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Corporate social responsibility, durable-goods and firm profitability

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  • Gregory E. Goering

    (University of Alaska Economics, Fairbanks, AK, USA)

Abstract

Utilizing a two-period durable-goods framework, we show that in uncommitted sales markets a firm may earn higher profits as it increases its level of corporate social responsibility (CSR). We find that this occurs even though CSR has no direct impact other than increasing the durable-goods firm's manufacturing costs. We show that in sales markets, CSR may allow the firm to credibly commit itself to lower production in the future. This, in turn, can enhance their profits even though the CSR activities are costly and provide no direct demand or marketing benefit in our model. This is important because it provides another, hereto unexplored, strategic rationale for the willingness of profit-maximizing firms to undertake costly CSR activities. Copyright © 2010 John Wiley & Sons, Ltd.

Suggested Citation

  • Gregory E. Goering, 2010. "Corporate social responsibility, durable-goods and firm profitability," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(7), pages 489-496.
    • Handle: RePEc:wly:mgtdec:v:31:y:2010:i:7:p:489-496
    DOI: 10.1002/mde.1508
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    Cited by:

    1. Lambertini, Luca & Tampieri, Alessandro, 2015. "Incentives, performance and desirability of socially responsible firms in a Cournot oligopoly," Economic Modelling, Elsevier, vol. 50(C), pages 40-48.
    2. Yang-Ming Chang & Hung-Yi Chen & Leonard F. S. Wang & Shih-Jye Wu, 2014. "Corporate Social Responsibility and International Competition: A Welfare Analysis," Review of International Economics, Wiley Blackwell, vol. 22(3), pages 625-638, August.
    3. Bian, Junsong & Li, Kevin W. & Guo, Xiaolei, 2016. "A strategic analysis of incorporating CSR into managerial incentive design," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 86(C), pages 83-93.
    4. Pangburn, Michael S. & Stavrulaki, Euthemia, 2014. "Take back costs and product durability," European Journal of Operational Research, Elsevier, vol. 238(1), pages 175-184.
    5. Lisa Planer-Friedrich & Marco Sahm, 2017. "Strategic Corporate Social Responsibility," CESifo Working Paper Series 6506, CESifo.
    6. Planer-Friedrich, Lisa & Sahm, Marco, 2017. "Strategic corporate social responsibility," BERG Working Paper Series 124, Bamberg University, Bamberg Economic Research Group.
    7. Ali Uyar & Simone Pizzi & Fabio Caputo & Cemil Kuzey & Abdullah S. Karaman, 2022. "Do shareholders reward or punish risky firms due to CSR reporting and assurance?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1596-1620, July.
    8. Chan Wang & Pu‐yan Nie & Yan Meng, 2018. "Duopoly Competition with Corporate Social Responsibility," Australian Economic Papers, Wiley Blackwell, vol. 57(3), pages 327-345, September.
    9. Kopel, Michael & Brand, Björn, 2012. "Socially responsible firms and endogenous choice of strategic incentives," Economic Modelling, Elsevier, vol. 29(3), pages 982-989.
    10. Daniela Salvioni, 2010. "Intangible Assets and Internal Controls in Global Companies," Symphonya. Emerging Issues in Management, University of Milano-Bicocca, issue 2 Intangi.
    11. Alessandro Gioffré & Alessandro Tampieri & Antonio Villanacci, 2021. "Private versus public companies with strategic CSR," Journal of Economics, Springer, vol. 133(2), pages 129-166, July.

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