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Strategic Leadership in Corporate Social Responsibility

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  • Albuquerque, Rui
  • Cabral, Luis

Abstract

We propose a theory of strategic Corporate Social Responsibility (CSR). Shareholders commit to a mission statement that extends beyond value maximization but ultimately achieve higher shareholder value than if committing to value maximization. We thus provide a new formalization of the “doing well by doing good†adage. We develop conditions such that the mission-statement game is a pure coordination game, which provides a natural and novel theory of strategic leadership in CSR: By selecting a CSR mission statement, a first mover leads the industry to a Pareto superior equilibrium. The theory can rationalize recent evidence on correlated industry-wide CSR adoption.

Suggested Citation

  • Albuquerque, Rui & Cabral, Luis, 2023. "Strategic Leadership in Corporate Social Responsibility," CEPR Discussion Papers 18121, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18121
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    More about this item

    Keywords

    Leadership;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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