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Modeling Cognitive Social Capital and Corporate Social Responsibility (CSR) as Preconditions for Sustainable Networks of Relations

Author

Listed:
  • Giacomo Degli Antoni

    (University of Milano-Bicocca)

  • Lorenzo Sacconi

    (University of Trento - Department of Economics)

Abstract

The paper studies the relationship between social capital (SC) and Corporate Social Responsibility (CSR) by investigating the idea of a virtuous circle between the level of SC and the implementation of CSR practices that favours the creation of cooperative networks between the firm and all its stakeholders by promoting the spread of social norms of trust, trustworthiness and cooperation. Following the literature on SC that stresses its multidimensional character (e.g. Paldam 2000), we consider two dimensions of this notion. Starting from the distinction introduced by Uphoff (1999), we take into account a cognitive and a structural idea of SC. The first one essentially refers to the dispositional characters of agents that affect their propensity to behave in different ways. The latter refers to social networks connecting agents.With regard to the concept of CSR, we adopt a contractarian approach and consider CSR as an extended model of corporate governance, based on the fiduciary duties owed to all the firm's stakeholders. Among stakeholders, we distinguish between strong and weak stakeholders. Both these two categories have made specific investments in the firm. However, strong stakeholders are precious for the firm because they bring in strategic assets. They are, for example, skilled workers or institutional investors. On the contrary, weak stakeholders do not bring strategic assets into the firm and firms have material incentives at defecting in the relationship with them. They are, for example, unskilled workers. By using the tools of psychological game theory, the paper shows the role of cognitive social capital and the adoption of CSR practices in promoting the emergence of social norms of trust, trustworthiness and cooperation which favour the creation of cooperative networks between the firm and all its stakeholders (structural social capital). In particular, we show that: a) the level of cognitive SC plays a key role in inducing the firm to adopt and observe CSR practices that respect all the stakeholders; b) the decision of adopting formal instruments of CSR contributes to create cognitive SC that is endogenously determined in the model; c) the level of cognitive SC and the decision of adopting CSR practices creates structural SC in terms of a long term relationship between the firm and the weak and strong stakeholders.

Suggested Citation

  • Giacomo Degli Antoni & Lorenzo Sacconi, 2010. "Modeling Cognitive Social Capital and Corporate Social Responsibility (CSR) as Preconditions for Sustainable Networks of Relations," Econometica Working Papers wp19, Econometica.
    • Handle: RePEc:ent:wpaper:wp19
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    References listed on IDEAS

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    Cited by:

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    2. Fabio Sabatini & Francesco Sarracino, 2013. "Will Facebook save or destroy social capital? An empirical investigation into the effect of online interactions on trust and networks," Department of Economics University of Siena 692, Department of Economics, University of Siena.
    3. Zhonghua Zhao & Fanchen Meng & Yin He & Zhouyang Gu, 2019. "The Influence of Corporate Social Responsibility on Competitive Advantage with Multiple Mediations from Social Capital and Dynamic Capabilities," Sustainability, MDPI, vol. 11(1), pages 1-16, January.
    4. Fabio Sabatini & Francesco Sarracino & Eiji Yamamura, 2014. "Social norms on rent seeking and preferences for redistribution," Econometica Working Papers wp55, Econometica.
    5. Fabio Sabatini & Francesco Sarracino, 2019. "Online Social Networks and Trust," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 142(1), pages 229-260, February.
    6. Degli Antoni, Giacomo & Sacconi, Lorenzo, 2013. "Social responsibility, activism and boycotting in a firm–stakeholders network of games with players’ conformist preferences," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 45(C), pages 216-226.
    7. Giacomo Degli Antoni & Lorenzo Sacconi, 2011. "Does virtuous circle between social capital and CSR exist? A �network of games� model and some empirical evidence," Department of Economics Working Papers 1103, Department of Economics, University of Trento, Italia.
    8. Leonardo Becchetti & Giacomo Degli Antoni & Marco Faillo, 2013. "Team reasoning theory: an experimental analysis of common reason to believe and social distance," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 60(3), pages 269-291, September.

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