The role of public information in corporate social responsibility

Aleix Calveras and Juan-José Ganuza

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: Many of the attributes that make a good 'socially responsible' are credence attributes that cannot be learned by consumers either through search or experience. Consumers, then, use for their purchasing decisions 'noisy' information about these attributes obtained from potentially contradictory channels (media, advertisement, NGOs). In this paper we model such informational framework and show the positive relationship between the accuracy of the information transmitted to consumers and corporate social responsibility (CSR). We also show that a firm may be tempted to add noise to the information channel (through lobbying of the media), which might reduce the supply of the CSR attributes and even harm the firm itself (with lower profits). It might then be profitable to the firm to commit ex-ante to not manipulate the information regarding the firm's business practices (e.g., with a partnership with an NGO). Finally, we extend our model to a competition framework endogenizing the number of firms active in the CSR segment. We show both that in more transparent markets a larger number of firms will be CSR, and that in a market with more intense competition, a higher degree of transparency is required in order to sustain a given number of CSR firms.

Keywords: credence good; information asymmetry; corporate social responsibility; regulation; NGO; competition. (search for similar items in EconPapers)
JEL-codes: D72 H42 L51 M14 Q52 (search for similar items in EconPapers)
Date: 2015-02
New Economics Papers: this item is included in nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://econ-papers.upf.edu/papers/1491.pdf Whole Paper (application/pdf)

Related works:
Journal Article: The Role of Public Information in Corporate Social Responsibility (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1491

Access Statistics for this paper

More papers in Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
Bibliographic data for series maintained by ( this e-mail address is bad, please contact ).