The trade-off between corporate social responsibility and competitive advantage: a biform game model

    Xiaoyang Zhao Affiliation
    ; Justin Tan Affiliation
    ; Shuxin Zhong Affiliation


This paper uses a biform game model to study firms’ trade-offs between corporate social responsibility (CSR) and competitive advantage. We focus on the context in which a competitive advantage may lead to a non-profitable scenario. It is possible that the first mover’s investment in competitive strength may deter itself from the market, which encourages firms’ investment in CSR over competitive strength. As a result, in some circumstances, firms may actively choose a CSR strategy over a competitive strategy. Our results show that (1) technological characteristics, (2) industrial structure, and (3) institutional environments are factors that influence the rational equilibrium of our model and the balance between competitive advantage and CSR. The mechanism and boundary on how firms make trade-offs between CSR activities and competitive strength are exhibited by our model, which provides a framework for decision-making and adds new insights into the strategic balance between market and non-market strategies.

First published online 10 February 2022

Keyword : CSR, competitive advantage, biform game

How to Cite
Zhao, X., Tan, J., & Zhong, S. (2022). The trade-off between corporate social responsibility and competitive advantage: a biform game model. Technological and Economic Development of Economy, 28(2), 463–482.
Published in Issue
Feb 23, 2022
Abstract Views
PDF Downloads
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.


Aguilera, R. V., Rupp, D. E., Williams, C. A., & Ganapathi, J. (2007). Putting the S back in corporate social responsibility: A multilevel theory of social change in organizations. Academy of Management Review, 32(3), 836–863.

Aguinis, H., Boyd, B. K., Pierce, C. A., & Short, J. C. (2011). Walking new avenues in management research methods and theories: Bridging micro and macro domains. Journal of Management, 37(2), 395–403.

Aguinis, H., & Glavas, A. (2012). What we know and don’t know about corporate social responsibility: A review and research agenda. Journal of Management, 38(4), 932–968.

Allinson, R. E. (2004). Circles within a circle: The condition for the possibility of ethical business institutions within a market system. Journal of Business Ethics, 53(1–2), 17–28.

Awaysheh, A., Heron, R. A., Perry, T., & Wilson, J. I. (2020). On the relation between corporate social responsibility and financial performance. Strategic Management Journal, 41(6), 965–987.

Baron, D. P. (2001). Private politics, corporate social responsibility, and integrated strategy. Journal of Economics & Management Strategy, 10(1), 7–45.

Bosch-Badia, M. T., Montllor-Serrats, J., & Tarrazon, M. A. (2013). Corporate social responsibility from Friedman to Porter and Kramer. Theo-retical Economics Letters, 3(03), 11–15.

Branco, M. C., & Rodrigues, L. L. (2006). Corporate social responsibility and resource-based perspectives. Journal of Business Ethics, 69(2), 111–132.

Brandenburger, A., & Stuart, H. (2007). Biform games. Management Science, 53(4), 537–549.

Brandenburger, A. M., Stuart, & Jr H. W. (1996). Value-based business strategy. Journal of Economics & Management Strategy, 5(1), 5–24.

Burke, L., & Logsdon, J. M. (1996). How corporate social responsibility pays off. Long Range Planning, 29(4), 495–502.

Carroll, A. B., & Shabana, K. M. (2010). The business case for corporate social responsibility: A review of concepts, research and practice. Inter-national Journal of Management Reviews, 12(1), 85–105.

Carroll, A. B. (1979). A three-dimensional conceptual model of corporate performance. Academy of Management Review, 4(4), 497–505.

Carroll, A. B. (1999). Corporate social responsibility: Evolution of a definitional construct. Business and Society, 38(3), 268–295.

Chatain, O., & Zemsky, P. (2007). The horizontal scope of the firm: Organizational tradeoffs vs. buyer-supplier relationships. Management Sci-ence, 53(4), 550–565.

China Shenhua Energy Company Limited. (2018). 2018 annual report. Retrieved July 18, 2021, from

Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence and implications. Academy of Management Review, 20(1), 65–91.

Du, S., Bhattacharya, C. B., & Sen, S. (2011). Corporate social responsibility and competitive advantage: Overcoming the trust barrier. Manage-ment Science, 57(9), 1528–1545.

Falkenberg, J., & Brunsæl, P. (2011). Corporate social responsibility: A strategic advantage or a strategic necessity? Journal of Business Ethics, 99(1), 9–16.

