utilitarian, managerial and relational theories of corporate social responsibility

International Journal of Management Reviews Volume 9 Issue 4 pp. 347–373 347

© Blackwell Publishing Ltd 2007, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA

International Journal of Management Reviews (2007)doi: 10.1111/j.1468-2370.2007.00215.x

Blackwell Publishing LtdOxford, UKIJMRInternational Journal of Management Reviews1460-8545© Blackwell Publishing Ltd 2007XXX ORIGINAL ARTICLESutilitarian, managerial and relational theories of corporate social responsibilityXXXX 2007

Utilitarian, managerial and relational theories of corporate social responsibilityDavide Secchi

Concepts and theories of corporate social responsibility (CSR) have been examined andclassified by scholars since the mid-1970s. However, owing to the evolving meaning of CSRand the huge number of scholars who have begun to analyze the issue in recent years freshefforts are needed to understand new developments. Since there is a great heterogeneity oftheories and approaches, the task remains a very hard one, mainly because heterogeneityderives from multi-disciplinary diversity. The criterion for selection is to consider the rolethat theorists confer to the firm. Following this idea, three groups of theories have beendiscerned: (1) the utilitarian group, in which the corporation is intended as a maximizing‘black box’ where problems of externalities and social costs emerge; (2) the managerialcategory, where problems of responsibility are approached from inside the firm (internalperspective); (3) relational theories, or those in which the type of relations between the firmand the environment are at the center of the analysis. The three perspectives allow thereader to understand the most significant differences between the various theories of CSR. Theobjective is to classify the theories and to draw a map in which group specificities can be madeavailable. This allows scholars to reach a better understanding of corporate–society relations,and enhances developments both in theoretical and empirical terms.

Introduction

The debate on corporate social responsibility(CSR) issues is commonly dated back to the 1950s(Bowen 1953; Chase et al. 1950). The mostimportant contribution these earlier approachesseem to have made is that they defined theissue in a structured way for the first time.They presented a narrow definition of socialresponsibility, limited to philanthropy. Far

from these earlier works, if the term ‘socialresponsibility’ refers to the contribution thatthe corporation provides for solving socialproblems (Wood and Logsdon 2002), a sig-nificant number of studies may be includedin the analysis. Moreover, if this is the startingpoint, we may also include the generationof social problems at the core of the analysis,i.e. the general study of business–societyrelations.

348 © Blackwell Publishing Ltd 2007

Utilitarian, managerial and relational theories of corporate social responsibility

One of the first attempts at classifyingtheories on CSR (business and society issues)was made by Preston (1975). In recent years,many scholars have followed Preston’s ideaand tried to give a rationale to the growingnumber of theories in this field (see, for exam-ple, Frederick 1978, 1986, 1998; Klonoski1991; Pasquero 2000).

A far-reaching and complete review ofresearch on the issue has been published byGarriga and Melé (2004). The authors divideCSR theories into four groups:

(1) A first group in which it is assumed that thecorporation is an instrument for wealth creation andthat this is its sole social responsibility. [ ... ] Thisgroup of theories could be called instrumentaltheories because they understand CSR as a meremeans to the end of profits. (2) A second group inwhich the social power of corporation is emphasized,specifically in its relationship with society and itsresponsibility in the political arena associatedwith this power. This leads the corporation to acceptsocial duties and rights or participate in certainforms of social co-operation. We will call thisgroup political theories. (3) A third group includestheories which consider that business ought tointegrate social demands. They usually argue thatbusiness depends on society for its continuity andgrowth and even for the existence of businessitself. We can term this group integrative theories.(4) A fourth group of theories understands thatthe relationship between business and society isembedded with ethical values. [ ... ] We can termthis group ethical theories. (Garriga and Melé2004, 52–53)

Two critical points emerge from the usefulframework developed by Garriga and Melé(2004). The first relates to the distinctionbetween theories from the first and the secondgroups: it is not clear why a political theorymight not also be an instrumental one. Aretheories used to analyze corporations thatemploy their political power to maximizeprofits political or instrumental? Socialisttheories of the firm, for example, are politicalin relation to the kind of power they consider,but economic/instrumental in the objective

they suppose the firm has – nevertheless, theauthors do not cite socialists. This and othersimilar problems are among the most difficultwhen studying complex and heterogeneoustheories. When isolating groups of theories,overlaps always occur but they have to beavoided as much as possible.1

The second problem concerns the strictmeaning they give to CSR, in the sense thatthey only consider ‘direct’ literature. In otherwords, they consider theories that referdirectly to ‘social responsibility’. This is alimit, in my opinion, mainly because, inconclusion, they omit to find more multidis-ciplinary interconnections.

While the first point is a matter of interpre-tation, the second is a very consistent weaknessbecause it limits the width and depth of theanalysis, and its implications. Moreover, itseems more committed to the CSR label thanto problems and issues therein.

Considering Garriga and Melé’s effort, athird point can be defined even if it does notarise from a critical appraisal and, for thisreason, it must be considered separately. Itrelates to the kind of approach followed,and can also be connected to Klonoski (1991).Authors analyze theories of CSR from a‘deontological’ (or, broadly speaking, philo-sophical) perspective (the meaning can befound in Boatright (2003)); thus the categoriesthey obtain deal with the broader question,‘What is the meaning of business?’ It is afundamental question indeed. However, onceit has been underlined that using this ‘deon-tological’ perspective is not a problem initself, we need to take things a step further:What are the connections with managementscience? How can these broad categoriesinteract with the theoretical developments ofCSR? What are the main implications for man-agement practices?

In other words, these approaches are extremelyuseful from many points of view, but theauthors’ focus remains mainly fixed on anormative basis.

My approach is rather different, as I aminterested in the ‘how’ and ‘where’ issues

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rather than the ‘what’. I claim that theseclassifications present data on what thetheoretical background of CSR theories is.I analyze CSR theories questioning howthey define relations between corporationsand society and, more specifically, whereresponsibility is allocated. I see this approachas integrating with, rather than substitutingfor, previous ones. The aim is to add somethirty years’ experience to the work begun byPreston (1975).

Moreover, and back to the two criticalappraisals of Garriga and Melé (2004), myclaim is that the heterogeneity of approaches,united to the growing literature on CSR needto be systematized using simple but clear-cut concepts. As a result, theories are madecomparable. This is a fundamental point, whoseimplications in terms of empirical evaluationand testing of theories are scarcely con-sidered, since theoretical benchmarking islacking in modern scientific work (Morin1999).

In summary, the aims of this paper are:(1) to analyze CSR from a broader multidis-ciplinary perspective (i.e. including ‘indirect’literature) through (2) the definition of clear-cut classes of theories (i.e. avoiding overlapsas much as possible) in order (3) to obtain aset of variables that allow us to analyze CSRin a way that can be useful for enhancingfurther developments both in theory andpractice.

Criteria and Methodology

Following up attempts to improve upon thework of other scholars working on CSR wedeveloped a new category system in whichcontributions can be classified. The aim is tohave a system that can help in understandingdifferences between concepts and avoid theabove-mentioned limitations.

Distinguishing between disciplines can beof some help. Contributions maintain strongconnections with business ethics (De George1999), strategic management, political economy,and sociology2 (Boatright 2003).

This paper is dedicated to an analysis ofvarious aspects of CSR. Selecting and classi-fying literature may help both in exploringhidden meanings of each contribution and inproviding a means of fine tuning the conceptsadopted for the analysis of firm behavior,within the perspective of social responsibility.Models and approaches analyzed here aredirected more to building up a theoreticalframework than to a complete overview ofthe literature. A few examples of so-called‘neglected’ literature will, however, be takeninto consideration, neglected texts often beingnon-English contributions (mainly European).The criterion for dividing theories into homo-geneous groups is the role that theorists con-fer to the firm.

Following this idea, three groups of theorieshave been drawn up:

(1) The enterprise is seen as part of a widermechanism, the economic system. Fromthis well-known perspective, analyzingthe firm’s internal variables makes nosense; moreover, self-interest is alsosupposed to be the economic system’sdriving force. This stream of thought isfundamentally neoclassical in origin and ishere defined utilitarian (traditional ormechanicist). It derives mainly from theutilitarianism matrix.

(2) The second group of theories is composedof scholars who have tried to re-evaluatethe role of the corporation, putting it at thecore of their analysis. Theories here con-cerned, and labeled managerialists, definethe firm as the center through which toevaluate external phenomena. It is a kindof counter-proposal if compared withmodels of the first group, where thecore encompasses the whole system(reductionism vs holistic).

