Reputation, corporate social responsibility and market regulation
AbstractThe paper investigates the role of the government and self-regulatory reputation mechanisms to internalise externalities of market operation. If it pays off for companies to invest in a good reputation by an active policy of corporate social responsibility (CSR), external effects of the market will be (partly) internalised by the market itself. The strength of the reputation mechanism depends on the functioning of non governmental organisations (NGOs), the transparency of the company, the time horizon of the company, and on the behaviour of employees, consumers and investors. On the basis of an extensive study of the empirical literature on these topics, we conclude that in general the working of the reputation mechanism is rather weak. Especially the transparency of companies is a bottleneck. If the government would force companies to be more transparent, it could initiate a self-enforcing spiral that would improve the working of the reputation mechanism. We also argue that the working of the reputation mechanism will be weaker for smaller companies and for both highly competitive and monopolistic markets. We therefore conclude that government regulation is still necessary, especially for small companies.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 20772.
Date of creation: 2004
Date of revision:
Corporate social responsibility; market regulation;
Other versions of this item:
- J.J. Graafland & H. Smid, 2004. "Reputation, Corporate Social Responsibility and Market Regulation," Review of Business and Economics, Katholieke Universiteit Leuven, Faculteit Economie en Bedrijfswetenschappen, vol. 0(2), pages 271-308.
- M14 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
- C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
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.:
- Webley, Paul & Lewis, Alan & Mackenzie, Craig, 2001. "Commitment among ethical investors: An experimental approach," Journal of Economic Psychology, Elsevier, vol. 22(1), pages 27-42, February.
- Patrick Francois & Joanne Roberts, 2000.
"Contracting Productivity Growth,"
jorob-99-02, University of Toronto, Department of Economics.
- Patrick Francois & Joanne Roberts, 2003. "Contracting Productivity Growth," Review of Economic Studies, Wiley Blackwell, vol. 70(1), pages 59-85, January.
- Patrick Francois & Joanne Roberts, 2003. "Contracting Productivity Growth," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 59-85.
- Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November.
- Brown, Lawrence D. & Ngo Higgins, Huong, 2001. "Managing earnings surprises in the US versus 12 other countries," Journal of Accounting and Public Policy, Elsevier, vol. 20(4-5), pages 373-398.
- Kimberly Ann Elliott & Richard Freeman, 2004.
"White Hats or Don Quixotes? Human Rights Vigilantes in the Global Economy,"
CEP Discussion Papers
dp0638, Centre for Economic Performance, LSE.
- Kimberly Ann. Elliott & Richard B. Freeman, 2004. "White Hats or Don Quixotes? Human Rights Vigilantes in the Global Economy," NBER Chapters, in: Emerging Labor Market Institutions for the Twenty-First Century, pages 47-98 National Bureau of Economic Research, Inc.
- Kimberly Ann Elliott & Richard Freeman, 2001. "White Hats or Don Quixotes? Human Rights Vigilantes in the Global Economy," NBER Working Papers 8102, National Bureau of Economic Research, Inc.
- Graafland, J.J. & Ven van de, B. & Stoffele, N., 2003. "Strategies and instruments for organising CSR by small and large businesses in the Netherlands," MPRA Paper 20754, University Library of Munich, Germany.
- Oriol Amat & John Blake & Ester Oliveras, 2000. "The ethics of creative accounting: Some Spanish evidence," Economics Working Papers 455, Department of Economics and Business, Universitat Pompeu Fabra.
- Landon, Stuart & Smith, Constance, 1997. "The Use of Quality and Reputation Indicators by Consumers: The Case of Bordeaux Wine," MPRA Paper 9283, University Library of Munich, Germany.
- Graafland, J.J. & Eijffinger, S.C.W., 2004.
"Corporate social responsibility of Dutch companies: Benchmarking, transparency and robustness,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-138824, Tilburg University.
- 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, 09.
- Bizjak, John M. & Brickley, James A. & Coles, Jeffrey L., 1993. "Stock-based incentive compensation and investment behavior," Journal of Accounting and Economics, Elsevier, vol. 16(1-3), pages 349-372, April.
- Graafland, J.J., 2002. "Modelling the trade-off between profits and principles," MPRA Paper 20752, University Library of Munich, Germany.
- Graafland, J.J., 2002. "Sourcing ethics in the textile sector: The case of C&A," MPRA Paper 20769, University Library of Munich, Germany.
- Koku, Paul Sergius & Akhigbe, Aigbe & Springer, Thomas M., 1997. "The Financial Impact of Boycotts and Threats of Boycott," Journal of Business Research, Elsevier, vol. 40(1), pages 15-20, September.
- Graafland, J.J., 2003. "Distribution of responsibility, ability and competition," MPRA Paper 20731, University Library of Munich, Germany.
- Badrinath, S G & Bolster, Paul J, 1996. "The Role of Market Forces in EPA Enforcement Activity," Journal of Regulatory Economics, Springer, vol. 10(2), pages 165-81, September.
- Richardson, Vernon J & Waegelein, James F, 2002. " The Influence of Long-Term Performance Plans on Earnings Management and Firm Performance," Review of Quantitative Finance and Accounting, Springer, vol. 18(2), pages 161-83, March.
- Graafland, J.J., 2001. "Profts and principles: Four perspectives," MPRA Paper 21134, University Library of Munich, Germany.
- Nijhof, A. & Graafland, J.J. & Kuijer de, O., 2009. "Exploration of an agenda for transparency in the construction industry," MPRA Paper 20274, University Library of Munich, Germany.
- J. Graafland, 2010. "Do Markets Crowd Out Virtues? An Aristotelian Framework," Journal of Business Ethics, Springer, vol. 91(1), pages 1-19, January.
- Johan Graafland & Corrie Mazereeuw-Van Der Duijn Schouten, 2007. "The Heavenly Calculus and Socially Responsible Business Conduct: An Explorative Study among Executives," De Economist, Springer, vol. 155(2), pages 161-181, June.
- Thomas Laudal, 2011. "Drivers and barriers of CSR and the size and internationalization of firms," Social Responsibility Journal, Emerald Group Publishing, vol. 7(2), pages 234-256, July.
- David Williamson & Gary Lynch-Wood & John Ramsay, 2006. "Drivers of Environmental Behaviour in Manufacturing SMEs and the Implications for CSR," Journal of Business Ethics, Springer, vol. 67(3), pages 317-330, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.