Sustainability Science Program

Corporate Social Responsibility through an Economic Lens in a Developing Country Context

Corporate Social Responsibility through an Economic Lens in a Developing Country Context

Robert Stavins, Albert Pratt Professor of Business and Government, Environment Economics Program, Kennedy School of Government

Forest Reinhardt, John D. Black Professor of Business Administration, Head, Business, Government, and the International Economy Unit, Harvard Business School

Richard H.K. Vietor, Senator John Heinz Professor of Environmental Management, Senior Associate Dean

2007 award of $20,000

This is an inter-faculty research project of KSG Professor Robert Stavins with Professors Forest Reinhardt and Richard Vietor of the Harvard Business School. “Corporate social responsibility” in the environmental realm is the notion that firms do and ought to exceed full compliance with environmental laws, because of their broader social responsibilities. The project brings to bear analysis from law, business, and economics to examine four key questions: may they, can they, do they, and should they. For all four questions, the social context is crucial. First, whether it is legally permissible for publicly traded firms to voluntarily exceed the requirements of environmental laws depends upon the legal structure — in particular, corporate law — in the relevant jurisdiction. Second, whether firms can carry out such activity on a sustained basis depends upon market conditions in the relevant economy. Third, whether firms actually behave this way varies from one location to another, and is purely an empirical matter. Fourth, whether such activities and policies to encourage them are socially desirable is intimately linked with the available set of alternatives. The answer differs significantly for industrialized and developing countries.

Final progress report - submitted 080829

Publications:

Reinhardt, Forest L., Robert N. Stavins, and Richard H.K. Vietor. 2008. Corporate social responsibility through an economic lens. Review of Environmental Economics and Policy  2(2): 219–239