(3) The third group refers to studies that con-sider relationships between the corpor-ation and society first and foremost. Fromthis perspective, the firm loses its centralrole and starts being an interactive part ofthe economic system. Thus, the category



has been termed relational, referring to theattempt to ‘open’ managerial and utili-tarian studies.3

The three classes of theories have beendeveloped following two main frames. Thefirst has been that of Scott (2003), where heclassifies organization theories through a sim-ple criterion, following the three main ideason systems theory (natural, rational and open).This definition had been helpful, especiallywhen distinguishing the third class of theoriesfrom the first two.

The second fundamental source for thispaper has been Klonoski’s classification oftheories, in which the author tries to findanswers to the question ‘[a]re corporationssocial institutions?’ (Klonoski 1991, 9), andhe isolates three groups of approaches to CSR:amoral, personal and social. In this paper, Iexplicitly do not refer to ethical issues as hedoes, but to management. I found Klonoski’sperspective very powerful for classifying CSRtheories, but heavily focused on ethics. I thinkmanagement scholars need something morefocused on the organizational perspective.Moreover, I suggest that fundamentalismin business ethics and in CSR is not ‘a-moral’,as suggested by Klonoski’s (1991, 9ff.)statements; it simply lies on a differentmoral basis.

The role of previous classifications has beenfundamental for this paper but, nevertheless,

it is structured on a different basis, thesetwo being the main sources of inspiration formethodological purposes.

It is now apparent that these three perspec-tives (Scott, 2003, 31ff.) could be seen to fallin the normative domain more than in theprescriptive one, because their aim is that ofdefining a framework through which sociallyresponsible behavior could be analyzed.

The classification scheme of the threegroups and the sub-groups is summarized inFigure 1, which reflects the contents of thepaper, and allows the reader to get a cleareridea of the theories from which variables forframing CSR issues are derived (see the lastsection).

Before going on with the analysis, threemethodological elements must be specified.First, papers, books and other material arehere considered with the aim of underliningspecific elements. Secondly, references to thedifferent authors must be considered as re-ferring only to the work cited. It is not the aimof the writer to summarize fully one author’sgeneral thinking, or evolution, from theanalysis of the work here cited. From thisperspective, quotes from a particular scholarmay not necessarily represent their currentstance on the issue, but indicate only whatshe/he affirms in that particular text.

The third methodological point stays at thecore of the analysis. The subject of this paperis CSR. This paper deals with any kind of

Figure 1. Utilitarian, managerial and relational theories of CSR.


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concept, theory, model, tool, approach, etc.that allows the reader to capture the centraltrends in mainstream CSR literature and itsnew developments. For this reason, it doesnot refer just to existing or actual, but alsoto potential theories. The focus is on con-cepts more than theories following recentapproaches from the philosophy of scienceangle that develop further the traditional Kuh-nian and Popperian approaches to scientificdevelopment (for the role of abduction in sci-entific development, see Magnani (2001),while conceptual revolutions are analyzed inThagard (1992)). This allows us to keep theanalysis open to emerging issues and trendsin CSR that already characterize, or willcharacterize, academic and scholarly debates.Henceforth, the word ‘theory’ might be usedfor both actual and potential theories.

As this paper refers entirely to twentiethcentury literature, it does not cover previouspioneering experience of CSR (ante lit-teram).4 Corporate activity in the social fieldhas important historical references (see Boyerand Equilbey (1990, Chap. 5 ‘Idées sociales etmanagement’)).

‘A critical point regards the ‘great absentee’in social responsibility issues: socialist thought.It is difficult to ignore the facts that commu-nist and socialist traditions were based uponin the study of firm–society relations (Preston1975). A re-reading of the huge number ofthese contributions can, however, be mostuseful and enlightening. Of course, theargument is too complex to be discussedhere.

Finally, the most important thing that welearn from past experiences is that conductingbusiness has always led to social problems.Going beyond the label ‘social responsibility’,we discover the problem of corporate–environment relationships which has been apoint of interest for a significant number ofscholars.

In the following pages, I try to focus atten-tion on theories that can be related to CSR,referring mainly to the concept herein, and notonly to the field of studies.

Utilitarian Theories

In utilitarian theories the corporation is definedas a part of the economic system. Its behavioris rather mechanical, it acquires its meaningonly if the function is defined. The term‘utilitarian’ refers mainly to the traditional eco-nomic approach to the firm – mainly seen inthe first part of the last century and the yearsimmediately following the Second World War.Within this framework, the firm’s behavioris commonly studied as a profit maximizingfunction, no matter what happens inside thebox. This approach is accepted by both theLiberals (or neo-classicists) and the Keyne-sians (Velo 2003).

The first contribution directed to theproblem of responsibility is that of Clark (1916).Referring to the laissez faire regime, heaffirms that ‘[w]e have inherited an economicsof irresponsibility. [ ... ] To make control reallytolerable we need something more; somethingwhich is still in its infancy. We need aneconomics of responsibility, developed andembodied in our working business ethics. [ ... ]The old idea of free will is giving way todeterminism, individualism to public control,personal responsibility to social responsibility’(Clark 1916, 210). Stressing the responsibilityof businessmen as very important for thewhole system (pp. 225ff.), this contributionremains like a ‘lighthouse in the desert’.

In order to understand better the basis ofthe utilitarian approach to social responsibility,we divide it into two sub-categories: oneincluding scholars involved in studying thesocial revenues and costs of the firm, and theother for functionalists.

The Theory of Social Costs

While responsibility issues did not come tothe fore in the scientific debate of the period,the analysis of the external impacts of economicactivities were considered by the foundingfathers of modern economic science.5 Thefocus on corporate non-economic influencesto the socio-economic system is the basis for



responsibility allocation. To some extent,the authors considered below address thispoint, even if they rarely wrote directly aboutresponsibility. In other words, sometimesproblems of modern corporate responsibility,deal with the fair allocation of social costs.Moreover, the social costs literature indirectlyinfluenced the first attempts at measuringthe so-called ‘social performance’. Whenquestioning the nature of CSR, we areimplicitly relating the concept to economicand social problems, taken together, at thesame time. The terms ‘social cost’ point out,at a very basic level of analysis, the sameconcept.

Problems arise in the literature with regardto the study of ‘external economies’, as itappeared in Marshall’s (1890, 221ff.) contri-bution. This is probably one of the first casesin which an economist takes such ‘hexogen’variables belonging directly to the firm intoconsideration. External economies have to ‘besecured by the concentration of many smallbusinesses of a similar character in particularlocalities: or, as is commonly said, by thelocalization of industry’ (Marshall 1890, 221).In particular, he affirms that ‘every cheapen-ing of the means of communication, everynew facility for the free interchange of ideasbetween distant places alters the action of theforces which tend to localize industries’(p. 227). The location of small enterprise isthought of as a matter of exogenous advantagewhen they can be placed among a cluster ofsimilar enterprises. There is, undeniably, alwayssome part of their activity that affects theenvironment.

From ‘external’ to ‘social’ is a short logicalpassage, in fact ‘[s]ocial forces here co-operate with economic: there are often strongfriendships between employers and employed:but neither side likes to feel that in case ofany disagreeable incident happening betweenthem, they must go on rubbish against oneanother [ ... ]’ (Marshall 1890, 226). Evenif the issue is limited to a particular case,one can recognize that Marshall takes abroader view.

Pigou (1920) starts out from Marshall’sintuitions in order to introduce the problem ofthe firm’s social costs, or what we might callthe ‘real’ theoretical basis of social responsi-bility. The distinction between ‘social’ and‘private’ (Pigou 1920, 131–132) becomesclearer in respect to Marshall’s work. Thisdifference assumes importance in welfareeconomics, as it can be positive or negative(social revenues and losses). The fact that wecan distinguish between social and privateprofits or losses implies a series of problemsin terms of evaluation. Pigou (1920) writes ondifficulties concerning the ways to reduce theeventual social losses (from the point of viewof the whole economic system).6

The issue of social costs, on the oneside, relates to the organization originating thecosts and, on the other side, to their coverage.Of the two, the latter produces a huge debate(for a review, see Meade 1973), based on thefact that the problem, according to Pigou, isthat of justifying state intervention in theeconomy, making it easier to reach a ‘natural’equilibrium (Pigou 1920, 129–130).

This assumption has important consequencesin terms of social responsibilities: the state’srole in the economic system aims to coversocial costs and may be intended as the stateassuming responsibilities in order to preservethe national product and citizens’ welfare.Thus, its natural counterpart should be that ofleaving no responsibilities to the corporationthat produces the cost (except that of taxingit), even if indirectly or involuntarily. Thisissue makes it clear that there is a responsibil-ity and that it has to be assumed by someone:either by the firm (its managers or owners) orby the state (see also Perez 2002, 7).

From a different perspective, Coase (1960)tries to shift the issue to corporate productionfactors. The main thesis is that the costs of thetransaction between citizens and governmentdetermine whether the state intervenes inthe economy or not (Coase 1988, 24ff.).Responsibility (or paying for social costs) is amatter of contracting (see also Aoki et al.1990).


