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When Necessity Becomes a Virtue: The Effect of Product Market Competition on Corporate Social Responsibility

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  • Daniel Fernández-Kranz
  • Juan Santaló

Abstract

"We test whether Corporate Social Responsibility (CSR) is driven by strategic considerations by empirically studying the link between competition and firms' social performance. We find that firms in more competitive industries have better social ratings. In particular, we show that (i) different market concentration proxies are negatively related to widely used CSR measures; (ii) that an increase in competition due to higher import penetration leads to superior CSR performance; (iii) that firms in more competitive environments have a superior environmental performance, measured by firm pollution levels; and (iv) that more product competition is associated to a larger within-industry CSR variance. We interpret these results as evidence that CSR is strategically chosen." Copyright (c) 2010, The Author(s) Journal Compilation (c) 2010 Wiley Periodicals, Inc..

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

Volume (Year): 19 (2010)
Issue (Month): 2 (06)
Pages: 453-487

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Handle: RePEc:bla:jemstr:v:19:y:2010:i:2:p:453-487

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Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/

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  1. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2006. "Corporate Social Responsibility: Strategic Implications," Journal of Management Studies, Wiley Blackwell, vol. 43(1), pages 1-18, 01.
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  4. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
  5. Segerson, Kathleen & Miceli, Thomas J., 1998. "Voluntary Environmental Agreements: Good or Bad News for Environmental Protection?," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 109-130, September.
  6. Guadalupe, Maria, 2005. "Product Market Competition, Returns to Skill and Wage Inequality," IZA Discussion Papers 1556, Institute for the Study of Labor (IZA).
  7. Catherine M. Paul & Donald Siegel, 2006. "Corporate social responsibility and economic performance," Journal of Productivity Analysis, Springer, vol. 26(3), pages 207-211, December.
  8. Abagail McWilliams, 2002. "Raising Rivals' Costs Through Political Strategy: An Extension of Resource-based Theory," Journal of Management Studies, Wiley Blackwell, vol. 39(5), pages 707-724, 07.
  9. Mark Bagnoli & Susan G. Watts, 2003. "Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 419-445, 09.
  10. David P. Baron, 2001. "Private Politics, Corporate Social Responsibility, and Integrated Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 7-45, 03.
  11. Nickell, S.J., 1993. "Competition and Crporate Performance," Economics Series Working Papers 99155, University of Oxford, Department of Economics.
  12. Hansen, Lars Gårn, 1997. "Environmental Regulation through Voluntary Agreements," MPRA Paper 47537, University Library of Munich, Germany, revised 1999.
  13. Timothy J. Feddersen & Thomas W. Gilligan, 2001. "Saints and Markets: Activists and the Supply of Credence Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 149-171, 03.
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Cited by:
  1. Gani Aldashev & Michela Limardi & Thierry Verdier, 2013. "Watchdogs of the Invisible Hand: NGO Monitoring, Corporate Social Responsibility, and Industry Equilibrium," Working Papers 1404, University of Namur, Department of Economics.
  2. Patricia Crifo & Vanina Forget, 2012. "The Economics of Corporate Social Responsibility: A Survey," Working Papers hal-00720640, HAL.
  3. Basil Al-Najjar & Rong Ding, 2014. "Product Market Competition and Corporate Governance Disclosure: Evidence from the UK," Economic Issues Journal Articles, Economic Issues, vol. 19(1), pages 73-94, March.
  4. Patricia Crifo & Vanina Forget, 2013. "La responsabilité sociale et environnementale des entreprises : mirage ou virage ?," Working Papers hal-00830642, HAL.
  5. Sandra Cavaco & Patricia Crifo, 2010. "The CSR-Firm Performance Missing Link: Complementarity Between Environmental, Social and Business Behavior Criteria?," Working Papers hal-00504747, HAL.
  6. Kopel, Michael & Brand, Björn, 2012. "Socially responsible firms and endogenous choice of strategic incentives," Economic Modelling, Elsevier, vol. 29(3), pages 982-989.
  7. Ran Zhang & Jigao Zhu & Heng Yue & Chunyan Zhu, 2010. "Corporate Philanthropic Giving, Advertising Intensity, and Industry Competition Level," Journal of Business Ethics, Springer, vol. 94(1), pages 39-52, June.
  8. Mihail BUªU & Constantin BELU, 2013. "Which Are The Welfare Limits? Competition Policy In The Context Of Corporate Social Responsibility," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 7(1), pages 108-113, November.

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