The True Value of CSR

Corporate Identity and Stakeholder Perceptions

B. Fryzel

• Publisher: Palgrave Macmillan
• Year: 2014
• Print ISBN:
  9781137433183
• eBook ISBN:
  9781137433206
• Topic: Business
• Subtopic: Business General
• Index: Business

By considering the importance of Corporate Social Responsibility (CSR) as a business paradigm but also as a growing scepticism about it's outcomes, The True Value of CSR answers questions about true value behind this concept, motivations of firms embedding CSR in their core strategies and a capacity of CSR to make a real difference on the market.

Part I

The Meaning of Responsibility in Organizations: Some Reflections

1

CSR: What Does It Mean?

Rafael Alvira

Introduction

Is Corporate Social Responsibility (CSR) only a medication to remove the pain caused to business by current society, that is to say, simple symptomatic medicine, or is it something more? Some specialists think that the manner in which CSR is managed today leads us to this response. Current CSR seems not to have taken into account the deep causes of the problems – but seeks only to remove the pains, the symptoms, and even these in a superficial manner. The purpose of this chapter is to try to find the explanation for this superficial CSR, which even at this level has already generated many good consequences for current society.

The state-market formula

First of all, it must be said that generally speaking CSR is not, contrary to what many people seem to assume, a new concept, but, in fact, has a relative long history. It began to develop at the time of the industrial revolution. Nevertheless, it is in a certain sense a new concept. The reason is the problematic separation between the state and the market.

In the famous formula of the modern socio-political system – ‘state and market’ – the market has been understood as the field of the private gain, while the state assumed the task of solving social problems.

For a long time many businessmen have considered, and many still do today, that a business’s social duties were fulfilled by paying taxes to the state and creating wealth for society, while fulfilling, in the expected manner, their duties towards their stakeholders, mainly the shareholders.

Indeed, from the strict point of view of the ‘state-market’ system such behaviour should be considered correct, which is the reason for asking why CSR has become fashionable. Why has recent literature, the media and the business sector shown such great interest in this topic? A pure liberal approach doesn’t match very well with the existence of a CSR that went beyond the already mentioned points. In any case, if a company wants to go beyond, this could be its private interest or desire, but from a liberal approach it shouldn’t be generalized as a kind of obligation. In my view, CSR can be justified only if it is accepted that the state-market formula is not correct.

The modern state – even if it is a minimal one, as liberal theory maintains it should be – is always totalitarian, in the sense that it is the only owner of the people’s sovereignty. No other institution can have a similar claim. Therefore, at the beginning of the French Revolution corporations were politically suspect; and in the tradition of the American Revolution business corporations were conceived as pure instruments for private benefit.

An external proof of this situation is the old reluctance of business to be considered as institutions. In the democratic world institutions are creations of the state and belong to it, but this is not the case for business. The purely political implications of the word ‘institution’ and the fact that politics is the apanage of the state made the word strange to the business world.

If politics is only possible in the state, and at the same time the state is in charge of social problems, then the political sphere and the solving of social problems are intrinsically linked. Outside this sphere there is only the market, with its private search for wealth. The market then has nothing to do with politics. It can only indirectly help politics through its correct and successful functioning, because as a consequence of this good economic behaviour supposedly there will be no social problems.

This theoretically strict separation between state and market nevertheless presents some difficulties. Indeed, modern democracy is based on liberty and equality both considered only in the public and exterior realm. Ethics and religion are pure interior and individual concerns. As a consequence, to function correctly the whole system has to rely upon laws and rules. Both state and the market have their rules that should be harmonized and fulfilled. But pure liberty and ethical behaviour have a difficult connection. How does a person develop a system of ethics that also takes seriously into account the idea of her or his total liberty?

In fact, the weakness of the state-market system has been shown up recently through the ethical corruption of many politicians and businessmen and, even more so, through the corruption of political institutions and market organizations. This corruption has at least two important roots. One is the already mentioned lack of ethics, the other is the factual impossibility of the separation of the state and the market.

The rules are never sufficient to avoid this structural problem: politicians need money and businessmen need favourable and only minimal market regulations. The conjunction of both roots – ethical and structural – are devastating for the functioning of a democratic system.

Already by the 19th century it was normal to read in French newspapers: ‘tout est pourri’ [all is corrupt], and the cries in favour of the ‘regeneration of democracy’ or for a ‘true democracy’ are also old. On the other hand, it doesn’t make sense to affirm that other political systems are worse than the democracy. First of all because it is not easy to compare systems developed historically under different conditions; second because each of the different systems has its own kinds of weaknesses; third because the principal comparison should be based more upon principles than facts, which are always subject to different interpretations; but mainly because the important question is not whether the current version of democracy is better than past political systems, but what are the possible means to improve the present social and political situation. Winston Churchill’s famous and so often quoted sentence about democracy has frequently hindered a normal study of the real problems of our society.

No doubt, liberty and equality are fundamental dimensions of person and society, but the point is how they are to be understood and developed. Louis de Bonald wrote that the revolutionaries had introduced morality instead of morals, that is to say, they spoke about people and society in an abstract manner. The revolutionary ideas of absolute liberty and total equality, de Bonald thought, are abstract, and, therefore, cannot be achieved.

If this is true, as it appears to be, if you should try to assure total equality (through total state) you will make liberty impossible and if you try to assure absolute liberty you will then make equality impossible.

You may nevertheless remain in the political abstract and then think that the solution is a methodical one: the liberals hope that liberty will later also bring equality; and the socialists hope that equality will later also bring liberty. But both methods have historically failed. Neither the growing of richness through liberty has brought equality (liberal position) nor the power of the state to introduce equality has brought liberty (socialist position).

