Market competition, managerial overconfidence, and corporate social responsibility

Jui-Chia Lin, Edward M. Werner, Ya-Chi Huang

Research output: Contribution to journalArticlepeer-review


This chapter investigates how market competition relates to firm corporate social responsibility (CSR) investment strategy. Using separate measures to capture different dimensions of competition, we find that firms are likely to invest more (less) in socially responsible initiatives when competition from existing rivals (potential entrants) is high. We also find that industry leaders are more likely to engage in more CSR when higher levels of competition exist, while followers primarily choose to strengthen other aspects of their competitiveness instead. Finally, analyzing the impact of CEO overconfidence on CSR engagement, our study finds novel evidence suggesting that firms with overconfident CEOs tend to underestimate the intensity of competition and are less sensitive to the impact of market competition on CSR engagement, relative to rational CEOs.
Original languageEnglish
Pages (from-to)1-27
Number of pages27
JournalAdvances in Pacific Basin Business, Economics, and Finance
StatePublished - 15 Mar 2022


  • market competition
  • corporate social responsibility
  • managerial overconfidence
  • existing rivals
  • potential entrants
  • principal component analysis


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