Is Corporate Social Responsibility (CSR) a New Alternative to Governance Challenges of State-Owned Enterprises (SOEs)?3

Abstract This article aims to analyze the current theory of managing the State-owned Enterprises (SOEs) with the use of Single Ownership Entity and to suggest alternative solution, particularly, managing SOEs with Corporate Social Responsibility (CSR). After a thorough review of the literature analyzing the connection between CSR and SOEs, the article states that there are important missing points in the previous research and academic debate: (1) no scholar directly emphasizes CSR as the answer to the problems of SOEs; (2) there is no research conducted on the comparison of Single Ownership Entity and CSR, evaluating their potential positive effects on SOEs; (3) accordingly, academic literature does not discuss the ways and tools of implementation of CSR in SOEs. The article aims to fill this gap and emphasize the links between CSR and SOEs. Due to the challenges, goals and ownership structure of SOEs, CSR is the most suitable corporate governance model for SOEs and its effective implementation is more vital than the execution of recommendations on creating the single ownership entity suggested by international organizations. The research question of the article is to compare managing the SOEs with the use of the CSR model (Alternative Theory) to single ownership mechanism established by OECD (Current Theory) and find out whether CSR is a better solution to the existing problems of SOEs. Finally, the article discusses the institutional context of SOEs based on the examples of the countries of Eastern and Central Europe where the problems regarding SOEs remain remarkable; presents the balance of interests of stakeholders’ in SOEs in connection to Alternative and Current Theories; and combines analysis, research and recommendations of international organizations and academia towards the problems of SOEs.