Strategic corporate social responsibility activities and corporate governance in imperfectly competitive markets

Constantine Manasakis, Evangelos Mitrokostas, Emmanuel Petrakis

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Abstract

We investigate the incentives of firms' owners to commit voluntarily to corporate social responsibility (CSR) activities in an oligopolistic market. The socially responsible attributes attached to products are considered as credence goods, with consumers forming expectations about their existence and level. We show that hiring an ‘individually’ socially responsible CEO and delegating to him the CSR effort and market decisions acts as a commitment device for the firm's owners and credibly signals to consumers that the firm will undertake the ‘missioned’ CSR activities. We also find that CSR activities are welfare enhancing for consumers and firms and thus, they should be encouraged.
Original languageEnglish
Pages (from-to)460-473
JournalManagerial & Decision Economics
Volume35
Issue number7
Early online date30 Jul 2013
DOIs
Publication statusPublished - 1 Oct 2014

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