Feess, E., & Thun, J. H. (2014). Surplus division and investment incentives in supply chains: A biform-game analysis. European Journal of Oper-ational Research, 234(3), 763–773.

Flammer, C., Hong, B., & Minor, D. (2019). Corporate governance and the rise of integrating corporate social responsibility criteria in executive compensation: Effectiveness and implications for firm outcomes. Strategic Management Journal, 40(7), 1097–1122.

Flammer, C., & Kacperczyk, A. (2019). Corporate social responsibility as a defense against knowledge spillovers: Evidence from the inevitable disclosure doctrine. Strategic Management Journal, 40(8), 1243–1267.

Galbreath, J. (2009). Building corporate social responsibility into strategy. European Business Review, 21(2), 109–127.

Husted, B. W. (2005). Risk management, real options, corporate social responsibility. Journal of Business Ethics, 60(2), 175–183.

Kölbel, J. F., Busch, T., & Jancso, L. M. (2017). How media coverage of corporate social irresponsibility increases financial risk. Strategic Man-agement Journal, 38(11), 2266–2284.

Lockett, A., & Thompson, S. (2001). The resource-based view and economics. Journal of Management, 27(6), 723–754.

MacDonald, G., & Ryall, M. D. (2004). How do value creation and competition determine whether a firm appropriates value? Management Sci-ence, 50(10), 1319–1333.

Makadok, R., & Ross, D. G. (2018). Losing by winning: The danger zone of adverse competitor replacement. Strategic Management Journal, 39(7), 1990–2013.

Margolis, J., & Walsh, J. (2003). Misery loves companies: rethinking social initiatives by business. Administrative Science Quarterly, 48(2), 268–305.

Maxfield, S. (2008). Reconciling corporate citizenship and competitive strategy: Insights from economic theory. Journal of Business Ethics, 80(2), 367–377.

McWilliams, A., & Siegel, D. (2001). Corporate social responsibility: A theory of the firm perspective. Academy of Management Review, 26(1), 117–127.

McWilliams, A., & Siegel, D. S. (2011). Creating and capturing value: Strategic corporate social responsibility, resource-based theory, and sus-tainable competitive advantage. Journal of Management, 37(5), 1480–1495.

Mellahi, K., Frynas, J. G., Sun, P., & Siegel, D. (2016). A review of the nonmarket strategy literature: Toward a multi-theoretical integration. Journal of Management, 42(1), 143–173.

Muller, A., & Kräussl, R. (2011). Doing good deeds in times of need: A strategic perspective on corporate disaster donations. Strategic Manage-ment Journal, 32(9), 911–929.

Peloza, J. (2009). The challenge of measuring financial impacts from investments in corporate social performance. Journal of Management, 35(6), 1518–1541.

Planer-Friedrich, L., & Sahm, M. (2020). Strategic corporate social responsibility, imperfect competition, and market concentration. Journal of Economics, 129(1), 79–101.

Porter, M. E., & Kramer, M. R. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review, 80(12), 56–68.

Porter, M. E., & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78–92.

Quairel-Lanoizelée, F. (2011). Are competition and corporate social responsibility compatible? The myth of sustainable competitive advantage. Society and Business Review, 6(1), 77–98.

Ross, D. G. (2018). Using cooperative game theory to contribute to strategy research. Strategic Management Journal, 39(11), 2859–2876.

Ryall, M. D., & Sorenson, O. (2007). Brokers and competitive advantage. Management Science, 53(4), 566–583.

Shiu, Y. M., & Yang, S. L. (2017). Does engagement in corporate social responsibility provide strategic insurance-like effects? Strategic Manage-ment Journal, 38(2), 455–470.

Stuart, Jr H. W. (2004). Efficient spatial competition. Games and Economic Behavior, 49(2), 345–362.

Tan, J. (2009). Institutional structure and firm social performance in transitional economies: Evidence of multinational corporations in China. Jour-nal of Business Ethics, 86(2), 171.

Vilanova, M., Lozano, J. M., & Arenas, D. (2009). Exploring the nature of the relationship between CSR and competitiveness. Journal of Business Ethics, 87(1), 57–69.

Von Stackelberg, H. (1934). Marktform und gleichgewicht. J. Springer.

Wang, H., & Qian, C. (2011). Corporate philanthropy and corporate financial performance: The roles of stakeholder response and political access. Academy of Management Journal, 54(6), 1159–1181.

Wood, D. J. (1991). Corporate social performance revisited. Academy of Management Review, 16(4), 691–718.