Voluntary agreements and community development as CSR in innovation strategies
AbstractThe present paper examines how an innovating firm decides between two forms of voluntary agreements (VA) in a context, where a non-governmental organization (NGO) rather than a regulator watches over citizens' interests. The innovation generates profit and consumer surplus as well as environmental damage. Corporate social responsibility (CSR) within the innovation process is considered in terms of a redistribution of profit towards community development, with or without additional abatement efforts via a VA. Bargaining between firm and NGO yields the amount allocated to community development. The model demonstrates that the firm's choice of VA hinges on the tradeoffs between appropriating the full innovation profit and paying a higher lump sum towards community development or sacrificing some of the innovation profit by lowering innovation effort, but gaining in terms of paying a lesser amount towards community development. CSR with abatement is unlikely in the case of radical innovations. There is also a clear divergence of interests between the firm, the NGO and the State for some parameter configurations, which are duly identified.
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Bibliographic InfoPaper provided by United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology in its series UNU-MERIT Working Paper Series with number 016.
Date of creation: 2011
Date of revision:
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Web page: http://www.merit.unu.edu
Corporate social responsibility; voluntary agreements; community development; donations; innovation;
Other versions of this item:
- Mukherjee, Vivekananda & Ramani, Shyama V., 2011. "Voluntary agreements and community development as CSR in innovation strategies," UNU-MERIT Working Paper Series 016, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology.
- M14 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Corporate Culture; Social Responsibility
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-11 (All new papers)
- NEP-CSE-2011-06-11 (Economics of Strategic Management)
- NEP-ENV-2011-06-11 (Environmental Economics)
- NEP-INO-2011-06-11 (Innovation)
- NEP-KNM-2011-06-11 (Knowledge Management & Knowledge Economy)
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