Corporate Social Responsibility: From Margin to Mainstream
The C, the S, and the R
The “C” refers to the policies, practices, and impacts of corporations. Historically, governments granted special licenses to corporations to pursue large public projects. Consequently, society needed additional assurance about their sociability.
The “S” captures the location. Since businesses play a role in society, this suggests that behavioral risks can be socially punished through boycotts or social media critiques, while good behavior that exceeds societal expectations is rewarded.
The “R” stands for companies being liable for something. Companies take responsibility and answer for their actions and social or environmental impact.
There have been antecedents to CSR embodied in ancient populations. However, in European tradition, CSR has often been defined in terms of philanthropy and industrial paternalism.
From the Margin to the Mainstream
For many companies, the adoption and development of CSR is more a question of learning and adaptation on the one hand and business opportunity on the other.
Here are the main indicators of the mainstreaming of CSR among businesses:
Leadership Perspective
Business leaders tended to see business and society as integral to one another. David Packard from HP also suggested his employees to: “make a contribution to society.”
Walmart CEO Lee Scott, in 2006, announced his intention to make Walmart run on 100% renewable energy.
Societal Perspective
CSR expanded from being almost entirely a business concern to an issue with which society is more aware and engaged.
CSR relates to labor practice issues, business ethics, responsibility to society, and environmental impact.
The general public is made very sensitive to particular issues, with the growth of media coverage of business responsibility. Greenpeace campaigning against Nestle’s impact on orangutan habitat in KitKat advertising is a prime example.
Public opinion is increasingly attuned to issues of business responsibility, and valuable companies want to feel secure to operate.
From Corporate-Centered to Corporate-Oriented
Apart from being part of the leadership agenda and a matter of societal attention, CSR has also moved from being corporate-centered to corporate-oriented.
CSR was originally about companies deciding themselves what responsibilities they had and how to pursue them. Now, civil society and government are involved in defining businesses’ responsibilities.
CSR at the Company Level
At the company level, there are many frameworks used by companies to manage their CSR and develop related strategies. The more influential frameworks are:
CSR Pyramid (Archie Carroll)
This model distinguishes four types of responsibilities:
- Economic
- Legal
- Ethical
- Discretionary
Critiques considered this model overly descriptive, but it is quite simple. Considering the economic base of the pyramid, it reminds us that CSR extends to core business and makes us think about how profits are made.
Stakeholder Approach (Edward Freeman)
Stakeholders are those upon whom the firm depends for its success. Companies employing this model prioritize stakeholders:
- Primary stakeholders can be investors, employees, suppliers, customers, governments.
- Secondary stakeholders can include media and civil society.
Stakeholder management aims to combine good management and ethics.
This model is used by firms as a way of thinking about their responsibility.
Triple Bottom Line (People, Profit, Planet) (John Elkington)
Companies should account for their social and environmental impacts.
There are obvious problems of integration, but this model has been welcomed because of the simplicity of this message by companies who are willing to extend their CSR agenda.
Procter and Gamble evaluates suppliers’ sustainability, focusing on energy and water use, helping the company achieve its long-term vision of zero waste.
Shared Value (Michael Porter and Mark Kramer)
This is a shared value approach to business which goes in contrast to CSR; however, some companies have adopted it. Shared value is seen as a source of innovation and advantage for companies more than a way of managing stakeholders.
Doing CSR – Spheres of Influence
The UK business association Business in the Community (BITC) distinguishes CSR practices according to their respective spheres: Community, Marketplace, Workplace, and Environment.
Spheres are used to distinguish and organize CSR practices.
Community
MNC reputation may also depend upon their community impact, developed as strategic and socially oriented. Community is seen as synonymous with society, willingness of employees to work for a firm, and customers to buy from them. Key areas include education, unemployment, environment, health, homelessness, and supporting employees.
Workplace
This relates to working conditions, pay, sexism, but also working age, remuneration, labor standards, health & safety, pay and treatment, training, and leave.
Many companies do not realize the importance of their reputation with their own employees.
Marketplace
Businesses should be responsible in the marketplace, as well as suppliers responsible for their business operations and consumers responsible for how they use the products.
Globalization allowed cheap and poorly regulated labor, with companies now addressing issues of labor standards, health & safety, and remuneration, in light of controversy in the last two decades.
Environment
The environment is becoming a combination of intrinsic responsibility, cost-saving opportunities, and innovation.
Good, Bad, and Ugly: Criticisms of CSR
Devinney presents three perspectives in his examination of the issue of CSR:
- Corporations have conflicting virtues and vices by their own nature that they will never be truly socially responsible.
- First, the traditional idea: corporations receive a moral sanction from society and hence are required to operate within the economical, legal, political, and social norms of society. However, this is confusing because corporations do not operate in a singular, clear society with unambiguous norms.
- Secondly, Devinney considers the good of CSR versus the bad of CSR. CSR is good because corporations are the most efficient way of determining social needs and delivering social solutions: Corporations with more acceptable practices would have more satisfied customers and employees. Corporations are more likely to tailor products and services.
Ugly
There is no indication that doing well by doing good has a clear relation to generating firm value.
The relationship between CSR and performance is such that performance drives CSR and not the other way around.
In essence a firm can definitely “do well” but not necessarily can “do good”.
We want the corporation to engage in good social activity, but to be nice and not to use it for competitive advantage. Firms like individuals, will naturally be conflicted