Strategic Leadership in Corporate Social Responsibility

Rui Albuquerque and Luis Cabral

No 16564, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We propose a strategic theory of Corporate Social Responsibility (CSR). Shareholder maximizers commit to a mission statement that extends beyond firm value maximiza- tion. This commitment leads firms (either product market competitors or complementors along the value chain) to change their actions in ways that ultimately favor shareholders. We thus provide a formal analysis of the “doing well by doing good†adage. We also pro- vide conditions such that the mission statement game has the nature of a pure coordination game. Our framework thus provides a natural theory of firm leadership in a CSR context: by selecting a CSR mission statement, a first mover effectively leads the industry to a Pareto optimal equilibrium.

Keywords: Commitment; Leadership; Corporate social responsibility; Stockholder model; Stakeholder model; Externalities; Mission statement; Clean-energy technology; Supply chain; Wage setting (search for similar items in EconPapers)
JEL-codes: D24 G32 G34 L20 M14 (search for similar items in EconPapers)
Date: 2021-09
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