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Neoclassical economics limits the problemof firm–environment relations to systemdisequilibria and links it to the common–private interest debate. The approach ismonistic in kind, that is to say while it considersindividuals and organizations as uniqueentities, it sees them as analogues in termsof behavior, such that the impact of theiractivities on society are measured through astatistical calculation. Furthermore, the sort ofenvironment considered within the utilitarianperspective is strictly economical; it is veryrare that scholars belonging to this groupconsider political, social, cultural and otherconditions (Etzioni 1988), if not purelyincidentally.

The works of Marshall and Pigou gave riseto a series of critical appraisals. Among thehuge number of authors, Kapp (1950) seemsparticularly interesting in his analysis of thenature and meanings of social costs.

Kapp finds a significant inadequacy intraditional social costs analysis, which hedefined as ‘static’ and ‘narrow’ (Kapp 1950,xxiv). This assumption derives mainly fromhypotheses on human rationality and on thegoal of economics (as stated by Robbins 1940).Rationality, in Kapp’s view, is a dynamicprocess, in which means and ends evolve in aprocess of continuing interaction, and influ-ence individual and firm behavior (Kapp 1950).The only way to explain the raising of socialcosts is to analyze the non-rational domain ofhuman beings.7

When the market falls short in determiningthe value of social elements that occur inproducing goods and services, it appears thatthe theoretical approach to the issue has tochange. In other words, ‘if private entre-preneurs are able to shift part of the total costof production to other persons, or to the com-munity as a whole, points to one of the mostimportant limitations of the present scope ofneoclassical value theory’ (Kapp 1950, 11).

Being more precise, one can argue that

if, furthermore, important social returns are notreflected in private return [ ... ] then the competitive

equilibrium implies necessarily an arbitrary andhighly wasteful utilization of resources. What ismaximized is not ‘aggregate satisfaction’ in anycomprehensible sense of the term but at best onlyprivate exchangeable utilities. (Kapp 1950, 234)

The problems Kapp focuses on are importantfor two reasons: (1) he considers the intangi-bility and the unquantifiable nature of somesocial elements;8 (2) he assumes that theprivate corporation is the main source of socialcosts and revenues, while Pigou’s (1920) mainproblem was the general equilibrium. Kapp’s(1950) contribution to the analysis of thefirm’s impact on the social environment canbe referred to as both pioneering and stimulat-ing: it seems to be one of the first steps in theattempt to ‘open up’ the neoclassical approachto the study of firms’ behavior.

The Functionalists

Functionalists see the firm as a part of theeconomic system whose goal derives from itsdefinite function in society: that of makingprofits. Some authors call the theories belong-ing to this group ‘integralist’ (Klonoski 1991),‘narrowed view’ (Shaw and Barry 1995, 207–208) or ‘productivist’ (Buono and Nichols 1985,74–79). The core assumptions are a kind ofmodern economic ‘mechanicism’, where thesystem is a closed cybernetic one.

First, Milton Friedman’s contribution onsocial responsibility (Friedman 1962, 1970)can certainly be considered as integralist.While the authors cited above seem to bequasi-foundational, Friedman refers directlyto social responsibility as something belong-ing to the ongoing debate. He gives a narrowmeaning to social responsibility, seeing it asthe same as a form of philanthropy, i.e. todonate money to the poor, non-profit organi-zations, churches, and so on. ‘Social responsi-bility’, and everything that goes beyondshareholders interests, is a ‘fundamentalmisconception of the character and natureof a free economy’ (Friedman 1962, 133).This statement derives from the idea that



there is one and only one social responsibility ofbusiness – to use its resources and engage inactivities designed to increase its profits so long asit stays within the rules of the game, which is to say,engages in open and free competition, withoutdeception or fraud. (1962, 133)

The firm is viewed as an investment, andinvestments have to be eligible and fruitful fortheir investors (shareholders, in this case).This concept was widespread among otherscholars in that period (Chamberlain 1973;Hayek 1967).

Forty years have passed since the publicationof Friedman’s work on social responsibility,and it is still discussed and cited as a strongand consistent theory. Friedman’s positionfollows on directly from the main utilitarianneoclassical assumptions about the firm andthe market. Developing a theory surroundingits extreme consequences could be a way totest the hypothesis and its predictive and nor-mative potentials. Milton Friedman, perhapsnot consciously, contributed to making a stepforward in discovering the incongruence ofthe original neoclassical approach: it does notexplain actual corporate behavior, nor forecastit (Etzioni 1988).

Contributions referring directly to CSRcame earlier (in the 1950s) from managementscientists. Among others, Theodore Levitt wassignificantly involved in the debate.9

Levitt (1958) is reluctant to admit that thefirm can assume a kind of social responsibility.The distinction between profit and non-profitis clear-cut: corporations operate in the marketto make profits. Social responsibility wasborn, in the USA, as a defense tactic of theindustrial system against external attacks(Levitt 1958, 41–42).

The talk about social responsibility is already morethan a talk. It is leading into the believing stage; ithas become a design for change. [ ... ] The functionof business is to produce sustained high-levelprofits. The essence of free enterprise is to goafter profit in any way that is consistent with itsown survival as an economic system. (Levitt 1958,44)

Assuming social responsibility as a strategicgoal may lead the entire system to collapse.Every organism has to absolve its function,for the system’s general equilibrium. If thefunction of the corporation is that of makingprofits, then a misleading objective can stopthe entire mechanism. This is a typicalfunctionalist view.

In other terms, profit-making is devolved toenterprises but it is, to some extent, a socialobjective. Profit-seeking derives directly fromthe pluralistic character of society, sociallyresponsible objectives result somehow imposed,being opposite and non-concealable to thatof profit maximizing. This is a sort of ‘NewFeudalism’, in which the firm becomessomething like the church was in the MiddleAges (Levitt 1958, 44).

The Neo-functionalists

More recently there have been new utilitariancontributions. Porter and Kramer (2002), forexample, present social responsibility issuesas no more than corporate philanthropy orcause-related marketing (see also Kotler andLee 2004). Belonging to their approach thereis an area in which corporate philanthropy(social benefit) and pure business (economicbenefit) overlap and are beneficial for bothcorporations and society. However, the instru-mental view of philanthropy seems to charac-terize this contribution as typically utilitarian.

Also Jensen (2002) could be assimilated toPorter and Kramer’s view of CSR. Their com-mon point is to focus on value maximization,as the ultimate goal of corporate management.In order to understand their point of view, sufficeit to write that scholars in corporate financeordinarily present a very similar utilitarianperspective (see, for example, Damodaran 2001;Brealey and Meyers 2000).

During the 1950s and 1960s the debate onsocial issues spread to a wider context, andscholars began to connect social responsibilitydirectly to the management of the firm. This isalso traced in essential reading of the period(see, for example, Ansoff 1965).


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Theories from Inside the Firm: The Managerial Group

Theories included in the managerial group arecharacterized by the stress scholars place oncorporate management. The main differencebetween the utilitarian and the managerial viewconsists of the fact that the latter approachesstart considering social responsibility frominside the firm. Managerialists have a firm-centered perspective and, therefore, everythingfrom outside the firm is principally addressedto organizational decision-making.

The following theories are never organizedaccording to a chronological criterion, nordoes the order they have imply that the latteris a kind of improvement on the former theory.Every contribution has its own theoreticalvalue that does not necessarily discount theprevious theories, thus connections andreferences abound.

Managerial theories have been dividedinto three sub-groups: (1) CSP models, (2)theories on social accountability, auditing andreporting, and (3) social issues in internationalbusiness.

In advance of analyzing the three groups oftheories that define the managerialists, I shallmention Drucker’s thought as a sort of bridgefrom Levitt to the managerialists. On one side,he suggests that business ethics as a field ofstudy has no theoretical relevance; on the otherside, he does not say that corporate managersand owners have not got any social responsi-bility (Drucker 1973). The first sentence isrelated to the assumption that ethics is notessential for economics, since it relates to‘pure sentimentalism’ (Drucker 1973, 54–55).The second element seems to contradict Drucker’sdisbelief in business ethics. He affirms thatthe social responsibility of managers is directlyrelated to the power and authority they have.However, integrity, disclosure and responsi-bility maintain sense only if they reflect on busi-ness (Drucker 1955). The author is not againstsocial responsibility tout court; however, he thinksphilanthropy, altruism and similar activitiesare dangerous for the firm ( just as Levitt does).

Despite the common ground in Drucker’sposition (Schwartz 1998), he does not main-tain social responsibility as being inverselyrelated to profit maximization. His view onthe ultimate goal of the firm is not the same asLevitt or Friedman, i.e. profit maximization,but the production of goods and services.Analysis of Drucker’s thought leads to twomain considerations: (a) it appears very clearly,from a traditional point of view, that socialresponsibility does not simply mean ‘philan-thropy’, and that (b) rejecting the functionalistview is not connected to the logic of profit.

