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Modelling the trade-off between profits and principles

Author

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  • Graafland, J.J.

Abstract

Corporations discover that social responsibility pays off. However, sometimes doing what is ethical will prove costly to a company. The purpose of this article is to clarify this trade-off by developing an economic model that describes the choice between profits and principles. The model is used to analyse how external factors like a change in consumer interests and competitiveness affect the relationship between profits and principles.

Suggested Citation

  • Graafland, J.J., 2002. "Modelling the trade-off between profits and principles," MPRA Paper 20752, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:20752
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    File URL: https://mpra.ub.uni-muenchen.de/20752/1/MPRA_paper_20752.pdf
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    References listed on IDEAS

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    1. Holmlund, Bertil & Linden, Johan, 1993. "Job matching, temporary public employment, and equilibrium unemployment," Journal of Public Economics, Elsevier, vol. 51(3), pages 329-343, July.
    2. Judith F. Posnikoff, 1997. "Disinvestment From South Africa: They Did Well By Doing Good," Contemporary Economic Policy, Western Economic Association International, vol. 15(1), pages 76-86, January.
    3. Peter A. Diamond, 1982. "Wage Determination and Efficiency in Search Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(2), pages 217-227.
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    5. Janet Adams & Armen Tashchian & Ted Shore, 2001. "Codes of Ethics as Signals for Ethical Behavior," Journal of Business Ethics, Springer, vol. 29(3), pages 199-211, February.
    6. Graafland, J.J., 2001. "Profts and principles: Four perspectives," MPRA Paper 21134, University Library of Munich, Germany.
    7. Catherine M. Paul & Donald Siegel, 2006. "Corporate social responsibility and economic performance," Journal of Productivity Analysis, Springer, vol. 26(3), pages 207-211, December.
    8. Hurley, Jeremiah, 2000. "An overview of the normative economics of the health sector," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 2, pages 55-118, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ven van de, B. & Graafland, J.J., 2006. "Strategic and moral motivation for corporate social responsibility," MPRA Paper 20278, University Library of Munich, Germany.
    2. Muddassar Sarfraz & Wang Qun & Muhammad Ibrahim Abdullah & Adnan Tariq Alvi, 2018. "Employees’ Perception of Corporate Social Responsibility Impact on Employee Outcomes: Mediating Role of Organizational Justice for Small and Medium Enterprises (SMEs)," Sustainability, MDPI, vol. 10(7), pages 1-19, July.
    3. Isaiah Marom, 2006. "Toward a Unified Theory of the CSP–CFP Link," Journal of Business Ethics, Springer, vol. 67(2), pages 191-200, August.
    4. J.J. Graafland & H. Smid, 2004. "Reputation, Corporate Social Responsibility and Market Regulation," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(2), pages 271-308.
    5. Jolejole, Christina B. & Swinton, Scott M. & Robertson, G. Philip & Syswerda, Sara P., 2009. "Profitability and Environmental Stewardship for Row Crop Production: Are There Trade-offs?," 2009 Conference, August 16-22, 2009, Beijing, China 50920, International Association of Agricultural Economists.
    6. Graafland, J.J. & Eijffinger, S.C.W. & Smid, H., 2004. "Benchmarking of corporate social responsibility: Methodological problems and robustness," MPRA Paper 20771, University Library of Munich, Germany.
    7. J.J. Graafland & S.C.W. Eijffinger, 2004. "Corporate social responsibility of Dutch companies: Benchmarking, transparency and robustness," De Economist, Springer, vol. 152(3), pages 403-426, September.
    8. Graafland, J.J., 2003. "Distribution of responsibility, ability and competition," MPRA Paper 20731, University Library of Munich, Germany.
    9. María González-Rodríguez & María Díaz-Fernández & Marek Pawlak & Biagio Simonetti, 2013. "Perceptions of students university of corporate social responsibility," Quality & Quantity: International Journal of Methodology, Springer, vol. 47(4), pages 2361-2377, June.

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    More about this item

    Keywords

    Corporate social responsibility; ethics; competitiveness; profit maximisation; reputation; win-win;
    All these keywords.

    JEL classification:

    • D69 - Microeconomics - - Welfare Economics - - - Other
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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