Good deeds, business, and social responsibility in a market experiment

We study how commitment of entrepreneurs to corporate social responsibility practices might effectively improve the social impact of market competition: to this end we devised a market experiment in which profit maximization and socially-concerned behavior were both potential goals of producers. Our subject pool included two distinct types of students having different prosocial attitudes. The two types adopted significantly different strategies in the treatment group, where producers could contribute to a positive externality, whereas they behaved similarly in the control group, where the only objective was profit maximization. Subjects who were ex-ante more prosocial chose to produce with more focus on the positive externality than their counterparts. However, they failed to actually deliver a larger social impact, since that also required winning a large enough market share. We conclude that producers often commit to social responsibility, even though well-meaning conducts do not necessarily beget equally good outcomes.