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Voluntary agreements and community development as CSR in innovation strategies

Author

Listed:
  • Mukherjee, Vivekananda

    () (Department of Economics, Jadavpur University)

  • Ramani, Shyama V.

    () (UNU-MERIT, and Ecole Polytechnique Paris)

Abstract

The 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.

Suggested Citation

  • Mukherjee, Vivekananda & Ramani, Shyama V., 2011. "Voluntary agreements and community development as CSR in innovation strategies," MERIT Working Papers 016, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2011016
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    File URL: https://www.merit.unu.edu/publications/wppdf/2011/wp2011-016.pdf
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    References listed on IDEAS

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    1. Maxwell, John W & Lyon, Thomas P & Hackett, Steven C, 2000. "Self-Regulation and Social Welfare: The Political Economy of Corporate Environmentalism," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 583-617, October.
    2. David P. Baron, 2007. "Corporate Social Responsibility and Social Entrepreneurship," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(3), pages 683-717, September.
    3. 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, March.
    4. 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.
    5. Manzini, Paola & Mariotti, Marco, 2003. "A bargaining model of voluntary environmental agreements," Journal of Public Economics, Elsevier, vol. 87(12), pages 2725-2736, December.
    6. 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, September.
    7. David P. Baron & Daniel Diermeier, 2007. "Strategic Activism and Nonmarket Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(3), pages 599-634, September.
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    10. Ramani, Shyama & Mukherjee, Vivekananda, 2010. "CSR and market changing product innovations: Indian case studies," MERIT Working Papers 026, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
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    Cited by:

    1. Saiz Álvarez, José Manuel & Mendoza Macías, Marlene Mariluz, 2015. "Innovación y creatividad como motores de desarrollo y RSC. El caso de las empresas de Guayaquil (Ecuador)
      [Innovation and Creativity as Engines for Development and CSR. The case of firms in Guayaqu
      ," MPRA Paper 86611, University Library of Munich, Germany.

    More about this item

    Keywords

    Corporate social responsibility; voluntary agreements; community development; donations; innovation;

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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