Corporate Social Respomsibility

Research Paper No. 1656

Private Politics, Corporate Social Responsibility, and Integrated Strategy

David P. Baron

RESEARCH PAPER SERIES

GRADUATE SCHOOL OF BUSINESS STANFORD UNIVERSITY

Private Politics, Corporate Social Responsibility, and Integrated Strategy David P. Baron1 Stanford University

I. Introduction Economic activity is a®ected by interest and activist groups through two mechanisms. One is through public politics in which groups attempt to in°uence public o±ceholders to the bene¯t of the groups themselves or those whom they support. The other is through private politics in which interest and activist groups attempt to in°uence economic activity directly without reliance on public institutions or o±ceholders. This paper provides a theory of private politics in which an activist seeks to change the production practices of a ¯rm for the purpose of redistribution to those whose interests it supports. The source of the activist's in°uence is the possibility of support for its cause by the public. One objective of the paper is to explore the positive implications of interest and activist groups in a®ecting economic activity through private politics. The subject of redistribution by ¯rms has a long history in the normative literature on corporate social responsibility (CSR).2 CSR advocates argue both that normative principles demand redistribution by ¯rms and that if ¯rms do not meet the expectations of society with regard to their social performance they will be faced with government action. The ¯rst argument pertains to a moral motivation, whereas the second argument pertains to a response to, or anticipation of, a threat. A third argument is that ¯rms that voluntarily take actions in the name of CSR will be rewarded in the marketplace, for example, by increased demand for their products. Firms thus can adopt policies labeled as CSR for a variety of reasons. Some may do so because they believe it will increase pro¯ts. Others may do so for... [continues]

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