IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v218y2019icp196-211.html
   My bibliography  Save this article

Corporate sustainability interactions: A game theoretical approach to sustainability actions

Author

Listed:
  • Uşar, Damla Durak
  • Denizel, Meltem
  • Soytaş, Mehmet Ali

Abstract

Recent global developments lead companies to include into their strategic plans not only economic sustainability but environmental and social sustainability as well. Companies have been investing in environmental and social sustainability to meet stakeholder demand and/or regulatory demands. Considering this as a market mechanism, we view the sustainability actions of companies as interrelated strategic decisions and propose a Stackelberg game to model the effects of competition for sustainability and sustainability spillovers over the sustainability outcomes of companies. We provide equilibrium solutions for the one leader, two followers game over different intervals of competition levels and spillover rates. Using a numerical example, we observe how the sustainability investments and net benefits change as competition levels and spillover rates change and identify the competition-spillover regions, where each player invests the most and has the advantage in terms of benefit. We discuss implications for both the companies and the policy makers.

Suggested Citation

  • Uşar, Damla Durak & Denizel, Meltem & Soytaş, Mehmet Ali, 2019. "Corporate sustainability interactions: A game theoretical approach to sustainability actions," International Journal of Production Economics, Elsevier, vol. 218(C), pages 196-211.
    • Handle: RePEc:eee:proeco:v:218:y:2019:i:c:p:196-211
    DOI: 10.1016/j.ijpe.2019.05.008
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527319301835
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2019.05.008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alvaro J. Mendoza & Robert T. Clemen, 2013. "Outsourcing sustainability: a game-theoretic modeling approach," Environment Systems and Decisions, Springer, vol. 33(2), pages 224-236, June.
    2. 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.
    3. Jeremy Hall & Marcus Wagner, 2012. "Integrating Sustainability into Firms' Processes: Performance Effects and the Moderating Role of Business Models and Innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 21(3), pages 183-196, March.
    4. Liu, Zugang (Leo) & Anderson, Trisha D. & Cruz, Jose M., 2012. "Consumer environmental awareness and competition in two-stage supply chains," European Journal of Operational Research, Elsevier, vol. 218(3), pages 602-613.
    5. Schoenherr, Tobias, 2012. "The role of environmental management in sustainable business development: A multi-country investigation," International Journal of Production Economics, Elsevier, vol. 140(1), pages 116-128.
    6. Besley, Timothy & Ghatak, Maitreesh, 2007. "Retailing public goods: The economics of corporate social responsibility," Journal of Public Economics, Elsevier, vol. 91(9), pages 1645-1663, September.
    7. Battini, Daria & Persona, Alessandro & Sgarbossa, Fabio, 2014. "A sustainable EOQ model: Theoretical formulation and applications," International Journal of Production Economics, Elsevier, vol. 149(C), pages 145-153.
    8. Kopel, Michael & Lamantia, Fabio & Szidarovszky, Ferenc, 2014. "Evolutionary competition in a mixed market with socially concerned firms," Journal of Economic Dynamics and Control, Elsevier, vol. 48(C), pages 394-409.
    9. Ashish Arora & Michelle Gittelman & Sarah Kaplan & John Lynch & Will Mitchell & Nicolaj Siggelkow & Robert J. Carroll & David M. Primo & Brian K. Richter, 2016. "Using item response theory to improve measurement in strategic management research: An application to corporate social responsibility," Strategic Management Journal, Wiley Blackwell, vol. 37(1), pages 66-85, January.
    10. Erica Plambeck & Qiong Wang, 2009. "Effects of E-Waste Regulation on New Product Introduction," Management Science, INFORMS, vol. 55(3), pages 333-347, March.
    11. Huck, Steffen & Muller, Wieland & Normann, Hans-Theo, 2001. "Stackelberg Beats Cournot: On Collusion and Efficiency in Experimental Markets," Economic Journal, Royal Economic Society, vol. 111(474), pages 749-765, October.
