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Strategic Leadership in Corporate Social Responsibility
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ECGI New Working Paper Alert
ECGI Finance Series 788/2021
Thursday 14 October 2021
Strategic Leadership in Corporate Social Responsibility

Rui Albuquerque, Boston College, CEPR and ECGI
Luís Cabral, New York University and CEPR

Keywords:

Commitment • Leadership • Corporate Social Responsibility •
Stockholder Model • Stakeholder Model • Externalities •
Mission Statement • Clean-Energy Technology • Supply Chain • Wage Setting

 
We propose a strategic theory of Corporate Social Responsibility (CSR). Shareholder maximizers commit to a mission statement that extends beyond firm value maximization. This commitment leads firms (either product market competitors or complementors along the value chain) to change their actions in ways that ultimately favour shareholders.

We thus provide a formal analysis of the “doing well by doing good” adage. We also provide conditions such that the mission statement game has the nature of a pure coordination game. Our framework thus provides a natural theory of firm leadership in a CSR context: by selecting a CSR mission statement, a first-mover effectively leads the industry to a Pareto optimal equilibrium.
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Submitted by

Professor Rui Albuquerque ECGI Profile
Professor of Finance
Boston College


Email: rui.albuquerque@bc.edu
The ECGI is an international scientific non-profit association providing a forum for debate and dialogue between academics, legislators and practitioners, focusing on major corporate governance issues. 
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