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Socially Responsible Investment and Pro-social Change

Author

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  • Martha Starr

Abstract

Socially responsible investment (SRI) refers to investing in companies based on financial and social performance, where the latter includes such concerns as the environment, sweatshop labor, and animal testing. This paper argues that SRI strongly resembles pro-social behaviors and social dynamics found in experimental settings. The role of fairness-related sanctioning is emphasized, wherein companies that treat their various stakeholders “fairly” are screened into SRI portfolios, while those treating them poorly are screened out. It is argued that, because SRI creates opportunities for businesses to thrive relative to their competitors by improving social performance, it creates some scope for pro-social change. Still, the magnitude of changes that can be expected from voluntary changes in business behavior remains to be determined.

Suggested Citation

  • Martha Starr, 2007. "Socially Responsible Investment and Pro-social Change," Working Papers 2007-23, American University, Department of Economics.
  • Handle: RePEc:amu:wpaper:2307
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    File URL: http://w.american.edu/cas/economics/repec/amu/workingpapers/2007-23.pdf
    File Function: First version, 2007
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    Citations

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    Cited by:

    1. Matthew Lee & Jillian Kohler, 2010. "Benchmarking and Transparency: Incentives for the Pharmaceutical Industry’s Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 95(4), pages 641-658, September.
    2. Steven Scalet & Thomas Kelly, 2010. "CSR Rating Agencies: What is Their Global Impact?," Journal of Business Ethics, Springer, vol. 94(1), pages 69-88, June.
    3. repec:dau:papers:123456789/7349 is not listed on IDEAS
    4. Jo, Tae-Hee, 2011. "Heterodox Critiques of Corporate Social Responsibility," MPRA Paper 35367, University Library of Munich, Germany.

    More about this item

    Keywords

    Social responsibility; pro-social behavior; fairness; investment decisions; corporate culture;

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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