Hidden Nature of Corporate Social Responsibility: An Inquiry into Personal Motivations

Abstract

According to Adam Smith (1980) one of the main motivations behind human action is to seek the approval of an “impartial spectator”. We present an alternative view of corporate social responsibility (CSR) by focusing on how personal motivations affect CSR investments. We theorize that managers’ personal motives can result in CSR initiatives. We present a novel view of CSR as a means to attract attention to CEOs and to satisfy chief executives’ needs for praise and positive image. Furthermore, we argue that CSR initiatives based on managers’ personal motives will not result in performance improvements for firms. We test our hypotheses on a sample of Fortune 500 CEOs. Our results show that CEO characteristics affect firms’ levels of CSR. Additionally we find support for our hypotheses regarding the link between CSR and financial performance. The relationship between CSR and firm performance is not significant in the presence of personal motivations for CSR activity.