Corporate Social Responsibility and Business Performance
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Corporate Social Responsibility and Business Performance

Theories and Evidence about Organizational Responsibility

Tobias Gössling

Does it pay for businesses to act morally? This book attempts to answer this question. Taking a positive approach, it demonstrates that, under certain conditions, organizations can act responsibly and profitably at the same time. It elaborates on these conditions and provides evidence for the assumed positive relation between responsibility and profitability.
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Chapter 3: The Price of Morality: An Institutional Analysis of the Profitability of Responsibility

Tobias Gössling


Introduction Morality has a price. One cannot buy morality or pay a price for being a moral person. However, we can define prices, or shadow prices, for moral behaviour as opposed to immoral behaviour. At least for simple situations, it is possible to construct a cost–benefit analysis. The difference between the net result of the most efficient immoral choice in a situation and a moral choice in the same situation would be the price of morality in that situation. This study discusses whether or not it can be economically rational to behave morally, and describes the market mechanisms that determine the costs and benefits of morality. In business ethics, expressions like ‘morality pays’ or ‘good ethics is good business’ suggest that it is always economically efficient to behave morally or to be a moral person. Some political economists, on the other hand, argue that the systematic approach to ethics and moral behaviour can be found in the formal institutional setting of a society (Homann and Blome-Drees,1992; Brennan and Buchanan, 1985). This study describes the institutional setting of formal and informal institutions as a condition for morality of individual institutions. Given these conditions, this chapter draws conclusions for the price that individuals have to pay for moral behaviour and for the price that societies have to pay for the morality of their members. Individual morality This study describes morality as individual and intrinsic. Furthermore, morality is based upon cognitive processes. These processes lead to the development of general individual...

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