Corporate Social Responsibility and Corporate Governance

Lorenzo Sacconi

No wp38, Econometica Working Papers from Econometica

Abstract: Corporate social responsibility (CSR) is a model of corporate governance (CG) extending fiduciary duties from fulfillment of responsibilities towards the firmÕs Êowners to fulfillment of analogous Êfiduciary Êduties Êtowards Êall Êthe ÊfirmÕs Êstakeholders. After considering the place of CSR in the debate about alternative CG modes, a full-fledged social contract foundation of the multi-stakeholder and multi-fiduciary model is present. The paper shows that CSR is a social Ênorm Êthat Êwould Êendogenously Êemerge Êfrom Êthe ÊstakeholdersÕ Êsocial Êcontract Êseen Êas Ê the first move in an equilibrium selection process that reaches the equilibrium state of a CG institution. The social contract provides a model of the impartial mediating reasoning performed by a board of directors striving to balance different claims of stakeholders. It also allows deducing the multi-stakeholder objective function that socially responsible firms maximize, and then provides a specification of the particular fiduciary duties owed to each stakeholder according to its position.

Keywords: Agency theory, fiduciary duties, mediating hierarchy, social contract, social norms; stakeholders (search for similar items in EconPapers)
Pages: 43
Date: 2012-06
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Citations: View citations in EconPapers (10)

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