CSR is often defined as activities that go beyond the firm''s interest. This is true only if interest is defined narrowly. The key result from this thesis is that enlightened firms, with a sufficient long-term horizon for the maximisation of profits, manage their resources in such way that the society perceives them to be Socially Responsible. To obtain this result, first a distinction is made between CSR as differentiation strategy and efficient resource management. Despite a rapidly increasing number of publications, the economic literature on CSR has only dealt with the former and still lacks a coherent theoretical framework of analysis. This thesis provides one, also considering the view of CSR as efficient resource management. CSR is defined as "every activity that a firm undertakes voluntarily, based on an economic incentive, resulting in the full or partial internalisation of the externalities on the society and the environment associated with the firm''s production". It studies the different motivations why firms to engage in CSR and the effects of CRS on the firms'' location choice and their interaction through the market.