    12. Darnall, Nicole & Henriques, Irene & Sadorsky, Perry, 2008. "Do environmental management systems improve business performance in an international setting?," Journal of International Management, Elsevier, vol. 14(4), pages 364-376, December.
    13. Gökçe Esenduran & Eda Kemahlıoğlu-Ziya & Jayashankar M. Swaminathan, 2017. "Impact of Take-Back Regulation on the Remanufacturing Industry," Production and Operations Management, Production and Operations Management Society, vol. 26(5), pages 924-944, May.
    14. Sengupta, Aditi, 2015. "Competitive investment in clean technology and uninformed green consumers," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 125-141.
    15. Sylvia Grewatsch & Ingo Kleindienst, 2017. "When Does It Pay to be Good? Moderators and Mediators in the Corporate Sustainability–Corporate Financial Performance Relationship: A Critical Review," Journal of Business Ethics, Springer, vol. 145(2), pages 383-416, October.
    16. Deishin Lee, 2012. "Turning Waste into By-Product," Manufacturing & Service Operations Management, INFORMS, vol. 14(1), pages 115-127, January.
    17. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2006. "Corporate Social Responsibility: Strategic Implications," Journal of Management Studies, Wiley Blackwell, vol. 43(1), pages 1-18, January.
    18. Klaus CONRAD, 2005. "Price Competition and Product Differentiation when Goods have Network Effects," Industrial Organization 0502002, University Library of Munich, Germany.
    19. Prayag Lal Yadav & Seung Hun Han & Hohyun Kim, 2017. "Sustaining Competitive Advantage Through Corporate Environmental Performance," Business Strategy and the Environment, Wiley Blackwell, vol. 26(3), pages 345-357, March.
    20. Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2014. "Strategic Corporate Social Responsibility Activities and Corporate Governance in Imperfectly Competitive Markets," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 35(7), pages 460-473, October.
    21. Robert G. Eccles & Ioannis Ioannou & George Serafeim, 2014. "The Impact of Corporate Sustainability on Organizational Processes and Performance," Management Science, INFORMS, vol. 60(11), pages 2835-2857, November.
    22. Birger Wernerfelt, 1984. "A resource‐based view of the firm," Strategic Management Journal, Wiley Blackwell, vol. 5(2), pages 171-180, April.
    23. Yue Li & Gordon D. Richardson & Daniel B. Thornton, 1997. "Corporate Disclosure of Environmental Liability Information: Theory and Evidence," Contemporary Accounting Research, John Wiley & Sons, vol. 14(3), pages 435-474, September.
    24. Daniel Matisoff, 2015. "Sources of specification errors in the assessment of voluntary environmental programs: understanding program impacts," Policy Sciences, Springer;Society of Policy Sciences, vol. 48(1), pages 109-126, March.
    25. Sabbaghi, Mostafa & Behdad, Sara & Zhuang, Jun, 2016. "Managing consumer behavior toward on-time return of the waste electrical and electronic equipment: A game theoretic approach," International Journal of Production Economics, Elsevier, vol. 182(C), pages 545-563.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Umer Hussain & Bo Yu, 2021. "Repelolicer: A Reality or Snake Oil," South Asian Journal of Business and Management Cases, , vol. 10(2), pages 167-179, August.
    2. Ye, Yi & Guo, Qiang & Nie, Jiajia, 2023. "Retailer information strategies with a dual-purpose manufacturer," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 180(C).
    3. Dariusz Klimek, 2020. "Sustainable Enterprise Capital Management," Economies, MDPI, vol. 8(1), pages 1-10, February.
    4. Mehmet Ali Soytaş & Damla Durak Uşar & Meltem Denizel, 2022. "Estimation of the static corporate sustainability interactions," International Journal of Production Research, Taylor & Francis Journals, vol. 60(4), pages 1245-1264, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mehmet Ali Soytaş & Damla Durak Uşar, 2017. "Role of Strategic Interactions in Corporate Sustainability Decisions: An Empirical Investigation," Ekonomi-tek - International Economics Journal, Turkish Economic Association, vol. 6(1), pages 17-46, January.
