Endogenous consumers’ preferences as drivers of green corporate social responsibility
ISSN: 1747-1117
Article publication date: 7 December 2018
Issue publication date: 21 June 2019
Abstract
Purpose
This paper’s main objective is to expand the demand-driven strategic field by developing a model where endogenization of consumers’ preferences for clean(er) products becomes the driver of the firm green corporate social responsible (GCSR) profit maximization behavior.
Design/methodology/approach
The model proposes that in undifferentiated markets, firms using a conventional technology manage production-related negative externalities via information asymmetries. In turn, when consumer socially responsible individuals (CnSR) discover the nature of the information asymmetries, they then reveal their preferences. The building block of the model is that CnSR derive value both from intrinsic as well as extrinsic product features, and derive negative satisfaction from the production negative externalities. In turn, CnSR preferences offer a higher willingness to pay for a combined intrinsic (private good and direct utility) and extrinsic (public good and feel good–do good utility) product.
Findings
The model demonstrates that the firm’s GCSR behavior is a technological-driven process directly affecting the extrinsic component of the product through the development of a safe technology, and exclusively targeting CnSR type of consumers. The corollary of the model is that for the firm pursuing a GCSR behavior, the development of a competitive advantage with higher firm performance leads to profit maximization when exclusively serving the GCSR segment of the market. Thus, GCSR is the result of unusual innovation efforts.
Originality/value
This paper presents a model that expands the field of strategic management through the demand-driven incorporation and respective modeling. To the best of the author’s knowledge, this is the first model to explicitly develop this relationship in this format.
Keywords
Acknowledgements
The author thanks the invaluable assistance provided by William Snyder. All remaining errors are the sole responsibility of the author.
Citation
Barboza, G. (2019), "Endogenous consumers’ preferences as drivers of green corporate social responsibility", Social Responsibility Journal, Vol. 15 No. 4, pp. 424-450. https://doi.org/10.1108/SRJ-03-2018-0071
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited