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Why Do Private Firms Invest in Public Goods?

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Cross-Sector Leadership for the Green Economy

Abstract

Recent years have witnessed a growing debate surrounding the idea that firms that act in public interest will profit from doing so. Although the proponents of this idea have argued that public and private interests are inextricably linked for firms seeking sustainable competitive advantage (e.g., Kanter, 2009), the skeptics offer a different perspective. They point out that “in circumstances in which profits and social welfare are in direct opposition [as has been argued in the case of the oil and gas industry, for instance], managers are unlikely to act voluntarily in the public interest and against shareholder interests” (Karnani, 2010). Based on these observations, we develop a framework for why the private sector invests in the creation of public goods, how it organizes such activities, and how it benefits from these investments.

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Author information

Authors and Affiliations

  1. Carlson School of Management, University of Minnesota, Minnesota, USA

    Gurneeta Vasudeva

  2. Darla Moore School of Business, University of South Carolina, Columbia, South Carolina, USA

    Hildy Teegen

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  1. Gurneeta Vasudeva
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  2. Hildy Teegen
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Editor information

Alfred Marcus Paul Shrivastava Sanjay Sharma Stefano Pogutz

Copyright information

© 2011 Alfred Marcus, Paul Shrivastava, Sanjay Sharma, and Stefano Pogutz

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Cite this chapter

Vasudeva, G., Teegen, H. (2011). Why Do Private Firms Invest in Public Goods?. In: Marcus, A., Shrivastava, P., Sharma, S., Pogutz, S. (eds) Cross-Sector Leadership for the Green Economy. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137015891_14

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