Adoption of corporate social responsibility codes by multinational companies

Multinational companies (MNCs) increasingly publicize their commitment to Corporate Social Responsibility (CSR) and advertise their Codes of conduct. These CSR Codes are the result of genuine corporate intent as well as external pressure. We underline the risks of corporate self-regulation for shareholders as well as stakeholders. In a competitive environment, MNCs' managers have no incentive to adopt codes that truly limit corporate externalities. Regulation by public authorities or at the industry level provides better safeguards than regulation by the individual company itself.