von Martin Schelberg, PhD
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Quelle: Mackey et al 2007 Seite(n): 831, Zeilen: right col.: 23 ff. |
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| [Managerial or corporate altruism is not required to explain why firms may sometimes make these kinds of investments. Indeed, throughout this paper we] adopt the standard economic assumption that firms are trying to maximize their market value. Because firms are profit maximizing, they are willing to change their type - from socially responsible to traditional profit maximizing and back - to the extent that these actions maximize their market value. In other words, this is a theory of social responsibility that does not depend on the existence of agency conflicts between a firm’s managers and its equity holders.
Practical Implications Finally, the theory developed here has practical implications, both for those charged with making decisions about whether or not invest in socially responsible activities—managers—and those who would like to see the absolute level o [sic] such investments in society increase. The managerial task. At first, the task managers face in firms contemplating whether or not to change their social responsibility policies seems daunting. After all, in the model, managers are required to estimate the supply of socially responsible investment opportunities in an economy and the demand for these investment opportunities, and then evaluate whether or not they should change their social responsibility policies accordingly. While daunting, this task is actually not materially different from the task managers face when estimating the supply of and demand for any of their products or services in the product market. While the product - socially responsible investment opportunities - and the market - current and potential equity investors - are different, the essential challenge of discovering the level of supply and demand is very similar. Thus, it would not be surprising to see managers adopt many of the same mechanisms and tools they use to gauge supply and demand in the product market to gauge supply and demand in the market for socially responsible investment opportunities. For example, firms often use customer focus groups and product tests to estimate demand in the product market. In the market for socially responsible investment opportunities, it is likely that firms will use focus groups with current and potential investors, along with smaller tentative changes in their social responsibility policies, to estimate the demand for these types of investment opportunties [sic]. Ascertaining the current level of supply of these investment opportunities may be more difficult. Managers can attempt to measure this supply through benchmarking the activities and disclosures of their product market and equity market competitors. Indeed, it seems reasonable to expect that the relationship between the supply of and demand for socially responsible investment opportunities will change over time. In some economic conditions - for example, when there are significant earnings pressures and large numbers of unfriendly takeovers—there may well be a shortage of socially responsible investment opportunities. In other settings there may be an excess number of these investment opportunities. While at first the decision about whether or not to invest in socially responsible activities seems very complex, the model presented here does suggest a way that these decisions can be significantly simplified. In particular, the model suggests that the only time a firm seeking to maximize its market value should change its social responsibility policies is when either the demand for or the supply of these investment opportunities changes dramatically. Thus, managers need not directly estimate the size of this demand or supply - only significant changes in these parameters. Shifts in demand for these investment opportunities will often reflect specific exogenous shocks in the economy. Thus, for example, when the government in South Africa abandoned its apartheid principles, socially responsible activities that supported a ban on business in South Africa were no longer in demand. Obviously, in this kind of setting, continuing to maintain these policies, because they reduced the present value of a firm’s cash flows without any compensating firm value advantages, would have reduced a firm’s market value. More recently, various business scandals may have increased demand for socially responsible activities, as investors look to put their money into companies whose management they respect [and trust.] |
Managerial or corporate altruism is not required to explain why firms may sometimes make these kinds of investments.14
Indeed, throughout this paper, the standard economic assumption that firms are trying to maximize their market value. Because firms are profit maximizing, they are willing to change their type—from socially responsible to traditional profit maximizing and back—to the extent that these actions maximize a firm’s market value. In other words, this is a theory of social responsibility that does not depend on the existence of agency conflicts between a firm’s managers and its equity holders (Wright & Ferris, 1997). Practical Implications Finally, the theory developed here has practical implications, both for those charged with making decisions about whether or not invest in socially responsible activities—managers—and those that would like to see the absolute level of such investments in society increase. [p. 832] The Managerial Task. At first, the task facing managers in firms contemplating whether or not to change their social responsibility policies seems daunting. After all, in the model, managers are required to estimate the supply of socially responsible investment opportunities in an economy, the demand for these investment opportunities, and then evaluate whether or not they should change their social responsibility policies accordingly. While daunting, this task is actually not materially different than the task managers face when estimating the supply of and demand for any of their products or services in the product market. While the product—socially responsible investment opportunities—and the market—current and potential equity investors—are different, the essential challenge of discovering the level of supply and demand is very similar. Thus, it would not be surprising to see managers adopt many of the same mechanisms and tools they use to gauge supply and demand in the product market to gauge supply and demand in the market for socially responsible investment opportunities. For example, firms often use customer focus groups and product tests to estimate demand in the product market. In the market for socially responsible investment opportunities, it is likely that firms will use focus groups with current and potential investors, along with smaller tentative changes in their social responsibility policies, to estimate the demand for these types of investment opportunities. Ascertaining the current level of supply of these investment opportunities may be more difficult. Managers can attempt to measure this supply through benchmarking the activities and disclosures of their product market and equity market competitors. Indeed, it seems reasonable to expect that the relationship between the supply and demand for socially responsible investment opportunities will change over time. In some economic conditions, e.g., when there are significant earnings pressures and large numbers of unfriendly takeovers, there may well be a shortage of socially responsible investment opportunities. In other settings, there may be an excess number of these investment opportunities. While, at first, the decision about whether or not to invest in socially responsible activities seems very complex, the model presented here does suggest a way that these decisions can be significantly simplified. In particular, the model suggests that the only time a firm seeking to maximize its market value should change its social responsibility policies is when either the demand for or the supply of these investment opportunities changes dramatically. Thus, managers need not directly estimate the size of this demand or supply—only significant changes in these parameters. Shifts in demand for these investment opportunities will often reflect specific exogenous shocks in the economy. Thus, for example, when the government in South Africa abandoned its apartheid principles, socially responsible activities that supported a ban on business in South Africa were no longer in demand. Obviously, in this kind of setting, continuing to maintain these policies, because they reduced the present value of a firm’s cash flows without any compensating firm value advantages, would have reduced a firm’s market value. More recently, various business scandals may have increased demand for socially responsible activities, as investors look to put their money into companies whose management they respect and trust. 14 Although, managerial morality is not required to motivate corporate social responsibility in the model presented in this paper, such considerations may, nevertheless, influence firm decisions concerning such activities (Aguilera, Rupp, Williams, & Ganapathi, 2005; Schnedier, Oppegaard, Zollo, & Huy, 2005). |
The source is given on pp 58 f. |
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