Corporate Social Responsibility and Corporate Governance

Corporate social responsibility (CSR) is a model of corporate governance (CG) extending fiduciary duties from fulfillment of responsibilities towards the firmOs Eowners to fulfillment of analogous Efiduciary Eduties Etowards Eall Ethe EfirmOs Estakeholders. After considering the place of CSR in the debate about alternative CG modes, a full-fledged social contract foundation of the multi-stakeholder and multi-fiduciary model is present. The paper shows that CSR is a social Enorm Ethat Ewould Eendogenously Eemerge Efrom Ethe EstakeholdersO Esocial Econtract Eseen Eas E the first move in an equilibrium selection process that reaches the equilibrium state of a CG institution. The social contract provides a model of the impartial mediating reasoning performed by a board of directors striving to balance different claims of stakeholders. It also allows deducing the multi-stakeholder objective function that socially responsible firms maximize, and then provides a specification of the particular fiduciary duties owed to each stakeholder according to its position.