The economic consequences of corporate social irresponsibility and policy implications

Abstract

Although extensive research has explored topics related to corporate social responsibility (CSR)—particularly within the context of the Sustainable Development Goals—including its impact on firms’ performance, the evidence is mixed and inconclusive.1 Further, even as the research focusing on CSR has increased, a relatively small number of studies have investigated “corporate social irresponsibility” (CSI). Yet, CSR and CSI may exist simultaneously and have distinct economic consequences on firms. This chapter first discusses the coexistence of CSR and CSI then expounds on their different economic consequences. It analyzes factors that affect the economic consequences of CSR and CSI, summarizes relevant regulations and legislation, and details the policy implications of CSR and CSI. As governments and wider civil society have grown more aware of environmental and social issues, the public too has started to emphasize and expect companies to play a role as social citizens. This has fueled interest in CSR in academia, in practice, and from policymakers.