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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 2011-016, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2011016
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    References listed on IDEAS

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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.

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    More about this item

    Keywords

    Corporate social responsibility; voluntary agreements; community development; donations; innovation;
    All these keywords.

    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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