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Modeling Cognitive Social Capital and Corporate Social Responsibility (CSR) as Preconditions for Sustainable Networks of Relations

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  • Giacomo Degli Antoni

    ()
    (University of Milano-Bicocca)

  • Lorenzo Sacconi

    ()
    (University of Trento - Department of Economics)

Abstract

The paper studies the relationship between social capital (SC) and Corporate Social Responsibility (CSR) by investigating the idea of a virtuous circle between the level of SC and the implementation of CSR practices that favours the creation of cooperative networks between the firm and all its stakeholders by promoting the spread of social norms of trust, trustworthiness and cooperation. Following the literature on SC that stresses its multidimensional character (e.g. Paldam 2000), we consider two dimensions of this notion. Starting from the distinction introduced by Uphoff (1999), we take into account a cognitive and a structural idea of SC. The first one essentially refers to the dispositional characters of agents that affect their propensity to behave in different ways. The latter refers to social networks connecting agents.With regard to the concept of CSR, we adopt a contractarian approach and consider CSR as an extended model of corporate governance, based on the fiduciary duties owed to all the firm's stakeholders. Among stakeholders, we distinguish between strong and weak stakeholders. Both these two categories have made specific investments in the firm. However, strong stakeholders are precious for the firm because they bring in strategic assets. They are, for example, skilled workers or institutional investors. On the contrary, weak stakeholders do not bring strategic assets into the firm and firms have material incentives at defecting in the relationship with them. They are, for example, unskilled workers. By using the tools of psychological game theory, the paper shows the role of cognitive social capital and the adoption of CSR practices in promoting the emergence of social norms of trust, trustworthiness and cooperation which favour the creation of cooperative networks between the firm and all its stakeholders (structural social capital). In particular, we show that: a) the level of cognitive SC plays a key role in inducing the firm to adopt and observe CSR practices that respect all the stakeholders; b) the decision of adopting formal instruments of CSR contributes to create cognitive SC that is endogenously determined in the model; c) the level of cognitive SC and the decision of adopting CSR practices creates structural SC in terms of a long term relationship between the firm and the weak and strong stakeholders.

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Bibliographic Info

Paper provided by Econometica in its series Econometica Working Papers with number wp19.

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Length: 42
Date of creation: Mar 2010
Date of revision:
Handle: RePEc:ent:wpaper:wp19

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Postal: Università degli Studi di Milano-Bicocca, Edificio U9, Viale dell'Innovazione, 10, 20126 Milano
Phone: 0039 02 6448 6540
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Web page: http://www.econometica.it
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References

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  1. Lorenzo Sacconi, 2006. "A Social Contract Account for CSR as an Extended Model of Corporate Governance (I): Rational Bargaining and Justification," Journal of Business Ethics, Springer, vol. 68(3), pages 259-281, October.
  2. Lippert, Steffen & Spagnolo, Giancarlo, 2005. "Networks of Relations and Social Capital," CEPR Discussion Papers 5078, C.E.P.R. Discussion Papers.
  3. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-58, December.
  4. Lorenzo Sacconi, 2010. "A Rawlsian View of CSR and the Game Theory of its Implementation (Part II): Fairness and Equilibrium," Econometica Working Papers wp23, Econometica.
  5. Lippert, Steffen & Spagnolo, Giancarlo, 2004. "Networks of Relations," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 28, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  6. Lorenzo Sacconi, 2010. "A Rawlsian View of CSR and the Game Theory of its Implementation (Part I): the Multistakeholder Model of Corporate Governance," Econometica Working Papers wp22, Econometica.
  7. Lorenzo Sacconi, 2004. "Corporate social responsibility (CSR) as a model of "extended" corporate governance. an explanation based on the economic theories of social contract, reputation and reciprocal conformism," LIUC Papers in Ethics, Law and Economics 142, Cattaneo University (LIUC).
  8. Lorenzo Sacconi & Marco Faillo, 2010. "Conformity, reciprocity and the sense of justice. How social contract-based preferences and beliefs explain norm compliance: the experimental evidence," Constitutional Political Economy, Springer, vol. 21(2), pages 171-201, June.
  9. Lorenzo Sacconi, 2004. "A Social Contract Account for CSR as Extended Model of Corporate Governance (Part II): Compliance, Reputation and Reciprocity," Department of Economics Working Papers 0411, Department of Economics, University of Trento, Italia.
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Cited by:
  1. Sabatini, Fabio & Sarracino, Francesco, 2013. "Will Facebook save or destroy social capital? An empirical investigation into the effect of online interactions on trust and networks," EconStor Preprints 88145, ZBW - German National Library of Economics.
  2. Leonardo Becchetti & Giacomo Degli Antoni & Marco Faillo, 2013. "Team reasoning theory: an experimental analysis of common reason to believe and social distance," International Review of Economics, Springer, vol. 60(3), pages 269-291, September.
  3. Sabatini, Fabio & Sarracino, Francesco, 2014. "E-participation: social capital and the Internet," MPRA Paper 55722, University Library of Munich, Germany.
  4. Giacomo Degli Antoni & Lorenzo Sacconi, 2011. "Does virtuous circle between social capital and CSR exist? A “network of games” model and some empirical evidence," Department of Economics Working Papers 1103, Department of Economics, University of Trento, Italia.
  5. Lorenzo Sacconi, 2010. "A Rawlsian View of CSR and the Game Theory of its Implementation (III): Conformism, Equilibrium Refinement and Selection," Econometica Working Papers wp24, Econometica.

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