Drucker’s thought is eminently pragmatic,and related to corporate management. Whilehe did not write explicitly on social and finan-cial performance, he seems to refer to thisissue. This is the reason why he is both out-side the first group of theories on CSP, butalso inside it.

Studies on Corporate Social Performance

The analysis is located, for scholars studyingsocial performance inside the firm, and theobjective is trying to measure the contributionthe ‘social’ variable makes to economic per-formance. Thus, the problem is that of manag-ing the firm considering social and economicvariables together. Social responsibility is, tosome extent, something that can be integrated,measured and controlled in the economicperformance.

Kreps (1940) analyzed whether socialevaluation is possible and then how to meas-ure it. However, the first question concernsthe reason why it can be useful to make anevaluation of social performance. Kreps (1962)assumes that corporate activities cannot beevaluated only through the profit level. Theseare but a part of firm–environment relations.

According to other authors, the reason foranalyzing CSP can be connected to the need toestimate the extent to which a corporation issocially responsible (Carroll 1993, 44). There-fore, CSP becomes a sort of measure for socialresponsible behavior and makes it possible toobtain connections to strategic and organizational



issues (Carroll 1993). Starting from a differentperspective, Pruzan (2001) links the tool formaking common values clear and understand-able to the firm’s various components to socialaccountability.

Corporate social performance may also beconsidered as the coherent integration ofapproaches based on social ‘responsibility’ or‘responsiveness’. It focuses on the ‘outcome ofbehavior’ giving operational meaning tosocial responsibility (Wood 1991a).

The common objective of scholars promot-ing CSP theories is that of creating tools formanagers, through making social responsibilitymore concrete (for a literature review on thisspecific issue, see Clarkson (1995)).

Once the final goal of this perspective isdefined, it is useful to focus attention on themodels and approaches used to reach it.Carroll (1979, 1993), for example, gives an out-standing contribution with the creation of his‘three-dimensional model’, trying to integratewhat Frederick (1978) defines as social re-sponsibility (CSR1) and responsiveness (CSR2).Three variables are selected in the model: (1)social responsibility categories (economic, legal,ethical and discretionary); (2) social issuesinvolved (consumerism, environment, discrimin-ation, product safety, occupational safety andshareholders); (3) philosophy of social respon-siveness (pro-action, accommodation, defense,reaction) (Carroll 1979, 1993, 44–45). Corpo-rate performance derives from interconnectingthe three variables.

Starting from this basic model, scholarspropose integrations and modifications. Wartickand Cochran (1985), for example, define theprocesses that lead to social issues and not thesingle items, in order to make the model moredynamic. The second modification concernsCarroll’s categories: ‘social responsibility’becomes ‘principles’, ‘philosophy of socialresponsiveness’ is renamed ‘processes’, and‘policies’ changes to ‘issues’.

From another point of view, followingWood’s definition for CSP – measuring socialperformance in order to contribute to corporatemanagement – the model should give infor-

mation for managing the firm. Therefore, CSP(or the model connected thereto) is ‘[a] busi-ness organization’s configuration of principlesof social responsibility, processes of socialresponsiveness, and policies, programs andother observable outcomes as they relate to thefirm’s societal relationships’ (Wood 1991b).The words ‘observable outcomes’, ‘policies’and ‘programs’ refer to quantifying andauditing processes. In short, the outcomes ofcorporate behavior represent the interactionbetween principles and processes.

Other scholars start from a different pointof view. Burke and Logsdon (1996), for example,assume that identifying the connections betweencorporate, social and financial-economicperformance is very hard. Thus, the objective oftheir model is to re-define these relations. Theway to gain such information is to link socialresponsibility to strategy, giving rise to Strate-gic corporate social responsibility (S-CSR).As they put it, ‘corporate social responsibility(policy, programme or process) is strategicwhen it yields substantial business-relatedbenefits to the firm, in particular by supportingcore business activities and thus contributingto the firm’s effectiveness in accomplishingits mission’ (Burke and Logsdon 1996, 496).

Corporate strategy may be divided into five‘dimensions’ in order to keep detailedinformation on the value chain: (1) centralitymeasures the way CSR is compatible withmission and the core goals; (2) specificitymeasures advantages CSR cause for the firm(positive externalities); (3) pro-activity is thedegree of reaction to external pressures;(4) voluntarism evaluates how discretional thefirm is in implementing social responsibility;(5) visibility refers to the way socially respon-sible behavior is perceived by corporate stake-holders (Burke and Logsdon 1996, 496–499).

The model generates a twofold interest.At first, it considers socio-economic variablesinstead of economic and/or social variables(for a review, see Margolis and Walsh 2003).Secondly, it attempts to connect the socialresponsibility ‘doctrine’ to business strategy.This element is sometimes understated or


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taken at face value but remains very relevantin terms of interdisciplinary disseminationand improvement. The actual scientific worldis characterized by ‘splendid isolated’ scholars(Morin 1999), that have broken with scientificimprovement deriving from analogical reason-ing. For this reason, cross-contaminations ofevery sort are particularly welcomed.

These two authors do not create a specifictheory of CSR; they present a model for ana-lyzing and understanding corporate social andeconomic performances. However, their attemptto merge social and strategic issues providesmany points of interest that have been recentlydeveloped. According to Vogel (2005), CSR isnot an asset, it belongs to strategy (Burke andLogsdon 1996) and, in this respect, is a matterof corporate policy. Firms chose to behave ina socially responsible way, in the same waythey chose to spend more on marketing orproduction or any other function. More pre-cisely, ‘just as firms that spend more on mar-keting are not necessarily more profitable thanthose that spend less, there is no reason toexpect more responsible firms to outperformless responsible ones. In other words, the risksassociated with CSR are no different than thoseassociated with any other business strategy;sometimes investments in CSR make businesssense and sometimes they do not. Why shouldwe expect investments in CSR to consistentlycreate shareholder value when virtually noother business investments or strategies doso?’ (Vogel 2005, 33). The link between stra-tegic, environmental, and social processesdefines what Vogel calls ‘virtuous behavior’.Whether we know or not if this is a major trendin CSR, what is apparent is that Burke andLogsdon’s perspective opens to a wide set ofissues.

A number of studies on social performanceunderline its connections to the financialperformance of the corporation. Few scholarsconsider the ‘ontological’ problem – shouldwe measure social responsibility or ethicalcommitment? – (see, for example, Korhonen2003) while the larger number focus onevaluating the relationship – how can we

measure the relationship between CSP andfinancial performance? (Orlitzky 2001;Verschoor 1998; Webley and Hamilton 2004).Recently Margolis and Walsh (2003)published an in depth literature review.

Social Accountability, Auditing and Reporting

Concepts and general aims of theories connectedto corporate social accounting, auditing andreporting (SAAR) are strictly related to socialperformance contributions. However, they aredivided from CSP theories, as scholars measuresocial performance through accounting pro-cedures or reporting practices.

A multiplicity of models and approachescould be found, and they derive both frompractical and theoretical needs. Accountability,auditing and reporting are separate activities,but they may intervene in succession. Forexample, social accounting could be the first,then the managers might decide to publish asocial report, and afterwards the need to havean independent evaluation of both reportingand accounting practices (auditing) may arise.This is the main reason why, here, the threeare considered together.

The phenomenon of social reporting emergesin the late 1960s, in the US, when corpora-tions began to publish social reports (see, forexample, the case of Abt Inc., cited in Bauerand Fenn 1973). Literature concerning socialauditing and accountability began a few yearslater, in the early 1970s (Bauer and Fenn 1973).The theories have been also called corporatesocial responsiveness or cited as belonging tothe Harvard group (see, for example, Ackerman1973; Andrews 1972, 1973; Bauer andFenn 1973), as Frederick (1978) pointed out.They define social audit as ‘a commitment tosystematic assessment of and reporting onsome meaningful, definable domain of acompany’s activities that have social impact’(Bauer and Fenn 1973, 38).

Contributions belonging to this sub-groupcan be divided by source into two maingroups. The first group of scholars analyzes



the process of social accountability, auditingand reporting, underlining its effectivenessand suggesting models or approaches tothe theme (Gonella et al. 1998; Gray et al.1987, 1996; Pruzan 1998; Rusconi 1988; Vermot-Gaud 1986; Zadek 1998; and, for a criticalreappraisal, Gray 2001). Recently, interna-tional institutions entered the debate promot-ing models of social reporting. It is possibleto highlight three general approaches:(a) sustainable model (United Nations –Global Reporting Initiative 2000); (b) safetylabor based (the model SA8000 is based onthe International Labor Office Declarationof 2000); and (c) soft encouragement(European Commission 2001).

