Abstract
This paper investigates the bargaining agenda selection in a socially concerned unionised monopoly producing a network good. We show that the recently established result that under network effects the firm prefers sequential efficient bargaining may be reversed when there are social concerns. Thus, firm’s social responsibility restores also in network industries the conventional result of the trade-union economics that the firm prefers right-to-manage (RTM). However, this may result rather paradoxical because RTM is always welfare-inferior and thus the higher the social responsibility is, the lower the social welfare outcome due to the agenda selection. As a consequence an increase of the firms’ social concerns in network industries may reduce, through the channel of the unionised labour market, social welfare, in contrast with the common sense. This sheds some light on so far unexplored effects of the promotion of social responsibility activities by policy makers when also labour markets are taken into account.
Highlights
Two stylised facts have involved firms’ behaviours in recent decades
This paper investigates the bargaining agenda selection in a socially concerned unionised monopoly producing a network good
As a consequence an increase of the firms’ social concerns in network industries may reduce, through the channel of the unionised labour market, social welfare, in contrast with the common sense. This sheds some light on so far unexplored effects of the promotion of social responsibility activities by policy makers when labour markets are taken into account
Summary
Two stylised facts have involved firms’ behaviours in recent decades. On the one hand, corporate social responsibility (CSR) has generated a large amount of interest in the economics and management literature (see, e.g., the survey article of Carroll and Shabana 2010). On the other hand, network industries are among the fastest developing sectors of advanced modern economics. With regard to the firms’ CSR behaviours, numerous reports have witnessed an increasing trend of this phenomenon: for instance, the KPMG Survey of Corporate responsibility (Cr) in 2013 observes that ‘‘this year the research is more broadranging than ever, covering 4100 companies across 41 countries (the last survey in 2011 looked at 3400 companies in 34 countries)...the growth in the number of countries and companies covered in this survey is just one indication of how Cr reporting has evolved into a mainstream business practice over the last two decades.’’ (KPMG 2013, 3). According to the Reputation Institute Global CSR survey, among the world’s top ten companies with the best CSR reputations, large multinationals active in network industries are prevailing, as Table 1 shows, which reports the top 10 companies of the past 3 years of the Global CSR RepTrakÒ (Reputation Institute 2015)
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