TITLE:
Application of Externality Theory in Corporate Social Responsibility Decision-Making
AUTHORS:
Yutong Cai
KEYWORDS:
Externality Theory, Corporate Social Responsibility, Shared Value Creation, Sustainable Development, Stakeholder Theory
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.12 No.11,
November
19,
2024
ABSTRACT: Externality theory provides an important economic perspective for understanding corporate social responsibility (CSR) decision-making. This study explores the application of externality theory in CSR decision-making. The research first elaborates on the concept of externalities and its connection to CSR, emphasizing the spillover effects of corporate behavior on society and the environment. The study analyzes how companies make CSR decisions while considering externalities, demonstrating that internalizing externalities can help companies more comprehensively assess the social impact of their actions, thereby making better CSR decisions. However, the research also points out the difficulties in quantifying and valuing externalities, which are the main obstacles to applying the theory in practice. To address this issue, the study proposes a framework that integrates economic evaluation methods and stakeholder engagement mechanisms. Finally, the research discusses the impact of new types of externalities in the digital economy era on CSR decision-making, such as data privacy and algorithmic fairness issues. This study provides theoretical guidance for companies to incorporate externality considerations into CSR decision-making, contributing to the synergistic development of corporate economic, social, and environmental values.