Corporate Social Responsibility (CSR) and Profit Performance: CSR for Profitability, CSR for Social Welfare, or CSR for both Profitability and Social Welfare?

Author

JiangBo HuangFu, Southern Illinois University CarbondaleFollow

Date of Award

8-1-2017

Degree Name

Master of Science

Department

Economics

First Advisor

Watts, Alison

Abstract

This study focuses on the topic of CSR and profitability and extends the current literature on the topic by examining the relationship between CSR and profitability from a game theory setting. Specifically, this study implements game modelling and develops two parts of analysis on the topic of CSR and profitability. The goal of part one analysis is to investigate competing CSR firms in comparison with competing non-CSR firms. The part two analysis is to study a CSR firm and a non-CSR firm that compete in the same market in two scenarios. In scenario 1, the CSR firm and its non-CSR counterpart compete for profitability. In scenario 2, the CSR firm is operating to optimize its defined welfare objective; whereas the non-CSR operates for a maximized profit level. The solutions to the models complemented with a detailed analysis reveal that the CSR could actually gain strategic and competitive advantages over its non-CSR counterpart in both defined scenarios. However, this study does not intend to advocate a positive relationship between CSR and profit performance. The positive relationship is qualified, and whether or not the relationship is positive, as this study shows, is dependent on the firm’s tactics.