The Routledge Companion to Corporate Social Responsibility

Thomas Maak, Nicola Pless, Marc Orlitzky, Sukhbir Sandhu, Thomas Maak, Nicola Pless, Marc Orlitzky, Sukhbir Sandhu

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000419023
• Edition: 1
• Topic: Business
• Subtopic: Corporate Governance
• Index: Business

While the concept and domain of Corporate Social Responsibility (CSR) are not new—its beginnings can be tracked back to the 1960s—its scope, urgency, and relevance have shifted dramatically in recent years. CEO responses show that the majority of business leaders understand that they operate in an environment of contested values and that stakeholders expect companies to do better and more. However, many corporate incentive systems are not in sync with societal norms and expectations. Moreover, "grand challenges" such as climate change and global pandemics 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.

As a consequence, 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 environment standards, to governance and recognition of stakeholders, supply chain design, and corporations' stand on climate change and its responsibility to future generations. This volume assembles state-of-the-art scholarship from leading scholars in the field and enables a "full range view" of CSR, from its roots, normative foundations, and institutional perspectives to matters of stakeholding, the global value chain, social innovation, and future directions.

The Routledge Companion to Corporate Social Responsibility represents a prestige reference work providing an overview of the subject area of CSR for academics, researchers, postgraduate students, as well as reflective practitioners.

1 Corporate Social Responsibility (CSR)

Bringing Society Back In

Thomas Maak and Nicola M. Pless

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 question—for what, and to whom, are businesses responsible?—we 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 organization’s 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 all—different 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 “tortured concept” (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 label—less “normative” (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 “Dieselgate” 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 Sweden’s 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 chains—such 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 corporations’ 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 CSR—a 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 “Management’s Responsibilities in a Complex World” 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: “[Modern] management must understand that the general public—men and women everywhere—have a very deep interest in, and are affected by, what is going on” (1951: 32). He thus introduced an early stakeholder perspective, a concept later shaped by R. Edward Freeman (1984).

Bowen’s study from 1953, in contrast, is concerned with fleshing out the specific social responsibilities of businessmen. Hence, what are now considered the “micro-foundations” of CSR were, at the beginning of the debate, its core focus and locus. Bowen argues that businessmen must assume “a large measure of responsibility if the economic system of free enterprise is to continue and prosper” (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-à-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 “modern society” 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 “businessman,” as there were hardly any women in leadership positions. For example, Davis refers to social responsibility as “businessmen’s decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest” (1960: 70). He later argues that “the substance of social responsibility arises from the concern for the ethical consequences of one’s acts as they might affect the interests of others” (1967: 46).

The social and political revolution of the late 1960s, in particular rising social awareness and ecological concerns, perhaps best exemplified by Rachel Carson’s (1962) book Silent Spring, triggered an intensification of the debate throughout the 1970s. Milton Friedman’s contribution in the New York Times Magazine in 1970 cast the longest shadow. Nobel laureate Friedman famously claimed “that the social responsibility of business is to increase its profits.” He argues that businesses and corporations in fact have no responsibilities (1970: 51), in contrast to managers and corporate executives. As a businessperson and “an agent serving the interests of his principal” (1970: 53), the executive has direct responsibility to the principal (also called owner, employer, or stockholder), namely “to 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 custom” (1970: 51). Friedman’s 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 Friedman’s comments show, he does not suggest an amoral position. While being vague on the term “ethical custom,” he acknowledges ethical standards as important guideposts for executives and, hence, the fact that, while the executive’s 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, Friedman’s much-cited argument marks a key reference point for those warning against “too much” CSR, mostly driven by concerns about the redistribution of profits which “are not the managers’ to give away” (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 corporation’s basic economic responsibilities; the middle circle of “current social and environmental concerns”; and the outer circle depicting “emerging responsibilities.” The Committee for Economic Development’s 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 “enlightened self-interest” (Steiner, 1971), as what goes beyond obeying the law in terms of “what every good citizen does” (Davis, 1973), absorbing the emerging idea of “good corporate citizenship.” Eels and Walton (1974), in a key contribution, define CSR as “concerns with the needs and goals of society,” broadening the scope quite substantially. Their contribution lays the groundwork for a more comprehensive view of businesses’ 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 Friedman’s 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 shareholders’ 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...