Are competition and corporate social responsibility compatible?

Abstract

PurposeWhile fierce global competition has negative environmental and social impacts and may lead large companies to act irresponsibly, corporate social responsibility (CSR) academic literature, especially stakeholder theory, pays little attention to competition and market pressure. It only highlights the competitive advantage a CSR strategy represents for companies. The purpose of this paper is to explore the connection between CSR and competition in order to contribute to the CSR concept through analysis of the conditions for its implementation.Design/methodology/approachThe paper draws upon the academic literature in economics and strategic management, on mainstream CSR papers and on the official disclosure and communication from companies listed on the “CAC 40” of the French stock market. The paper uses the definition of corporate responsibility which integrates companies' environmental and social concerns into all their activities.FindingsThe following three major findings arise. First, on a theoretical level and in terms of corporate disclosure on CSR, a large gap is noticed in how the economic view and the CSR view of competition are represented. Second, it is observed that the limits of the competitive advantage obtained by CSR strategy while the “demand for virtue” is weak even if the stakeholders' “expectations” for responsible practices are strong. In fact, a typology of CSR strategies is proposed related to competitive situations. Third, the paradox of the CSR competitive advantage is underlined: specifically, it is gained only if not imitable, i.e. if companies prevent the mimetic practices which could spread best practices for sustainable development.Originality/valueThe paper highlights the limits of the CSR concept within the liberal paradigm, arguing that the mainstream theoretical CSR framework based on the hypothesis of the convergence between firms' objectives and the common interest is not relevant. The framework of the neo‐institutional theory is more appropriate to analyse the mimetic behaviour in competitive markets and corporate commitments in sector‐based codes of conduct that define new norms of social quality.