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ETHICAL BUSINESS PRACTICES ABSTRACTS"Financial Returns of Corporate Social Responsibility, and the Moral Freedom and Responsibility of Business Leaders"
PETER DEMACARTY, Beacon Management Consulting A number of theorists have proposed mechanisms suggesting that corporate social responsibility produces better financial results. Others subscribe to the theory that, realistically, less ethical means are necessary. This article contains an analysis of these perspectives drawing on observations from evolutionary game theory and nature. Based on these analyzes, it is concluded that the financial returns of corporate social responsibility and irresponsibility (CSR and CSI) are equal on average. The explanation is that CSR and CSI are driven to a state of equilibrium, because if one or the other were to offer higher profits, it would attract more players who would compete for the best opportunities until there was no difference in average profit. Existing empirical research generally shows a positive correlation between CSR as measured and financial outcomes. It is argued that what is actually causing that finding is probably not CSR but management skill. More skillful managers, whether actually responsible or irresponsible, are able to obtain both higher profits and greater credit in imperfect measures of CSR. Next it is shown that this theory of equal returns implies greater moral freedom and therefore responsibility for business leaders. It is concluded that this insight can intensify the interest of decent business leaders in vigorously championing CSR. | ||||||||
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Solicitation of Abstracts
This eJournal was formerly part of the Social & Environmental Impact Network (SEIN). It is now included in the Corporate Governance Network (CGN). Ethical Business Practices publishes working and accepted paper abstracts covering the philosophical and practical applications of business ethics. The Journal welcomes and encourages research in any one of the main ethical topics, which include Deontological, Consequentialist, Contractual, and Situational ethics.
Distribution ServicesIf your organization is interested in increasing readership for its research by starting a Research Paper Series, or sponsoring a Subject Matter eJournal, please email: RPS@SSRN.com Distributed by:Advisory BoardSEIN Ethical Business Practices, Archives of Vols. 1-3, 2007-2009 PAUL N. BLOOM MARC EPSTEIN TIMOTHY L. FORT MARY C. GENTILE, PH.D. GEOFFREY M. HEAL ANDREW JOHN HOFFMAN ANDREW A. KING ANDREA LARSON TODD L. SAYRE
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