Reputational Risk and Corporate Social Responsibility: How to Make CSR Policies Attractive to Productive Corporations

Abstract

In traditional economic theories, corporation main task is only to generate profits for the investors. However, in modern global economies, some companies have more money and power than many countries, many activist sectors and governments began to look closely at the role of those businesses in order to prevent abuses and environmental harm, and such an audit would create reputational risk that can strongly affect companies’ profits. Although some corporations undervalue Corporate Social Responsibility (CSR) policies, these could be a way to mitigate reputational risks, generate competitive advantages and new forms of competition, increase the value of the stocks and shares, and be the key to sustainable business.

Keywords

• Advertising, competition, corporate social responsibility, corporations, media revolution, profit maximization, reputational risk, transaction cost