Does stakeholder engagement through corporate social and environmental behaviors affect innovation?

Firms often engage with their internal and external stakeholders to enrich their knowledge base and augment innovation. An important yet under-examined mechanism to tap into knowledge stakeholders can provide is corporate social and environmental behaviors (CSEB) that firms undertake. This study examines the impact of stakeholder engagement through CSEB on firm investment in innovation. Drawing arguments from the knowledge-based view (KBV), stakeholder theory, and the upper echelons perspective, we argue that undertaking higher levels of corporate social and environmental behaviors lead to better innovation outcomes through different pathways. We test our proposed model on a sample of Fortune 500 firms and find that while corporate social behaviors (CSB) have a direct positive effect on firms' subsequent R&D investments, the impact of corporate environmental behaviors (CEB) on innovation is conditioned by executive tenure. We contribute to innovation, CSB, and CEB literatures by clarifying different mechanisms through which CSB and CEB impact innovation.