Abstract:

Competition is a fundamental driver of market dynamics. In this study, we investigate how and when competition influences corporate environmental irresponsibility (CEI), a critical issue of our times. We theorize that competition can unfold at two distinct levels: The firm level, where it is reflected by a firm’s market power (i.e., the firm’s capacity to extract economic rent), and the industry level, where it manifests through the intensity of competition among firms within the same industry.

Our study explores competition’s effect on CEI by examining both the market power of individual firms and the competition intensity in their respective industries. Furthermore, as countries significantly differ in terms of their institutional makeup, we hypothesize that the institutional environment moderates the relationship between competition and CEI, specifically by the degree of national stakeholder voice. Utilizing a longitudinal dataset that includes 24,740 firm-year observations across 28 countries from 2002 to 2019, we find that competition at both the micro (firm) and meso (industry) levels significantly predicts firm-level CEI. However, this relationship is contingent upon the strength of national stakeholder voice. Our findings offer a nuanced understanding of the interplay between competition and institutions in shaping corporate environmental behaviors.

General information:

Attendance to this seminar is possible by invitation only. Please send an e-mail to secbs-abs@uva.nl if your are interested in attending this seminar.