AQFC2015

Seminar: Effect of Consumer Awareness on Corporate Social Responsibility under Asymmetric Information

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                  Department of Systems Engineering and Engineering Management
                               The Chinese University of Hong Kong

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Date: Friday, 4:30pm - 5:30pm, 22 September, 2017

Title: Effect of Consumer Awareness on Corporate Social Responsibility
under Asymmetric Information

Speaker: Prof. Xiaomeng Guo, Department of Logistics and Maritime
Study, Faculty of Business, Hong Kong Polytechnic University.

Abstract:
This paper studies the interaction between a firm and consumers under
the consideration of corporate social responsibility. The firm can be
either socially responsible or socially irresponsible; however, the
consumers cannot observe the firm’s exact type, which is private
information. The firm can try to signal its type through pricing and
other information sharing mechanism (e.g., issue sustainability
reports and obtain third-party certifications). We find that due to
the existence of asymmetric information, increasing consumer awareness
on corporate social responsibility does not necessarily help promote
responsible corporate behaviors. Specifically, when a larger fraction
of consumers become socially concerned or when the consumers have
stronger willingness to reward (punish) the responsible
(irresponsible) firm, the responsible firm could be worse off whereas
the irresponsible firm could be better off. This is because the
seemingly attractive trend in consumer behavior will affect the
responsible firm’s signaling cost as well as its equilibrium strategy
(separating vs. pooling). In addition, we find that improving the
signaling accuracy will always benefit the responsible firm but it may
or may not hurt the irresponsible firm. Our results suggest that
addressing the information asymmetry issue is the key in promoting
corporate social responsibility. In particular, concerned parties
should first exert efforts to create transparency of firms’
sustainability practices before making investments to educate
consumers and influence their purchasing behaviors.

Biography:
Xiaomeng Guo is an Assistant Professor at Department of Logistics and
Maritime Study, Faculty of Business, Hong Kong Polytechnic University.
Xiaomeng Guo received her bachelor degree in mathematics and physics
from Tsinghua University in 2010 and her Ph.D. degree in operations
management from Washington University in St. Louis in 2016. Her
research interests include supply chain management, operations and
marketing interface, omni-channel retail management, and behavioral
operations. Her work has been published in Journal of Marketing
Research.

Everyone is welcome to attend the talk!

Venue: Room 513,
         William M.W. Mong Engineering Building (ERB),
         (Engineering Building Complex Phase 2)
         The Chinese University of Hong Kong.

The talk will be hosted by:
Prof. Gao Xuefeng,
Department of Systems Engineering and Engineering Management,
The Chinese University of Hong Kong,
E-mail: xfgao@se.cuhk.edu.hk
Homepage: http://www.se.cuhk.edu.hk/people/xfgao.html

SEEM-5201 Website: http://seminar.se.cuhk.edu.hk
Email: seem5201@se.cuhk.edu.hk

Date: 
Friday, September 22, 2017 - 16:30 to 17:30