Article i 'Tidsskrift for arbejdsliv' no. 2 1999, page 35-44.
English resume

Would it be a rational decision for firms to take on social responsibility?

Flemming Ibsen

The continuous high level of early retirement in Denmark has over recent years turned attention on the social responsibility of the enterprises and the responsibility, both the internal responsibility vis a vis their own employees and their responsibility towards the "outsiders" and the local labour markets. But is it rational for the enterprises to engage themselves in "social contract" with their employees and the local authorities to reduce the marginalisation and the early retirement of labour and help to integrate the "outsiders" in the enterprises? The author use microeconomic theory to demonstrate, the in the case of imperfect competition on the market for goods, services and production factors it can be rational for the firms to include a social responsibility for their employees, when they maximize their profits. If the transactions costs on the labour market are very high, the firm has a strong incentive to maintain their employees on the "internal " labour markets of the firm. The price behaviour of the firm is "mark up pricing", and their is plenty of room for wages, which are higher than the value of the marginal product of labour. In the case of the external responsibility of the enterprises vis a vis the "outsiders" of the labour market, the article argues, that it might be rational for the firm to externalize the costs of integrating the outsiders to the local community or to other firms. This is a classical "free rider problem", and

it is supported by the behaviour of the "insiders" and the firms, who in many cases are in opposition to managements attempt to integrate the outsiders in the firm. In some cases it is rational for the enterprises to engage themselves in a social responsibility for the outsiders. This is the case

in the "stakeholder model", but the author argues, that it would still be necessary to change the attitude of the insiders in the firm, if the object is to integrate the outsiders in the enterprises.



Tidsskrift for arbejdsliv

(Journal for Working Life)


 

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