When do firms invest in corporate social responsibility? A real option framework

Danny Cassimon, Peter-Jan Engelen and Luc Van Liedekerke

No 2014.06, IOB Working Papers from Universiteit Antwerpen, Institute of Development Policy (IOB)

Abstract: In this paper, the process for firms to decide whether or not to invest in corporate social responsibility is treated from a real option perspective. We extend the Husted (2005) framework with an important extra parameter that allows us to understand the timing of CSR investment and explain why some companies drag their feet over CSR investments. Our model explicitly allows for the impact of the opportunity cost of delaying the CSR investment decision, providing firms with tools to determine the optimal moment of exercising the CSR investment option. We illustrate our timing model through a case study and analyze governmental support strategies for CSR from a real options perspective.

Keywords: real options; CSR; stakeholder management; reputational risk; optimal timing (search for similar items in EconPapers)
JEL-codes: D81 G13 G31 K42 M14 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014-10
New Economics Papers: this item is included in nep-cfn and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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https://medialibrary.uantwerpen.be/oldcontent/cont ... 2014/06-Cassimon.pdf (application/pdf)

Related works:
Journal Article: When do Firms Invest in Corporate Social Responsibility? A Real Option Framework (2016)
Working Paper: When Do Firms Invest in Corporate Social Responsibility?: A Real Option Framework (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:iob:wpaper:201406

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