IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i14p5935-d1433607.html
   My bibliography  Save this article

The Impact of Profitability Sustainability on Innovation in Dairy Companies: The Multiple Moderating Effects of Corporate Social Responsibility

Author

Listed:
  • Xiangrong Wan

    (College of Economics and Management, Northeast Agricultural University, Harbin 150030, China
    These authors contributed equally to this work.)

  • Fanghui Pan

    (College of Economics and Management, Northeast Agricultural University, Harbin 150030, China
    These authors contributed equally to this work.)

  • Chenyang Liu

    (College of Economics and Management, Northeast Agricultural University, Harbin 150030, China)

  • Jing Zhao

    (College of Economics and Management, Northeast Agricultural University, Harbin 150030, China)

  • Cuixia Li

    (College of Economics and Management, Northeast Agricultural University, Harbin 150030, China
    College of Agriculture, Heilongjiang Bayi Agricultural University (HLAU), Daqing 163000, China)

Abstract

Although previous studies have extensively explored the relationship between corporate profitability and innovation, the specific impact of profitability sustainability on corporate innovation has not received sufficient attention. Furthermore, while Corporate Social Responsibility (CSR) has been recognized as significantly influencing corporate innovation, its moderating role between profitability sustainability and innovation remains underexplored. This study fills these research gaps by empirically analyzing the impact of profitability sustainability on corporate innovation and examining in detail the multiple moderating effects of CSR. This paper employs Ordinary Least Squares (OLS) and Instrumental Variables Two-Stage Least Squares (IV-2SLS) methods, using data from dairy companies listed on China’s A-share and H-share markets from 2016 to 2021, to empirically analyze the impact of profitability sustainability on corporate innovation and to examine in detail the multiple moderating effects of CSR. The results indicate that profitability sustainability significantly promotes corporate innovation. CSR directly moderates this relationship, and along with other moderating variables (financing constraints, executive compensation), it plays a complex role in this interaction, potentially inhibiting the positive connection between profitability sustainability and innovation when acting alone, but significantly enhancing innovation when interacting with CSR. Heterogeneity analysis shows that non-state-owned and H-share listed dairy companies exhibit a more significant positive effect of profitability sustainability on innovation compared to state-owned and A-share listed companies. These findings highlight the key moderating role of CSR in promoting innovation within the dairy industry and offer new perspectives on how profitability sustainability can drive corporate innovation.

