Perspectives on Corporate Social Responsibility

Lez Rayman-Bacchus, David Crowther

• Publisher: Routledge
• Year: 2017
• Topic: Business
• eBook ISBN:
  9781351911740
• Subtopic: Business General
• Index: Business

Over the last decade the question of the relationship between organizations and society has been subject to much debate, often of a critical nature. The decade has seen protests concerning the actions of organizations, exposures of corporate exploitation and unfolding accounting scandals. At the same time ethical behaviour and a concern for the environment have been shown to have a positive correlation with corporate performance. The nature of corporate social responsibility is therefore a topical one for businesses and academics. There are, however, many different perspectives upon what is meant by corporate social responsibility and how this might be applied within organizations. The authors involved are respected academics from a variety of disciplines from around the world. The contributions to this book investigate theoretical perspectives on the topic, the application in practice of socially responsible behaviour and the ethical dimension of such behaviour.

Chapter 1
Introduction: Perspectives on Corporate Social Responsibility

David Crowther and Lez Rayman-Bacchus

If the confidence of the public in the integrity of accountants’ reports is shaken, their value is gone. To preserve the integrity of his reports, the accountant must insist upon absolute independence of judgment and action. The necessity of preserving this position of independence indicates certain standards of conduct. (Arthur Andersen, 1932 - cited in Toffler, 2003)

For many people, particularly in the Western world the year 2002 will be the one in which corporate misbehaviour was exposed by the collapse of some large corporations. In particular the spectacular collapse of Enron and the subsequent fallout among the financial world - including the firm which Arthur Andersen himself founded in 1913 - will have left an indelible impression among people that all is not well with the corporate world and that there are problems which need to be addressed. This will be particularly the case amongst those adversely affected by this collapse, not least of whom are the former employees of the company who have lost their jobs, their life savings and their future pensions. Equally remembered however in other parts of the world is that 2002 was the tenth anniversary of the Union Carbide incident in Bhopal, India - the worst pollution incident in the history of the world. This incident killed thousands, left thousands permanently injured and an even greater number living a life of misery in the area surrounding the former plant. To date not one penny has been paid in compensation to those whose lives have been blighted by an incident caused by the lack of safety precautions which would be required in the Western world and which any socially responsible organisation would implement as a matter of course.

Issues of socially responsible behaviour are not of course new and examples can be found from throughout the world and at least from the earliest days of the Industrial revolution and the concomitant founding of large business entities and the divorce between ownership and management - or the divorcing of risk from rewards, as Crowther argues. But corporate social responsibility is back on the agenda of corporations, governments and individual citizens throughout the world. In this book for example Abreu and David consider practice in the European Community, while Mahon and McGowan consider practice in the USA. Clarke and de la Rama take a wider perspective in considering practice and performance in various Anglo-Saxon countries.

The term corporate social responsibility is in vogue at the moment but as a concept it is vague and means different things to different people. For example Topal and Crowther are concerned with bioengineering and its effects upon biodiversity and therefore upon the future of the planet. On the other hand Mraovich is concerned with the consequences of the networked society (Castells, 1996) while Rayman-Bacchus is more concerned with trust in, and legitimacy of, corporate behaviour and the constant tension between economic wealth and social wellbeing. On the other hand Haw makes the point that socially responsible behaviour is based upon individual behaviour and we cannot expect responsible behaviour from corporations unless we behave responsibly as individuals. All of these interpretations are found within this book. Indeed one of the purposes of the book is to explore different definitions and to arrive at a broad understanding of the range of concerns subsumed within the term corporate social responsibility.

