Impacts of Distributional Social Comparison Behavior on Corporate Social Responsibility: Power of the Small

Posted: 2 Apr 2019 Last revised: 28 Dec 2021

See all articles by Mingzheng Wang

Mingzheng Wang

Zhejiang University--School of Management

Zizhuo Wang

Dalian University of Technology

Xin Fang

Singapore Management University - Lee Kong Chian School of Business

Ying-Ju Chen

Hong Kong University of Science & Technology (HKUST) - Department of Information Systems, Business Statistics and Operations Management

Date Written: March 11, 2019

Abstract

Motivated by the emergence of various corporate social responsibility (CSR) rankings and awards, we study the impacts of distributional social comparison behavior of firms on CSR in a supply chain, consisting of one manufacturer and one retailer. Both the manufacturer and the retailer can choose to make CSR investment, which attracts CSR-concerned consumers. We consider two types of social comparison behavior: ahead seeking that makes one willing to overperform relative to others, and ahead averse that results in underperforming. We find that if the retailer is a large enterprise who has strong negotiation power in the supply chain, his ahead-seeking behavior cannot motivate the up-tier manufacturer to increase CSR investment. In contrast, if the retailer is small, his ahead-seeking behavior can lead to significant increase in the manufacturer’s CSR investment. This is because the increased market share achieved by the small ahead-seeking retailer makes it profitable for the manufacturer to increase CSR investment. Interestingly, the total CSR investment of the supply chain is also higher with the small ahead-seeking retailer than that with the large ahead-seeking retailer. On the other hand, the ahead-averse behavior of the retailer increases the manufacturer’s CSR investment if the retailer is large, whereas it reduces the manufacturer’s investment if the retailer is small. While many contemporary CSR rankings and awards are for large firms in practice, our results suggest that governments and NGOs should pay more attention to small firms, motivating their ahead-seeking behavior or deterring ahead-averse behavior through rankings and awards. Measures to promote consumers’ social consciousness are also helpful to leverage the benefit of ahead-seeking behavior or to offset the negative effect of ahead-averse behavior.

Keywords: Corporate Social Responsibility; Social Comparison Behavior; Small and Medium-size Enterprise (SME)

Suggested Citation

Wang, Mingzheng and Wang, Zizhuo and Fang, Xin and Chen, Ying-Ju, Impacts of Distributional Social Comparison Behavior on Corporate Social Responsibility: Power of the Small (March 11, 2019). Available at SSRN: https://ssrn.com/abstract=3350157 or http://dx.doi.org/10.2139/ssrn.3350157

Mingzheng Wang

Zhejiang University--School of Management ( email )

No.866, Yu-Hang-Tang Road
Hangzhou, Zhejiang 310058
China

Zizhuo Wang

Dalian University of Technology ( email )

Huiying Rd
DaLian, LiaoNing, Liaoning 116024
China

Xin Fang (Contact Author)

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

Ying-Ju Chen

Hong Kong University of Science & Technology (HKUST) - Department of Information Systems, Business Statistics and Operations Management ( email )

Clear Water Bay
Kowloon
Hong Kong

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