Scholars from the second group analyzethe diffusion of corporate social accountingand reporting practices in order to find proof ofsocially responsible behavior. As data fromthe larger corporations operating all over theworld are not well developed (Line et al. 2002)or not eligible at all, information from singlecountries is available. These empirical studiesconcern the state of ethical and social report-ing in selected areas or countries, such asNorth America (Dunfee and Werhane 1997;Nitkin and Brooks 1998), the UK (Belal 2002;Hutton et al. 2001), Greece (Bichta 2003),Spain (Guillén et al. 2002) and Italy (Secchi2006; Tencati et al. 2004).

The two approaches considered togetherreveal the empirical ‘state of the art’ concern-ing the diffusion of social reporting practicesand the way it ought to be (the former groupof studies).

Scholars that promote SAAR emphasizethis side of social responsibility, and their studiessupport the idea that CSR is devoted mainlyto all these activities. This group of scholarsprovides practical tools to promote CSR, giv-ing a strong managerial character to the issue.It is not easy to find a common approach amongthese scholars, the most important thing beingthat they believe CSR has to be implementedthis way. Whether it is a theory or not, needlessto say it is growing in importance amonginstitutions and organizations all over the

world (especially in the EU; see EuropeanCommission, 2001). This suffices to includethe group in this classification.

Social Responsibility in International Business

The number of corporations carrying onactivities in foreign countries or facingtransnational competition is constantly growing(Enderle 1999). When these problems arise,separating social from economic issuesbecomes difficult, as was clear when Sullivanproposed his Principles against the SouthAfrican apartheid regime (see, for example,De George 1999, 542–546; Sethi and Williams2001).

Cases in international business have alsobeen seriously addressed by supra-nationalinstitutions that intervene to moderate corpo-rate behavior, especially when western firmsoperate in less developed countries (Interna-tional Labour Office 2000; Organization forEconomic Cooperation and Development2000). However, they cannot actually constraincorporate behavior in any way, and problemsolving remains in the hands of managers andowners. Furthermore, this explains the hugenumber of authors that try to address corporatebehavior by studying social responsibilityin multinationals. Contributions focusing oninternational social and ethical issues are gen-erally not involved in measurement modelsbut in defining useful tools and concepts formanagement ‘survival’ in foreign countries.To this extent, they are managerialists: theyare mainly practice-oriented, even when authorsprovide in-depth analyses serving as the basisfor codes, guidelines or principles.

This group of scholars provides interestingconcepts for a theory of social responsibilityin the international context that has not beendefined as an actual theory yet.

One of the first monographs (maybe it isthe first) on the ethics of internationalbusiness is that of Donaldson (1989). Theobjective is ‘to establish the moral bottom linefor economic actors, for individuals and


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multinational corporations in global business,and, to some extent, nation-states insofar astheir actions relate directly to global business’(Donaldson 1989, 8). The analysis definesnormative rules for actors (especially multi-nationals) that operate in the internationalcontext.

Thus, the aim of the work can be synthe-sized in defining (1) why ethics matters and (2)what are the ethical norms for the internationaleconomic environment (Donaldson 1996).

Donaldson refers to the multinationalcorporation as a ‘moral agent’, analyzed onthe basis of the moral values used whenindividuals make decisions in the firm. Itappears clear that the firm has many responsi-bilities, going beyond the logic of profit(Donaldson 1989).

The model the author proposes is the socialcontract approach (1989, 47) for the studiesconcerning corporate–society relations. Formultinationals, this means that one can followprinciples that are ‘culturally neutral’.10 In thetext, Donaldson tries to specify the meaningof the minimum requirements for multinationalsin international contexts. We need to specifythat the social contract theory is a relationalone, and is considered together with the othersin the next section. The point here is theobjective that Donaldson defines in the textrelating a managerial problem of the firm, andthis suffices to consider the contribution withinthis group of theories. His analysis starts froma relational theory, but the point he makes ismanagerial in kind: how the corporationcan manage such problems. In other words,Donaldson uses a relational approach toanalyze the issue, but he focuses on amanagerial solution. While the first fallsinto the relational theories, the second iseminently managerialist.

One of the most important contributions isthat of De George (2000). He defines a seriesof guidelines that the enterprise should followin order to behave morally in foreign contexts(De George 2000). The guidelines have anormative character, as they are anchored ingeneral ethical-philosophical principles and,

at the same time, they describe specific norms.11

These rules need to be defined in detail ifmanagers do not want to incur a form of ethicalrelativism. However, to follow the author’sview, democratic development and co-operationin less developed countries can hardly beconfused with actions that lead to the opposite.Applying the rules, the corporation behavesmorally, but is also responsible for the impactsthat activities have on society overall. Moreover,the norms acquire a definite meaning ifmanagers act voluntarily in applying them, sothat control is endogenous.

Beyond these two well-known examples,other scholars propose similar approaches tothe problem of multinational social responsi-bility, or moral commitment. Welford (2002),for example, focuses on the respect of humanrights in the global economy, but with noreference to guidelines or general principles.

The problem of the social impact ofmultinational corporations has been analyzed,giving a ‘concrete form’ to moral commitment.Some authors propose to base corporatecommitment on the voluntary elaboration andadoption of the so-called ‘codes of conduct’.Recently, Sethi (2002), going back to thebeginnings of his experience as one of thefounders of corporate social issues debate(Votaw and Sethi 1969), questions how thecorporation responds to social critics. Theseproblems normally arise in multinationalswhen a clash of cultures becomes relevantand, for example, boycotts, hostile commercialpolicies, protests and other actions emergeagainst the firm.

The answer lies, for Sethi, in the adoptionof specific ‘codes of conduct’ for multi-national enterprises. Through the code, theenterprise can be proactive, in the sense that itcan anticipate the criticism from society andalready has a tool prepared to manage thesituation (Sethi 2002). The success of theinitiative may depend on (1) customer expec-tations and corporate reputation, and (2) thelevel of trust and acceptance that appertainsto all stakeholders (Bobrowsky 1999). Once afew basic conditions are satisfied, Sethi



gives an operational schedule for the code’sapplication: (1) definition; (2) measurementand testing; (3) accounting and reporting(Sethi 2002, 29).

Relational Theories

Relational theories originate from complexfirm–environment relationships that, in somecases, have brought about a redefinition of thefoundations of analysis.

Scholars belonging to this group put rela-tionships at the heart of the analysis. They arenot concerned with the analysis of corporateinternal dynamics in addressing social issues,nor do they focus attention on the environ-ment (system). On the contrary, they study theway the two interact, hence the stress is oninterrelations. For this reason, relationaltheories can be thought of as a type of ‘openingup’ of the utilitarian or managerial approaches.

The category is divided into four sub-groupsof theories: (1) business and society; (2) stake-holder approach; (3) corporate citizenship;and (4) theory of social contract. In somecases, these groups may belong to one ofthe fields of studies previously cited.

Studies on Business and Society

A series of different contributions can befound under the terms ‘business and society’.Being more precise, this sub-group of theoriesrepresents a sort of box (container) in which ahuge number of scholars place themselves.The meaning here conferred to the expressionis slightly different from the common wayscholars understand it. With the words ‘businessand society’, we refer to scholars who analyzesociety, trying to understand the role thatorganizations, mainly corporations, play init.

Giving space to the use and meanings ofterms representing the field of studies, Wood(1991a) proposes the change from ‘businessand society’ to ‘business in society’.

Therefore, the activities of organizationsbecome intelligible only within the social

context in which they operate. Corporate socialresponsibility emerges as a matter of interac-tion between business and society. While thefirm remains the most studied unit, some authorspropose to expand the analysis to every organ-izational type. These short notes may help inunderstanding the reason why this approachis thought to be ‘wider’ than the previousones.

In order to focus on concepts that helped indefining social responsibility, an initial criticalappraisal on business and social analysiscomes from McGuire (1963, 1964; seePasquero 2000, 374, for similar opinions onthis author).

However, in terms of the influence it has hadon the following debate and on the relevanceof the issues explored, probably the mostimportant contribution is that of Davis andBlomstrom (1966). The aim of the work is toshow how organizations and their environmentinteract.

This definition of social responsibility isprobably the widest ever given. First, theystate that business ‘refers to the developmentand processing of economic values in a society’(Davis and Blomstrom 1966, 4). Secondly, ifsocial responsibility within the economy isnot limited to corporations, it becomes impor-tant to analyze relations between corporationsand the other productive organizations. Thirdly,social responsibility is defined as ‘a person’sobligation to consider the effects of his deci-sions and actions on the whole social system.[ ... ] Social responsibility, therefore, broadensa person’s view to the total social system’(Davis and Blomstrom 1966, 167).

