Corporate Social Responsibility (CSR). Cui bono?

Corporate Social Responsibility (CSR) is a concept that has become widely accepted as an ethical claim for firms. It reflects a more recent distribution conflict over the economic rents created by large firms. In this respect, these firms resemble political institutions more than economic entities. To take up this observation theoretically, rent-seeking theory is employed in this paper to analyze CSR more thoroughly. First, CSR may be a form of productive rent-seeking or rent-creation if it provides goods and services with those ethical standards that are coincidental with customers' preferences. Second, CSR could be unproductive rent-seeking if existing rents were simply redistributed. Third, CSR could be rent-shrinking if redistributing rents diluted control incentives within firms with the effect to reduce firm output or profitability. However, the CSR-induced rent competition between owners/shareholders, managers and stakeholders may also alter the rent allocation of firms to the advantage of owners/shareholders via stakeholder preferences. Prudent forms of CSR, therefore, can enhance welfare.