How can a business institution function as an ethical institution within a wider system if the context of the wider system is inherently unethical? If the primary goal of an institution, no matter how ethical it sets out to be, is to function successfully within a market system, how can it reconcile making a profit and keeping its ethical goals intact? While it has been argued that some ethical businesses do exist, e.g., Johnson and Johnson, the argument I would like (...) to put forth is that no matter how ethical a business institution is, or how ethical its goals are, its capacity to act in an ethical manner is restricted by the wider system in which it must operate, the market system. Unless there is a fundamental change in the notion of the market system itself, the capacity for individual businesses to act in an ethical manner will always be restricted. My argument is divided into two parts. The first part is to show the inherent bias towards unethical outcomes that is inherent in the market system. The second part is to suggest how to reorient the general economic framework in order to make ethical institutions more possible. The question then becomes, how to define economic behavior in terms other than competition for profit. (shrink)

Firms engage in corporate social responsibility (CSR) because they consider that some kind of competitive advantage accrues to them. We contend that resource-based perspectives (RBP) are useful to understand why firms engage in CSR activities and disclosure. From a resource-based perspective CSR is seen as providing internal or external benefits, or both. Investments in socially responsible activities may have internal benefits by helping a firm to develop new resources and capabilities which are related namely to know-how and corporate culture. In (...) effect, investing in social responsibility activities and disclosure has important consequences on the creation or depletion of fundamental intangible resources, namely those associated with employees. The external benefits of CSR are related to its effect on corporate reputation. Corporate reputation can be understood as a fundamental intangible resource which can be created or depleted as a consequence of the decisions to engage or not in social responsibility activities and disclosure. Firms with good social responsibility reputation may improve relations with external actors. They may also attract better employees or increase current employees’ motivation, morale, commitment and loyalty to the firm. This article contributes to the understanding of why CSR may be seen as having strategic value for firms and how RBP can be used in such endeavour. (shrink)

The relationship of corporate social responsibility to risk management has been treated sporadically in the business society literature. Using real options theory, I develop the notion of corporate social responsibility as a real option its implications for risk management. Real options theory allows for a strategic view of corporate social responsibility. Specifically, real options theory suggests that corporate social responsibility should be negatively related to the firm’s ex ante downside business risk.

In this paper we examine the effects of different competitive conditions on the determination and evaluation of strategies of corporatesocial responsibility (CSR). Although the mainstream of current thinking in business ethics recognizes that a firm should invest in social responsibility, the normative theory on how specific competitive conditions affect a firm’s social responsibility remains underdeveloped. Intensity of competition, risks to reputation and the regulatory environment determine the competitive conditions of a firm. Our central thesis is that differential strength of competition (...) produces differential moral legitimacy of firm behavior. When competition is fierce or weak, different acts or strategies become morally acceptable, as well as economically rational. A firm has to develop its own strategy of social responsibility, in light of its competitive position, as well as ethical considerations. (shrink)