Monday, August 1, 2011

Corporate Social (Ir)responsibility

Here is a new study on corporate social responsibility that will feed cynicism about CSR in general:

by Matthew J. Kotchen and Jon Jungbien Moon

This paper provides an empirical investigation of the hypothesis that
companies engage in corporate social responsibility (CSR) in order to
offset corporate social irresponsibility (CSI). We find general
support for the causal relationship: when companies do more "harm,"
they also do more "good." The empirical analysis is based on an
extensive 15-year panel dataset that covers nearly 3,000 publicly
traded companies. In addition to the overall finding that more CSI
results in more CSR, we find evidence of heterogeneity among
industries, where the effect is stronger in industries where CSI
tends to be the subject of greater public scrutiny. We also
investigate the degree of substitutability between different
categories of CSR and CSI. Within the categories of community
relations, environment, and human rights--arguably among those
dimensions of social responsibility that are most salient--there is a
strong within-category relationship. In contrast, the
within-category relationship for corporate governance is weak, but
CSI related to corporate governance appears to increase CSR in most
other categories. Thus, when CSI concerns arise about corporate
governance, companies seemingly choose to offset with CSR in other
dimensions, rather than reform governance itself.

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