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Private Politics, Corporate Social Responsibility, and Integrated Strategy

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  • David P. Baron

Abstract

This paper provides a theory of private politics in which an activist seeks to change the production practices of a firm for the purpose of redistribution to those whose interests it supports. The source of the activist's influence is the possibility of support for its cause by the public. The paper also addresses the issue of corporate social responsibility by distinguishing among corporate redistribution as motivated by profit maximization, altruism, and threats by the activist. Private politics and corporate social responsibility not only have a direct effect on the costs of the firm, but also have a strategic effect by altering the competitive positions affirms in an industry. From an integrated‐strategy perspective the paper investigates the strategic implications of private politics and corporate social responsibility for the strategies of rival firms when one or both are targets of an activist campaign. Implications for empirical analysis are derived from the theory.

Suggested Citation

  • David P. Baron, 2001. "Private Politics, Corporate Social Responsibility, and Integrated Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 7-45, March.
  • Handle: RePEc:bla:jemstr:v:10:y:2001:i:1:p:7-45
    DOI: 10.1111/j.1430-9134.2001.00007.x
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    References listed on IDEAS

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    1. Timothy J. Feddersen & Thomas W. Gilligan, 2001. "Saints and Markets: Activists and the Supply of Credence Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 149-171, March.
    2. Teoh, Siew Hong & Welch, Ivo & Wazzan, C Paul, 1999. "The Effect of Socially Activist Investment Policies on the Financial Markets: Evidence from the South African Boycott," The Journal of Business, University of Chicago Press, vol. 72(1), pages 35-89, January.
    3. Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring.
    4. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    5. David P. Baron, 2001. "Theories of Strategic Nonmarket Participation: Majority‐Rule and Executive Institutions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 47-89, March.
    6. Karpoff, Jonathan M. & Malatesta, Paul H. & Walkling, Ralph A., 1996. "Corporate governance and shareholder initiatives: Empirical evidence," Journal of Financial Economics, Elsevier, vol. 42(3), pages 365-395, November.
    7. Baron, David P., 1999. "Integrated Market and Nonmarket Strategies in Client and Interest Group Politics," Business and Politics, Cambridge University Press, vol. 1(1), pages 7-34, April.
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