Social Responsibility and Local Government: Soft Budget Constraint and Internal Decision Making Process

This paper analyzes local government and social responsibility in terms of ISO (International Standardization Organization) 26000. ISO 26000 provides 7 core subjects and related issues of social responsibility. Our survey results indicate that government officers are more focused on the factors that impact internal decision making process in pursuing social responsibility, compared to citizens. Our economic model suggests focusing on internal process happens under soft budget constraint. We think the notion “government is not allowed to fail” leads local governments to soft budget constraint.