Corporate social responsibility and the classical theory of the firmAre both theories irreconcilable?

  1. García de Madariaga Miranda, Jesús
  2. Rodríguez de Rivera Cremades, Fernando
Journal:
Innovar: revista de ciencias administrativas y sociales

ISSN: 0121-5051

Year of publication: 2010

Volume: 20

Issue: 37

Pages: 5-19

Type: Article

More publications in: Innovar: revista de ciencias administrativas y sociales

Abstract

There has been a lot of discussion about corporate social responsibility (CSR) during these last decades. Neoclassical authors support the idea that CSR is not compatible with the objective of profit maximization, and defenders of CSR argue that, in these times of globalization and network economies, the idea of a company managed just to meet shareholders' interests does not support itself. However, beyond this discussion, how can CSR affect firms' market value? If we found a positive relationship between these variables, we could conclude that the two theories are reconcilable and the objective of profit maximization, perhaps, should satisfy not only shareholders' interests, but also stakeholders'. We review previous literature and propose a model to analyze how CSR affects firms' market value.