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* This paper aims to provide a working definition of corporate social responsibility (CSR). It
begins by describing how the lack of a widely agreed definition contributed to
misunderstandings and cynicism towards the concept itself and argued that hence the
need for a working definition. The paper then goes on to divide current literature on CSR,
and current business practices, into two main categories depending on the way CSR
is perceived—as an ethical position or as a business strategy. A brief overview on how CSR is
practised in the real business world is also presented. The paper describes how practitioners
seem to be practising CSR despite the lack of a universally agreed definition. Subsequently,
based on the ongoing academic debates on CSR and on examples of what is happening in
the real business world, the paper concludes with a proposed definition that reconciles
ongoing academic debates with practice.
Copyright # 2006 John Wiley & Sons, Ltd.
Copyright # 2006 John Wiley & Sons, Ltd. Journal of Public Affairs, August–November 2006
DOI 10.1002/pa
Corporate Social Responsibility 177
seems to mean the engagement of non- CSR has led Frooman to measure the wrong
governmental organizations (NGOs), the next indicators of social responsibility.
it is all about charitable donations, and The confusion about what CSR really is has
5 minutes later it seems to mean the ethical also contributed to cynicisms towards CSR
treatment of employees. One minute the itself. There were claims that some elements
NGOs are calling the shots, the next the of CSR are actually socialism in disguise
accountants are in on the act selling (Lantos, 2003). Some neoclassical economists
reputation assurance’. Different authors claim that CSR is a dangerous concept that
seem to have different explanations as to threatens the foundations of market economy
what CSR is. Some argued that CSR is an (Friedman, 1970; Henderson, 2001, 2004). In
excellent tool to market the firm and should his 2004 book, Henderson repeatedly stressed
therefore be led by marketers (Lantos, 2001) or that the primary role of business in the
be used to enhance the company’s brand modern world is as an agent of economic
(Lewis, 2003). Others argued that firms should progress and to pursue profitability. To
be socially responsible because that is the right Henderson, CSR is a ‘radically new model of
way to behave (Novak, 1996; Trevino and corporate behaviour’ that seeks to change the
Nelson, 1999). way the market operates by forcing corpora-
It is not surprising that authors present tions to give unnecessary attention to public
contradicting pictures of what is CSR. After welfare.
all, even if the same term—CSR—is used, it It is difficult to ascertain why Henderson is so
does not necessarily mean that the discussion vehemently opposed to CSR other than
is about the same concept. As an example, because (1) he sees the increased attention to
based on his review of nine empirical studies, public welfare will detract companies from the
Frooman (1994) concluded that the stock pursuit of profitability; or (2) he opposes the
market penalizes firms’ socially irresponsible calls for CSR legislations. The former view, to
behaviour. Five of these nine studies looked at this author, is very restricted as it ignores the
the market’s reaction following product fact that CSR can be a vital strategy to enhance
recalls. Frooman assumed that product recall profitability (e.g. the increased attention to
is a sign of social irresponsibility and in societal needs may become a competitive
each case, the share-prices dropped after advantage which increases customer loyalty
the recall. But it can also be argued that and ultimately profitability). On the other hand,
recalling products is an evidence of a socially this author accepts that the market does not
responsible behaviour, because socially irre- need CSR legislations as the market is better
sponsible firms will not recall their products. able to look after itself. However, making a
If this is the case, then Frooman’s study blanket opposition to CSR as a whole just
actually proved that a socially responsible because one is against CSR legislation is surely a
action (i.e. product recall) are punished by the case of mistaken and hasty generalization. The
market! Another case reviewed by Frooman reality is, the lack of a widely accepted
was market reaction towards an airplane definition has contributed to needless cynicism
crash. But how can an airplane crash become towards the concept.
a sign of corporate irresponsibility? It may Clearly there is a need for CSR to be defined
be an accident, or carelessness of the pilot properly before embarking in a deeper study
or mechanical failure. But surely it is not about this fascinating concept—a concept that
corporate irresponsibility. Frooman has has sparked wide-ranging debates among some
clearly missed the fact that CSR is exemplified of the most prominent management gurus of
by a company’s reaction to an event or its our time. Absence of a clear working definition
actions in general, not by how the market would only mean that studies on CSR could be
react to actions taken by the company. based on weak or false understanding of the
Arguably, the lack of a consensus on what is topic.
