The Assignment of a CSR Action Choice

Socially responsible behaviors represent a growing concern for economic agents : consumers,employees, investors, Örms. Indeed, many people feel concerned about the social and environ-mental impact of their choices ; likewise, beyond their economic impact, companies are beingmade accountable and responsible for the incidence of their activities, their processes and theirgovernance, in such Öelds. Firms are required to take part to the preservation and even theimprovement of the environmental and socio-economic features of the area in which they arelocated and operate. Corporate Social Responsibility (CSR) is regarded as one possible answerto tackle market and redistributive failures and help building a new model respectful of social,ethics and economic dimensions. However, as many kinds of stakeholders are involved, conÖctsof interests may emerge. As a by-product, this paper deals with the choice of designing andimplementing a CSR policy and seeks to address the question of its assignment in a multilevelgovernance framework. We use a mechanism design without transfer approach and we considera three-tier hierarchy model involving an organization made of two levels of decisionmaking inthe Örm : the board and the management, and we assume that agents have taste for CSR. Sucha policy can be Önanced through the funds derived from the willingness to pay of the di§erentstakeholders involved in the Örm activity. However, the preferences of the stakeholders are he-terogenous and represent a private information of them. The board has to deÖne which amountof CSR good should be produced or he can delegate this task to the Örm management who maybeneÖt from a better knowledge advantage. We show that it is optimal for the board to partiallydelegate the choice of CSR policy to better informed managers when their respective objectivesdo not display a great divergence and if their ideal points are highly sensitive to the agent pri-vate information. We enhance one type of Örm organization likely to make interests convergeand delegation be preferred : co-operative companies. They usually promote economic initiativeand solidarity, an inclusive society, a good economic and social climate, and they historicallydisplay strong commitment to proximity, Thatís why it seems consistent that such a kind of Örmbe naturally eager to promote actions allowing to achieve social and environmental goals andthat such an organization display an alignment of the interests.