Private Politics, Corporate Social Responsibility, and Integrated Strategy

Essay by badfans October 2004

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1. Introduction

Economic activity is affected by interest and activist groups through

two mechanisms. One is through public politics, in which groups

attempt to in uence public ofŽceholders to the beneŽt of the groups

themselves or those whom they support. The other is through private

politics, in which interest and activist groups attempt to in uence

economic activity directly without reliance on public institutions

or ofŽceholders. This paper provides a theory of private politics in

which an activist seeks to change the production practices of a Žrm

for the purpose of redistribution to those whose interests it supports.

The source of the activist's in uence is the possibility of support for its

cause by the public. One objective of the paper is to explore the positive

implications of interest and activist groups in affecting economic

activity through private politics.

The subject of redistribution by Žrms has a long history in the

normative literature on corporate social responsibility (CSR).1


This research has been sponsored by NSF Grant No. SBR-9809177. I would like to thank

Peter Coughlan and Dennis Yao for their comments and David Ahn for his assistance.

1. See Carroll (1979), Freeman (1984), Preston and Post (1975), and Wood (1991).

© 2001 Massachusetts Institute of Technology.

Journal of Economics & Management Strategy, Volume 10, Number 1, Spring 2001, 7-45

8 Journal of Economics & Management Strategy

advocates argue both that normative principles demand redistribution

by Žrms and that if Žrms do not meet the expectations of society with

regard to their social performance they will be faced with government

action. The Žrst argument pertains to a moral motivation, whereas the

second argument pertains to a response to, or anticipation of, a threat.

A third argument is that Žrms that voluntarily take actions in the

name of CSR will be...