Another possible solution is the centrist or moderate, introduced through the different forms of welfare state. The problem here is that this kind of political system – even if there may be successes at the beginning – creates a social ambience of easiness that destroys the personal and social strength and at the end this apparently best democratic form leads to the fall of a society. Society – as we can observe today – is not capable to afford the welfare state.

The awakening of CSR

In my view those are the real fundamental problems that have awakened again, perhaps more than ever, the realization of a need for CSR. But the lack of sufficient reflection on the political philosophy of our society has led to a purely empirical and mathematical view. CSR today frequently means a list of numbers that pretend to synthesize the degree of responsibility of a business: numbers referring to the adequate treatment of the environment and of the different stakeholders.

Whilst somewhat inconsistent and even allowing for the lack of credibility that some of the CSR evaluation studies may have they can still be a useful instrument to help businessmen know and take into account some aspects of their business, but they can never be a means to make businessmen understand what it means to be responsible personally and in society. As a consequence, as it is today often the case, the studies are mainly used only to gain a good reputation in the market.

The thesis of this chapter is that true CSR should first of all understand and take seriously into account what is the cause of the growing interest in CSR, and that this cause forces us to a new approach in the analysis (in political philosophy) of our society; second that it is necessary to understand that speaking about personal and corporative ethics is wasting time if the places in which the ethical education can be achieved (i.e., family, educational centres and the churches) don’t occupy the central point of the social net that they deserve; and finally that only by rethinking civil society on the basis of those institutions can CSR be something necessary and very important, and not just an instrument for improving and advertising a business’s reputation.

In my view, the growing interest in CSR is very often an unconscious consequence of the already mentioned socio-political situation. It is very clear that usually businessmen were only interested in the state to the extent that it fulfilled the tasks of ensuring liberty, property, security, social peace, respect of market rules and economic help in moments of difficulty. But it is also very clear that normally only the very rich countries – and then not always – are able to maintain the state under these limits. And the most usual consequences of this fact have been either corruption or economic failure under a socialist regime. Corruption here means: ‘buying’, in different manners, the leftist group that has got or gained political power.

Little by little the net of ‘dark’ relations between the economic and the political powers has grown until reaching an enormous degree. The political establishment is hardly worried about this in reality, but has been forced to show preoccupation. On the contrary, many businessmen are really worried about the situation, but they are often not interested in showing preoccupation in the public sphere.

The influence of the present political system

All this is the consequence of our socio-political system. Theoretically politics and economics are two separate realms. Indeed, if the economic sphere interferes in the political, then the sovereignty of the people disappears; if the political sphere interferes in the economic then the liberty of individuals is threatened. In other words: the separation is theoretically dogmatic in democracy, but every one knows that it is impossible in reality. Therefore, each democratic country looks for a convenient and adequate solution, but the efficacy of those solutions are quite often very questionable, mainly in periods of crisis, periods that following one of the few correct predictions of Marx, are repeated always more rapidly and with greater intensity.

When a country is rich or its richness is growing, this richness plays the role of a personal and social ‘anaesthesia’. It has been always so because it is essentially so. Material richness leads very often to the vice of spiritual richness, and this is a problem for the spirit.

But we cannot ignore the fact that the formula of the pure ‘liberal-capitalist’ doctrine is that social problems will be solved through the growing of richness. This formula linked to the already mentioned rules and political structures that businessmen hope to be respected by the state seems to be sufficient for the correct functioning of society as a whole. But the problem is that it is not the case: of course, the system very often produces a general growing of material richness, and an extension of the middle class during the good economic periods, but has never been able to solve the problems of adequate distribution and of the increasing distance between rich and poor.

In the last years it has been shown, once and again, in various statistical studies how much this difference increases, which was easy to foresee: the desire for richness, deeply integrated in the system, leads to the enlargement of the markets, and, as a normal consequence, leads also to the expansion of the big companies and financial institutions.

And there is something more: the globalization of economics has not been accompanied by the globalization of law and politics. Also, a new world has been born, one that does not have a sovereign power, the only thing that under these circumstances could avoid the general ‘Pirateria’; a power nevertheless which, on the other hand, could introduce the danger of world tyranny.

But even if this difficulty is big, still much bigger is the economic-individualistic fundamental assumption of the liberal-capitalist system. It is simply wrong trying to build a society upon foundations that are not social, like the ‘individuals as such’. The present system, granting to families only a secondary role in society makes it impossible to understand what ‘a person’ and ‘a society’ mean, and consequently makes it impossible to develop them in a correct manner.

But, on the other hand, the socialist solution is even more impossible. It substitutes human capabilities and the immense force of liberty with the predominance of the state, that wrongs the nature of politics, destroy economics and is unable to understand the soul of a human society, which is here interpreted as a different entity, namely the ‘collectivity’.

Ethics and the relevance of the common

The real effects of this general situation are today quite often unconsciously perceived, and precisely this is in my view the most important hidden cause of the rebirth of CSR. Indeed, CSR is in search of the means to escape the ‘fatalities’ of the system, but is doing so without studying the problem’s deep causes. It tries to solve the problem directly through the introduction of the fundamental concept of the ‘social responsibility’ of business. The intention is very good, and so far has had some real and favourable consequences.

Nevertheless, in the medium and long term, a solid solution can be achieved only by (a) granting a central role to ethics – ethics is necessary and has no valid possible substitute because law and policy function adeq...

Table of contents

• Cover
• Title
• Part I  The Meaning of Responsibility in Organizations: Some Reflections
• Part II  A Market for CSR: Forming Identities and Behaviours
• Part III  Capitalist Economy and CSR: Contradictions and Inconsistencies?
• Part IV  Responsible Business and Behavioural Patterns
• Index