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Facing Up to Social Cost: The Real Meaning of Corporate Social Responsibility

Griffith Law Review, Vol. 20, No. 1, p. 221, 2011

24 Pages Posted: 15 Sep 2011  

Andrew Johnston

University of Sheffield - Law School

Date Written: August 25, 2011

Abstract

This article argues that the label ʻcorporate social responsibilityʼ (CSR) should be reserved for the process by which corporations voluntarily identify and correct the costs their operations impose on society. This would exclude both voluntary measures aimed at making the world a better place and enhancing the value of corporate brands from the scope of CSR. It would allow CSR to become another – possibly more cost-effective – method of governing the negative externalities or social costs of economic activity. In support of this argument, the article examines a number of economic approaches to the governance of negative externalities through taxation, regulation and market-based bargaining. It then argues that CSR – understood as voluntarily facing up to social cost – offers significant advantages over these more conventional alternatives. However, a number of legal changes would be required before corporations would voluntarily be likely to face up to the social costs of their activities.

Keywords: externalities, social cost, corporate social responsibility, corporate governance, comparative institutional analysis, transaction costs, constructivist sociology, Coase

JEL Classification: A14

Suggested Citation

Johnston, Andrew, Facing Up to Social Cost: The Real Meaning of Corporate Social Responsibility (August 25, 2011). Griffith Law Review, Vol. 20, No. 1, p. 221, 2011. Available at SSRN: https://ssrn.com/abstract=1927066

Andrew Johnston (Contact Author)

University of Sheffield - Law School ( email )

Sheffield
United Kingdom

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