Influence of eco‐product innovation and firm reputation on corporate social responsibility and competitive advantage: A mediation‐moderation analysis

• Published date: 01 November 2023
• Author: Banji Rildwan Olaleye
• Date: 01 November 2023
• DOI: http://doi.org/10.1002/pa.2878

RESEARCH NOTE

Influence of eco-product innovation and firm reputation on

corporate social responsibility and competitive advantage:

A mediation-moderation analysis

Banji Rildwan Olaleye

Department of Business Administration,

Faculty of Management Sciences, Federal

University Oye-Ekiti, Oye, Nigeria

Correspondence

Banji Rildwan Olaleye, Department of

Business Administration, Faculty of

Management Sciences, Federal University

Oye-Ekiti, Nigeria.

Email: banji.olaar@gmail.com

Eco-product innovation is a response to environmental legislation and social respon-

sibility movements. Established agricultural manufacturers must figure out how to

use green ideas and reputation to compete for business excellence. This study

adopted a knowledge-based approach to examine corporate social responsibility and

competitive advantage. This study also examined how eco-product innovation and

reputation affect firms' competitive advantage. The proposed model was tested on

427 Nigerian agro-allied manufacturers using causal pathways and structural equa-

tion modeling. Business competition is directly and indirectly affected by corporate

social responsibility, eco-product innovations, and firm reputation. Additionally,

eco-product innovation partially mediated the nexus between corporate social

responsibility and competitive advantage, while reputation moderated the influence

of eco-product innovation. The findings suggest that manufacturers pursuing green

initiatives should strive to participate in an eco-friendly competition and deal with

policy pressures in order to meet environmental standards. Overall, this study adds

the environment and business competition to the idea of innovation.

KEYWORDS

competitive advantage, corporate social responsibility, eco-product innovation, firm reputation,

natural-resource-based view and PLS-SEM

1|INTRODUCTION

Demand for a green economy has prompted a paradigm shift in how

enterprises operate, with great improvements in productivity and effi-

ciency leading to heightened competitiveness (Buffa et al., 2018). The

green economy has spurred business and innovation in the industrial

sector, increasing eco-labeling and green tech investments. The green

transition spans numerous industries. It's hard to estimate the transi-

tion's business possibilities. Recent estimates suggest the green econ-

omy is growing swiftly and might account for 10% of global market

capitalization by 2030, aroundthe same as the health or finance indus-

tries. Every country has strengths, opportunities, and challenges in the

green economy.In most nations, sectors with a comparative advantage

are also leadinggreen innovators, showing countries may preservetheir

competitiveness in the green economy(Söderholm, 2020).

Barriers restrict the development and distribution of green tech-

nologies, preventing green transition economic prospects from materi-

alizing. There is a lack of skills, innovation, corporate competition,

public adoption of new technology, infrastructure, policy misalign-

ment, policy uncertainty, and financial constraints (OECD, 2017).

Companies in today's dynamic business environment must be

evaluated on more than just their bottom line. The world outside an

organization's doors frequently determines its worth and success.

Managers should care about their social responsibilities because doing

so shows that the company can adapt to and benefit from the outside

world. “Corporate Social Responsibility”(CSR) has become a central

tenet of many companies' missions, both domestically and abroad.

That is to say, large corporations have led the way in showing support

for social and environmentally sustainable business practices (Sharma

et al., 2009).

Received: 18 March 2023 Revised: 30 April 2023 Accepted: 16 June 2023

DOI: 10.1002/pa.2878

J Public Affairs. 2023;23:e2878. wileyonlinelibrary.com/journal/pa © 2023 John Wiley & Sons Ltd. 1of16

https://doi.org/10.1002/pa.2878

In Nigeria, organizations like the Dangote Group are known for

helping people in need in the north and giving monetary support to

universities. On the other hand, Food, Agro & Allied Industries Lim-

ited, both on its own and as part of the Sona Group, is involved in a

number of social, economic, and environmental development projects,

such as improving the rural economy by developing sorghum produc-

tion and markets, giving people clean water, paying for eye exams,

and building schools. So, CSR activities, which can be anything from

small donations to big projects, are usually done to help people and

keep the environment healthy.

As the importance of CSR and reputation in the manufacturing

industries grows, so does the importance of green innovation and

improving competition (Sarjana & Khayati, 2017; Wang et al., 2020).

