Certification of corporate social responsibility activities in oligopolistic markets

Abstract

We investigate the impact of alternative certifying institutions on firms' incentives to engage in costly Corporate Social Responsibility (CSR) activities as well as their relative market and societal implications. We find that the CSR certification standard is the lowest under for-profit private certifiers and the highest under a Non Governmental Organization (NGO), with the standard of a welfare-maximizing public certifier lying in between. Yet, regarding industry output, this ranking is reversed. Certification of CSR activities is welfare enhancing for consumers and firms and should be encouraged. Finally, the market and societal outcomes of CSR certification depend crucially on whether certification takes place before or after firms' CSR activities. JEL classification: L13, M14 Certification des activités de responsabilité sociale des compagnies dans des marchés oligopolistiques. On fait enquête sur l'impact de diverses institutions de certification sur les incitations des entreprisesà s'engager dans des activités coûteuses pour assurer la responsabilité sociale ainsi que sur les implications relatives de ces sortes de certification pour le marché et la société. On découvre que le standard de certification est le plus bas pour ceux qui certifient les organisations du secteur privéà but lucratif, et le plusWe are grateful to three anonymous referees and the co-editor Joanne Roberts for their valuable comments and suggestions that contributed substantially in the improvement of the paper. We would also like to thank Certification of corporate social responsibilities 283 elevé pour ceux qui certifient les organisations non-gouvernementales, et que le standard d'un certificateur public qui viseraità maximiser le bien-être tombe entre les deux. Pour ce qui est de la production industrielle, l'ordre est inversé. La certification des activités de responsabilité sociale améliore le bien-être des consommateurs et des entreprises, et devraitêtre encouragée. Finalement, les impactséconomiques et sociaux de cette certification dépendent de manière cruciale du fait que la certification a eu lieu avant ou après ces activités.

Corporate Social Responsibility and Environmentally Sound Technology in Endogenous Firm Growth

“…CSR is the best embodiment of business ethics of firm owner or manager. More than half of global companies' annual financial reports include CSR information, and 59% of the multinational companies in the world need to provide corporate social responsibility reputation of its stakeholders [15]. On 16 February 2011, Social Responsibility Report of the State Grid Corporation in 2010 was issued in Beijing, the first Corporate Social Responsibility Report (CSRR) of Chinese firms after entering the period of "the 12th Five-Year Plan" [16].…”

Strategic Corporate Social Responsibility by a Local Firm Against a Multinational Enterprise

“…On the demand side, following Häckner (2000), Garella and Petrakis (2008), Manasakis et al (2013) and Liu et al (2015), the utility function of a representative consumer in country i for i = h, f is:…”

“…Moreover, the local firm's production cost is given by C f (q f2 , s f ) = c(1 + s 2 f )q f2 , implying that a higher CSR effort level increases its marginal cost at an increasing rate (Manasakis et al 2013).…”

“…In parallel with the expansion of multinational enterprises, stylized facts and evidence suggest that consumers are increasingly aware of the social and environmental responsibility and footprint of their local firms (Ioannou and Serafeim 2015). In this spirit, Manasakis et al (2013) cite evidence suggesting that consumers express a willingness to pay a premium for goods and services produced by socially responsible firms in manufacturing industries, tourism services and agriculture. Within a policy context, the promotion of corporate social responsibility (CSR) has become a top priority in the agenda for sustainable development in many countries and international organizations.…”

“…In particular, socially and environmentally responsible attributes are perceived by socially conscious consumers as a "quality improvement" (see also Manasakis et al 2013;Liu et al 2015). In this context, our work addresses the following questions: How do CSR investments by the local firm affect market and societal outcomes in both countries under two different modes of entry, exports and FDI?…”