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An Economic View of Corporate Social Impact

Author

Listed:
  • Hunt Allcott
  • Giovanni Montanari
  • Bora Ozaltun
  • Brandon Tan

Abstract

The growing discussions of impact investing and stakeholder capitalism have increased interest in measuring companies' social impact. We conceptualize corporate social impact as the welfare loss that would be caused by a firm's exit. To illustrate, we quantify the social impacts of 74 firms in 12 industries using a new survey measuring consumer and worker substitution patterns combined with models of product and labor markets. We find that consumer surplus is the primary component of social impact (dwarfing profits, worker surplus, and externalities), suggesting that consumer impacts deserve more attention from impact investors. Existing ESG and social impact ratings are essentially unrelated to our economically grounded measures.

Suggested Citation

  • Hunt Allcott & Giovanni Montanari & Bora Ozaltun & Brandon Tan, 2023. "An Economic View of Corporate Social Impact," NBER Working Papers 31803, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31803
    Note: CF EEE IO
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    Cited by:

    1. Stone, Daniel & Lees, Jeffrey Martin, 2024. "Is SRC truly polarizing?," OSF Preprints jwmvf, Center for Open Science.

    More about this item

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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