Munasinghe et al. (2019) and Kraus et al. (2020) opined that firms

committed to offering social care via different corporate social pro-

grams augment the economic development and quality of the commu-

nity. Mbanyele et al. (2022), Novitasari and Tarigan (2022), and Sapta

et al. (2021) believe that while such a program can improve the busi-

ness of any company, it also affects the environment and builds rela-

tionships with the private sector, the government, and the public.

Meanwhile, scholars opine that companies have a responsibility to

offer crucial data concerning the adoption of CSR to communities and

governments via their websites to help people within the immediate

communities comprehend the role of the company in society (Her-

manto et al., 2021). Therefore, the current study considers eco-

product innovation as a mediator in order to address the relationship

between firms' competitive advantage, performance metrics, and

reputation.

The relevance of the “Natural Resource Based View”(NRBV) in

modern business is evidenced, as is its value via repeated links with

competitiveness (McDougall, 2018). Important questions arise, includ-

ing whether or not it is necessary to investigate the availability of

NRBV resources in actual use. According to the literature (Mencug &

Ozanne, 2005), few people have a firm grasp on the significance of

NRBV resources for long-term competitive advantage and sustainabil-

ity. Few people understand the importance of NRBV resources for

long-term competitive viability (Mencug & Ozanne, 2005). According

to McDougall (2018), conceptualizations are the most crucial compo-

nent of what we need to know about the NRBV theory.

CSR concepts have a robust impact on human resources, dis-

tributors, and consumers, helping companies expand their markets

and manage sustainable brands in different market domains

(Flores-Hernández et al., 2020;Majerovaetal.,2020). This study,

focusing on CSR, eco-product innovation, and competitive ad-

vantage (performance), might indicate shortcomings in previous

related studies and have enormous ramifications for different large

companies globally. Ultimately, this research will contribute to the

sustainable improvement of companies through environmental

approaches. Notably, different corporations must consider adopt-

ing CSR in line with expectations in specific environments and

ensure that the implemented methods are not only profitable but

also sustainable (Okur & Saricam, 2019). In addition, this study

offers the concerned parties the knowledge needed to respond to

the social environment while maintaining their operations within

external and internal environmental conditions. Again, this

research will provide top management with the insights required

to conduct CSR activities and enrich their sustainable perspectives

or theories in business execution.

2|THEORETICAL AND HYPOTHESIS

DEVELOPMENT

The Natural Resource Based View (NRBV) theory offers a sound theo-

retical source for conferring contributions to ecological and societal

development in a competing business operation. Up until recently,

academics were primarily using the natural resource-based view to

explain competitive, sustainable operations. According to NRBV pro-

ponents, an organization's competitive edge stems from the way it

interacts with its natural environment (Hart & Dowell, 2011; Olajide

et al., 2019). Companies can gain an advantage in the market by

leveraging their NRBV framework, which highlights the competencies

that contribute to sustainable development. Hart (1995) detailed a set

of competencies that businesses may develop; these competencies

are interconnected in that they build upon various key resources, and

each competency also offers an exclusive competitive advantage. Pos-

sessing the ability to prevent pollution aids in reducing both pollution

and waste. Sustainable development capabilities mitigate the negative

effects of business growth on the natural world. However, the current

research is based on the Porter hypothesis, which shows a connection

between environmentally sound policies and innovative

competitiveness.

2.1 |Corporate social responsibility (CSR)

Munasinghe et al. (2019) and Barnett et al. (2020) define CSR as an

aspect of economic growth, social relations, and environmental aware-

ness that affects firmsand the performance of different economic sec-

tors. CSR encourages companies to assume responsibility for their

actions and improve society, including the company's neighborhood,

customers, employees,and shareholders (Gaurangkumar, 2015). CSR is

an organization's way of showingthat it cares for the places in which it

does business. Companies that practice corporate social responsibility

(CSR) make a public commitment to do the right thing for their

workers, their families, their communities, and society at large

(Cierna & Sujova, 2015).

By incorporating these three elements in large companies,

Hernández et al. (2020) opine that such a move leads to partnerships

in operations for the duties of the company and the community.

Similarly, Gillan et al. (2021) and Hou (2019) believe CSR investments

aid in building a company's reputation and augment relations with

employees or customers as a mechanism that increases company

shares and fosters governmental relations, community welfare, and

business practices. It is essential to highlight that any CSR principles

must align with the governance of these actions in different domains

2of16 OLALEYE