Vox
July 26, 2012Money matters, but is that all? This column presents evidence that social incentives can boost productivity in sectors that rely on pro-social behaviour such as health, education, and social care. It argues that this may help explain the growing popularity of Corporate Social Responsibility programmes within firms.
Corporate Social Responsibility (CSR) activities, ranging from corporate philanthropy to the adherence of firms' operations to code of conducts involving, for instance, environmental protection or labour standards, are important and growing in their importance. As the Economist (2008) puts it, "it is almost unthinkable today for a big global corporation to be without [a corporate CSR policy]". Given their heterogeneous nature, it is not easy to quantify CSR activities in a comprehensive manner. However, the available figures suggest that CSR is more than a declaration of intents. For instance, the 139 US companies surveyed by the Conference Board gave $8.45 billion in charitable donations in 2010 (Tonello and Torok 2011).
One rationale for CSR is that various stakeholders have some demand for corporations to engage in philanthropy on their behalf (Benabou and Tirole 2010). Usually it is underlined how CSR may be valued by customers (Casadesus-Masanell et al. 2009, Elfenbein and McManus 2010) or employees and investors. Additionally, CSR activities may be rewarded by regulators or by social activists and NGOs (Baron 2001). There is, however, not much evidence on the impact of CSR on employees, despite the fact that, as The Economist (2008) emphasises, "[a]sk almost any large company about the business rationale for its CSR efforts and you will be told that they help to motivate, attract and retain staff".
In recent research (Tonin and Vlassopoulos 2012), we set up a ‘real effort’ experiment to assess the impact of social incentives brought about by CSR activities on productivity.
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