Copyright # 2006 John Wiley & Sons, Ltd. Journal of Public Affairs, August–November 2006
DOI 10.1002/pa
178 Wan Saiful Wan-Jan
CSR as an ethical stance far, as they are necessary to sustain and support
the development of excellence in the [busi-
Mintzberg (1983) stated that CSR can be ness] practice’ (p 51, explanation added).
practised or can appear in four forms. The Moore claimed that if CSR is to be properly
purest form is when CSR is practised for its own applied in business practices, then it must not
sake. The firm expects nothing back from their be at the service of greater profitability. To do
CSR activities and they become socially respon- so would be unethical.
sible because ‘that is the noble way for In the same light as Moore and Mintzberg,
corporations to behave’. A second, less pure, Goyder (2003) articulated his concern that
form of CSR is when it is undertaken for many firms are taking CSR as mere compliance
‘enlightened self-interest’ in which case firms with expectations. According to Goyder, ‘com-
undertake CSR with the belief that CSR pays. pliance CSR’ will only make firms tell stake-
The ‘pay’ could be tangible or intangible but in holders what they want to hear so that the firm
either case, the payback is expected. This is is seen as fitting into society’s template. This is
related to Mintzberg’s third form of CSR in opposite to real CSR, or what Goyder calls
which CSR is seen as a sound investment. ‘conviction CSR’ in which firms truly believe in
According to the ‘sound investment theory’ a set of purpose and values and have convic-
the stock market reacts to firms’ actions tions to act on them. Firms that subscribe to
and socially responsible behaviours will be ‘conviction CSR’ will ensure that they have
rewarded by the market. The fourth form of positive impacts on ‘people, the natural world,
CSR, which is also related to enlightened self- and the planet’ (p 4). All these should occur in
interest, is CSR practised in order to avoid addition to compliance with the law and
interference from external political influences. fulfilling shareholders expectations.
In this case, firms become socially responsible In reviewing the works of the French
in order to prevent the authorities forcing them philosopher Jacques Derrida—once dubbed
to be so via legislation. as the world’s greatest philosopher (Weitzman,
Apart from the first, pure form of CSR, 2004),—Jones (2003) argued that from the
Mintzberg’s other forms see CSR not as an ethical ethics perspective, it is problematic for CSR to
stance. Mintzberg argued that CSR can only be exercised with the aim of obtaining calcu-
survive, and should be practised, in its purest and lative advantage or strategic competitive edge.
most proper form—as an ethical position with- If being socially responsible means ‘giving
out any expectation of paybacks. He attacked the back’ to society, then as soon as a firm starts
glorification of self-interest which he sees as to calculate the returns from being socially
bringing society back to ‘an earlier and darker responsible, or as soon as a firm starts to
ages’ as it raises greed to ‘some sort of high strategize being ethical, that firm is actually not
calling’ (2002, p 67). To Mintzberg, CSR means committing the act of ‘giving’. ‘Giving, to be
firms undertaking some actions to serve society giving, must exceed or interrupt the circle of
beyond selfishness and greed. economy’ (p 230) and must not be done with
Moore (2003) went a step further by saying the expectation of being rewarded for it. Thus,
that the use of CSR in the quest of enhancing if Jones’ arguments were to be followed, in
profitability is actually putting virtue at the order to be socially responsible firms must see
service of avarice. He argued that there is a CSR as an ethical stance, not as a tool for
tension between social and economic endea- strategic advantage.
vours and by becoming socially responsible, However, contrary to Moore’s (2003) argu-
firms are actually working to ease this tension. ments as described above, Jones does not
Moore calls for the creation of a properly believe that it is unethical for a firm to act out
socially responsible firm. He dubs this ‘the of self-interest. The ethicality of an action must
virtuous firm’ which ‘pursues the external be perceived in terms of relations with an
goods [e.g. profits] in so far, and only in so external party. If the consideration is about
Copyright # 2006 John Wiley & Sons, Ltd. Journal of Public Affairs, August–November 2006
DOI 10.1002/pa
Corporate Social Responsibility 179
one’s own self, then the deliberations fall firms,1 ethical CSR is the very minimum while
outside the realm of ethics. The implication is, strategic CSR is good for business and society.
according to Jones, corporations who act Lantos also added that altruistic CSR, although
socially responsibly out of self-interest are not sometimes expected because of the perceived
unethically using CSR as strategy. They are ‘social contract’ between a firm and society, is
simply working outside the realm of ethics. relatively rare because it lies outside the scope
of a firm’s proper activities (2001, p 605).