Suggested Citation

  • Xiangrong Wan & Fanghui Pan & Chenyang Liu & Jing Zhao & Cuixia Li, 2024. "The Impact of Profitability Sustainability on Innovation in Dairy Companies: The Multiple Moderating Effects of Corporate Social Responsibility," Sustainability, MDPI, vol. 16(14), pages 1-25, July.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:14:p:5935-:d:1433607
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/14/5935/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/14/5935/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Modak, Nikunja Mohan & Kazemi, Nima & Cárdenas-Barrón, Leopoldo Eduardo, 2019. "Investigating structure of a two-echelon closed-loop supply chain using social work donation as a Corporate Social Responsibility practice," International Journal of Production Economics, Elsevier, vol. 207(C), pages 19-33.
    2. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    3. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    4. Bronwyn Hall, 2004. "The financing of research and development," Chapters, in: Anthony Bartzokas & Sunil Mani (ed.), Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 2, Edward Elgar Publishing.
    5. Rajesh K. Aggarwal & Andrew A. Samwick, 1999. "The Other Side of the Trade-off: The Impact of Risk on Executive Compensation," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 65-105, February.
    6. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58, January.
    7. Lingfu Kong & Minhas Akbar & Petra Poulova, 2023. "The Role of Environment, Social, and Governance Performance in Shaping Corporate Current and Future Value: The Case of Global Tech Leaders," Sustainability, MDPI, vol. 15(17), pages 1-14, August.
    8. Teece, David J., 2016. "Dynamic capabilities and entrepreneurial management in large organizations: Toward a theory of the (entrepreneurial) firm," European Economic Review, Elsevier, vol. 86(C), pages 202-216.
    9. Parneet Kaur & Navneet Kaur & Paras Kanojia, 2021. "Firm innovation and access to finance: firm-level evidence from India," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 14(1), pages 93-112, March.
    10. Heli Wang & Jaepil Choi & Jiatao Li, 2008. "Too Little or Too Much? Untangling the Relationship Between Corporate Philanthropy and Firm Financial Performance," Organization Science, INFORMS, vol. 19(1), pages 143-159, February.
    11. Ahmed A. Sarhan & Basil Al‐Najjar, 2023. "The influence of corporate governance and shareholding structure on corporate social responsibility: The key role of executive compensation," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 4532-4556, October.
    12. Yuanhui Li & Rongrong Chen & Erwei Xiang, 2022. "Corporate social responsibility, green financial system guidelines, and cost of debt financing: Evidence from pollution‐intensive industries in China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(3), pages 593-608, May.
    13. Sujit Mondal & Tarak Nath Sahu & Kalpataru Bandopadhyay, 2023. "Influence of institutional factors on global corporate social responsibility performance," International Journal of Business Excellence, Inderscience Enterprises Ltd, vol. 31(3), pages 370-391.
    14. Huang, Hongyun & Mbanyele, William & Wang, Fengrong & Zhang, Chenxi & Zhao, Xin, 2023. "Nudging corporate environmental responsibility through green finance? Quasi-natural experimental evidence from China," Journal of Business Research, Elsevier, vol. 167(C).
    15. Thanh Tiep Le & Marcos Ferasso, 2022. "How green investment drives sustainable business performance for food manufacturing small‐ and medium‐sized enterprises? Evidence from an emerging economy," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 1034-1049, July.
    16. Najah Attig, 2024. "Relaxed Financial Constraints and Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 189(1), pages 111-131, January.
    17. Helfat, C.E. & Raubitschek, R.S., 2000. "Product Sequencing: Co-Evolution of Knowledge, Capabilities and Products," Papers 00-1, U.S. Department of Justice - Antitrust Division.
    18. Beisland, Leif Atle & Hamberg, Mattias, 2013. "Earnings sustainability, economic conditions and the value relevance of accounting information," Scandinavian Journal of Management, Elsevier, vol. 29(3), pages 314-324.
    19. Mengning He & Raquel Pérez Estébanez, 2023. "Exploring the Relationship between R&D Investment and Business Performance—An Empirical Analysis of Chinese ICT SMEs," Sustainability, MDPI, vol. 15(6), pages 1-17, March.
    20. Glavas, Ante & Fitzgerald, Erin, 2020. "The process of voluntary radical change for corporate social responsibility: The case of the dairy industry," Journal of Business Research, Elsevier, vol. 110(C), pages 184-201.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dirk Czarnitzki & Hanna Hottenrott, 2011. "R&D investment and financing constraints of small and medium-sized firms," Small Business Economics, Springer, vol. 36(1), pages 65-83, January.
    2. An, Suwei, 2023. "Essays on incentive contracts, M&As, and firm risk," Other publications TiSEM dd97d2f5-1c9d-47c5-ba62-f, Tilburg University, School of Economics and Management.
    3. Heitor Almeida & Murillo Campello & Michael S. Weisbach, 2002. "Corporate Demand for Liquidity," NBER Working Papers 9253, National Bureau of Economic Research, Inc.
    4. Aggarwal, Rajesh K. & Samwick, Andrew A., 2006. "Empire-builders and shirkers: Investment, firm performance, and managerial incentives," Journal of Corporate Finance, Elsevier, vol. 12(3), pages 489-515, June.
    5. Z. Jun Lin & Shengqiang Liu & Fangcheng Sun, 2017. "The Impact of Financing Constraints and Agency Costs on Corporate R&D Investment: Evidence from China," International Review of Finance, International Review of Finance Ltd., vol. 17(1), pages 3-42, March.
    6. Rahman Ashiqur & Rahman M. Twyeafur & Belas Jaroslav, 2017. "Determinants of SME Finance: Evidence from Three Central European Countries," Review of Economic Perspectives, Sciendo, vol. 17(3), pages 263-285, September.
    7. Valérie Revest & Alessandro Sapio, 2012. "Financing technology-based small firms in Europe: what do we know?," Small Business Economics, Springer, vol. 39(1), pages 179-205, July.
    8. Wiwattanakantang, Yupana, 1999. "An empirical study on the determinants of the capital structure of Thai firms," Pacific-Basin Finance Journal, Elsevier, vol. 7(3-4), pages 371-403, August.
    9. Francesco Aiello & Graziella Bonanno & Stefania P. S. Rossi, 2020. "How firms finance innovation. Further empirics from European SMEs," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 689-714, November.
    10. Jang, SooCheong (Shawn), 2011. "Growth-focused or profit-focused firms: Transitions toward profitable growth," Tourism Management, Elsevier, vol. 32(3), pages 667-674.
    11. Churyk, Natalie Tatiana, 2005. "Reporting goodwill: are the new accounting standards consistent with market valuations?," Journal of Business Research, Elsevier, vol. 58(10), pages 1353-1361, October.
    12. Kaivanto, Kim & Stoneman, Paul, 2007. "Public provision of sales contingent claims backed finance to SMEs: A policy alternative," Research Policy, Elsevier, vol. 36(5), pages 637-651, June.
    13. Edoardo Ferrucci & Roberto Guida & Valentina Meliciani, 2021. "Financial constraints and the growth and survival of innovative start‐ups: An analysis of Italian firms," European Financial Management, European Financial Management Association, vol. 27(2), pages 364-386, March.
    14. Brown, James R. & Petersen, Bruce C., 2011. "Cash holdings and R&D smoothing," Journal of Corporate Finance, Elsevier, vol. 17(3), pages 694-709, June.
    15. Souad Chaieb, 2021. "The Impact of Cash Holding on Debt Cost," International Journal of Economics and Financial Issues, Econjournals, vol. 11(6), pages 75-93.
    16. Low, Angie & Makhija, Anil K. & Sanders, Anthony B., 2007. "The Impact of Shareholder Power on Bondholders: Evidence from Mergers and Acquisitions," Working Paper Series 2007-5, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    17. Bernini, Michele & Guillou, Sarah & Bellone, Flora, 2015. "Financial leverage and export quality: Evidence from France," Journal of Banking & Finance, Elsevier, vol. 59(C), pages 280-296.
    18. Lee, Sanghoon, 2015. "Slack and innovation: Investigating the relationship in Korea," Journal of Business Research, Elsevier, vol. 68(9), pages 1895-1905.
    19. Zagudalova, E. & Grigorieva, S. & Zueva, S., 2024. "Does the education and experience of CEO matter? Evidence from M and As initiated by the Russian companies," Journal of the New Economic Association, New Economic Association, vol. 64(3), pages 103-127.
    20. Maria Luisa Mancusi & Andrea Vezzulli, 2014. "R&D AND CREDIT RATIONING IN SMEs," Economic Inquiry, Western Economic Association International, vol. 52(3), pages 1153-1172, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:16:y:2024:i:14:p:5935-:d:1433607. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.