Does Hypercompetition Foster Corporate Social Responsibility? A Research Framework of the Hypercompetitive Effects on ESG Performance

Abstract

Does hypercompetition leave any room for corporate social responsibility (CSR) and how would we test this empirically? Although the majority of CSR scholars stress that firms can profit from CSR initiatives, how competition affects a firm’s CSR effort or environmental, social and governance (ESG) performance remains largely understudied. Based on the theory of hypercompetition and the slack resources perspective, I propose some thoughts on how hypercompetitive industry conditions, such as a low environmental munificence, may affect a firm’s ESG performance. Hypercompetition can also create a resource allocation tension, where firms must choose between focusing on increasing their competitive actions or seeking new growth opportunities through CSR activities. Consequently, hypercompetition can polarize industries with regard to their ESG performance, where many high and low ESG-performers may appear compared to middle ESG-performers. However, the current data limitations of firms’ CSR data make it difficult to accurately measure the impact of hypercompetition on firms’ ESG performance.