Corporate social responsibility, business strategy, and the environment.pdf
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1、Corporate social responsibility, business strategy, and the environment Forest L. Reinhardt* and Robert N. Stavins* AbstractWe examine the concept of firms sacrificing profits in the social interest within the environmental realm, with particular focus on the case of the United States by addressing
2、four key questions. May they do so within the scope of their fiduciary responsibilities to their shareholders? Can they do so on a sustainable basis, or willtheforcesof acompetitivemarketplace render sucheffortsandtheir impactstransient atbest? Dofirms, in fact, frequently or at least sometimes beha
3、ve this way, reducing their earnings by voluntarily engaging in environmental stewardship? Should firmscarryout suchprofit-sacrificingactivities (i.e. isthis an efficientuse of social resources)? We address these questions through the lens of economics, including insights from legal and business sch
4、olarship. Key words: corporate social responsibility, voluntary environmental performance JEL classification: M140, L510, Q5 I.Introduction Business leaders, government officials, and academics continue to focus considerable attention on the concept of corporate social responsibility (CSR), particul
5、arly in the realm of environmental protection. Beyond complete compliance with environmental regulations, do firms have additional moral or social responsibilities to commit resources to environ- mental protection? How should we think about the notion of firms sacrificing profits in the social inter
6、est? May they do so within the scope of their fiduciary responsibilities to their shareholders? Can they do so on a sustainable basis, or will the forces of a competitive marketplace render such efforts and their impacts transient at best? Do firms, in fact, *Harvard Business School, e-mail: freinha
7、rdthbs.edu *John F. Kennedy School of Government, Harvard University, Resources for the Future, and National Bureau of Economic Research, e-mail: robert_stavinsharvard.edu This paper draws in part on Reinhardt et al. (2008), and has benefited from reviews by Michael Barnett, Robert Ritz, and the edi
8、tors. Any remaining errors are our own. doi: 10.1093/oxrep/grq008 The Authors 2010. Published by Oxford University Press. For permissions please e-mail: journals.permissionsoxfordjournals.org. Oxford Review of Economic Policy, Volume 26, Number 2, 2010, pp.164181 at Zhejiang University on February 2
9、2, 2011oxrep.oxfordjournals.orgDownloaded from frequently or at least sometimes behave this way, reducing their earnings by voluntarily engaging in environmental stewardship? And finally, should firms carry out such profit- sacrificing activities (i.e. is this an efficient use of social resources)?
10、We address these questions1through the lens of economics, including insights from legal and business scholarship, and focusing our empirical analysis on the case of the United States. One of the challenges of examining the concept of CSR is simply identifying a consistent and sensible definition fro
11、m among the wide range of definitions that have been proposed.2 We adopt a simple definition originally offered by Elhauge (2005)sacrificing profits in the social interest. This definition is consistent with useful prior perspectives (Graff Zivin and Small, 2005; Portney, 2005; Reinhardt, 2005), and
12、 enables us to focus the discussion on some key normative and positive questions.3 Questions regarding sacrificing profits in the social interest apply beyond the environ- mental sphere, and the academic debate over the legality of sacrificing profits in the public interest appears to have begun in
13、1932 with opposing articles (Dodd, 1932; Berle, 1932) in a Harvard Law Review symposium on For Whom Are Corporate Managers Trustees?. The debate in economics began more recently, with Milton Friedmans 1970 article, The Social Responsibility of Business Is to Increase Its Profits, in the New York Tim
14、es Magazine. Since then, the debate has continued, and CSR continues to receive much attention from both scholars and the public, especially in the environmental protec- tion area. We begin by examining whether firms may sacrifice profits to benefit individuals other than their shareholders, and the
15、n look at the legality of CSR in the United States and other countries. Next, we identify circumstances under which firms can sacrifice profits without being punished by market forces. We then turn to positive questions about whether firms actually do engage in CSR, asking whether some firms truly e
16、xceed full compliance with the law and, if so, whether their socially responsible actions actually sacrifice profits. To address our fourth question, should firmsfrom a societal perspectivebe carrying out such activities, we examine CSR in a normative light. The final section summarizes our findings
17、 and offers some conclusions. II.May they? Despite the view held by many economists and business scholars that corporations have a simple and strict fiduciary duty to maximize profits for shareholders, the legal basis of this view is surprisingly weak. Although the judicial record supports a duty to
18、 maximize profits for shareholders, it leaves room for the possibility that firms may sacrifice profits in the public interest. This is principally because courts give considerable deference to the judge- ment of business people under the so-called, business judgement rule. 1 These four questions we
19、re originally identified by Hay et al. (2005). 2 More broadly, see reviews by Wood and Jones (1996) and Mohr et al. (2001). Lyon and Maxwell (2008) and Portney (2008) discuss CSR from theoretical and empirical perspectives, respectively. 3 Although we adopt our CSR definition of sacrificing profits
20、in the social interest for the reasons indicated above, we also acknowledge that a wide range of alternative definitions have been used by others. See, for example, Barnett (2007). Corporate social responsibility, business strategy, and the environment165 at Zhejiang University on February 22, 2011o
21、xrep.oxfordjournals.orgDownloaded from (i)The corporation The most widely accepted position on the legal purpose of the corporationknown as shareholder primacy (Springer, 1999; Ehrlich, 2005; Fisch, 2006)was articulated by Mil- ton Friedman in 1970: In a free-enterprise, private-property system, a c
22、orporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That respon- sibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the soci
23、ety, both those embodied in law and those embodied in ethical custom. (Friedman, 1970) A more subtle version of the shareholder primacy argumentthe nexus of contracts approach (Jensen and Meckling, 1976; Easterbrook and Fischel, 1991)views the cor- poration as a nexus of legal contracts between the
24、suppliers of various factors of production, who agree to cooperate in order to generate monetary returns. These agree- ments specify that, in exchange for their contributions, the owners of most factors of productionlabour, land, intellectual property rights, etc.will receive set payments with littl
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