Conspicuous Corporate Altruism

It seems that running a for-profit corporation with a large, well-publicized, altruistic component could serve as a viable competitive advantage. The economic rationale here is that altruism can be viewed as an expense with a variety of benefits: consumer mindshare, lower labor costs (employees willing to get paid less when working for such a company), the direct expense itself as a write-off, charging more for a product by presenting it as a [altruism-conscious] status signal, etc. For some of the firms that have built themselves around such a model, it seems to be relatively successful (Toms is an obvious example). My guess is there will be a growing trend of mainstream firms looking at the explicit tradeoffs of such altruistic efforts vs. plain old marketing and ad spend. I wonder how sustainable the benefits are if competitors take on a similar approach, or if it becomes a race to the bottom with no net mindshare increase for any single player.

How beneficial such acts of altruism are to humanity is a separate question altogether. I don’t think the questions of consumer motivation are particularly relevant, since on the margin the typical tradeoff an individual faces is do something or do nothing rather than optimizing what is done. Rather, it comes down to the tricky development economics issues raised by doing things like giving away shoes: probably better than giving money to the governments, but probably not as beneficial as giving mosquito nets.

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