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Strategic Corporate Social Responsibility and Spillover

Author

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  • Ma, Qing
  • Xu, Heng

Abstract

This paper investigates the firms’ incentive of using corporate socially responsible (CSR) innovation as a device in the presence of spillover effect of such innovation. By modelling a two-period environment where a fraction of consumers is altruistic who have higher willingness to pay for the CSR product, we particularly study the firms’ decision on CSR innovation with respect to the spillover effect and the fraction of the altruistic consumers. We find that a large (small) fraction of the altruistic consumers attracts (restricts) both firms to innovate. Moreover, if the leader has only one chance to innovate (i.e., makes decision on innovation in the first period onely), a relatively large fraction could be a credible threat from the follower to the leader of innovation. Furthermore, in the situation where the leader has option of innovating in both periods, there exists a “patient area” in which the leader wishes to delay its innovation and do it with its rival in the second period. By doing so, the leader can weaken the rival’s benefit from being a follower of innovation.

Suggested Citation

  • Ma, Qing & Xu, Heng, 2018. "Strategic Corporate Social Responsibility and Spillover," MPRA Paper 89771, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:89771
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    References listed on IDEAS

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    Cited by:

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    2. Banerjee, Shantanu & Homroy, Swarnodeep & Slechten, Aurélie, 2022. "Stakeholder preference and strategic corporate social responsibility," Journal of Corporate Finance, Elsevier, vol. 77(C).
    3. Xu Lili & Lee Sang-Ho, 2022. "Corporate Profit Tax and Strategic Corporate Social Responsibility Under Foreign Acquisition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 22(1), pages 123-151, January.
    4. Ellen Pei‐yi Yu & Alessandra Tanda & Bac Van Luu & Dominic H. Chai, 2021. "Environmental transparency and investors' risk perception: Cross‐country evidence on multinational corporations' sustainability practices and cost of equity," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 3975-4000, December.
    5. Xingtang Wang & Leonard F. S. Wang, 2022. "Corporate social responsibility, vertical product differentiation, and privatization policy," The Japanese Economic Review, Springer, vol. 73(2), pages 403-425, April.
    6. Arturo Garcia & Mariel Leal & Sang-Ho Lee, 2021. "Competitive CSR in a strategic managerial delegation game with a multiproduct corporation," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 68(3), pages 301-330, September.
    7. Yi Hsu & Thi Hong Gam Bui, 2022. "Consumers’ Perspectives and Behaviors towards Corporate Social Responsibility—A Cross-Cultural Study," Sustainability, MDPI, vol. 14(2), pages 1-23, January.
    8. Ho, Tung Manh & Le, Ngoc-Thang B., 2021. "Reviewing Studies On Corporate Social Responsibility Research In Vietnam During The 2008-2020 Period," OSF Preprints hyuqs, Center for Open Science.
    9. Xu, Lili & Lee, Sang-Ho, 2021. "Strategic corporate social responsibility and tariff policies: The timing of commitments and policy implications," MPRA Paper 108499, University Library of Munich, Germany.
    10. Kehinde Oni & Mukaila Ayanda Aremu & Taiwo Ogunniran, 2022. "Impact of Corporate Social Responsibility on Microfinance Banks' Performance in Ogbomoso, Oyo State, Nigeria," Technium Social Sciences Journal, Technium Science, vol. 31(1), pages 553-574, May.
    11. Xingtang Wang & Leonard F. S. Wang, 2024. "Corporate social responsibility and tariff policy in a differentiated mixed duopoly," Bulletin of Economic Research, Wiley Blackwell, vol. 76(2), pages 470-487, April.
    12. Xu, Lili & Lee, Sang-Ho, 2021. "Strategic Corporate Social Responsibility by a Multinational Firm and International Privatization Policies," MPRA Paper 105651, University Library of Munich, Germany.
    13. Zhang, Qidi & Wang, Leonard F.S., 2022. "Corporate social responsibility, entry and optimal privatization in an international mixed market," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 14-24.
    14. Yang, Na & Zhang, Yuan & Yu, Lu & Wang, Jue & Liu, Xiaming, 2022. "Cross-border mergers and acquisitions, regional cultural diversity and acquirers’ corporate social responsibility: Evidence from China listed companies," International Review of Economics & Finance, Elsevier, vol. 79(C), pages 565-578.
    15. Hui Wen & George Deltas, 2022. "Global corporate social responsibility reporting regulation," Contemporary Economic Policy, Western Economic Association International, vol. 40(1), pages 98-123, January.

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    More about this item

    Keywords

    Corporate social responsibility; Innovation; Spillover; Altruism;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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