Schwartz and Carroll (2003) supported this
CSR as business strategy
view. Thus, according to Lantos, CSR should be
Although some authors have argued that firms focused on two aspects:
should be socially responsible without expect-
(1) preventing injuries and harm that could
ing to be rewarded, others argued that it is
result from business activities;
wrong for firms to do anything without the
(2) accomplishing strategic business goals.
intention of reaping benefits from their actions.
Such ideas usually have their origin in the Lantos’s ideas were developed from Carroll’s
agency theory which states that managers (1979) Social Responsibility Categories, or
are agents of the stockholders and should there- sometimes labelled Carroll’s ‘Four Faces’ of
fore give priority to serving them by maximizing Social Responsibility. In this model, Carroll
financial gains. Managers must seek to max- stated that ‘for a definition of social responsi-
imize shareholders returns and they should not bility to fully address the entire range of
engage in any acts that may lead to its obligations business has to society, it must
reduction. In its simplest form, they argue that embody the economic, legal, ethical and
managers should do whatever is legal in order discretionary categories of business perfor-
to maximize shareholder value. It is well known mance’ (p 499—emphasis in original). Eco-
that on the extreme end of agency theory, nomic responsibility—the category that
authors like Friedman (1970) and Henderson Carroll says is the ‘first and foremost social
(2001, 2004) have argued that CSR is a responsibility of business’—is the responsibil-
dangerous concept as it threatens the basic ity of firms to sell goods at a profit. Legal
principles of market economy. However, many responsibility is the obligation of firms to abide
others from the same school of thought believe by the rules of law. Carroll’s definition of ethical
that CSR can become a very useful tool to responsibility is rather hazy as he says that it
maximize shareholders value. simply means ‘that society has expectations of
Lantos (2001) divided CSR into ethical CSR, business over and above legal requirements’.
altruistic CSR and strategic CSR. Ethical CSR is The ‘discretionary’ element is what Lantos used
the demand for firms to be morally responsible to develop his concept of altruistic CSR and it
to prevent injuries and harm that could result covers activities like philanthropic contribu-
from their activities. This type of CSR is tions and other non-profit generating acts.
expected of all firms and must be fulfilled as Carroll improved his Social Responsibility
the very minimum. Altruistic CSR is ‘genuine Categories model in 1991 when he proposed
optional caring, even at possible personal or the Pyramid of CSR (see Figure 1). Both the
organizational sacrifice’ (p 608). In another Social Responsibility Categories and the Pyr-
article, Lantos (2002, p 207) stated that amid of CSR emphasize that economic aims are
strategic CSR is when a firm undertakes certain indeed a major part of CSR. Firms should not
‘caring corporate community service activities pursue the discretionary (called ‘philanthropic’
that accomplish strategic business goals.’
In both his 2001 and 2003 articles, Lantos ————
1
—
used various ethics framework to vigorously It should be noted that Lantos only argued against
altruistic CSR in public firms. He clearly stated that
argue that altruistic CSR is unethical and altruistic CSR is appropriate and commendable for private
therefore should not be practised by public firms.
Copyright # 2006 John Wiley & Sons, Ltd. Journal of Public Affairs, August–November 2006
DOI 10.1002/pa
180 Wan Saiful Wan-Jan
Copyright # 2006 John Wiley & Sons, Ltd. Journal of Public Affairs, August–November 2006
DOI 10.1002/pa
Corporate Social Responsibility 181
seen as an ethical stance, the company treat The list above is not exhaustive but aims only
stakeholders ethically due to the belief that, to indicate that when CSR is defined as serving
that is, the proper way to behave. When CSR is the needs of stakeholders, it will include a wide
seen business strategy, again, stakeholders are variety of actions that can be embarked upon by
treated ethically for, by doing so, managers corporations.
