Peer‐Driven Competitive Escalation, Market Position, and Positive CSR Decoupling

ABSTRACT

CSR ratings, rankings, and disclosure systems are designed to enhance corporate accountability by making firms more visible and comparable. Yet comparison‐based governance may also generate unintended consequences. This study examines whether peer‐driven competitive escalation is associated with positive CSR decoupling and whether this relationship varies with firms' market position. Positive CSR decoupling is defined as the extent to which visible CSR disclosure exceeds substantive CSR performance. We argue that repeated peer comparison may encourage firms to strengthen visible responsiveness without making equivalent substantive improvements. Using an unbalanced panel of 680 globally listed firms and 7820 firm‐year observations from 2009 to 2024, we combine data from CSRHub, Refinitiv ESG, MSCI ESG, and Compustat. Firm fixed‐effects and system GMM estimates show that peer‐driven competitive escalation is positively associated with positive CSR decoupling. This association is weaker for firms with stronger market positions and becomes stronger at higher levels of escalation. The findings remain robust across alternative measures, peer definitions, fixed‐effects structures, regulatory periods, and nonlinear specifications. This study contributes to the literature by conceptualizing positive CSR decoupling as a dynamic pattern associated with comparative governance rather than only a static response to legitimacy pressure. More broadly, the findings suggest that ratings, rankings, and repeated comparison may strengthen visible CSR responsiveness without necessarily producing equivalent substantive alignment.