The Political (dis)economies of Csr

Aseem Kaul (University of Minnesota)
Jiao Luo (University of Minnesota)

Abstract: We argue that the use of Corporate Social Responsibility (CSR) as a source of competitive advantage implies the exclusion of at least some potential beneficiaries from the private provision of public goods. While such exclusion may be welfare-enhancing if private provision is transient and leads to greater state or non-profit provision once the demand for the public good has been established, it may also be welfare-destroying in so far as private provision crowds out state provision, leaving those who are excluded worse off than they were before. In such cases, CSR may be a source of political polarization, with the interests of those who are served by CSR increasingly diverging from the interests of those whose concerns are of no interest to profit-maximizing firms.