MIT Sloan Management Review

When consumers encounter negative information about a company, its reputation for corporate social responsibility can help — but only sometimes.

Does the belief that a manager‘s overriding duty is to maximize shareholder returns encourage socially destructive actions by corporations? Employing economic, legal and behavioral analyses, the author concludes that, although the shareholder theory is often inaccurately maligned, stakeholder theory may be more conducive to curbing the kind of impropriety seen at Enron and Global Crossing.

Skepticism about the motivation behind corporate social responsibility initiatives can undercut their effectiveness.

Companies can benefit by auditing how closely they fulfill the aims of their mission statement.