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Signaling Corporate Social Responsibility: Third‐Party Certification versus Brands
Author(s) -
Etilé Fabrice,
Teyssier Sabrina
Publication year - 2016
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12150
Subject(s) - credence , corporate social responsibility , certification , credence good , third party , business , halo effect , marketing , accounting , economics , industrial organization , public economics , public relations , information asymmetry , finance , halo , statistics , mathematics , management , internet privacy , physics , quantum mechanics , galaxy , political science , computer science
Corporate social responsibility (CSR) is a credence attribute of products, which can be signaled either through a label certified by a third party, or via unsubstantiated claims used as part of a brand‐building strategy. We use an experimental posted‐offer market with sellers and buyers to compare the impact of these signaling strategies on market efficiency. Only third‐party certification gives rise to a separating equilibrium and an increase in CSR investments. Unsubstantiated claims can generate a halo effect on consumers, whereby the latter are nudged into paying more for the same level of CSR investments by firms.