Shareholders, Corporate Social Responsibility and Global Public Goods
This article examines why publicly owned companies include the creation of global public goods in their goals. There are often acute market failures and public policy problems on a global scale. In such cases, profit maximization cannot guarantee efficient and fair economic outcomes. The article discusses developing socially responsible strategies for investors and proposes various practical implications.
Why should firms care about promoting the common good1, especially at the global level? Is profit maximization not enough? What is the impact of corporate social responsibility (CSR), defined as corporate policies that go beyond legal and contractual obligations in the pursuit of the common good (Benabou and Tirole, 2010), on firms' profitability? These questions are important for socially responsible investors who expect both a financial and a societal return on investment. They are also crucial in the context of the apparent under-supply of global public goods (Otker-Robe, 2014).Achieving the common good entails ensuring efficient production of goods and services and, at the same time, fairly distributing them among individuals and over time. The literature in public economics has identified what could prevent profit maximization from…