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Due to the huge social and environmental issues faced by the world during the last couple of decades the concept of Corporate Social Responsibility (CSR) has taken front stage in the business world by becoming the key element of sustainable competitive advantage that benefit the company, society and environment
The purpose of this paper is to analyze whether the concept of CSR is taken as a tool only for maximizing the shareholdersâ€™ wealth by the investors (principals) as well as managers (agents) of the company by analyzing the two prominent CSR related scandals happened in the auto industry. It uses the agency theory model to analyze these cases and understand whether this model is overshadowing the stakeholder model of CSR concept. The preliminary studies carried out by comparing CSR reported by these two companies and the facts, effects and reactions to the emission scandals indicates that although firms indicate that they follow a stakeholder model for their CSR initiatives and reports based on it, in reality, they follow agency model and CSR appears to be does not really matter. This study also implies that manager need to have a proper strategy that is followed and reported along with a proper monitoring and control measure for a successful implementation of CSR. Due to many complexities, this it is too early to generalize CSR does not really matter view neither to the entire corporate world nor to the auto industry. Therefore, future studies are encouraged to include more companies in the auto industry and expand it to other industries as well.
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