    2. Lisa Planer-Friedrich & Marco Sahm, 2020. "Strategic corporate social responsibility, imperfect competition, and market concentration," Journal of Economics, Springer, vol. 129(1), pages 79-101, January.
    3. Lisa Planer-Friedrich & Marco Sahm, 2017. "Strategic Corporate Social Responsibility," CESifo Working Paper Series 6506, CESifo.
    4. Ohnishi, Kazuhiro, 2023. "Why firms should care for consumers: Complementary goods," MPRA Paper 117305, University Library of Munich, Germany.
    5. Mehmet Ali Soytaş & Damla Durak Uşar & Meltem Denizel, 2022. "Estimation of the static corporate sustainability interactions," International Journal of Production Research, Taylor & Francis Journals, vol. 60(4), pages 1245-1264, February.
    6. Kopel, Michael & Lamantia, Fabio, 2018. "The persistence of social strategies under increasing competitive pressure," Journal of Economic Dynamics and Control, Elsevier, vol. 91(C), pages 71-83.
    7. Zhifang Zhou & Lingyan Zhang & Li Lin & Huixiang Zeng & Xiaohong Chen, 2020. "Carbon risk management and corporate competitive advantages: “Differential promotion” or “cost hindrance”?," Business Strategy and the Environment, Wiley Blackwell, vol. 29(4), pages 1764-1784, May.
    8. Planer-Friedrich, Lisa & Sahm, Marco, 2017. "Strategic corporate social responsibility," BERG Working Paper Series 124, Bamberg University, Bamberg Economic Research Group.
    9. Wen, Wen & Zhou, P. & Zhang, Fuqiang, 2018. "Carbon emissions abatement: Emissions trading vs consumer awareness," Energy Economics, Elsevier, vol. 76(C), pages 34-47.
    10. Luciano Fanti & Domenico Buccella, 2018. "Profitability of corporate social responsibility in network industries," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 65(3), pages 271-289, September.
    11. Dewan Muktadir‐Al‐Mukit & Firoz Haroon Bhaiyat, 2024. "Impact of corporate governance diversity on carbon emission under environmental policy via the mandatory nonfinancial reporting regulation," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 1397-1417, February.
    12. Lisa Planer-Friedrich & Marco Sahm, 2021. "Strategic CSR in Asymmetric Cournot Duopoly," Journal of Industry, Competition and Trade, Springer, vol. 21(1), pages 33-42, March.
    13. Soytas, Mehmet Ali & Denizel, Meltem & Durak Usar, Damla, 2019. "Addressing endogeneity in the causal relationship between sustainability and financial performance," International Journal of Production Economics, Elsevier, vol. 210(C), pages 56-71.
    14. Vasileiou, Efi & Georgantzis, Nikolaos & Attanasi, Giuseppe & Llerena, Patrick, 2022. "Green innovation and financial performance: A study on Italian firms," Research Policy, Elsevier, vol. 51(6).
    15. Laszlo Goerke, 2019. "Corporate social responsibility and tax avoidance," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 21(2), pages 310-331, April.
    16. Joseph Taylor & Joseph Vithayathil & Dobin Yim, 2018. "Are corporate social responsibility (CSR) initiatives such as sustainable development and environmental policies value enhancing or window dressing?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(5), pages 971-980, September.
    17. Pi Jiancai & Zhao Runzhi, 2020. "Corporate Social Responsibility and Wage Inequality," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(3), pages 1-16, July.
    18. Tomáš Tichý & Davide Radi & Fabio Lamantia, 2022. "Hybrid evolutionary oligopolies and the dynamics of corporate social responsibility," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 17(1), pages 87-114, January.
    19. Harjoto, Maretno A. & Hoepner, Andreas G.F. & Li, Qian, 2022. "A stakeholder resource-based view of corporate social irresponsibility: Evidence from China," Journal of Business Research, Elsevier, vol. 144(C), pages 830-843.
    20. Jing‐Lin Duanmu & Maoliang Bu & Russell Pittman, 2018. "Does market competition dampen environmental performance? Evidence from China," Strategic Management Journal, Wiley Blackwell, vol. 39(11), pages 3006-3030, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:218:y:2019:i:c:p:196-211. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.