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Dynamic corporate social responsibility (CSR) strategies in oligopoly

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Abstract

This paper investigates dynamic and strategic (oligopolistic) interactions with respect to their corporate social responsibility (CSR) activities. In order to separate dynamic from strategic effects, the paper proposes a differential game and derives the open loop and Markov perfect Nash equlibria with the cooperative solution as benchmark. The Markov strategies are in stark contrast to the open loop equilibrium that is close to cooperation. This suggests that strategic aspects are indeed crucial. This rat race, once triggered, can explain fast and wide growth of CSR and not necessarily underlying overall efficiency considerations.

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Notes

  1. http://ec.europa.eu/environment/emas/pdf/5_5articles_en.pdf.

  2. Another example that managers may promise too much is Mike Sears, (former) chief financial officer of Boeing. He writes in his book “Soaring Through Turbulence: A New Model for Managers Who Want to Succeed in a Changing Business World ” (coauthored by Thomas Schweich but then withdrawn): “either you are ethical or you are not. You have to make that decision; all of us do. And there is no in-between”. Mike Sears was fired from his job as chief financial officer of Boeing for misconduct, i.e., an affair with Darleen Druyun, who later joined Boeing’s missile division.

  3. The major criterion for the parameter values was to satisfy all assumptions and to allow for feasible and sensible interior solutions, e.g. at least some CSR also in the efficient solution. Thus no further meaning except for differences and qualitative features should be attached to the numbers.

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Authors and Affiliations

  1. Department of Business Studies, University of Vienna, Faculty of Business, Economics and Statistics, Brünnerstr. 72, 1210, Vienna, Austria

    Franz Wirl

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  1. Franz Wirl
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Correspondence to Franz Wirl.

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I gratefully acknowledge the very helpful comments from three anonymous referees.

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Wirl, F. Dynamic corporate social responsibility (CSR) strategies in oligopoly. OR Spectrum 36, 229–250 (2014). https://doi.org/10.1007/s00291-013-0319-6

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