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Introduction
In recent years, academics in fields of several business administration have studied the economic and managerial implications of corporate social responsibility (CSR). CSR may be defined, consistent with McWilliams and Siegel (2001), as actions on the part of a firm that appear to advance the promotion of some social good beyond the immediate interests of the firm/shareholders and beyond legal requirements. That is, CSR activities of companies are those that exceed compliance with respect to, e.g., environmental or social regulations, in order to create the perception or reality that these firms are advancing a social goal.
It is not surprising that some firms choose to be socially responsible in this sense. Most large multi-national companies encounter extensive pressure from consumers, employees, suppliers, community groups, government, non-governmental organizations (NGOs), and institutional shareholders to engage in CSR. Such CSR activities might include incorporating social characteristics or features into products and manufacturing processes (e.g., producing aerosol products with no fluorocarbons or making greater use of environmentally-friendly technologies), striving to reach higher levels of environmental performance via recycling or pollution abatement (e.g., adopting an aggressive stance towards reducing emissions), or promoting the goals of community organizations or NGOs (e.g., United Way or Greenpeace). From an economics perspective, companies would be expected to engage in such activities if the perceived (measured or unmeasured) benefits exceeded the associated costs in the view of the decision-making entity.
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