Davis and Blomstrom connect social respon-sibility to the quantity of power the organiza-tion possesses. They build-up the power–responsibility equation relating to the influencethat corporate managers and owners holdover society (called ‘social power’). In short,‘to the extent that businessmen or any othergroup has social power, the lessons of historysuggest that social responsibility should beequated with it. Stated in the form of a generalrelationship, social responsibilities of businessmen


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need to reflect the amount of social powerthey have’ (p. 171). The ‘iron law of socialresponsibility’ here follows: ‘those who donot take responsibility for their power ulti-mately shall lose it’ (p. 176).

In recent years, many scholars have researchedwithin the business and society framework(among others, see Carroll 1993; Weiss 2003).However, they seem to have lost the widerapproach followed in the work of thefounding authors (Davis and Blomstrom 1966;McGuire 1963). For example, Carroll’s pyra-mid of social responsibility remains mainlya study directed to corporate managers(Carroll 1991).

The Stakeholder Approach

In origin, the stakeholder approach has beendeveloped as a model for improving the man-agement of the firm (Freeman 1984); while itnow offers numerous applications (Kaler 2002;Mitchell et al. 1997; Weiss 2003), it has foundmany critics (Beaver 1999). Above all, it isnow far from its origin if considered as a wayto foster social responsibility issues (Freemanand Liedtka 1991). Separating it fromcorporate practices, it remains a model forstudying relationships, and this is the way itis taken here.

Some authors underline the complementaryrelationship that the stakeholder approach haswith ethical variables (Freeman 1984), otherstry to expand the list of relevant stakeholdersin order to face social issues better (Spenceet al. 2001).

While some scholars identify the stakeholderapproach as a way to understand reality in orderto manage the socially responsible behavior ofthe firm (Carroll 1993; Weiss 2003), othersfind that it can improve the doctrine of CSR(Freeman and Liedtka 1991). The result shouldbe that social responsibility be abandoned in favorof the correct implementation of the stake-holder approach. Following this perspective,Freeman and Liedtka (1991, 93ff.) suggestabandoning CSR,12 because (1) it promotesmanager incompetence, (2) it implies that the

corporation and society are two distinctdomains, connected by responsibility, and (3)‘rights’ and ‘responsibility’ have no relevancein terms of everyday management.

In short, Freeman and Liedtka affirm thatCSR lacks dynamism and any connectionwith the practice of corporate management. Anew theory is needed: the ‘new conversation’. Itis described by three propositions: (1) thestakeholder proposition considers the firm asan interconnected web of different interests;(2) for the caring proposition individualsbehave altruistically; (3) the pragmatic propo-sition describes the enterprise as a means forexpressing creativity and personality (Free-man and Liedtka 1991, 96–97). Within thisframework, ‘self creation’ and ‘communitycreation’ are ‘two sides of the same coin’, andthe process referred to here is adaptive: thefirm is a kind of adaptive system (p. 97).

Distinctions and classifications of stake-holder theory have multiplied in recent years;here I mention but two of them. One of themost important is that of Donaldson andPreston (1995) identifying four ‘central theses’of stakeholder theory. It is descriptive, instru-mental, normative and managerial (‘in thebroad sense of that term’, p. 67). Garriga andMelé (2004) distinguish between ‘stake-holder management’ (p. 59) and the ‘norma-tive stakeholder management’ (p. 60) in orderto divide contributions that directly refer toethical contents (normative) from those whichdo not.

The stakeholder literature might be enrichedwith a broader set of concepts that help inanalyzing the complex contractual and,say, political relationships between them. Forexample, the boycott phenomenon emerges asa typical reaction to suspected corporatemisbehavior. I argue that the model developedby Hirshman (1970) could be of some help,in a way this option is related to the ‘voice’alternative in a market dominated by ‘exits’.Moreover, one can learn from boycotts byconsidering them in terms of ‘lack of cooper-ation’ (Axelrod 1984; Frank 2004), or of‘socializability’ – ‘docility’ to use Simon’s



expression (Etzioni 1988; Simon 1993; Secchi2005). All these models, theories and conceptscould be explored in connection with sociallyresponsible behavior, to enrich the originalparadigms and test to see whether fruitfulresults could follow.

Corporate Citizenship

Understanding differences or similarities betweencorporate citizenship and social responsibilityis a difficult task. The concept of citizenshipstrongly depends upon the type of communityto which it is referred. Nevertheless, the defi-nitions scholars use for ‘corporate citizenship’remain vague, and differences can be notedcompared with social responsibility doctrine.An initial approach is that of Clark (1957),who tries to define nine ‘social objectives’that industry might follow; the eighth refers tothe need it has to behave as ‘a good citizen’(Clark 1957, 181–197).

Matten et al. (2003, 111) write that ‘[c]orporatecitizenship can be said to highlight that thecorporation sees – or recaptures – its rightfulplace in society, next to other “citizens”, withwhom the corporation forms a community’.Relations between the firm and the com-munity (society) are intended as formal andinformal rights and duties. Comparing corpo-rate citizenship with social responsibility, threedifferent views can be defined: (a) the limited,(b) the equivalent and (c) the extended view(Matten et al. 2003).

The emerging concept in this recent field isthat of ‘corporate global citizenship’. The issuederives from studies published in the first partof the 1990s, together with the market open-ings and the resurgence of interest in socialresponsibility (see, for example Logan andTuffrey 1997). The new terms might have beenchosen to re-direct the firm–environment rela-tions field of studies (Wood and Logsdon 2002).

Altman and Vidaver-Cohen (2000) proposea scheme for interpreting ‘corporate citizen-ship for the new millennium’. It is defined asthe interconnection of (1) proactive engagement,(2) partnership society, (3) business opportu-

nity, (4) transformation, (5) stakeholder rela-tionship, and (6) global corporate citizenship(2000, 3). For these scholars, corporate globalcitizenship differs from the concept of socialresponsibility while, for the others, it is a paththat corporations may take to behave respon-sibly. In order to understand differences, itmight be better to look at the elements thetwo approaches share.

The two are discretional, in the sense thatthey are based on individual voluntary behaviorthat goes beyond social, economic and legalduties (Waddock and Smith 2000). Within thisframework, a corporation that wants to becomea ‘good citizen’ needs to involve itself in aprocess of continuing successful relationshipswith society. Acquiring the status of ‘globalcitizen’ has to start from focusing on the basicvalues that lead corporate behavior. Thispassage involves managers engaging indialogue with all stakeholders. In other terms,citizenship ‘fundamentally, is about therelationships that a company develops with itsstakeholders’ (Waddock and Smith 2000, 48).This is clearly defined as a relational approachto corporate citizenship, and it is characterizedby the search for engagement, commitmentand relations, toward corporate stakeholders.

It follows a different definition of CSR,deriving from the fact that

being a good global citizen in a relational contextmeans treating well the entire range of constituencies– stakeholders – who have invested their capital inthe business. Citizenship thus has significantly moreimpact and importance for corporate operationsthan the so-called discretionary responsibilitiesimplied in typical definitions of corporate ‘social’responsibility. (Waddock and Smith 2000, 49)

Other scholars seem to have the same sensibilitytoward the concept, when stating ‘the veryphrase “corporate citizenship” suggests a morereciprocal and less philanthropic relationship’(Willmott 2001, 3).

Other authors try to focus attention oncorporate global citizenship analyzing it throughmore traditional economic models. Post (2000),for example, writes that it


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is the process of identifying, analyzing, andresponding to the company’s social, political, andeconomic responsibilities as defined throughlaw and public policy, stakeholder expectations,and voluntary acts flowing from corporate valuesand business strategies. Corporate citizenshipinvolves actual results (what corporations do) andthe processes through which they are achieved(how they do it). (Post 2000, 29)

The definition is a wide one, and it does notprovide a strict meaning of what is thought tobe ‘corporate global citizenship’, but it givesjust the sense of what being a ‘citizen’ means.In order to define the different global citizenshipmodels, the author describes two elements,the geographic scope of the business, whichcould be domestic, multi-domestic or global,and the industry citizenship orientation, whichincludes natural resources, industrial, service,retail and e-commerce (Post 2000, 33).

One of the neglected (or only implicitlymentioned) issues in this literature concernsthe role of corporate power. In order to findconnections between CSR literature and thisparticular sociological literature, we need tostate that citizenship deals with power. ManyCSR issues involve power, from employee–management relations, to sweatshop con-troversies or to dealing with local governmentover environmental safety. All these issues(and many others) deal with the power thecorporation or its counterparts have. From abroader perspective, this is a mere politicalpoint which different contributions (most ofthem coming from outside the traditional CSRliterature: DiMaggio and Powell (1991),Pfeffer (1992), Pfeffer and Salancik (1978))may help to address fairly.

