CSR investment timing in a duopoly: The threat of responsibility violations in the context of socially conscious customers

Sustainability in supply chains is increasingly important. Firms risk losing customers if they delay corporate social responsibility (CSR) investments but may gain customers from competitors by acting early. Using a dynamic model, we analyze CSR investment timing in a duopoly. We study when firms adopt responsible strategies to meet socially conscious customers’ expectations to avoid disclosure risks. Small firms invest early to attract customers from larger competitors. In markets with high penalties or disclosure risks, large firms invest relatively early. However, when socially conscious customers dominate, large firms delay investment relative to the small company, leading to a crowding-out effect.