Corporate Social Responsibility: A Review

Corporate Social Responsibility:A Review Brenda Gainer Schulich School of Business York University

Agenda • Definitions of CSR • The Scope of CSR • Perspectives and Theories • CSR and the State • CSR and the Nonprofit Sector (Civil Society) • Current Opportunities and Challenges

CSR: Definitions • Basic elements are: • A commitment to specific actions • Discretionary action that goes beyond the requirements of law or corporate governance • Goal directed behaviour that results in social and/or community benefit • The value created goes beyond the economic interests of the firm

Early definitions and critiques • “The firm’s consideration of, and response to, issues beyond the narrow economic, technical and legal requirements of the firm to accomplish social benefits along with the traditional economic gains which the firm seeks” • (David, 1973, Journal of the Academy of Management) • Milton Friedman argued that CSR is actually a “theft” of shareholder-owned resources

Stakeholder Theory • CSR is “…a behavior that is alleged by a stakeholder to be expected by society or morally required and is therefore justifiably demanded of a business.” • (Whetten et al, 2002). • “A concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis.” • (European Commisision, 2005

The Scope of CSR Examples: • -support of charitable and educational organizations • -transparency in reporting • -policy based initiatives • hiring and training of hard-core unemployed-support of charitable and educational organizations • -hiring and training of hard-core unemployed • -non-discrimination in employment • -improved workplace safety • -pensions and benefits • -development of green technologies • -use of non-animal testing processes • -increased consumer protection

“The Business Case” for CSR • Economic responsibility theory • “Doing well by doing good” • A responsible element of strategic management designed to improve a firm’s financial performance

Stakeholder Theory Perspective • Ethical responsibility theory • Stakeholders are those who affect or are affected by a firm’s actions • Stakeholders have legitimate rights • A firm has a moral duty to respect those rights

Corporate Citizenship Perspective • Rooted in political theory of the firm • Views corporations as citizens who have a duty towards all other citizens in a society • Corporations are therefore compelled to participate in creating the common good of society (beyond their individual interests)

“Blurring the Boundaries” State

CSR and the State

CSR and the State • CSR depends on differences in government regimes with respect to social entitlements, regulation, etc • Traditional relationship was encouragement of corporate philanthropy as an economic substitute for shrinking government funds • Current relationship is complementary in terms of policy initiatives

CSR, the State and Civil Society

Relationships between the Corporate and Third Sectors • Moral imperative: altruistic relationship • The business case: buyer-seller relationships • The efficiency of business management: partnership and joint ventures • Preference for market mechanisms: social enterprise and impact investing

Changes in the Corporate-Third Sector Relationship • Altruism persists • Trust has eroded • The values of business management and the market are being applied to social value creation • Unclear what the long-term effect will be on the values and scope of civil society

Opportunities and Challenges in Contemporary CSR • Increased sales and market share through cause related marketing • Brand building through sponsorships • Improved corporate image through philanthropy • Employee engagement through internal volunteering and giving programs

The Main Challenge for the Future: WHO BENEFITS? And how do we ensure benefits for all?

Corporate Social Responsibility: A Review