Three essays on corporate social responsibility, business politicians and corruption.

Summary What is Corporate Social Responsibility (CSR) and can it be demand-driven? Is providing a public good profitable for companies or should these goods be provided exclusively by the state? Are green products excessively expensive and should they be taxed? Once the tax is imposed, who will benefit and who will actually pay the tax? How do outcomes depend on the complementarity or substitutability between the CSR investment in question and the public good provided by the state? Chapter 1 of this dissertation answers these questions and creates a conceptual framework for further analysis, in subsequent chapters, of CSR as a desirable practice by which firms provide a public good alongside the private good they produce. One of the issues that emerges from the analysis is the need to identify and explore a new form of dichotomy that is the trade-off between the provision of the public good by the market through CSR and its provision through the state. This issue is of great interest in the case of developing countries, but also in developed countries, where firms have important political connections. Chapter 2 shows that politically connected firms - or, in the extreme case, businessmen-politicians - are able to influence the government to reduce the level of public good it provides in order to maximize the reputational return on their CSR investment. The mechanism is as follows. An insufficient level of public good provided by the state offers significant political gains for firms that contribute to that good through their CSR activities to correct the state's failure. Consumers are then suspicious of the true motivations of firms behind these activities, they could result from their beneficence but also from their political greed. However, since all companies, including the most benevolent and opportunistic, participate, the fact that business and politics interfere does not damage the reputation of CSR participants since these political gains are so great that everyone is involved. Corruption becomes socially acceptable in the sense that it is not sanctioned in terms of reputation. Chapter 3 provides a strategic explanation for the phenomenon of corruption becoming epidemic in an economy. It explains why corruption, in the form of bribe-taking, can spread among different government agencies simply because of the interdependence of their efforts.