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 through unsubstantiated claims used as part of a brand building strategy. These claims might be, in theory, self-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 signaling strategies on market efficiency. Both third-party certification and the possibility of CSR-related brand building give rise to a separating equilibrium. Yet, only third-party certification clearly leads to efficiency gains, by increasing CSR investments. In markets where reputation matters little, unsubstantiated claims can generate a ‘halo' effect in consumer choices, whereby they are nudged to pay 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
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Related works:
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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