Signaling Corporate Social Responsibility: Third-Party Certification vs. Brands

Fabrice Etilé and Sabrina Teyssier ()
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Sabrina Teyssier: ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique

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Abstract: For most consumers, Corporate Social Responsibility is a credence attribute of products, which can be signaled either through a label certified by a third party, or via unsubstantiated claims used as part of a brand-building strategy. These claims may, in theory, be regulated by reputation mechanisms and the awareness of NGOs and activists. We use an experimental posted-offer market with sellers and buyers to compare the impact of these signalling strategies on market efficiency. Both third-party certification and the possibility of CSRrelated brand building give rise to a separating equilibrium. However, only third-party certification clearly produces efficiency gains, by increasing CSR investments. In markets where reputation matters little, unsubstantiated claims can generate a 'halo' effect on consumers, whereby the latter are nudged into paying more for the same level of CSR investments by firms.

Keywords: Corporate social responsibility; Third-party certification; Brand building; Market experiment; Halo effect (search for similar items in EconPapers)
Date: 2012-09
New Economics Papers: this item is included in nep-exp and nep-mkt
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Working Paper: Signaling Corporate Social Responsibility: Third-party certification vs. brands (2012)
Working Paper: Signaling Corporate Social Responsibility: Third-Party Certification vs. Brands (2012)
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