Campus Units

Supply Chain and Information Systems

Document Type

Article

Publication Version

Accepted Manuscript

Publication Date

12-28-2020

Journal or Book Title

International Journal of Production Research

Volume

Latest Articles

DOI

10.1080/00207543.2020.1856435

Abstract

The empirical literature considers firm-specific aspects affecting corporate sustainability decisions but generally omits the influence of the competition. We advocate that sustainability actions of a company impact its marketplace and vice versa. Therefore, the sustainability return of the single firm is a function of the other firms’ sustainability decisions. We approach sustainability decisions as strategic decisions and evaluate the effect of competition and spillovers in a static market entry game. We estimate the parameters of the discrete choice model using the social performance ratings from MSCI KLD 400 Social Index as proxy for sustainability decisions and financial information from Wharton Research Data Services’ COMPUSTAT dataset. When strategic interaction is not accounted for, we find that an increase in the number of competitors increases the likelihood of sustainability investments, seemingly shows the spillover effect dominates the competition. When we apply the multi-stage approach, which incorporates competitive interaction, we provide empirical evidence that the effect of competition on the likelihood of entry into the sustainability market dominates the effect of spillover. We find that strategic motives, typically ignored in the empirical literature, appear to be an important factor in understanding sustainability-related decisions.

Comments

This accepted article is published as Soytas, M.A., Usar, D.D., Denizel, M.E.K., Estimation of the static corporate sustainability interactions. International Journal of Production Research. December 2020, Latest Articles; doi: 10.1080/00207543.2020.1856435. Posted with permission.

Copyright Owner

Taylor & Francis

Language

en

File Format

application/pdf

Available for download on Tuesday, December 28, 2021

Published Version

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