Corporate social responsibility and innovation in unionised markets

We study a Cournot duopoly with socially responsible (CSR) firms and unions that value CSR objectives. Applying an innovation game framework, we examine how CSR engagement and union attitudes influence firms’ innovation decisions. The model demonstrates that while CSR activities boost profits for all firms, the innovator's profits increase more, creating a clear incentive to innovate. This incentive persists with unions, but only if they disregard the firm's CSR commitments. If, however, unions are sufficiently concerned with CSR, they can discourage innovation. Thus, CSR presents a dual – or ‘two-faced Janus’ – effect on a firm's innovative impetus.