Modelling the trade-off between profits and principles

Abstract

Corporations discover that social responsibility pays off. However, sometimes doing what is ethical will prove costly to a company. The purpose of this article is to clarify this trade-off by developing an economic model that describes the choice between profits and principles. The model is used to analyse how external factors like a change in consumer interests and competitiveness affect the relationship between profits and principles.Corporate social responsibility; ethics; competitiveness; profit maximisation; reputation; win-win