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

Arturo Garcia, Mariel Leal and Sang-Ho Lee ()

MPRA Paper from University Library of Munich, Germany

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.

Keywords: corporate social responsibility; managerial delegation; multiproduct corporation; endogenous timing game (search for similar items in EconPapers)
JEL-codes: D21 L13 L22 M14 (search for similar items in EconPapers)
Date: 2020-11, Revised 2020
New Economics Papers: this item is included in nep-bec, nep-com and nep-gth
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