Determinants of Corporate Social Innovation in South Africa’s Commercial Banking Sector

Abstract

This study is situated within the realm of Social Innovation (SI), specifically focusing on Corporate Social Innovation (CSIn) within the South African commercial banking sector. Addressing a significant gap in the understanding of the determinants of CSIn within this context, the study draws upon Institutional Theory and Social Capital Theory to extend theoretical insights in the domain of SI. While traditional Corporate Social Responsibility (CSR) practices often view social and environmental issues as external to core business strategy, the concept of Creating Shared Value (CSV) has emerged, emphasising the creation of economic value while addressing societal challenges. Employing a sequential mixed methods approach, the study first administered a seven-point Likert scale questionnaire to 219 CSR professionals within commercial banks in South Africa. Subsequently, semi-structured interviews were conducted with 14 CSR senior managers and leaders to deepen the findings. Path analysis and Confirmatory Factor Analysis (CFA) were used for quantitative analysis, revealing positive and significant relationships between management support, transformational leadership, and internal social capital with CSIn in South African commercial banks. Furthermore, the study found that internal social capital mediates the relationship between transformational leadership and CSIn, and that transformational leadership mediates the relationship between management support and CSIn, as well as social proactiveness and CSIn in South African commercial banks. The qualitative phase of the study involved thematic analysis of interview data to complement the quantitative findings. Methodological triangulation was employed to enhance the validity of the iii results. Given the underdeveloped and empirically lacking literature on CSIn, particularly in the commercial banking industry, this study makes a substantial contribution by identifying key determinants and enriching the theoretical understanding through empirical insights. It underscores the importance of social innovative behaviours within banks in addressing societal challenges, fostering a culture of social innovation that contributes not only to meeting Environmental, Social, and Governance (ESG) targets but also brings numerous implicit benefits.