The Economic Analysis Of Corporate Social Responsibility

Corporate Social Responsibility (CSR) is a hot topic that brings broad debate in academia. Many scholars research on CSR respectively from the point of view of economics, management science, sociology, ethnics, law etc. This paper analyses corporate social responsibility (CSR) based on stakeholder theory and discusses some issues about CSR from the standpoint of economics.Traditional economics theory assumes that the firm is the pursuer of profit maximization. The shareholder is the owner of firms, so the profit maximization is the shareholder interest maximization. But the emergence of two structural trends in western society in 1930s—the increasing diffusion of the ownership of the shares of corporations and the development of a pluralistic society. This situation challenged the ideas that corporations were only responsible for shareholders and the objective of corporation was maximization for shareholder value. As the same time, the enlargement of corporations produced more and more social problems.The strong criticism of public forced corporations to take on diversified social responsibilities. This paper proposes that CSR implies corporations maximize shareholder profits as well maintaining voluntarily the interest of non-shareholder stakeholders. The objective of firms is to pursue the whole stakeholder interest maximization. CSR is classified economic responsibilities, legal responsibilities, ethical responsibilities, discretionary responsibilities according to intensional approach and responsibilities of shareholders, employees, consumers, suppliers, creditors, local communities according to extensional approach.This paper argues that theoretical logic of shareholder primacy exists limitations. the corporation is not simply bundles of physical assets of shareholders but the nexus of contracts of stakeholders. Every stakeholder makes specific investment in the activities of the firm. The survival and development of firm depends on the collective contributions of stakeholders. If the firm ignores the legitimate interest of stakeholders, the sustainable operation of firm will be affected. Managers as the contract agents of firm must act in interests of the corporation—an abstract entity and balance the conflicting claims of the various stakeholders. The internal motivation of corporations taking on social responsibilities is economic interest and the external pressure of corporations taking on social responsibilities includes choice of consumers and...