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

This file is part of IDEAS, which uses RePEc data

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

Author Info

Baron, David P. (Stanford U)

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. In addition to acting as consumers, citizens have warm glow preferences for 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 activist selects a target, demands social action by the target, and threatens harm. The target can fight the activist campaign, but both parties have an incentive to bargain to a resolution. The model charaterizes 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 action. 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. For example, if citizens do not distinguish between morally-motivate 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 social action. Lower quality activists target morally-managed firms.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

Publisher Info
Paper provided by Stanford University, Graduate School of Business in its series Research Papers with number 1940.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:ecl:stabus:1940

Contact details of provider:
Postal: Stanford University, Stanford, CA 94305-5015
Phone: (650) 723-2146
Fax: (650)725-6750
Email:
Web page: http://gsbapps.stanford.edu/researchpapers/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: ().

Related research
Keywords:

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Thomas P. Lyon & John W. Maxwell, 2007. "Corporate Social Responsibility and the Environment: A Theoretical Perspective," Working Papers 2007-16, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy. [Downloadable!]
Other versions:
- Thomas P. Lyon & John W. Maxwell, 2008. "Corporate Social Responsibility and the Environment: A Theoretical Perspective," Review of Environmental Economics and Policy, Oxford University Press for Association of Environmental and Resource Economists, vol. 2(2), pages 240-260, Summer. [Downloadable!] (restricted)
Gupta, Sonam & Innes, Robert, 2008. "Determinants and Impact of Private Politics: An Empirical Analysis," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6238, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]

Statistics

Access and download statistics

Did you know? IDEAS also indexes books.

This page was last updated on 2009-12-2.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.