Journal of Business Ethics

, Volume 80, Issue 2, pp 367–377

Reconciling Corporate Citizenship and Competitive Strategy: Insights from Economic Theory

Article

DOI: 10.1007/s10551-007-9425-1

Cite this article as:
Maxfield, S. J Bus Ethics (2008) 80: 367. doi:10.1007/s10551-007-9425-1

Abstract

Neoclassical and Austrian/evolutionary economic paradigms have different implications for integrating corporate social responsibility (corporate citizenship) and competitive strategy. Porter’s “Five Forces” model implicitly rests on neoclassical theory of the firm and is not easily reconciled with corporate social responsibility. Resource-based models of competitive strategy do not explicitly embrace a particular economic paradigm, but to the extent their conceptualization rests on neoclassical assumptions such as imperfect factor markets and profits as rents, these models also imply a trade-off between competitive advantage and corporate social responsibility. Differences in Austrian/evolutionary economic model’s assumptions about equilibrium, profits, and other economic concepts allow this paradigm to embrace alternative views of strategy such as the activities or dynamic capabilities views. These alternative views of strategy focus on learning and adaptation; they align more easily with corporate social responsibility. In practice this alignment comes about because social engagement facilitates the learning and adaptation that are a source of competitive advantage. Among the many business arguments for CSR such as improved employee morale/productivity or brand differentiation, this view prioritizes innovation.

Keywords

corporate social responsibilitycompetitive strategyincomplete marketseconomic theory of the firmneoclassical economicsAustrian/evolutionary economics

Copyright information

© Springer Science+Business Media B.V. 2007

Authors and Affiliations

  1. 1.School of ManagementSimmons CollegeBostonU.S.A.