Signaling Corporate Social Responsibility: Third‐Party Certification Versus Brands

36 Pages Posted: 28 Jun 2016

See all articles by Fabrice Etilé

Fabrice Etilé

Paris School of Economics (PSE)

Sabrina Teyssier

French National Institute for Agricultural Research (INRA)

Date Written: July 2016

Abstract

Corporate social responsibility (CSR) is a credence attribute of products, which can be signaled either through a label certified by a third party, or via unsubstantiated claims used as part of a brand‐building strategy. We use an experimental posted‐offer market with sellers and buyers to compare the impact of these signaling strategies on market efficiency. Only third‐party certification gives rise to a separating equilibrium and an increase in CSR investments. Unsubstantiated claims can generate a halo effect on consumers, whereby the latter are nudged into paying more for the same level of CSR investments by firms.

Keywords: Claim, halo effect, label, market experiment, social preferences

JEL Classification: C92, D82, L15, M14

Suggested Citation

Etilé, Fabrice and Teyssier, Sabrina, Signaling Corporate Social Responsibility: Third‐Party Certification Versus Brands (July 2016). The Scandinavian Journal of Economics, Vol. 118, Issue 3, pp. 397-432, 2016. Available at SSRN: https://ssrn.com/abstract=2801361 or http://dx.doi.org/10.1111/sjoe.12150

Fabrice Etilé (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Sabrina Teyssier

French National Institute for Agricultural Research (INRA) ( email )

INRA, UMR Economie Publique INRA-AgroParisTech
Av. L. BRETIGNIERES
78850 GRIGNON, 78-Yvelines F-78850
France

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