What is the purpose of business? What is it responsible for? If we asked this question to students or academic colleagues their answers would probably revolve around some notion of value creation, including but not limited to the traditional notion of creating value for shareholders. We would also hear statements pertaining to value creation for customers and society at large and some may add that businesses are good at solving problems through innovation. If we were to ask a follow-up questionâfor what, and to whom, are businesses responsible?âwe may start to enter contested space. Some may insist that businesses are primarily or even exclusively responsible to owners and shareholders; others may object and argue that multiple stakeholders are involved in, and affected by, an organizationâs actions and, as a consequence, a business is responsible to all of them, including the natural environment and future generations. Hence, the social purpose and responsibility of a corporation is not the same concept in the minds of allâdifferent views exist, and these are influenced by individual values, societal preferences, corporate scandals, and misconduct, as well as different cultural and country-specific traditions.
Corporate social responsibility, or CSR, has been used as an umbrella term since the 1960s to describe not only the social but the societal responsibilities of businesses and their decision-makers. Over the course of the past two decades, it has taken center stage in both academic and practitioner debates to the extent that some consider it a âtortured conceptâ (Godfrey & Hatch, 2007), a label depicting everything and nothing. That skepticism is partly rooted in different origins of the debate. As we will briefly point out in the following, the term CSR originated in the United States and, as such, has initially shaped the debate in North America. In contrast, European scholars have long indicated that: (a) there are more implicit forms of corporate responsibility in European countries (Matten & Moon, 2008), and (b) the continental discourse initially centered around business ethics, as opposed to CSR, and the latter has only gained momentum in the past 20 years or so, as countries and academies globalized and became more intertwined. Indeed, corporate scandals on both sides of the Atlantic also led to some alignment in the debates, partly triggered by the increased interest from governments and industry alike. CSR, while not ideal, was considered a fitting, all-encompassing labelâless ânormativeâ (and, thus, less contested) than business ethics, and pragmatic and broad enough to also include stakeholder theory or more outcome-related discussions such as those pertaining to the environmental footprint of an organization, corporate social performance, or corporate reputation.
More specifically, the global financial crisis of 2008, previous corporate scandals such as Enron, Worldcom, Parmalat, and the more recent âDieselgateâ caused by Volkswagen, and concomitantly the blatant failure and arrogance of key decision-makers at the upper echelon of organizations, has led to widespread agreement among stakeholders that companies and their executives must do better. These incidents also revealed that many corporate incentive systems are not in sync with societal norms and expectations. Moreover, the rapidly globalizing economy and growing interconnectedness shed light on the fault lines of value creation through complex supply chain systems, exposing unacceptable working conditions, modern slavery, and the environmental consequences of highly distributed production at any cost. Most recently, the global debate on climate change and the global uprising of students has caught many executives off guard. The actions and rage of Swedenâs Greta Thunberg and the following she has created have made a lasting impression. Prior to that, worker suicides at Apple supplier Foxconn and the collapse of the Rana Plaza tower in Bangladesh, which killed more than 1,100 workers, were two high-profile cases that led to increased scrutiny and criticism of global production modes and supply chainsâsuch that stakeholders around the world expect businesses to do better and more.
Hence, while perhaps not the ideal umbrella term, corporate social responsibility has become a widely accepted common denominator of the role and responsibilities of business in society, ranging from core functions such as health, safety, and environmental standards, to governance and recognition of stakeholders, supply chain design, and corporationsâ stand on climate change and its responsibility to future generations. Furthermore, in light of high-level individual failure in organizations the micro-foundations of CSR (Aguinis & Glavas, 2012; Maak, Pless, & Voegtlin, 2016) have garnered particular attention in recent years.
In light of the growing and persistent interest in the concept and domain of CSR, and with a view to mirror its relevance and complexity, we have assembled a wide array of distinguished contributions that shed light on the origins of CSR, its normative foundations, the humane and political dimensions of the concept, institutional perspectives and domain-related issues pertaining to stakeholding, partnering, responsibility in the supply chain, social innovation, sustainability, as well as critical perspectives. Our aim here is not to provide a comprehensive overview of a crowded field; rather, we aim to create a go-to collection of state-of-the-art perspectives on the multiplex concept called CSRâa collection that is both thought-provoking and provides orienting knowledge for academics and practitioners alike. In this introductory chapter, we will first provide an overview of the history of CSR; we will then describe how CSR is used in strategic positioning as a result of increased attention by stakeholders; we will then briefly highlight emerging and under-represented areas of research, before we introduce the contributions to this volume.
From Bowen to Business with Purpose: A Very Short History of CSR1
The beginning of the debate on CSR is commonly marked by a study commissioned by the Federal Council of Churches of Christ in America, entitled The Social Responsibilities of the Businessman, authored by Howard Bowen (1953). However, two years earlier, in May 1951, Frank Abrams, then a top executive with Standard Oil, published a remarkable paper called âManagementâs Responsibilities in a Complex Worldâ in the Harvard Business Review. Fast forward 70 years and the title seems as topical as ever. Back then, Abrams urged his fellow managers at the upper echelons to think of themselves as professionals with an explicit sense of duty not just to shareholders, employees, and customers, but also to the public in general: â[Modern] management must understand that the general publicâmen and women everywhereâhave a very deep interest in, and are affected by, what is going onâ (1951: 32). He thus introduced an early stakeholder perspective, a concept later shaped by R. Edward Freeman (1984).
