Profits and Corporate Philanthropy: An Economic Rationale for Dual Mission Firms

This paper provides an economic rationale for corporate social responsibility. We develop a model of a dual mission firm that produces both a private good and a philanthropic good. By incorporating economies of scope arising from shared inputs into our model, we demonstrate that corporate social responsibility and profit maximization can complement each other. Supporters of new legal corporate forms that facilitate the creation of dual mission businesses have persuasive new evidence in support of hybrid firms.