On the Economics of Corporate Responsibility

Tommy Lundgren ()

No 2007/3, Sustainable Investment and Corporate Governance Working Papers from Sustainable Investment Research Platform

Abstract: This paper seeks to explore the economic mechanisms behind corporate social responsibility (CSR) in a micro-economic model of the firm. The motivation of this study is to shed some light on the potential causes of the observed phenomena of voluntary over-compliance among firms. We consider a few diferent models, both static and dynamic, to investigate how various assumptions about costs and benefits may aspect CSR behavior through a stock of goodwill capital. Our analysis show that in optimum, the profit maximizing firm must balance costs and benefits of CSR. From a cursory look into the CSR literature, we find evidence that some of the hypotheses that can be derived from the models in this paper can be verified empirically.

Keywords: corporate social responsibility; dynamics; goodwill; uncertainty (search for similar items in EconPapers)
Pages: 39 pages
Date: 2007-11-22
New Economics Papers: this item is included in nep-bec and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:hhb:sicgwp:2007_003

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