Bowenâs study from 1953, in contrast, is concerned with fleshing out the specific social responsibilities of businessmen. Hence, what are now considered the âmicro-foundationsâ of CSR were, at the beginning of the debate, its core focus and locus. Bowen argues that businessmen must assume âa large measure of responsibility if the economic system of free enterprise is to continue and prosperâ (1953: 5), stressing both values and notions of enlightened self-interest. And although Bowen addresses questions such as: What constitutes good citizenship for a business enterprise? How does a moral enterprise behave? What kinds of business decisions promote the ends of modern society and what kinds detract?, his contribution focuses on the responsibilities of individuals within an enterprise rather than the corporation as such. The beginning of the debate on CSR is therefore marked by arguments pertaining to the individual responsibilities of managers vis-Ă -vis their key constituencies, and society at large. Hence, the emergence of CSR was triggered by reflective practitioners who appealed to their peers to embrace responsibilities beyond their fiduciary duties; social responsibilities aligned with values of âmodern societyâ and a changing business landscape which was shaping the demand for good citizenship, as individuals and as organizations. As such, CSR was inextricably bound up with the responsibilities of executives.
Interestingly enough, it was not until the late 1960s that academics took serious notice of the emerging interest in CSR. When they did, the level of analysis continued to be focused on the individual manager, or âbusinessman,â as there were hardly any women in leadership positions. For example, Davis refers to social responsibility as âbusinessmenâs decisions and actions taken for reasons at least partially beyond the firmâs direct economic or technical interestâ (1960: 70). He later argues that âthe substance of social responsibility arises from the concern for the ethical consequences of oneâs acts as they might affect the interests of othersâ (1967: 46).
The social and political revolution of the late 1960s, in particular rising social awareness and ecological concerns, perhaps best exemplified by Rachel Carsonâs (1962) book Silent Spring, triggered an intensification of the debate throughout the 1970s. Milton Friedmanâs contribution in the New York Times Magazine in 1970 cast the longest shadow. Nobel laureate Friedman famously claimed âthat the social responsibility of business is to increase its profits.â He argues that businesses and corporations in fact have no responsibilities (1970: 51), in contrast to managers and corporate executives. As a businessperson and âan agent serving the interests of his principalâ (1970: 53), the executive has direct responsibility to the principal (also called owner, employer, or stockholder), namely âto conduct business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical customâ (1970: 51). Friedmanâs argument has since often been reduced to the profit section and has been the go-to quotation for generations of economists. And indeed, it is often implicit in comments by students who favor a limited shareholder focus for the corporation. Yet, as Friedmanâs comments show, he does not suggest an amoral position. While being vague on the term âethical custom,â he acknowledges ethical standards as important guideposts for executives and, hence, the fact that, while the executiveâs core responsibility must be geared towards the principle(s), any such endeavor should be in line with ethical custom. As customs shift in society, so do stakeholder expectations, and an executive is expected to comply with formal responsibilities and act in accordance with both legal and moral standards in society. Still, Friedmanâs much-cited argument marks a key reference point for those warning against âtoo muchâ CSR, mostly driven by concerns about the redistribution of profits which âare not the managersâ to give awayâ (Crook, 2005: 17).
But the 1970s were also marked by attempts to define CSR more broadly. The Committee for Economic Development (1971), for example, suggested a multi-level perspective: the inner circle consisting of a corporationâs basic economic responsibilities; the middle circle of âcurrent social and environmental concernsâ; and the outer circle depicting âemerging responsibilities.â The Committee for Economic Developmentâs basic framework was one of the first attempts to reflect the growing complexity of CSR issues in the 1970s, but also its increasingly dynamic nature. Moreover, CSR was defined as âenlightened self-interestâ (Steiner, 1971), as what goes beyond obeying the law in terms of âwhat every good citizen doesâ (Davis, 1973), absorbing the emerging idea of âgood corporate citizenship.â Eels and Walton (1974), in a key contribution, define CSR as âconcerns with the needs and goals of society,â broadening the scope quite substantially. Their contribution lays the groundwork for a more comprehensive view of businessesâ role in society. But there are also other sources that define CSR more narrowly: for example, we find multiple references to the legal responsibility of a corporation, to being ethical, making charitable actions, or ensuring legitimacy. Finally, the 1970s were also marked by an increasing interest in the measurement of CSR and, thus, the actual social performance of corporations (Carroll, 1979; Sethi, 1975).
Throughout the 1980s, the discussion on CSR became more diverse and, as more academics engaged in it, also more theory focused: scholars inquired about the ethical foundations of corporate responsibility and the moral status of the corporation. This was, in part, a response to Friedmanâs argument that corporations cannot be held morally accountable, only persons (managers), and, therefore, social responsibility has to be conceived of as an individual concept. However, Friedman was also adamant that shareholdersâ money is not the managers to give away. His argument was both legal and ideological, and a reflection of the time. Friedman, like many of his economist peers, held strong views about the threat of socialism (the Eastern Communist Bloc still existed), and CSR was considered a first step in that direction. As for the legal argument, diverting corporate funds to social causes, in his view, was illegal given that the corporation was in principle responsible to owners and shareholders only. To counteract the orthodox views, and open the discussion to more contemporary considerations and concerns pertaining to corporate responsibility, scholars, therefore, asked: Can we hold corporations morally accountable for what they do? And if yes, does this require treating them as mor...