Given the plurality of interpretations of corporate social responsibility contained in this book, this introductory chapter does not seek to knit them into some overarching big idea or single theme. We have chosen to let the individual chapters speak for themselves, and for the reader to draw their own conclusions from the arguments offered. Instead the discussions in this chapter ranges across a variety of themes, some of which resonate with particular ideas within individual chapters, while other themes are raised here without seeking to connect with the particular contributions. The first theme discussed here is the extent to which we can assess the accountability of organisations to a broader constituency by reference to an implicit or hypothetical social contract. In the process we show how social contract theory also helps bind the relationship between corporate social responsibility and ethical behaviour. Following this we raise questions about the scope and depth of commitment among corporate leaders to social responsibility. Assessing this commitment is made difficult given what appears to be a runaway free market ideology; a belief system that seems to be elevating the corporation above the nation state, and is being transmitted through corporate global expansion and USA led government sponsorship. We further develop this globalising process by considering the extent to which corporate and social exploitation of Internet technology is helping both corporate bodies and consumer and citizens transform our world into a global village. We then broaden this assessment of the role of Internet technology to consider the broader relationship between technological innovation and social change. In examining this relationship we show that technological development is underpinned by a utilitarian perspective, and at the same time technological change is unavoidably bound up with making moral choices. Lastly, we suggest that the wider debate about corporate social responsibility could be understood by framing the arguments in terms of a Hobbesian-Lockeian dichotomy, drawing in a consideration of the extent to which there is, or should be, an underlying utilitarian assumption, and how our rights might be affected.

The broadest definition of corporate social responsibility is concerned with what is - or should be - the relationship between the global corporation, governments of countries and individual citizens. More locally the definition is concerned with the relationship between a corporation and the local society in which it resides or operates. Another definition is concerned with the relationship between a corporation and its stakeholders. For us all of these definitions are pertinent and represent a dimension of the issue. A parallel debate is taking place in the arena of ethics - should corporations be controlled through increased regulation or has the ethical base of citizenship been lost and needs replacing before socially responsible behaviour will ensue? In the UK at the present the government seems to believe that citizenship needs teaching to our school children, presumably in the belief that this will manifest itself in the behaviour of corporations in the future. However this debate is represented it seems to us that it is concerned with some sort of social contract between corporations and society.

The Social Contract

A growing number of writers over the last quarter of a century have recognised that the activities of an organisation impact upon the external environment and have suggested that such an organisation should therefore be accountable to a wider audience than simply its shareholders. Such a suggestion probably first arose in the 1970s and a concern with a wider view of company performance is taken by some writers who evince concern with the social performance of a business, as a member of society at large. This concern was stated by Ackerman (1975) who argued that big business was recognising the need to adapt to a new social climate of community accountability, but that the orientation of business to financial results was inhibiting social responsiveness. McDonald and Puxty (1979) on the other hand maintain that companies are no longer the instruments of shareholders alone but exist within society and so therefore have responsibilities to that society, and that there is therefore a shift towards the greater accountability of companies to all participants.

Recognition of the rights of all stakeholders and the duty of a business to be accountable in this wider context therefore has been largely a relatively recent phenomenon.¹ The economic view of accountability only to owners has only recently however been subject to debate to any considerable extent. Some owners of businesses have however always recognised a responsibility to other stakeholders and this is evident from the early days of the Industrial Revolution. Thus, for example, in the nineteenth century Robert Owen (1816, 1991) demonstrated dissatisfaction with the assumption that only cost minimisation and the consequent profit maximisation was the only thing of concern to a business. Furthermore he put his beliefs into practice through the inclusion within his sphere of industrial operations the provision of model housing for his workers at New Lanark, Scotland. Further examples of socially responsible behaviour have continued to exist since these days. Thus there is evidence from throughout the history of modernity that the self-centred approach of accounting for organisational activity only to shareholders was not universally acceptable and was unable to satisfactorily provide a basis for human activity.

