Sustainable Entrepreneurship: Good Deeds, Business, Social and Environmental Responsibility in a Market Experiment

We study how commitment of entrepreneurs to sustainability practices might effectively improve the social and environmental impact of market competition. To this end we devised a market experiment in which profit maximization and socially and environmentally concerned behavior were both potential goals of producers. Our subject pool included two distinct types of students having different prosocial attitudes. The two types adopted significantly different strategies in the treatment group, where producers could contribute to a positive externality, whereas they behaved similarly in the control group, where the only objective was profit maximization. Subjects who were ex-ante more prosocial chose to produce with more focus on the positive externality than their counterparts. However, they failed to actually deliver a larger social impact as a consequence of the market outcome. We conclude that producers often commit to social responsibility, even though well-meaning conducts do not necessarily beget equally good outcomes.

Automated summary

This study examines how the commitment of entrepreneurs to sustainability practices can effectively enhance the social and environmental impact of market competition. The experiment reveals that individuals with pro-social attitudes are more likely to prioritize positive externalities in the market. However, their efforts to create a larger social impact did not materialize due to market outcomes. Thus, well-meaning behavior does not always yield desired results.