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A Positive Theory of Moral Management, Social Pressure, and Corporate Social Performance

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  • David P. Baron
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    Abstract

    "This paper provides a theory of firm behavior motivated by moral duty, self-interest, and social pressure. A morally managed and a self-interested firm compete in a market in which their corporate social performance (CSP) provides product differentiation. Some citizens have altruistic or warm glow preferences for products with associated CSP, personal giving to social causes, holding shares in firms providing CSP, and contributing to social pressure to increase CSP. Social pressure is delivered by an activist NGO funded by voluntary contributions by citizens. The model characterizes an equilibrium in the product market, the capital market, and the market for social pressure. The equilibrium establishes a price for CSP and for activist-induced social pressure. The theory provides predictions of the market values of firms, the prices of products, firm profits, target selection, contributions to the activist, and the amount of CSP supplied. For example, if citizens do not distinguish between morally motivated CSP and CSP induced by social pressure, the activist is more likely to target the softer, morally motivated firm. Higher quality activists are better funded, target self-interested firms, and obtain greater corporate social performance. Lower quality activists target morally managed firms." Copyright (c) 2009, The Author(s) Journal Compilation (c) 2009 Wiley Periodicals, Inc..

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

    Volume (Year): 18 (2009)
    Issue (Month): 1 (03)
    Pages: 7-43

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    Handle: RePEc:bla:jemstr:v:18:y:2009:i:1:p:7-43

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    Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/

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    Web: http://www.blackwellpublishing.com/journal.asp?ref=1058-6407&site=1

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    Cited by:
    1. Dominik van Aaken & Violetta Splitter & David Seidl, 2012. "Why Do Corporate Actors Engage in Pro-Social Behavior? A Bourdieusian Perspective on Corporate Social Responsibility," Working Papers 319, University of Zurich, Department of Business Administration (IBW).
    2. Markus Kitzmueller & Jay Shimshack, 2012. "Economic Perspectives on Corporate Social Responsibility," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 51-84, March.
    3. Etilé, Fabrice & Teyssier, Sabrina, 2013. "Corporate social responsibility and the economics of consumer social responsibility," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 2013(02), pages 221-259, June.
    4. Timothy Besley, 2013. "What's the Good of the Market? An Essay on Michael Sandel's What Money Can't Buy," Journal of Economic Literature, American Economic Association, vol. 51(2), pages 478-95, June.
    5. Patricia Crifo & Vanina Forget, 2012. "The Economics of Corporate Social Responsibility: A Survey," Working Papers hal-00720640, HAL.
    6. Patricia Crifo & Vanina Forget, 2013. "La responsabilité sociale et environnementale des entreprises : mirage ou virage ?," Working Papers hal-00830642, HAL.
    7. Daniel Elfenbein & Raymond Fisman & Brian McManus, 2009. "Reputation, Altruism, and the Benefits of Seller Charity in an Online Marketplace," NBER Working Papers 15614, National Bureau of Economic Research, Inc.
    8. L. Lambertini & A. Tampieri, 2011. "On the Stability of Mixed Oligopoly Equilibria with CSR Firms," Working Papers wp768, Dipartimento Scienze Economiche, Universita' di Bologna.
    9. Constantin Belu & Cristiana Manescu, 2013. "Strategic corporate social responsibility and economic performance," Applied Economics, Taylor & Francis Journals, vol. 45(19), pages 2751-2764, July.
    10. L. Lambertini & A. Tampieri, 2011. "Corporate Social Responsibility and Firms Ability to Collude," Working Papers wp778, Dipartimento Scienze Economiche, Universita' di Bologna.
    11. Degli Antoni, Giacomo & Sacconi, Lorenzo, 2013. "Social responsibility, activism and boycotting in a firm–stakeholders network of games with players’ conformist preferences," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 45(C), pages 216-226.
    12. Mukherjee, Vivekananda & Ramani, Shyama V., 2011. "Voluntary agreements and community development as CSR in innovation strategies," MERIT Working Papers 016, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    13. Vanina Forget, 2012. "Doing well and doing good: a multi-dimensional puzzle," Working Papers hal-00672037, HAL.
    14. Garcia, Jorge H. & Wei, Jiegen, 2013. "On Social Sanctions and Beliefs: A Pollution Norm Example," Discussion Papers dp-13-04-efd, Resources For the Future.
    15. Hannes Koppel & Tobias Regner, 2011. "Corporate Social Responsibility in the work place - Experimental evidence on CSR from a gift-exchange game," Jena Economic Research Papers 2011-030, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
    16. Windsor, Duane, 2013. "Corporate social responsibility and irresponsibility: A positive theory approach," Journal of Business Research, Elsevier, vol. 66(10), pages 1937-1944.
    17. Georgy Egorov & Bård Harstad, 2013. "Private Politics and Public Regulation," NBER Working Papers 19737, National Bureau of Economic Research, Inc.
    18. David P. Baron, 2010. "Morally Motivated Self-Regulation," American Economic Review, American Economic Association, vol. 100(4), pages 1299-1329, September.
    19. Karine Nyborg & Tao Zhang, 2013. "Is Corporate Social Responsibility Associated with Lower Wages?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 55(1), pages 107-117, May.
    20. Baron, David P., 2011. "Credence attributes, voluntary organizations, and social pressure," Journal of Public Economics, Elsevier, vol. 95(11), pages 1331-1338.

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