ABSTRACT
Literature has argued that CSR has a favourable impact on innovation. Empirical verification of this causal relationship is, however, challenging because of potential reverse causality. Some recent studies have used instrumental variables to identify a causal impact of stakeholder orientation on innovation. However, this research is limited to publicly traded companies and cannot be held to be representative of SMEs. In Chapter 4, we test the CSR-innovation link on a sample of SMEs. Using instrumental variables, CSR is found to have a significant causal effect on innovation.