Implicit in this concern with the effects of the actions of an organisation on its external environment is the recognition that it is not just the owners of the organisation who have a concern with the activities of that organisation. Additionally there are a wide variety of other stakeholders who justifiably have a concern with those activities, and are affected by those activities. Those other stakeholders have not just an interest in the activities of the firm but also a degree of influence over the shaping of those activities. This influence is so significant that it can be argued that the power and influence of these stakeholders is such that it amounts to quasi-ownership of the organisation. Indeed Gray, Owen and Maunders (1987) challenge the traditional role of accounting in reporting results and consider that, rather than an ownership approach to accountability, a stakeholder approach, recognising the wide stakeholder community, is needed.²

The desirability of considering the social performance of a business has not always however been accepted and has been the subject of extensive debate. Thus Hetherington (1973: 37) states:

There is no reason to think that shareholders are willing to tolerate an amount of corporate non-profit activity which appreciably reduces either dividends or the market performance of the stock.

while Dahl (1972: 18) states:

... every large corporation should be thought of as a social enterprise; that is an entity whose existence and decisions can be justified insofar as they serve public or social purposes.

Nevertheless the performance of businesses in a wider arena than the stock market and its value to shareholders has become of increasing concern. In many respects this can be considered to be a return to the notion of the social contract.

Social contract theory is most often associated with the work of Hobbes (1651) and Rousseau (1762) where a contract, usually considered to be implied or hypothetical, is made between citizens for the organisation of the society and as a basis for legal and political power within that society. The idea is that for the legal and political system to be legitimate it must be one that the members of society would have rationally contracted into. Social contract theory has been applied to the question of business in society in a similar fashion by considering ‘what conditions would have to be met for the members of such a society to agree to allow corporations to be formed’ (Smith and Hasnas, 1999). The conclusions reached by the theorists include that the members of society would demand that the benefits outweigh the detriments implying a greater welfare for the society while remaining ‘within the bounds of the general canons of justice’ (Donaldson, 1982). This can be summarised into three basic requirements that relate to social welfare and justice. Hasnas (1998) suggests that:

when fully specified, the social welfare term of the social contract requires that businesses act so as to 1) benefit consumers by increasing economic efficiency, stabilizing levels of output and channels of distribution, and increasing liability resources; 2) benefit employees by increasing their income potential, diffusing their personal liability, and facilitating their income allocation; while 3) minimizing pollution and depletion of natural resources, the destruction of personal accountability, the misuse of political power, as well as worker alienation, lack of control over working conditions, and dehumanization.

The justice term is less agreed upon but Hasnas suggests that one thing it should require as a minimum is that businesses do not ‘systematically worsen the situation of a given group in society’. This obviously has a strong resonance with stakeholder ideas. Social contract theory has been criticised most usually because, as mentioned earlier, the contract is either argued to be implied or hypothetical. Therefore there is no actual contract (Kultgen, 1987), that members of society have not given any formal consent to such a contract, and that they would be surprised to learn of its existence. Donaldson (1989) freely admits that the contract is a ‘fiction’ but continues that this does not undermine its underlying moral theory.

Social contract theory is therefore grounded in moral theory, with a strong basis in ethics. In various chapters in this book contributors argue that there is a strong connection between corporate socially responsible behaviour and ethical behaviour.

Social Responsibility and the Free Market

It was as long ago as 1967 that Marshall McLuhan first stated that we now live in a global village and that technology was connecting everyone together. Much has changed since then in terms of technology and now with access to the Internet available to everyone we truly do live in a global village in which anyone can interact with anyone else wherever they are living and whatever time zone they are residing in. The Internet has changed the world as never before and this is having profound consequences for people everywhere.

Marshall McLuhan was prophetic in some of the other things which he had to say. When he was talking about this global village he also said that war would continue to be a feature of the world but that there would be an increasing emphasis upon economic war rather than physical war. Well physical war has not gone away but it might be argued that the reasons for wars in the present are to do with economic reasons at least as much as they are to do with imperialistic or ideological reasons - at least as far as governments and countries are concerned. But governments, as the epitome of the nation state are becoming less important. In Europe we have seen a number of new nations states becoming established and in one country, the UK we are possibly in process of breaking up the country into the smaller units of England, Scotland, Wales and a uni...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Corporate Social Responsibility Series
• List of Contributors
• List of Figures
• List of Tables
• 1 Introduction
• PART 1 Theorising Corporate Social Responsibility
• PART 2 Practising Corporate Social Responsibility
• PART 3 The Ethics of Corporate Social Responsibility
• Index