The Social Contract Theory

One of the most important traditions in westernphilosophical thought is social contracttheory.13 The fundamental issue is to justifythe morality of economic activities in order tohave a theoretical basis for analyzing socialrelations between the firm and society. Social

responsibility derives from the moral leg-itimacy the corporation achieves in society.Understanding the phenomenon is containedin the founding of social actions and in elementsthat legitimize the corporations existence andbehavior.

Donaldson (1989) isolates the theoreticalbasis of his proposal, going beyond the Hob-besian model and ethical relativism, and triesto explain moral obligations for multinationalcorporations. In another work, together withDunfee (1999), they present a social contractapproach to business ethics that becameinstantly well known among business ethicists.

The basic idea is a simple one. The society,corporations and the other economic organiza-tions are supposed to share implicit, informalrelations in order to define a moral community.These relations are thought of as limits thatallow us to define every aspect of implicitmorality. In order to analyze these elementsDonaldson and Dunfee create a frameworkto underline moral constraints in corporate–society relations. This is the origin of theIntegrative Social Contracts Theory (ISCT),thought of as

a new approach to business ethics, an approach thatexposes the implicit understandings or ‘contracts’that bind industries, companies, and economicsystems into moral communities. It is in theseeconomic communities, and in the often unspokenunderstandings that provide their ethical glue, thatwe believe many of the answers to business ethicsquandaries lie. (Donaldson and Dunfee 2000a, 436)

The social contract helps in the analysis of theunspoken understandings that rule socialrelations, defining what is and is not right todo in a given community. Hence from thesocial contract derives the moral norms andthe so-called ‘moral free space’ (Donaldsonand Dunfee 1999).

The moral free space does not preclude‘deviant’ moral behavior. The result is that anumber of specific moral rules may derive fromthe original contract (Donaldson and Dunfee2000a,b). The contract changes with the dynamicsociety.



The authors isolate four general rules thatlimit individual behavior and define a macro-social contract. Economic communities have a‘moral free space’, i.e. they have discretionalmoral margins for action. Discretional moral-ity is defined through microsocial contracts,sub-ordered to the general macrosocial one.Moreover, individuals making second-levelcontracts have the faculty to choose between‘voice’ and ‘exit’ options (references toHirschman (1970) are here more than explicit).

The structured theoretical backbone of thesocial contract approach describes the bound-aries of moral and non-moral actions. The roleof communities is extremely important in thistheory, as they are the only way through whichmoral relations between the corporation andthe environment emerge. On the one side, thecontract isolates an ‘ethical framework’ foreconomic activities and, on the other, com-munities define the specific norms to regulatedetermined economic behaviors.

For example, the term community might beapplied to corporate stakeholders (Donaldsonand Dunfee 2000a, 441). The analysis ofcorporation–stakeholder relations leads to thedefinition of hypernorms, macro- and micro-social contracts. Thus, social responsibility isexpressed through stakeholder relations anddefines corporate existence.

This approach also gives rise to some criti-cism (Boatright 2000; Frederick 2000). Somescholars underline the scarce attention that thetheory dedicates to ‘problem-oriented needs ofbusiness practitioners’ (Frederick 2000, 476).Some other scholars affirm that the two authorsdo not expose the hypernorms source. JohnBoatright, for example, defines this ambiguityas ‘agnostic’, as Donaldson and Dunfeerefuse to delineate the source, even thoughit affects hypernorms legitimacy (Boatright2000, 455–456).

Donaldson and Dunfee’s conceptualizationhas given rise to a number of new theories.Among others, one of the most interesting, forthe sheer resourcefulness of its argumentativepower, is the evolutionary social contracttheory by Frederick and Wasieleski (2002).

The theory originates from studies in evolu-tionary biology, and it is a fascinating attemptto transfer advancements in that particularfield of studies to the economic domain.

Framing CSR

While the three groups (utilitarian, managerial,and relational) constitute a general frameworkfor the classification of theories, the conceptslocated in sub-groups (social costs, stakeholderapproach, and so on) are examples of the mainideas developed within the field of sociallyresponsible thought. Hence, other sub-groupsmight be isolated in a wider and more in-depthanalysis.

Among others, we can isolate emerging (orre-emerging) theories: (1) such as the so-called‘social issues management’ (Weiss 2003) whichconsists in selecting and analyzing significantissues relating to ethical concerns regardingthe firm and society (managerial); (2) thereligious influence in moral and social life(relational) is sometimes taken into consider-ation (Boulding 1953; Carey 2001; Corno 2002;Fort 1997; Melé 2002); (3) the sustainabilityapproach (relational) integrates social withenvironmental (this time in the ecologicalsense) and economic issues (Marrewijk 2003;Schaefer 2004).

The review gives rise to critical appraisalsof the consistency of the theories; developmentof these criticisms through more in-depthanalysis is being addressed in ongoing research.On the contrary, it aims to provide a synthesisof the key concepts characterizing the threegroups of theories (Table 1).

I focus on four key-concepts that describethe fundamental elements of the differenttheories. They are the assumptions drawnabout the individual, the firm and the system(social, economic, political, and so on); and Ialso question where responsibility is allo-cated. The last points derive from assumptionson the other variables, and can be thought of(see Table 1) as one of the clearest distinc-tions between the three groups. Not everytheory of the same group takes all four


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hypotheses as given but, more realistically, itemphasizes one or two of these key-concepts.

The theoretical framework, as exposed inTable 1, tries to include a huge range of pre-sent and perhaps future approaches, as, atthe moment, I cannot see any other way toanalyze corporation–society relations thatdoes not refer to the system, the corporationor to the relationship between the two.

The variables described in Table 1 aresupposed to be very flexible. The three groupsof theories show internally coherent viewsof the individual, of the firm, of the (socio-)economic system, and of responsibility alloca-tion. Keeping these variables in mind, we canfind ‘mixed’ approaches where, for example,(i) a values-based view of the individual isconnected to (ii) a measurable idea of the firm,(iii) where the system provides complexturbulences, and (iv) where the firm is thecontext to which responsibility is allocated. Inthis case, I repeat, if the variables are intendedas flexible ones, the approach can lie withinthe relational or managerial approach, depend-ing on the emphasis and importance authorsgive to the variables. It is worth noting thatthe last column on the right is fundamental inthis attempt to classify CSR theories.

The framework can also be useful in orderto define whether the theory we want to analyzeis or is not consistent and/or coherent. It isvery difficult, for example, to find the under-socialized view of the individual connected toideas of a complex and uncertain system; many

scholars have recently pointed this out(see, among others, Etzioni 1988; Sen 1987).Furthermore, following the previous example,ethical views of the individual hardly relatethe measurable managerial approach to thecorporation; values-based behavior is not alwaysmeasurable (Kapp 1950), although the groupand social behavior of ethically biasedindividuals is not supposed to be either.Nevertheless, most of the problems of theo-retical consistency and coherence rest on theemphasis that authors confer to one variableor the other.

Finally, Table 1 can be useful for framingCSR in empirical analysis. Socially responsi-ble behavior is growing in importance, andmost literature focuses on corporate practices oron the ‘ought to be’ domain (I provide manyreferences above; however, Margolis andWalsh (2003) help in getting a more detailedidea). Variables in this framework can be use-ful to define the kind of approach corporationsfollow when practicing socially responsiblebehavior. Many questions arise on thispoint: Are corporations oriented towards ameasurable approach? Or do managers con-sider the corporation as an interdependentbody? Do they always feel responsible forsocial issues involving the enterprise? Aremanagers and owners far from the utilitarian/mechanical view? More realistically, are theseapproaches and variables always useful,regardless of the time and context in whichthe corporation operates?

Table 1. Defining the three groups: key-concepts

Key-concepts

Views of the individual

Ideas on the firm

Assumptions about the system Responsibility allocation

Groups of theories

Utilitarian Simplified Mechanical Every sub-system has a definite function

Economic system

Managerial Organizational Measurable Inputs-outputs to be managed

Firm

Relational Values-based Interdependent Complex and uncertain It depends on the type of relationship between the parts



Conclusions

The analysis of the three perspectives fairlydescribes actual and potential theories ofCSR. Although one might argue, from thebody of citations, that some approaches seemto predominate over others, this is not whatthe threefold division provides to the reader.This may be a limit of this classification, inthe sense that this qualitative analysis requiresthe reader’s interpretation. However, the modeltells us something about the way theoriesemerge in relation to the period in whichthey have been created and presented. In anycase, this classification and re-organizationof the CSR literature does not mean tobe chronological; however, the reader mayobserve that overall conditions foster thepredominance of one or another theory, depend-ing on the emergence of each single issue.

