CSR and Competitive Activity of Firms: Complements or Substitutes?

Keywords: Corporate Social Responsibility, Competitive Dynamics, Competitive Actions, CSR

Abstract: Corporate social responsibility (CSR) research is confronted with a paradox: How can CSR simultaneously increase and decrease firm performance? We attempt to reconcile the paradox by bringing insights from competitive dynamics research. We show that CSR differentially affects two competitive activity (CA) attributes: it increases competitive complexity (the variety and novelty of competitive actions) but reduces competitive intensity (the number of competitive actions), especially in resource-scarce and hypercompetitive environments. We show that CSR benefits both types of CA by complementing the effects of competitive complexity and by substituting for the reduced competitive intensity, thus enhancing long- and short-term CFP, respectively.