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


  • Daniel Fernández-Kranz
  • Juan Santaló


"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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  • Daniel Fernández-Kranz & Juan Santaló, 2010. "When Necessity Becomes a Virtue: The Effect of Product Market Competition on Corporate Social Responsibility," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(2), pages 453-487, June.
  • Handle: RePEc:bla:jemstr:v:19:y:2010:i:2:p:453-487

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    References listed on IDEAS

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    Cited by:

    1. Patricia Crifo & Vanina Forget, 2012. "The Economics of Corporate Social Responsibility: A Survey," Working Papers hal-00720640, HAL.
    2. 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.
    3. Patricia Crifo & Vanina D. Forget, 2014. "Pourquoi s’engager volontairement dans la transition énergétique ? Enseignements de la littérature sur la responsabilité sociale et environnementale des entreprises," Revue d'économie industrielle, De Boeck Université, vol. 0(4), pages 349-381.
    4. Patricia Crifo & Vanina Forget, 2013. "La responsabilité sociale et environnementale des entreprises : mirage ou virage ?," Working Papers hal-00830642, HAL.
    5. Crifo, Patricia & Diaye, Marc-Arthur & Pekovic, Sanja, 2016. "CSR related management practices and firm performance: An empirical analysis of the quantity–quality trade-off on French data," International Journal of Production Economics, Elsevier, vol. 171(P3), pages 405-416.
    6. 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.
    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. Holger Görg & Aoife Hanley & Stefan Hoffmann and Adnan Seric, 2016. "When do multinational companies consider corporate social responsibility? A multi-country study in Sub-Saharan Africa," RSCAS Working Papers 2016/03, European University Institute.
    9. Görg, Holger & Hanley, Aoife & Seric, Adnan, 2015. "Corporate social responsibility in global supply chains of multinational companies," Kiel Working Papers 1986, Kiel Institute for the World Economy (IfW).
    10. Grougiou, Vassiliki & Dedoulis, Emmanouil & Leventis, Stergios, 2016. "Corporate Social Responsibility Reporting and Organizational Stigma: The Case of “Sin” Industries," Journal of Business Research, Elsevier, vol. 69(2), pages 905-914.
    11. X. H. Meng & S. X. Zeng & X. M. Xie & G. Y. Qi, 2016. "The impact of product market competition on corporate environmental responsibility," Asia Pacific Journal of Management, Springer, vol. 33(1), pages 267-291, March.
    12. Ron Bird & Francesco Momenté & Francesco Reggiani, 2012. "The market acceptance of corporate social responsibility: a comparison across six countries/regions," Australian Journal of Management, Australian School of Business, vol. 37(2), pages 153-168, August.
    13. Amore, Mario Daniele & Bennedsen, Morten, 2016. "Corporate governance and green innovation," Journal of Environmental Economics and Management, Elsevier, vol. 75(C), pages 54-72.
    14. Gupta, Sonam & Innes, Robert, 2014. "Private politics and environmental management," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 319-339.
    15. Kopel, Michael & Brand, Björn, 2012. "Socially responsible firms and endogenous choice of strategic incentives," Economic Modelling, Elsevier, vol. 29(3), pages 982-989.
    16. repec:eee:spacre:v:16:y:2013:i:1:p:11-23 is not listed on IDEAS
    17. Lisa Planer-Friedrich & Marco Sahm, 2017. "Strategic Corporate Social Responsibility," CESifo Working Paper Series 6506, CESifo Group Munich.
    18. Costa, Cláudia & Lages, Luis Filipe & Hortinha, Paula, 2015. "The bright and dark side of CSR in export markets: Its impact on innovation and performance," International Business Review, Elsevier, vol. 24(5), pages 749-757.
    19. Panda, Shibaji, 2014. "Coordination of a socially responsible supply chain using revenue sharing contract," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 67(C), pages 92-104.
    20. 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.
    21. Aldashev, Gani & Limardi, Michela & Verdier, Thierry, 2015. "Watchdogs of the Invisible Hand: NGO monitoring and industry equilibrium," Journal of Development Economics, Elsevier, vol. 116(C), pages 28-42.
    22. Planer-Friedrich, Lisa & Sahm, Marco, 2017. "Strategic corporate social responsibility," BERG Working Paper Series 124, Bamberg University, Bamberg Economic Research Group.
    23. Caroline Flammer, 2015. "Does product market competition foster corporate social responsibility? Evidence from trade liberalization," Strategic Management Journal, Wiley Blackwell, vol. 36(10), pages 1469-1485, October.
    24. Sandra Cavaco & Patricia Crifo, 2013. "The CSR-Firm Performance Missing Link: Complementarity Between Environmental, Social and Business Behavior Criteria?," Working Papers hal-00504747, HAL.
    25. You-Hua Chen & Xiao-Wei Wen & Ming-Zhong Luo, 2016. "Corporate Social Responsibility Spillover and Competition Effects on the Food Industry," Australian Economic Papers, Wiley Blackwell, vol. 55(1), pages 1-13, March.

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