Strategic Leadership in Corporate Social Responsibility

Strategic Leadership in Corporate Social Responsibility

Rui Albuquerque, Luis Cabral

Series number :

Serial Number: 
788/2021

Date posted :

September 27 2021

Last revised :

September 27 2021
SSRN Share

Keywords

  • Commitment • 
  • leadership • 
  • Corporate Social Responsibility • 
  • stockholder model • 
  • stakeholder model • 
  • Externalities • 
  • mission statement • 
  • clean-energy technology • 
  • supply chain • 
  • wage setting

We propose a strategic theory of Corporate Social Responsibility (CSR). Shareholder maximizers commit to a mission statement that extends beyond firm value maximization. This commitment leads firms (either product market competitors or complementors along the value chain) to change their actions in ways that ultimately favor shareholders.

We thus provide a formal analysis of the “doing well by doing good” adage. We also provide conditions such that the mission statement game has the nature of a pure coordination game. Our framework thus provides a natural theory of firm leadership in a CSR context: by selecting a CSR mission statement, a first mover effectively leads the industry to a Pareto optimal equilibrium.

Authors

Real name:
Luis Cabral