Journal of Business Economics

, Volume 84, Issue 7, pp 917–927 | Cite as

Corporate social responsibility: a strategic and profitable response to entry?

Original Paper

Abstract

This paper investigates whether an incumbent has an incentive to introduce corporate social responsibility (CSR) activities only as a response to entry by a competitor, i.e., the incumbent would eschew CSR if left uncontested. We assume that the entrant cannot provide CSR at least at the outset for two reasons: (1) it would not be credible due to its lack of recognition and (2) due to high fixed cost to pay e.g., for licensing. More precisely, this paper shows that monopolistic firms can have indeed the incentive to introduce CSR activities only as a response to entry. Therefore, increased competition can turn a firm “green”, providing a “win–win” for business as well as for the environment.

Keywords

CSR Entry Monopoly 

JEL Classification

D21 L12 

Notes

Acknowledgments

The authors would like to thank two anonymous referees for their valuable comments.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  1. 1.Faculty of Business, Economics, and StatisticsUniversity of ViennaViennaAustria

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