The Corporate Social Responsibility Price Premium as an Enabler of Substantive CSR (WITHDRAWN)

Abstract

While consumers’ willingness to pay a CSR-price premium is a key economic driver of CSR investments, the literature is relatively silent on whether and how the CSR-price premium affects firms’ choice between symbolic and substantive CSR engagement. To shed light on this question, I propose a game-theoretical framework that accounts for both supply- and demand-side factors influencing CSR engagement decisions and socio-environmental performance. Using this model, I establish sufficient conditions under which the CSR-price premium functions as an enabler of substantive CSR investments. I also examine how social performance monitoring, product differentiation, and competitors’ CSR engagement choices moderate this enabling effect of the CSR-price premium. My framework suggests that social performance monitoring may either strengthen or weaken the enabling effect of the CSR-price premium, depending on the social performance of substantive CSR, as well as on demand-side conditions. Product differentiation, in turn, nonlinearly impacts the effect of the CSR-price premium, depending also on the CSR engagement choices of competitors. This paper contributes to the literatures on substantive versus symbolic CSR, stakeholder monitoring, and the relationship between competition and social performance.