Corporate Social Responsibility and the Willingness to Eco-Innovate among Chilean Firms

Abstract

Adopting social responsibility can be a key strategy for firms to mitigate the impact of production on the environment, contributing to a more sustainable business model. Based on the triple bottom line perspective, we analyze the effect of Corporate Social Responsibility (CSR) on the willingness to allocate resources to eco-innovation among companies in a developing country. Firm-level data from the Fifth Longitudinal Survey of Chilean Firms are used to estimate a binary probit model for the willingness to eco-innovate and a Heckman sample-selection model for total expenditures and investment in eco-innovation. Results confirm that legal regulations and R&D efforts are drivers of eco-innovation among Chilean firms. Larger-sized and export-oriented firms also exhibit a higher willingness to eco-innovate. The main findings show a positive influence of CSR policy on the willingness to eco-innovate and on the resulting resource allocation decision. Interestingly, the evidence reveals that while financial and environmental CSR dimensions only affect the probability of adopting eco-innovation, the social CSR dimension also increases the amount firms spend on eco-innovation. This result suggests that social CSR may act as a complement to other CSR dimensions. These results are robust when controlling for firm-level specific effects under sample-selection models.