Analysis of the possible visions of CSR based on returns using game theory

Abstract

THE AIMS OF THE PAPER

Corporate Social Responsibility (CSR) is becoming more and more popular among domestic companies. However the different levels of responsibility can be distinguished from bolt-on activities to real deep, so called built-in solutions. The type of CSR activity of companies is mainly determined by the motivation of companies, what they expect from the responsible activity. Many researches focus on the relationship between CSR and financial performance of companies. The purpose of this study is to determine the possible future directions of this responsible concept based on this relationship. The study also analyses the possibility of operating real responsible companies in the future, which means that CSR will be not only just a marketing tool.

METHODOLOGY

The study summarizes the most important results of different researches connected to the relationship between responsible and financial performance, and based on these a game theory model will be introduced in order to analyse the potential development, outcomes of CSR. Because both CSR activities and the expected benefits are highly varied from the positive financial indicators to image improvement or employee benefits, the relationship between responsible and financial performance is also varied.

MOST IMPORTANT RESULTS

Because of the unclear relationship between responsible and financial performance the development of CSR can take different directions according to outcomes of the game theory model. One part of the companies will be using cheaper CSR elements connected to marketing communication, while others will acquire deeper and often more costly activities of responsibility until a player in the market (consumers, state, dominant company, etc.) will dynamize the game in order to reach the social optimum.

RECOMMENDATIONS

Based on the different outcomes of the model an exciting research question could be how to identify the company features (company size, industry, closeness to consumers, etc.) of each outcome. According to this the model presented in the study can be the basis of a primary research that can identify corporate groups that can be linked to CSR visions. Based on the results there is also an opportunity to use real options methodology in further researches of future of CSR.