Corporate Social Responsibility in the work place: Experimental evidence from a gift-exchange game

Exp Econ (2014) 17:347370

DOI 10.1007/s10683-013-9372-x

O R I G I NA L PA P E R

Received: 14 January 2012 / Accepted: 24 July 2013 / Published online: 9 August 2013 Economic Science Association 2013

Abstract We analyze the effect of investments in corporate social responsibility (CSR) on workers motivation. In our experiment, a gift exchange game variant, CSR is captured by donating a certain share of a rms prot to charity. We are testing for CSR effects by varying the possible share of prots given to charity. Additionally, we investigate the effect of matching mission preferences, i.e., a worker preferring the same charity the rm donates to. Our results show that, on average, workers reciprocate investments in CSR with increased effort. Matching mission preferences also result in higher effort, independently of the extent of the CSR investment.

Keywords Corporate Social Responsibility Gift-exchange game Experiment

Labor market Incentives Moral hazard

1 Introduction

Corporate social responsibility (CSR) has been a topic of hot debate in economics, not least because of a provocative article in New York TimesFriedman (1970) that stated the social responsibility of business is to increase its prots. In contrast to Friedmans view, it is often argued that rms responsibility in society goes beyond making prots and that it also includes taking environmental or social aspects

H. Koppel (

B)

Alfred Weber Institute of Economics, University of Heidelberg, Bergheimer Strasse 58, 69115 Heidelberg, Germanye-mail: mailto:[email protected]

Web End [email protected]

T. Regner

Max Planck Institute of Economics, Kahlaische Strasse 10, 07745 Jena, Germany

Corporate Social Responsibility in the work place

Experimental evidence from a gift-exchange game

Hannes Koppel Tobias Regner

348 H. Koppel, T. Regner

into account.1 At rst glance, these two points of view seem irreconcilable. However, if market reactions to a rms stance on CSR are taken into account, it may not necessarily be a contradiction to maximize prots and assume social responsibility at the same time. At least this is what recent research on CSR suggests. Costly CSR activities may actually be benecial to rms as they can have a positive effect on the decisions of socially-/environmentally-minded individuals consuming products of the rm (see, Sen and Bhattacharya 2001, among others), investing in it (cf. Graff Zivin and Small 2005), or working for...