csr (a to z of csr)

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to better reflect how managers actually perceive their companies’social responsibilities and performance.

→ Globalisation is of particular concern to both theorists andpractitioners. In the absence of supranational regulatory capacity,efforts to improve corporate social performance remain largely vol-untary or stakeholder driven. Nevertheless, efforts to systematiseand operationalise CSP can be seen in many areas of businesspractice, including corporate social reporting initiatives such asthose driven by AccountAbility and the → Global ReportingInitiative; development of corporate → codes of conduct guidedby principles from the → UN Global Compact, → Caux RoundTable, or the Organisation for Economic Cooperation and Devel-opment; socially-screened investing and venture capital; socialentrepreneurship; and collaborative social problem-solving part-nerships among businesses, NGOs, government agencies, andsupranational organisations.

In short, CSP forms a systematic intellectual framework for grasp-ing the structure of business and society relationships. In practice,it is a generalised template for assessing how firms identify and fulfiltheir responsibilities to individuals, stakeholders, and societies.

Donna Wood

CORPORATE SOCIAL RESPONSIBIL ITYThe concept of corporate social responsibility (CSR) refers to thegeneral belief held by growing numbers of citizens that mod-ern businesses have responsibilities to society that extend beyondtheir obligations to the stockholders or investors in the firm. Theobligation to investors, of course, is to generate profits for theowners and maximise long-term wealth of shareholders. Othersocietal stakeholders that business would also have some respon-sibility to typically include consumers, employees, the communityat large, government, and the natural environment. The CSR con-cept applies to all size organisations, but discussions tend to focus

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on large organisations because they tend to be more visible andhave more power. And, as many have observed, with power comesresponsibility.

A related concept is that of → corporate social performance(CSP). For practical purposes, CSP might be seen as an exten-sion of the concept of CSR that focuses on actual results achievedrather than the general notion of businesses’ → accountability orresponsibility to society. Thus, CSP is a natural consequence orfollow-on to CSR. In fact, it could well be argued that if CSRdoes not lead to CSP then it is vacuous or powerless. Interestingly,many advocates of CSR naturally assume that an assumption ofresponsibility will lead to results or outcomes. Therefore, the dis-tinction between the two is often a matter of semantics that is ofmore interest to academics than to practitioners. Most of our dis-cussion will be focused on CSR with the general assumption thatCSP is a vital and logical consequence.

Evolution of the CSR conceptThe definition of CSR has evolved over the decades, generallybecoming more precise as to the types of activities and practicesthat might be subsumed under the concept. Early definitions wereoften general and ambiguous. Over the decades, definitions of CSRhave reflected concerns such as:

• Seriously considering the impact of company actions on others;• The obligation of managers to protect and improve the welfare

of society; and• Meeting economic and legal responsibilities and extending

beyond these obligations.

A more comprehensive definition of CSR is that it encompassesthe economic, legal, ethical, and discretionary or philanthropicexpectations that society has of organisations at a given point intime. This definition specifies four different, but interrelated, cat-egories of responsibilities that business has towards society. This

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characterisation also attempts to place the traditional economic andlegal expectations of business in context by combining them withmore socially oriented concerns such as ethics and philanthropy.

A brief elaboration of this definition is useful. First, and foremost,business has a responsibility which is economic in nature or kind.Before anything else, the business institution is the basic economicunit in society. As such it has a responsibility to produce goods andservices that society wants and to sell them at a profit. All otherbusiness roles are predicated on this fundamental assumption. Theeconomic element of the definition suggests that society requiresbusiness to produce goods and services and sell them at a profit. Thisis how the capitalistic economic system is designed and functions.Firms that do not generate economic sustainability go out of businessand become irrelevant.

Just as society expects business to make a profit (as an incentiveand reward) for its efficiency and effectiveness, society expects andrequires business to obey the law. The law, in its most rudimentaryform, depicts the basic ‘rules of the game’ by which business isexpected to function. Society expects business to fulfil its economicmission within the framework of legal requirements set forth bythe society’s legal system. Law may be thought of as ‘codified’ethics. Thus, the legal responsibility is the second part of this CSRdefinition.

