Corporate Scandals and the Opportunistic Entry of Sustainable Products

Tony He, Business Economics and Public Policy, The Wharton School

Abstract: How firms manage product entry has been a central question in innovation scholarship. Empirical studies have established the impact of economic variables such as market competition, revenue uncertainty, and firm resources on the entry mode, timing, and performance of new products. However, the effects of the social or nonmarket dimension of a firm’s competitive landscape on product entry and outcomes are relatively understudied. In this project, we seek to address this knowledge gap by examining how the corporate social reputation of rival companies impact a focal firm’s entry and promotion strategies in the sustainable consumer packaged goods (CPG) market. We utilize comprehensive datasets on the weekly pricing and advertisement occurrences of consumer goods and the purchasing behavior of US consumers to analyze the entry timing, promotion intensity, and sales performance of products introduced by CPG firms in response to rival companies’ social reputation shocks. Our research aims to bridge stakeholder theory with innovation scholarship by exploring the mechanisms that determine how companies’ social performance shapes the strategic management and market outcomes of new products.