A Social Contract Account for CSR as an Extended Model of Corporate Governance (II): Compliance,Reputation and Reciprocity |
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Authors: | Lorenzo Sacconi |
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Institution: | (1) Department of Economics, University of Trento, Trento, Italy;(2) EconomEtica, interuniversity centre of research, Bicocca University, Milano, Italy |
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Abstract: | This essay seeks to give a contractarian foundation to the concept of Corporate Social Responsibility (CSR), meant as an extended
model of corporate governance of the firm. Whereas, justificatory issues have been discussed in a related paper (Sacconi,
L.: 2006b, this journal), in this essay I focus on the implementation of and compliance with this normative model. The theory
of reputation games, with reference to the basic game of trust, is introduced in order to make sense of self-regulation as
a way to implement the social contract on the multi-fiduciary model of corporate governance. This affords understanding of
why self-regulation, meant as mere recourse to a long-run strategy in a repeated trust game, fails. Two basic problems for
the functioning of the reputation mechanism are examined: the cognitive fragility problem, and the motivational problem. As
regards the cognitive fragilities of reputation (which result from the impact of unforeseen contingencies and from bounded
rationality), the paper develops the logic and the structure that self-regulatory norms must satisfy if they are to serve
as gap-filling tools with which to remedy cognitive limitations in the reputation mechanism. The motivation problem then arises
from the possibility of sophisticated abuse by the firm. Developed in this case is an entirely new application of the theory
of conformism-and-reciprocity-based preferences, the result of which is that the stakeholders refuse to acquiesce to sophisticated
abuse on the part of the firm.
Lorenzo Sacconi is professor of economics and Unicredit Chair in economic ethics and corporate social responsibility at the
Department of Economics of the University of Trento, where he leads the LaSER - Laboratory of research in Social responsibility,
Ethics and Rationality, and head of the graduate program (laurea magistralis) in “economic decisions, enterprise and corporate
social responsibility”. He is also director of EconomEtica, the interuniversity centre for economic ethics and corporate social
responsibility joining over 20 Italian Universities placed at the Milano-Bicocca University. Past president of tthe Italian
Business Ethics Network and past member of the EBEN executive committtee, currrently he is a member of the executive committee
of the Italian chapter of EBEN (EBEN Italy).
On related subjects, he is author of the book: The social contract of the firm, Springer, 2000 |
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Keywords: | self-regulation ethical norms reputation games unforeseen contingencies fuzzy logic and default reasoning reciprocity and fairness conformist preferences |
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