The next two responsibilities attempt to specify the nature orcharacter of the obligations that extend beyond obedience to thelaw. The ethical responsibility represents the kinds of behavioursand ethical norms that society expects business to follow. Theseethical responsibilities extend to actions, decisions and practiceswhich are beyond what is required by the law. Though they seemto be always expanding, they nevertheless exist as expectations ‘overand beyond’ legal requirements.

Finally, there are discretionary or philanthropic responsibilities.These represent voluntary roles, initiatives, and practices that busi-ness assumes but for which society does not provide as clear an


expectation as in the ethical responsibility. These are left to individ-ual managers’ and corporations’ judgement and choice; therefore,they are referred to as discretionary. Regardless of their voluntarynature, the expectation that business perform these is still held bysociety. This expectation is driven by social norms. The specificactivities are guided by businesses’ desire to engage in social rolesnot mandated, not required by law, and not expected of busi-nesses in an ethical sense, but which are becoming increasinglystrategic. Examples of these voluntary activities include makingphilanthropic and charitable contributions, employee volunteerism,support of non-profit organisations, and other attempts to fosterimproved relationships with various stakeholder groups. In short,these ethical and philanthropic activities embrace the whole rangeof how business attempts to do well by doing good.

Though this four part definition includes an economic responsi-bility, many today still think of the economic component as whatthe business firm does for itself and the legal, ethical and discre-tionary (or philanthropic) components as what business does forothers. While this distinction represents the more commonly heldview of CSR, it is important to think about economic performanceas something business does for society as well, though society seldomlooks at it in this way.

Whatever the definition used, CSR is all about business per-formance in a variety of social and environmental topic areas thatusually embrace issues of → diversity, philanthropy, socially respon-sible investing (SRI), environment, → human rights, workplaceissues, → business ethics, sustainability, → community developmentand → corporate governance.

Business’s interest in CSRAcademics have had an interest in the concept of CSR for closeto 50 years. But, it is important to emphasise that the busi-ness community has had a parallel development of its interest in

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the concepts as well, though they have not always been clearlyarticulated. The business community, moreover, has been less inter-ested in academic refinements of the concept and more interestedin what all this means for them, in practice. Prominent businessorganisations have developed specialised awards for firms’ socialperformance. One example of this would be Fortune magazine’s‘most admired’ and ‘least admired’ categories of reputational per-formance. Among Fortune’s eight attributes of reputation, one willfind the category of performance titled ‘social responsibility’. TheConference Board is another organisation that has developed anaward for corporate → leadership in the CSR realm. The Confer-ence Board annually gives an award titled the ‘Ron Brown Awardfor Corporate Leadership’ that recognises companies for outstand-ing achievements in community and employee relations. Amongthe core principles for this award are that the company be commit-ted to → corporate citizenship, express → corporate citizenship asa shared value visible at all levels, and it must be integrated into thecompany’s corporate strategy.

For many years now, Business Ethics magazine has published itslist of Annual Business Ethics and Corporate Citizenship Awards.In these awards, the magazine has highlighted companies that havemade stellar achievements in CSR/CSP. One of the importantcriteria used by the magazine in making this award is that the com-panies have programmes or initiatives in social responsibility thatdemonstrate sincerity and ongoing vibrancy that reaches deep intothe company. The award criteria also stipulate that the companyhonoured must be a standout in at least one area of social respon-sibility, though the recipients need not be exemplary in all areas.

