Four potential rationales for instituting CSR programs

by Ivano Abbadessa - 2016.03.16
Four potential rationales for instituting CSR programs
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Why companies invest on corporate social responsibility, or CSR? A new paper published in the Journal of Marketing investigates the motivations behind companies’ implementation of CSR programs. The paper examines 4,500 firms over a 19-year span and compares implementation of CSR programs. The study’s authors identified four potential rationales for instituting CSR programs:

- The first is what’s called the slack resources theory, which assumes that when a firm is doing well, it has plenty of extra money to play around with (i.e., slack resources mechanism).

- Another theory suggests that companies view CSR programs as good management practice, since firms that focus on social good can reap financial rewards because of their good reputation -such as increases in sales, more loyal customers, good press, or the ability to attract more high-quality employees.

- CSR makes amends for past corporate social irresponsibility (i.e., penance mechanism).

- Another is the insurance theory, where firms put together CSR programs to help mitigate any damage to their brand that could occur from future bad behavior.

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