Strategic Corporate Social Responsibility Activities and Corporate Governance in Imperfectly Competitive Markets |
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| Authors: | Constantine Manasakis Evangelos Mitrokostas Emmanuel Petrakis |
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| Affiliation: | 1. Department of Political Science, University of Crete, University Campus at Gallos, , Rethymnon, Crete, Greece;2. Economics and Finance Subject Group, Portsmouth Business School, University of Portsmouth, , Hampshire, Portsmouth, UK;3. Department of Economics, University of Crete, University Campus at Gallos, , Rethymnon, Crete, Greece |
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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. Copyright © 2013 John Wiley & Sons, Ltd. |
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