Market structure and corporate social responsibility in Mexican micro, small and medium enterprises. The link between individual and social preferences

Abstract

Market conditions influence firm behavior according Structure-Conduct-Performance paradigm of Industrial Organization Economics. Demand conditions are key factors in market structure. The role of economic agents may influence firm behavior. These economic agents are represented by interest groups, consumers and suppliers. Demand conditions influence decisions and firm performance. Also, these conditions create incentives for the adoption of Corporate Social Responsibility (CSR) activities in strategies design, that are manifested through the reconciliation of the individual preferences of entrepreneurs with their social preferences. We analyze the relationship between market structure and the incorporation of CSR actions in business strategies. We estimate a logistic regression model. We use business sector, firm size and age as control variables. We analyze the collected data from 296 Micro, Small and Medium Enterprises in Celaya, Guanajuato. Celaya is an important city in Mexico due to economic dynamic growth during recent years. This city received a large part of national Foreign Direct Investment (FDI) flows, mainly in automotive industry. Our findings suggest the importance of market structure visualized from the pressure of interest groups, consumer demands and loyalty of customers and suppliers for the MSME sector industry and trade in their design of strategies with a component of social responsibility.