Competitive Corporate Social Responsibility
44 Pages Posted: 27 Nov 2017 Last revised: 7 Dec 2018
Date Written: December 1, 2018
This paper presents a theoretical model for corporate social responsibility (CSR) in a fully rational framework. CSR is a strategic commitment to emphasize either consumer or employee interests in a multi-stage product market game against rival firms. We find that low cost firms in concentrated industries engage in higher levels of CSR and have higher profits. Empirical tests of the main hypotheses are confirmatory: low cost firms use more CSR; market to book increases in CSR and a dynamic test of firms migrating to less concentrated industries exhibit reductions in CSR.
Keywords: social responsibility, competitive, commitment
JEL Classification: G30
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