Competitive CSR in a strategic managerial delegation game with a multiproduct corporation

Garcia, Arturo and Leal, Mariel and Lee, Sang-Ho (2020): Competitive CSR in a strategic managerial delegation game with a multiproduct corporation.

Abstract

We study the firm's strategic choice of corporate social responsibility (CSR) in a managerial delegation framework where a multiproduct corporation competes against a single plant firm. We examine simultaneous-move versus sequential-move in output choices when CSR decisions are simultaneous. We show that both firms adopt CSR in a simultaneous-move game, whereas only the follower firm adopts CSR (but not the leader firm) in sequential-move games. We also consider an endogenous timing game in output choices between the two firms and show that a simultaneous-move is an equilibrium when the products are substitutes or weak complements, while a single plant firm's leadership is an equilibrium when the products are sufficiently strong complements. Our findings can explain the widely observed phenomenon, in the real world, of different industries in which firms' CSR activities are more or less (even non-CSR or negative CSR) commonly widespread. It also partially helps us understand CSR's strategic motives and its relations with the firm's profits.

• Item Type: MPRA Paper
• Language: English
• Keywords: corporate social responsibility; managerial delegation; multiproduct corporation; endogenous timing game
• Subjects: D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M1 - Business Administration > M14 - Corporate Culture ; Diversity ; Social Responsibility

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