Chapter 3

Firms’ Strategic Investment in Social Responsibility

Margarida Catalao-Lopes

Abstract

This chapter addresses firms’ strategic decisions on Corporate Social Responsibility (CSR), focusing on the role of market structure and firm size as drivers of CSR. Do large firms invest more in CSR? Do firms in more concentrated markets invest more in CSR? A simple theoretical model with product and CSR competition is presented. We find that more competition increases CSR investment and that firm size also positively influences firms’ social responsibility. Size and market concentration thus contribute in different directions to CSR, which contradicts the usually presumed positive association between these variables.

Total Pages: 51-58 (8)

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