Strategic corporate social responsibility with spillover effect in innovation

Purpose This paper aims to investigate the motivation for firms to innovate their products to be socially responsible in the presence of the spillover effect. The follower of the innovation in corporate social responsibility (CSR) can benefit from the leader’s innovation by technological spillover. For instance, evidence can be found in the cosmetics industry (e.g. Lush Retail Ltd. and The Body Shop) and the market of hybrid electric vehicles (e.g. Toyota and Honda). Moreover, consumers may have different perceptions on the sequence of CSR innovation by firms, they may prefer more on the CSR product launched by the leader because they usually relate the desired stage to their interests when making a purchase decision. Therefore, the firms’ decision to be a leader of the CSR innovation depends on the trade-off between the loss in the spillover effect and the benefit of the first-mover advantage, which has not been considered by the existing literature. This paper explains the firms’ motivation on CSR innovation in a realistic situation where competing firms’ CSR programs are launched sequentially and sheds light on the private sector’s decision on strategy from the perspective on the social contribution, and provides some managerial implications about the competing firms’ strategies of launching the CSR innovation. Design/methodology/approach The authors construct a two-period Hotelling model in which consumers are divided into two groups: the altruistic and normal consumers. The altruistic consumers have more willingness to pay for the CSR product while the normal consumers only care about the product performance improved by the firms’ CSR activities. Firms have the option to innovate their basic products to be socially responsible and make their decision on such CSR innovation sequentially. Moreover, the follower of the innovation can receive a spillover effect from the leader, meaning that there may exist a second-mover advantage in terms of innovation (the authors define this as a spillover effect), but in the meanwhile, the altruistic consumers value more on the CSR product sold by the leader than that by the follower (the authors define this as a preference-reduction effect). This implies that the firm can benefit in the production process from being a second-mover of the CSR innovation but may lose its first-mover advantage in terms of the preference-reduction effect. By finding and analyzing the sub-game perfect Nash equilibrium, the authors try to figure out the firms’ decisions on CSR innovation in various situations. Findings The authors find that the firms’ motivation of CSR innovation crucially depends on the fraction of the altruistic consumers, as well as the spillover effect and the preference-reduction effect. A large (small) fraction of the altruistic consumers attracts (restricts) both the leader and the follower to engage in CSR innovation. More importantly, when such fraction is not too large but stays at a relatively high level, a potential leader of the CSR innovation may not wish to innovate. Hence, the potential follower may be the monopolist in the market of the socially responsible product. In addition, the authors reexamine this result in a variation model where a leader can make its decision on the CSR innovation to be more flexible by allowing it can innovate in either periods 1 or 2. The authors demonstrate that when the fraction of the altruistic consumers falls in an intermediate range, the leader may wish to delay the CSR innovation to period 2. In such a case, the leader of the CSR innovation may tend to trade its first-mover advantage for head-to-head competition with the follower and prevents the follower from benefiting from the spillover effect. Moreover, a flexible choice on the CSR innovation brings greater initiative to a firm to be the leader of the innovation. Originality/value Nearly all the studies about firms’ decisions on CSR innovation are conducted in an environment of simultaneous move, which is not appropriate to describe the real business world; many pieces of evidence show that many CSR programs are launched sequentially rather than simultaneously. The theory identifies a couple of important factors of the CSR innovation in a more realistic situation, i.e. sequential more on CSR innovation. Both spillover effect and preference-reduction effect crucially affect the firms’ decision on innovating their products to be socially responsible, which contributes to the existing literature in CSR and strategic decision. This paper also sheds some light on managerial implications with CSR innovation under various situations of competition.

Intra-Labour Strategic Commitment

<p>This thesis explores a strategic investment motive for the choice of skilled labour (management). Using the case study of department store competition, we argue that management is an observable and irreversible input. This allows firms to use it to obtain a first-mover advantage in oligopolistic interactions. We find that, given complementarities of labour inputs, firms will hire excess management relative to the cost-minimising input bundle. This idea is first illustrated with a simple two-stage example. We then show that over-management also holds in a more realistic setting with infinitely-lived firms facing finite adjustment costs.</p>

Intra-Labour Strategic Commitment

<p>This thesis explores a strategic investment motive for the choice of skilled labour (management). Using the case study of department store competition, we argue that management is an observable and irreversible input. This allows firms to use it to obtain a first-mover advantage in oligopolistic interactions. We find that, given complementarities of labour inputs, firms will hire excess management relative to the cost-minimising input bundle. This idea is first illustrated with a simple two-stage example. We then show that over-management also holds in a more realistic setting with infinitely-lived firms facing finite adjustment costs.</p>

Competition for FDI with vintage investment and agglomeration advantages: A revisit

We analyze the taxation regimes that may emerge in a two-period dynamic tax competition game where a country that attracts investments during the initial period has agglomeration advantages during the later period. When competing countries choose taxation regimes simultaneously, mixed taxation may arise in an equilibrium where one country adopts a non-preferential and the other adopts a preferential taxation regime. Equilibrium tax revenues of competing countries decrease with the increase in agglomeration effects. Whether a country with a non-preferential or a preferential taxation regime obtains a higher tax revenue depends critically on the extent of agglomeration effects. Moreover, whether a country with a non-preferential or a preferential regime attracts investments during the initial period and in turn will have agglomeration advantages during the later period also depends on the extent of agglomeration effects. When competing countries choose taxation regimes sequentially, a mixed taxation regime arises, and the first mover chooses a non-preferential taxation regime when the agglomeration effect is not very large. On the other hand, when the agglomeration effect is very large, a mixed taxation regime arises where the first mover chooses a preferential and the second mover chooses a non-preferential regime. We provide the complete characterization and proof of the uniqueness of the equilibrium in mixed strategies.JEL classification: F21, H21, H25, H87

