relationships are contingent upon firm financial health and governance design. The differential effects by ownership type suggest that institutional context and organizational structure fundamentally shape CSR effectiveness in emerging markets.