Though one will always find individual business people whomight reject or fight the idea of CSR/CSP, for the most parttoday, large companies all over the world have accepted the ideaand internalised it. One of the best examples of this acceptancewas the creation in 1992 of the association titled → Business forSocial Responsibility (BSR) in the USA. BSR is a national business


association that helps companies seeking to implement policies andpractices that contribute to the companies’ sustainability and respon-sible success. In its statement of purpose, → BSR describes itself as aglobal organisation that helps its member companies achieve successin ways that respect ethical → values, people, communities, and the→ environment. A goal of BSR is to make CSR an integral partof business operations and strategies. An illustrative list of BSR’sover 1000 members includes such well-known companies as ABB,Inc., AstraZeneca plc, Coca-Cola, Johnson & Johnson, Nike, Inc.,Office Max, General Electric, General Motors, UPS, Procter &Gamble, Sony, Staples, Inc. and Wal-Mart. Similar organisationsexist now in → Europe, such as → Business in the Community, or→ Asia, such as CSR Asia.

The business case for corporate social responsibilityAfter weighing the pros and cons of CSR, most businesses todayembrace the idea. In recent years, the ‘→ business case’ for CSRhas been unfolding. Before buying in to the idea of CSR, manybusiness executives have insisted that the ‘→ business case’ for itbe further developed. The → business case embraces arguments orrationales as to why businesspeople believe these concepts bringdistinct benefits or advantages to companies specifically, and thebusiness community generally. Even the astute business strategyexpert, Michael Porter, who for a long time has extolled the virtuesof → competitive advantage, has embraced the belief that corpo-rate and social initiatives are intertwined. Porter has argued thatcompanies today ought to invest in CSR as part of their businessstrategy to become more competitive. Of course, prior to Porter,many CSR academics had been presenting this same argument.

Simon Zadek, a European, has presented four different businessrationales for being a civil (socially responsible) corporation. Thesereasons form a composite justification for business adopting a CSRstrategy. First, is the defensive approach. This approach to CSR

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is designed to alleviate pain. That is, companies should pursueCSR to avoid the pressures that create costs for them. Second, isthe cost – benefit approach. This traditional approach holds thatfirms will undertake those activities that yield a greater benefitthan cost. Third, is the strategic approach. In this rationale, firmswill recognise the changing environment and engage in CSR aspart of a deliberate corporate strategy. Finally, the innovation and→ learning approach is proposed. Here, an active engagement withCSR provides new opportunities to understand the marketplace andenhance organisational → learning, which leads to → competitiveadvantage. Most of these rationales have been around for years, butZadek has presented them as an excellent, composite set of businessreasons for pursuing CSR.

Putting forth the → business case for CSR requires a careful andcomprehensive elucidation of the reasons why companies increas-ingly understand that CSR is in their best interests to pursue. Twoparticular studies have contributed towards building this case. First,a study by PricewaterhouseCoopers, presented in their 2002 Sus-tainability Survey Report, identifies the following top 10 reasonswhy companies are deciding to be more socially responsible:

• Enhanced reputation• Competitive advantage• Cost savings• Industry trends• CEO/board commitment• Customer demand• SRI demand• Top-line growth• Shareholder demand• Access to capital

Second, a survey conducted by The Aspen Institute, in their Busi-ness and Society Program, queried MBA student attitudes regardingthe question of how companies will benefit from fulfilling their


social responsibilities. Their responses, in sequence of importance,included:

• A better public image/reputation• Greater customer loyalty• A more satisfied/productive workforce• Fewer regulatory or legal problems• Long-term viability in the marketplace• A stronger/healthier community• Increased revenues• Lower cost of capital• Easier access to foreign markets

Between these two lists, a comprehensive case for business interestin CSR/CSP is documented. It can be seen how CSR/CSP notonly benefits society and stakeholders, but how it provides specific,business-related benefits for business as well.

Examples of CSR in practiceThere are many ways in which companies may manifest their CSRin their communities and abroad. Most of these initiatives wouldfall in the category of discretionary, or philanthropic activities, butsome border on improving some ethical situation for the stake-holders with whom they come into contact. Common types ofCSR initiatives include corporate contributions, or philanthropy,employee volunteerism, community relations, becoming an out-standing employer for specific employee groups (such as women,older workers, or minorities), making environmental improvementsthat exceed what is required by law, designing and using → codesof conduct, and so on.

