Corporate Responsibility

Commentary Paper 3

Hanzhou Yang hy454

Do not fight out battle for us, just give us assistance when we need it.

The development of consumer social responsibility

Based on the assumption that

The role of consumer social responsibility in sustainable corporate responsibility development

（understanding how to promote behavioral change by firms requires an understanding of how people respond, sometimes imperfectly to non-price factors）

The introduction of the bank, no response from the consumers

Why companies want to involve in social responsibility? 

CSR programs, in which firms voluntarily try to reduce environmental and social

negative impacts, are increasingly popular but the notion of CSR means different things to

different people2. According to Crouch (2006) CSR is essentially ‘corporate externality

recognition’. For a firm to reduce production of a negative externality requires it to take

action that will cost it something, but for which it will not receive payment.

How can a profit-maximizing firm be expected to take action of such a kind? What

actually drives firms to engage in environmental CSR? Firms can adopt a CSR program and

“over-comply” with environmental regulation for several reasons, two of which seem

particularly strong. 

The underlying idea is no company will invest in CSR for nothing( Market forces, in fact, include win/win opportunities to increase revenues with environmentally responsible consumers who are willing to pay a higher price as a premium for environment friendly products and to cut costs by improving the efficiency of resource use, labour market advantages with employees who have green preferences, opportunities to reduce cost of capital from green investors (Arora and Gangopadhyay, 1995; Lutz, Lyon and Maxwell, 2000).

1). One is moving ahead of an expectable trend of both legislation and consumer's preferences becoming stricter. This can be interpreted as risk management.

2). Another is the use environmental reputation to gain market shares from less environmentally friendly competitors (Heal, 2005).

The pure market effects emerge from a company that has done just what it was supposed

to do.

3) The company can pitch certain customer segmentation.

Cerin (2006) reports that firms are usually reluctant to adopt a green technology due to

its higher-than-average costs. However, small groups of environmentally-minded consumers

who are willing to pay higher prices for green products can provide a market niche for green

firms with a small market share, eventually forcing overall adoption of the greener technology

in an industry. Consumer environmental preferences play an important role in the environment

protection.

Does it really has something to do with the consumers choices

In contrast to the above arguments, we can find evidence suggesting an opposite view.