Why and under which conditions do companies voluntarily adopt high
social and environmental standards? Christian R. Thauer looks
inside the firm to illustrate the internal drivers of the social
conduct of business. He argues that corporate social responsibility
(CSR) assists decision-makers to resolve managerial dilemmas.
Drawing on transaction cost economics, he asks why and which
dilemmas bring CSR to the fore. In this context he describes a
managerial dilemma as a situation where the execution of
management's decisions transforms the mode of cooperation within
the organization from a hierarchy to one in which managers become
dependent on, and vulnerable to, the behavior of subordinates.
Thauer provides empirical illustration of his theory by examining
automotive and textile factories in South Africa and China. Thauer
demonstrates that CSR is often driven by internal management
problems rather than by the external pressures that corporations
confront.
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