Elgar original reference
Edited by Luigino Bruni and Stefano Zamagni
Chapter 38: The economics of corporate social responsibility
Over the past two decades, corporate social responsibility (CSR) has been a focal subject for scholars in management studies, business ethics, and the law. More recently, however, economists have also started to pay attention to CSR in both popular newspapers and academic journals. As early as 2005, The Economist acknowledged the spectacular growth of company CSR initiatives throughout the world, involving companies, business associations, stakeholders representative groups, NGOs, universities, international organizations, and yet others. What struck The Economist as especially disturbing – in line with a famous Milton Friedman’s dictum of the 1970s – was that Boards of Directors, insufficiently committed to making profits for their shareholders, were instead engaging in ‘pernicious benevolence’ by being philanthropic with money taken not from their own pockets but from those of the corporate shareholders. What in fact this view indicated was that CSR is a philanthropic activity that ‘altruistic’ managers undertake by misusing corporate money, which as such, is in contrast with profit maximization. According to this view, CSR was a peculiar manifestation of managerial self-dealing: managers used company funds for the self-satisfaction of their own arbitrary moral preferences.