Different organization will have different definition of Corporate Social Responsibility (CSR), even though there is a considerable common ground between them. A simple definition of Corporate Social Responsibility is adopted from Elhauge (2005): Sacrifice profit in the social interest. There is no distinguish between developed and developing countries in CSR activities contributed by companies organizations through community development. Contribution in developing environmental community should involve company and their stakeholders while increasing their benefit as much money as they could. As a result companies should be able to answer a big question whether they have the continuing commitment to behave ethically and to contribute to economic development while improving the quality of life of the local community and social at large. The core of this topic is CSR talks about giving back companys’ profit to society. Describing about Corporate Social Responsibility should be engaged the main stakeholders not only customers and investor, but also employees, suppliers, communities, regulators and society as a whole. Second commitment beyond maximizing their profit, company should manage the economic, social and environmental impacts of their operations to maximize benefit. May firms sacrifice companys’ profit in the social interest? The answer depends on the willingness of business scholars in building community and developing environmental society.
The restrictive question raising beyond the definition of CSR should be addressed is: under what conditions is it economically feasible for firms to sacrifice profits in the social interest? Borck, Coglianese, and Nash (2006) describe whether firms undertake CSR actions voluntarily or reluctant, their economics sustainability depends on the market pressure and social expectation confronted by firm. It is really hard for firm pay more attention in CSR since their main duty is to maximize their profit. The first side that could be possible to act in CSR is voluntarily CSR in which some observer would think of as the purest from of CSR. The shareholders may be willing to subsidize firms’ profit sacrificing behavior. It depends on the investors whether they are willing to fund CSR activities or not. There is a consequence since they could accept the lower return because firm has already enjoyed of their economic position. Investors sacrificing profit may still earn return above the market norm. Jensen et al. (2002) has an evidence suggest that some individuals should pay more for social responsibility goods. He shows that ‘ethical investor’ could have consequences for firm for do not involve in CSR. On the other side, there is a reluctant CSR. The decision is not by the firm but made by individual managers or directors. The investors may be forced to accept profit-sacrificing activities caused by external constraints such as environmental regulatory particularly in developing countries. observation of ‘satisfice’ profit to be sacrificed should be observed since the magnitude of profit determine employee compensation structure.
In many cases, CSR activities is costly for firms. To involve in it, firms would accept lower cost for their operational production. The next sub sequence is the firm will raise their price and reduce their wage, accept smaller profit and also accept some economic consequences in decreasing their cost. In short term, economic consequences may include increased insurance, borrowing and loss of market share. In the long term, firm may face share holder litigation and corporate takeover (Alchian 1950;Altman 1999). Engaging in CSR activities depend on the managers or shareholders besides ethical belief, contracts and their goals. A variety of factors influence the firms who make decision about engaging in CSR activities such as managerial incentive, firm culture, organizational structure and monitoring constraints. Howard-Grenville, Nash, and Coglianese (2006) showed their evidence the significant effects of organizational culture in CSR activities. Identity of the firm determines how individual within the firm view the purpose of the firm. Firm size also determines whether they will sacrifice their profit. Firms would not involve in CSR if their work provides no scope for it.