The groups and sub-groups that I haveselected in the systematic classification canbe summarized in Figure 1 (see above). Inter-disciplinary connections and useful cluesregarding the meaning that a theory mighthave emerged as this model’s two most rele-vant strengths (see below for details). Withinthe first group, for example, I cited the workof Coase (1960), who can be classified, togetherwith Williamson and many others (such asDiMaggio and Powell, and Pfeffer, in the third‘relational’ group), in the area of new institu-tionalism in economics (Scott 2001). Fromthe same perspective, ‘new institutionalists’ insociology, economics or politics, might alsobe considered valuable contributors, even ifthey seem to be much more focused on the otherside of the impact: that of society on the firm(Scott 2001; see also Zenisek 1979, for con-nections between CSR and organization theory).

Corporate social responsibility emerges as avery broad issue that I have tried to detail inits main variables. In summary, I can reportthe main contributions of the paper as follows.

CSR has been always analyzed from agiven disciplinary perspective, either ethicalor managerial. This classification of theoriesinto utilitarian, managerial or relational allows

the definition of detailed variables that gobeyond the traditional disciplinary bounda-ries. Each perspective focuses on a particularproblem concerning the corporation–societyrelationship, hence we are able to shift theissue from ‘how a particular theory is used todeal with a specific problem’ to ‘how eachperspective helps in analyzing a particularproblem’. As shown in the paper, each ofthe three perspectives encounters multi-disciplinary perspectives and the shift, then,is also a shift from a monodisciplinary toa multidisciplinary approach to CSR. It isapparent that this framework defines the many‘levels’ of CSR, so that issues in this domainmay fall specifically into a given perspective,but it could be enriching the use of the threeperspectives at once. We can agree on thefact that different perspectives are supportedby a distinct knowledge. Take, for example,the case of a firm’s chimneys polluting theenvironment in a Third World country. Thisfact involves many issues, but we can managethem more effectively if we first divide theminto (a) the system’s overall effects, (b) man-agerial (internal) issues, and (c) interactive (orrelational) issues. Once issues have been iso-lated, we can look for models, theories ortools that fit the situation without any refer-ence to the label CSR. Many environmentalcritical issues need disciplinary support thatis far from traditional CSR approaches. Insummary, these frames allow scholars to iso-late the three basic components of CSR issueseasily and to look for concepts that help inunderstanding, analyzing and hopefully solv-ing the given problem.

I claim that the framework presented inthis paper (see Table 1) is useful for analyzingtheoretical developments. The main assump-tion of this paper is that CSR issues emergewhen corporate behavior and the socialsystem interact, regardless of whether theeffects are positive or negative. Hence, thereare only three possibilities for responsibilityallocation: (a) the system, (b) the corporation,(c) both the system and the corporation,depending on the analysis. If we exclude the


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fourth alternative, that of none being respon-sible, there are no more alternatives. Thismeans that any other development in theCSR area of studies must be covered by oneof these three (or four) alternatives. Then,this framework provides a grid to interpret themain actual or potential trends: are theyutilitarian, managerial or relational? Where isthe field going? Recent developments in CSRtheories fall under one of these three per-spectives, so that we can easily evaluate whatscholars are focusing on.

Recently, relational theories of CSR seem tohave captured the attention of scholars, and newconcepts and perspectives seem to come underthis third perspective (Fort 2001; Vogel 2005).

One of the main contributions that a usefulliterature review provides to scholars is that ofdefining some field boundaries. The threeperspectives allow us to define the boundariesof CSR theories and approaches; moreover,knowing what has been studied or what isgoing on in recent trends helps in searchingout grey areas or uncovering new issues. A fewexamples of what theories from each per-spective do not address here follow: (a) scholarsfrom the utilitarian approach are light onproviding formalized models of responsibleor irresponsible behavior, or in defining thequantitative benefit (or threat) of sociallyresponsible behavior in respect to the systemoverall; (b) managerialists wanting to analyzecarefully the core element of responsiblebehavior should think of defining the cognitive,psychological or socio-psychological sourceof responsible behavior at the individual level;(c) scholars studying relational theories mightthink of including insights from systemstheory, especially studies on system–subsystemsrelations.

A few citations could be provided, butmostly these are largely overlooked points(e.g. Boal and Peery 1985 for the managerial-ists). In addition, more interest could be givento approaches that originate from the attemptto mix concepts that fall under the first, sec-ond or third perspective. Hence, this analysisappears fundamental in the extent to which it

can help scholars in moving forward from theexisting theories, but it remains just the firststep in this direction.

I can add more points, not to mention therelevance this system of classification hasfor an initial didactical explanation of CSRtheories. However, in terms of research andtheoretical developments, this is a minor point.

The third point is, in my view, the most criticaland stimulating. Once theories are classifiedand we get the framework, what next? Howcan we improve the study of CSR, given theactual state of theories? And furthermore, whatis the empirical impact of the variables thatdefine theories of CSR?

These are the basic questions that we aretrying to answer in our ongoing research,where concepts derived from utilitarian, man-agerial and relational theories are the funda-mental hypotheses and form the groundwork.

Acknowledgements

I am especially indebted to W. Richard Scottand to Sabine Urban for comments on an earlierdraft of the manuscript, challenging discus-sions and support. Anthony Buono provided mewith a very interesting perspective that led meto change the last part of the paper. I also wishto thank the two referees who helped me somuch in analyzing the limits of the first draft.All unclear passages, errors and omissionsfall entirely under my responsibility.

Notes

1 In any case, what matters is the way a theory isread by the scholar that makes the classification.

2 Extremely interesting contributions come frompolitical economy and management science. Themost important contribution comes from businessethics, an insitutionalized field of studies in theUS but not yet in Europe. One of the most importantscholars within this field, Richard T. De George,defines business ethics as ‘the interaction ofethics and business. Business ethics is as national,international, or global as business itself, and noarbitrary geographical boundaries limit it’ (DeGeorge 1999, 23).



3 The distinction between managerial and rela-tional approaches relates closely to that of Scott(2003), when he points out differences betweenthe two organizational paradigms of closedand open systems.

4 It is worth noting that socially responsibleactivities have always been connected to corporatemanagement, as shown by the experience ofRobert Owen in 1804 Scotland at the NewLanark Mill (Morton 1962; Podmore 1906;Reynaud 1841; recently, Stuttard 1992, calledfor a re-interpretation of Owen’s work), and bythe so-called welfare work movement, occurringin the US at the beginning of the 20th century(Nelson 1980, 1995).

5 Moreover, owing to evident connections to theethics domain, references can be traced back toSmith (Sen 1987).

6 While the external positive variables in corporateactivity are of great importance, authors addresstheir attention to the problem of social costs(see, for example, Samuelson 1947).

7 It seems that ‘rational behavior = economicbehavior’, and ‘non-rational behavior = sociologicalbehavior’. This has no meaning when trying tounderstand human behavior; we need bothrational and non-rational elements contributingtogether to explain economic and sociologicalpoints of interest (Simon 1993).

8 The problem of measurement is not a way toreject the analysis, although it invites, in Kapp’sview, thought about the nature and the limits ofeconomic analysis.

9 Levitt dedicated the great part of his work to themanagement field. Thus, his inclusion with theutilitarians could lead to an idea of misplace-ment. However, if we consider his contributionas limited to the one mentioned in the text, itclearly appears that he falls into the so called‘economistic fallacy’ (Luijk 1992, 24).

10 The principles are: ‘1. That a productive organi-zation should enhance the long-term welfare ofemployees and consumers in any society inwhich the organization operates. 2. That aproductive organization should minimize thedrawbacks associated with moving beyond thestate of nature to a state containing productiveorganizations. 3. That a productive organizationshould refrain from violating minimum standardsof justice of human rights in any society inwhich it operates’ (Donaldson 1989, 54).

11 In short, the guidelines are: ‘1. Do no direct

intentional harm; 2. Produce more good thanharm for the host country; 3. Respect the rightsof employees and of all others affected byone’s actions or policies; 4. To the extent consistentwith ethical norms, respect the local culture andwork with and not against it; 5. Multinationalsshould pay their fair share of taxes and cooperatewith the local government in developingequitable laws and other background institu-tions’ (De George 2000, 51).

12 The concept of social responsibility consideredby Freeman and Liedtka derives from works byFrederick (1987) and Preston (1988).

13 Relating to its positive – Thomas Hobbes’Leviathan or De Cive for the contract within thestate, and the pamphlet Zum ewiger Frieden,written in 1795 by Immanuel Kant for the con-tract being signed within a community of states– or negative – Jean Jaques Rousseau analyzes inhis Le contracte social the origin of society –meanings, the approach maintains numbers ofapplications.

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Davide Secchi is from the Department ofManagement, University of Wisconsin – LaCrosse, 1725 State Street, La Crosse, WI 54601,USA.

utilitarian, managerial and relational theories of corporate social responsibility

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