Co-determination: A driving force for corporate social responsibility in German companies?

This discussion paper examines the relationship between co-determination and corporate social responsibility (CSR) in German companies, thereby addressing two distinct literatures. On the one hand, most quantitative studies of co-determination focus on its economic impact, with relatively little attention paid to other kinds of outcomes. On the other hand, few studies on CSR have looked at the role of worker representatives. Using a new measure of co-determination strength, the Mitbestimmungsindex (MB-ix), it is demonstrated that co-determination strength is positively related to the presence of "substantive" CSR policies, such as the adoption of targets for reducing pollution, but is unrelated to "symbolic" CSR policies, such as membership in UN Global Compact. The paper therefore sheds new light on the role of co-determination and provides a more differentiated view of the spread of what has been termed "explicit" CSR in Germany, one of the most prominent of the "coordinated market economies".