Research on the evolutionary game of knowledge pricing in an open innovation environment: from the perspective of social dual innovation balance

PurposeThis paper aims to find out the factors that influence the choice of dual innovation strategies in the process of knowledge pricing and transaction between first-mover and late-mover companies in an open innovation environment and also to find the key factors that affect the company's strategic choice in factors such as heterogeneous market environment, demand elasticity, exploration risk intellectual property prices and transaction cost.Design/methodology/approachThis study uses the Cournot equilibrium and Stackelberg two-stage master-slave game model to describe the evolutionary process of knowledge pricing in an open innovation environment of first-mover and late-mover companies.FindingsResearch shows that in an open innovation environment, the formation of a dual innovation strategy in the pricing process of corporate intellectual property transactions is a complex process. Changes in one-time transaction costs and changes in the inverse demand coefficient of the innovation market play the decisive role in the choice of dual innovation strategies. When the demand of the innovation market is moderate, the inverse demand coefficient of the innovation market and the one-time transaction cost has an inverted U-shaped influence relationship. As the innovation market's inverse demand coefficient and the one-time transaction cost increase at the same time, the degree of differentiation of the enterprise's dual innovation strategy choice gradually reduces; when the one-time transaction cost is the largest, the degree of strategy differentiation is minimized.Originality/valueBased on the above relationship, suggestions are made to guide enterprises in the knowledge pricing and transaction process in an open innovation environment, promote enterprises to form a dislocation development and complementary advantages in the knowledge innovation ecological chain and improve the overall innovation efficiency of the industry.

First-mover Advantage Explains Gender Disparities in Physics Citations

Mounting evidence suggests that publications and citations of scholars in the STEM fields (Science, Technology, Engineering and Mathematics) suffer from gender biases. In this paper, we study the physics community, a core STEM field in which women are still largely under-represented and where these gender disparities persist. To reveal such inequalities, we compare the citations received by papers led by men and women that cover the same topics in a comparable way. To do that, we devise a robust statistical measure of similarity between publications that enables us to detect pairs of similar papers. Our findings indicate that although papers written by women tend to have lower visibility in the citation network, pairs of similar papers written by men and women receive comparable attention when corrected for the time of publication. These analyses suggest that gender disparity is closely related to the first-mover and cumulative advantage that men have in physics and is not an intentional act of discrimination towards women.

ESTRATÉGIAS DE CIMENTEIRAS NA ENTRADA DE MERCADOS INTERNACIONAIS: ESTUDO COMPARATIVO

As estratégias em setores produtivos cimenteiro necessitam de investigações que elevem tangencialmente a busca por mercados e a competitividade das empresas. O cimento é uma das principais commodities mundiais, sensível ao mercado e a preço. Este estudo tem como objetivo de compreender e comparar as estratégias implementadas no passado por empresas atuantes no mercado internacional de cimento. Este artigo utiliza uma metodologia de estudos de caso e revisão bibliográfica e tem como foco apontar proposições que envolvam o processo de internacionalização entre empresas que se internacionalizaram em mercados de tipologia “first movers” e empresas de tipologia “late movers”. Habitualmente, empresas multinacionais que são oriundas de países desenvolvidos iniciaram os seus processos de internacionalização antes das empresas de países em desenvolvimento. Estes últimos já possuíam uma melhor infraestrutura e mão de obra mais qualificada, o que não se replicou nos países em desenvolvimento na mesma época. Como resultados desta comparação este artigo contribui para apontar que existem: (1) diferenças no processo de internacionalização entre “first” e “late movers”; (2) Diferenças culturais que influenciam o processo de internacionalização e (3) Oportunidades e vantagens competitivas diferentes nos processos de internacionalização “first mover” ou “late movers”.

Research on dual innovation incentive mechanism in terms of organizations’ differential knowledge absorptive capacity

Differences in the capacity for absorption between different organizations will have an important impact on an organization’s choices of innovation exploration and exploitive innovation strategies. Organizations need to explore correct strategic decisions under different policies for long-term development. This study with limited rational first-mover and late-mover organizations as the research object, based on the evolutionary game theory model, using visualization system deduced first-mover and late-mover organizations in the knowledge absorptive capacity differences and incentive policies under the condition of different strategies selection process. The research shows that the rationality of policy incentive setting has a direct impact on the choice of organizational dual innovation strategy with different knowledge absorption capacities. The market pattern is stable and organizational knowledge absorption capacity is different. The higher the policy incentive level is, the more the organization is inclined to carry out exploratory innovation activities. Under the environment of stable market structure, different organizational knowledge absorption capacity, and no policy incentive, late-mover cannot adopt exploratory innovation strategy alone. When the market pattern is stable and the absorptive capacity of the organization is different, whether the late-mover can adopt the exploratory innovation strategy depends on the policy incentive level. In this case, the optimal situation is to have the opportunity to change to exploratory innovation at the same time as the first-movers.