Among the 100 Best Corporate Citizens selected in 2006 byBusiness Ethics magazine, a number of illuminating examples ofCSR in practice are provided. Green Mountain Coffee Roasters ofWaterbury, Vermont, was recognised for its meticulous attention to

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CSR including its pioneering work in the → fair trade movement,which pays coffee growers stable, fair prices.

Another example of CSR in practice is the Chick-fil-A restau-rant chain based in Atlanta, Georgia. Founder and CEO TruettCathy has earned an outstanding reputation as a business exec-utive deeply concerned with his employees and communities.Through the WinShape Center Foundation, funded by Chick-fil-A,the company operates foster homes for more than 120 children,sponsors a summer camp, and has hosted more than 21 000 chil-dren since 1985. Chick-fil-A has also sponsored major charity golftournaments.

In the immediate aftermath of Hurricane Katrina in 2005, judgedto be the worst and most expensive ever in terms of destruction,hundreds of companies made significant contributions to the victimsand cities of New Orleans, Biloxi, Gulfport and the entire GulfCoast of the US. These CSR efforts have been noted as one of theimportant ways by which business can help people and communitiesin need.

As seen in the examples presented, there are a multitude of waysthat companies have manifested their corporate social responsibilitieswith respect to communities, employees, consumers, competitors,and the natural environment.

CSR in the futureWhat is the future for corporate social responsibility? The mostoptimistic perspective seems dominant and it is depicted well bySteven D. Lydenberg in his book Corporations and the Public Interest:Guiding the Invisible Hand. Lydenberg sees CSR as ‘a major seculardevelopment, driven by a long-term reevaluation of the role ofcorporations in society’. Lydenberg says this re-evaluation is moreevident in → Europe, where the stakeholder responsibility notionis more readily assumed, but that US business people are moresceptical of this assumption. He goes on to argue, however, thatthe European influence will be very hard to resist over the long run.

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By contrast with the optimistic perspective, David Vogel is gen-uinely sceptical of CSR and he develops this argument in his bookThe Market for Virtue: The Potential and Limits of Corporate SocialResponsibility, in which he critiques CSR’s influence and success.Vogel is very much of the mind that CSR will not be successfuluntil mainstream companies begin reporting some aspect of CSRas being critical to the company’s past or future performance. Inother words, CSR is successful only to the extent that it addsto the bottom line and can be specifically delineated as havingmade such an impact. In reacting to Vogel’s scepticism, it mustbe observed that this convergence of financial and social objectivescharacterises the trajectory that CSR has taken in the past twodecades.

It is evident by CSR practices and trends, that social responsibilityhas both a social component as well as a business component. Intoday’s world of intense global competition, it is clear that CSRcan be sustainable only so long as it continues to add value tocorporate bottom lines. It must be observed, moreover, that it isthat conglomerate of stakeholders known as society, or the public,not just business executives alone, that plays an increasing rolein what constitutes business success and for that reason, CSR hasan upbeat future in the global business arena. The pressures ofglobal competition will continue to intensify, however, and thiswill dictate that the ‘→ business case’ for CSR will always be at thecentre of discussions.

Archie Carroll

CORPORATE SOCIAL RESPONSIVENESS→ Corporate social responsibility

Corporate social responsiveness is a set of boundary-spanningbehaviours by which firms link social responsibility principles tobehavioural outcomes.

A Complete Reference Guide to Concepts, Codes and Organisations More than 100 Expert Contributors Over 400 Listed Entries, including: • 10 core terms • 60 key terms • 130 definitions • 80 key codes & guidelines • 40 key organisations • 120 website addresses • 110 referred terms Also Regional Profiles for: • Africa • Asia • Australia • Europe • Latin America • North America And Sector Profiles for: • Automotive • Banking • Chemicals • Infrastructure • Media • Mining • Oil & gas • Personal & household goods • Pharmaceuticals • Technology • Telecommunications • Travel & leisure • Utilities

The A to Z of Corporate Social Responsibility

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