believe their businesses will prosper. Hopkins (2003, p 10) is quite specific about
It is indeed possible to conceive CSR as an the relationship between CSR and stakeholder
undertaking that allows corporations to serve management when he defined CSR as ‘treating
stakeholders without jeopardizing shareholders. the stakeholders of the firm ethically or in a
The concept of stakeholders was discussed in responsible manner’. Similarly, Smith (2003)
detail by Freeman (1984) who defined stake- stated that CSR is ‘obligations of the firm to
holder as ‘any individual or groups who can society, or more specifically, the firm’s stake-
affect, or is affected by, the achievement of the holders—those affected by corporate policies
firm’s objectives’. Stakeholder theory does not and practices’. Smith related CSR to paternalis-
accept that shareholders must always be given tic capitalism and listed three characteristics of
primacy. A firm’s activities affect many other CSR which are (i) it is not a new concept, (ii)
constituents including the employees, the firms’ motivation may be a mix between self-
environment and the society. Thus, according interest and desire to do good and (iii) the
to stakeholder theory, a firm has a responsibility nature and scope of the actual responsibilities
to society, and constituents of society, just as are not at all clear.
much as it has responsibility to its shareholders.
But it is also important to point out that Some practitioners’ descriptions
stakeholder theory does not advocate abandon- of CSR
ing shareholders. Instead, shareholders are one
important stakeholder group that companies The debate about CSR has shifted in the sense
must serve. that it no longer focuses on whether or not to
Various studies have used the serving of become socially responsible and what is CSR,
specific stakeholder group or groups as a proxy but, as Smith (2003) explained, it now centres
to describe socially responsible behaviour. Some on how to be socially responsible. Perhaps due
studies gave more emphasis on certain stake- to this shift, business practitioners prefer to
holder or certain groups of stakeholders. This is discuss the specific activities that constitute
not because they believe that a particular CSR rather that debating the concept of CSR.
stakeholder is more important than others. The British Department for Trade and Industry
Rather, choosing a limited number of stake- (DTI) believes that CSR is best defined by
holders makes the study more feasible. Examples examining the behaviour of organizations.
of these include those who describe CSR as: According to the DTI, in order to be socially
responsible, firms must firstly abide by the laws
(1) looking after the environment (Bragdon & of the land as the laws set the minimum standard
Marlin, 1972; Spicer, 1978; McGuire et al, of practice. At the same time, in doing their
1988; Brammer & Millington, 2003); business, firms must also consider the impact
(2) investing in the community (Moir, 2001; they have on the wider society they operate in,
Brammer & Millington, 2003; Goyder, particularly on economic, social, environmental
2003; Hopkins, 2003; Lewis, 2003); and human rights issues. All these, according to
(3) making charitable contributions (Brammer the DTI, will ultimately bring tangible (e.g.
& Millington, 2003; CSR Europe; BSR); enhanced profitability, increased sales) and
(4) good employee relations (Moir, 2001; intangible (e.g. employee loyalty, enhanced
Goyder, 2003; WBCSD; Lewis, 2003); brand value) benefits to the firms.
(5) maintaining/increasing profitability (Goyder, The World Business Council for Sustainable
2003; Hopkins, 2003; CSR Europe; BSR). Development (WBCSD) defines CSR as ‘business’
Copyright # 2006 John Wiley & Sons, Ltd. Journal of Public Affairs, August–November 2006
DOI 10.1002/pa
182 Wan Saiful Wan-Jan
Copyright # 2006 John Wiley & Sons, Ltd. Journal of Public Affairs, August–November 2006
DOI 10.1002/pa
Corporate Social Responsibility 183
Thus, this author believes that the definition writing this paper, Wan Saiful was completing
provided by Hopkins (2003), that CSR means his postgraduate studies at Middlesex Univer-
‘treating the stakeholders of the firm ethically sity Business School.
or in a responsible manner’, best depicts the
true concept of CSR. This definition allows CSR
to be seen both as an ethical stance and as a
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Copyright # 2006 John Wiley & Sons, Ltd. Journal of Public Affairs, August–November 2006
DOI 10.1002/pa
184 Wan Saiful Wan-Jan
Copyright # 2006 John Wiley & Sons, Ltd. Journal of Public Affairs, August–November 2006
DOI 10.1002/pa