Firms’ environmental R&D cooperation strategy with strategic corporate social responsibility

Abstract

Whether to cooperate with a competitor on environmental R&D is a dilemma for firms. This paper develops a duopoly model to investigate firms’ environmental R&D cooperation strategy with corporate social responsibility (CSR). There are two CSR strategy structures (i.e. mixed CSR strategy structure and CSR compliance strategy structure) to be analysed considering the strategic CSR behaviour of firms. The result shows that regardless of the CSR strategy structures of two competing firms, CSR can always promote environmental R&D cooperation. Furthermore, we find that CSR can generate higher environmental R&D investment but not necessarily higher social welfare under environmental R&D cooperation. Finally, we show that mixed CSR strategy structure is optimal when firms collaborate on environmental R&D.

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