Corporate Social Counterpositioning: How Attributes of Social Issues Influence Competitive Response

We develop a theory of how firms respond to each other’s CSR activities. We contend that whether a firm will emulate, ignore, or oppose a rival’s CSR efforts depends on attributes of the underlying social issue, the level of market competition, and the substantiveness of CSR. We develop a formal model of CSR as a function of these factors, allowing, in particular, for issues to be socially polarizing. The model predicts several distinct equilibrium outcomes, including the potential for counterpositioning, whereby rival firms mutually boost their profits by taking opposing positions on a social issue. The model shows that such counterpositioning is more likely when issue salience is high but agreement is low, when markets are highly competitive, or when CSR is largely symbolic.