WHEN AND HOW CORPORATE SOCIAL RESPONSIBILITY PROMOTES INNOVATION

Our study advances and tests a micro-foundations model that reveals when and how corporate social responsibility (CSR) will promote innovation. Specifically, we posit that under conditions of good internal organization communication, CSR inspires employees’ intrinsic motivation. This motivation can, in turn, lead to innovation, but only if allowed to thrive, i.e., if employees are psychologically empowered. We investigate the proposed model in a 4-wave, time-lagged study in one of the largest Korean commercial banks, featuring 2,545 organizational members across 379 branches. The data include both survey data and centrally audited CSR data. Overall, the multi-level analyses support our prediction, but also highlight backlash effects. These results facilitate the integration of previously disparate literatures, while simultaneously producing practical justifications for engaging in CSR. Our micro-level model of boundary conditions also underlines that CSR efforts need to accompany other improvements (i.e., organizational communication and psychological empowerment) if any innovation benefits are to be reaped.