Do Awards Incentivize Non-Winners to Work Harder on CSR?
Competitive catch-up is prevalent in the corporate social responsibility (CSR) context. For instance, when Samsung China issued its first CSR report in China in 2012, the company swiftly rose to the top of the “Top 100 Social Responsibility Index of Foreign-Invested Enterprises” in the next year. Samsung China’s achievement not only incentivized a few other Korean multinational companies such as Hyundai China and LG China to publish their China-specific CSR reports in 2013, but also partly contributed to the significant rise in the CSR rankings of Korean multinational companies operating in China as a whole.
As corporate lists and awards that rank and recognize firms for superior social reputation have proliferated in recent years, the field of CSR is also replete with various types of awards given out to firms or CEOs, such as Fortune’s “Most Admired Companies” rankings and “Best 100 Companies to Work For” lists. Such awards serve to both reward and incentivize firms to become more dedicated to CSR. Prior research has primarily focused on the effects of awards on award-winning firms; however, the effectiveness and implications of such awards as incentives to non-winning firms remain understudied. Therefore, in the article of “Keeping up with the Joneses: Role of CSR Awards in Incentivizing Non-Winners’ CSR” published by Business & Society, we are curious about whether such CSR awards could successfully incentivize non-winning firms to catch up with their winning competitors.
Drawing on the awareness-motivation-capability (AMC) framework developed in the competitive dynamics literature, we use a sample of Chinese listed firms from 2009 to 2015 to investigate how competitors’ CSR award winning can influence focal firms’ CSR. The empirical results show that non-winning firms indeed improve their CSR after their competitors have won CSR awards. However, non-winning firms’ improvement in CSR may vary in different scenarios. For instance, media exposure can play an important informational role in reducing information asymmetries and inducing competitive actions among competitors, therefore, non-winning firms’ improvement in CSR is more salient when award-winning firms are more visible in the media. Meanwhile, when CSR award winners perform better financially, non-winners will be more motivated to respond to their competitors’ wins. Further, firms with a higher level of prior CSR are more capable of improving their CSR and therefore are more likely to respond to their competitors’ wins.
Our study contributes to the CSR literature in an important way. A firm’s CSR can be affected by key events experienced by the firm according to one stream of research and by peer firms according to another stream of research. Integrating these two streams of research, our study suggests that external events (i.e., winning CSR awards) experienced by peer firms can have a spillover effect on focal firms’ CSR, advancing our knowledge about the antecedents to CSR from the competitive dynamics perspective. In addition, we extend the AMC framework to the context of CSR research. While prior competitive dynamics research has primarily focused on competitive rivalry in much-contested business segments, we highlight the existence of competitive catch-up in the CSR setting and reveal how the AMC factors can strengthen such catch-up.
