Reputation, corporate social responsibility and market regulation
The 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.
|Date of creation:||2004|
|Date of revision:|
|Publication status:||Published in Tijdschrift voor Economie en Management XLIX (2004): pp. 271-308|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
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.:
- Graafland, J.J., 2001. "Profts and principles: Four perspectives," MPRA Paper 21134, 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.
- 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.
- 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., 2003. "Distribution of responsibility, ability and competition," MPRA Paper 20731, University Library of Munich, Germany.
- 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.
- 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.
- Kong, Nancy & Salzmann, Oliver & Steger, Ulrich & Ionescu-Somers, Aileen, 2002. "Moving Business/Industry Towards Sustainable Consumption:: The Role of NGOs," European Management Journal, Elsevier, vol. 20(2), pages 109-127, April.
- Zahra, Shaker A. & Covin, Jeffrey G., 1995. "Contextual influences on the corporate entrepreneurship-performance relationship: A longitudinal analysis," Journal of Business Venturing, Elsevier, vol. 10(1), pages 43-58, January.
- 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.
- 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 Elliot & Richard B. Freeman, 2004. "White hats or Don Quixotes? Human rights vigilantes in the global economy," LSE Research Online Documents on Economics 19952, London School of Economics and Political Science, LSE Library.
- 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.
- J.J. Graafland & S.C.W. Eijffinger, 2004.
"Corporate social responsibility of Dutch companies: Benchmarking, transparency and robustness,"
Springer, vol. 152(3), pages 403-426, 09.
- Graafland, J.J. & Eijffinger, S.C.W., 2004. "Corporate social responsibility of Dutch companies : Benchmarking, transparency and robustness," Other publications TiSEM 3086f970-3051-4b5d-9c4a-a, Tilburg University, School of Economics and Management.
- George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, Oxford University Press, vol. 97(4), pages 543-569.
- Francois, P. & Roberts, J., 2001.
"Contracting Productivity Growth,"
2001-35, Tilburg University, Center for Economic Research.
- 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.
- 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.
- 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.
- 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.
- 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.
- Graafland, J.J., 2002. "Modelling the trade-off between profits and principles," MPRA Paper 20752, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:20772. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.