Strategic Corporate Social Responsibility, Sustainable Growth, and Energy Policy in China

Lucheng Hong,Angela Chao

doi:10.3390/en11113024

Abstract

China’s economy steps into the “new normal” phase, as it is growing in an innovation-driven instead of a factor-driven mode. In this paper, we constructed the corporate behavioral decision models in different scenarios of policy and analyzed the effect of energy policies on corporate behavior and societal welfare, in a duopoly market. The following conclusions were derived. (1) In a duopoly, the product pricing is irrelevant to the resource cost in their production process. (2) For the firm undertaking the social responsibility, the energy tax imposed by the government would increase either the production or the profit, but decrease the consumer surplus. In contrast, for the other firms, the energy tax rate is opposite to their profit. (3) Low-energy-consuming products will promote efficiency, which reduces either the price or the marginal cost, resulting in a more conspicuous cost advantage to the firm adopting the ecological innovation. (4) The marginal cost for a low-energy-consuming technology research and development steadily decreases, which turns their short-term financial disadvantages into the long-term competitive advantages. The marginal contribution of this paper was to build a simultaneously moving model, in duopoly market, and provide theoretical evidence to endogenize the firm strategy to undertake social responsibilities and to realize sustainable growth.

Highlights

Sustainability is evolving to become one of the most prominent issues of the global economy, especially in developing countries Isaksson et al [1]
This paper first discusses the following questions through theoretical and empirical research. These include questions such as, what a corporation pursues is not merely for profit and for the consumers’ recognition, should corporate social responsibilities (CSR) be categorized as a part of cost or strategies? Will CSR affect corporate welfare, and if so, what is the mechanism? If a firm focuses on a broader social objective and includes green innovation and CSR as inborn factors of decision behaviors, will this bring a “win–win” for the business, as well as the environment? We argue that the firm that wins the market, maximizing both consumer surplus and societal welfare, is by no means a zero-sum game
As is well-known, CSR is a form of corporate self-regulation

Summary

Introduction

Sustainability is evolving to become one of the most prominent issues of the global economy, especially in developing countries Isaksson et al [1]. Corporate sustainability recognizes the importance of growth and profitability of a firm, along with other societal goals Wilson et al [2]. During the rapid development in the 21st century, China’s economy has entered a New Normal stage, which requires both a steady increase in economic growth and a shift from factor-driven to innovation-driven resources and fast wealth accumulate, while the ecological environment keeps deteriorating, as resources are wasted and the environment is polluted. As major participants in high-speed economic growth, corporations occupy an important part in the economy and in almost every social aspect. The behavior of a corporation is affected by outside factors, like industries, market structures, and policies, and such behaviors, in turn, affect the whole societal welfare, indirectly

Methods

Results

Discussion

Conclusion