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Profits and Corporate Philanthropy: An Economic Rationale for Dual Mission Firms
Author(s) -
Mao Wen,
Pearce II John A.,
Wasson Renya Reed
Publication year - 2015
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2680
Subject(s) - corporate social responsibility , dual (grammatical number) , scope (computer science) , profit maximization , profit (economics) , business , maximization , social responsibility , economies of scope , complement (music) , economics , industrial organization , market economy , marketing , microeconomics , public relations , political science , economies of scale , art , biochemistry , chemistry , literature , phenotype , complementation , computer science , gene , programming language
This paper provides an economic rationale for corporate social responsibility. We develop a model of a dual mission firm that produces both a private good and a philanthropic good. By incorporating economies of scope arising from shared inputs into our model, we demonstrate that corporate social responsibility and profit maximization can complement each other. Supporters of new legal corporate forms that facilitate the creation of dual mission businesses have persuasive new evidence in support of hybrid firms. Copyright © 2014 John Wiley & Sons, Ltd.