Positive Externality and the Absence of Foreign-funded Enterprises' Social Responsibility in China's Economic Transition

The positive externality of social responsibility conduct can cause the absence of foreign-funded enterprises' social responsibility in China's economic transition. By the price-demand theory of Economics, it derived the input cost-demand curve of foreign-funded enterprises' social responsibility conduct and analyzed the formation mechanism of the absence of foreign-funded enterprises' social responsibility in China's economic transition. It concluded that in economic transition of China with the imperfect institution system, it was the positive externality of the social responsibility conduct by foreign-funded enterprises that reduce the self-benefit of foreign-funded enterprises, then influence the initiative of fulfilling their social responsibility, and finally lead to the absence of their social responsibility. So the countermeasures to the absence of social responsibility by foreign-funded enterprises included strengthening the notion of social responsibility competitiveness, reinforcing the guidance and supervision of government, and establishing the positive feedback mechanism of foreign-funded enterprises' stakeholders.