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Theoretical Foundation: CSR
By Christian C. Loth Presentation Outline
• Motivation • Classification of CSR theories • Two contradicting theories: CRM vs. CSP • Evaluation of the introduced theories Evaluation of the introduced theories
• Discussion
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MOTIVATION
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Practical problems
http://www.nytimes.com/2007/12/10/world/asia/10sk
orea.html
http://verbalmedicine.files.wordpress.com/2010/05/nike‐
sweatshops.jpg
http://www.nytimes.com/2012/01/1
9/world/africa/report‐finds‐slow‐
response‐to‐east‐africa‐
famine.html?_r=1
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http://green.blogs.nytimes.com/2010/12/02/def
orestation‐slows‐as‐brazil‐chugs‐toward‐a‐goal/
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CSR Development
Beginning of CSR era
1950’
CSR literature
expands 1960’
more and more definitions
1970’
Frameworks,
attempts to measure
New themes:
Stakeholders, Business ethics,
Corporate
Citizenship…
1980’
1990’
(Carroll 1999)
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“Perhaps the best way to understand social responsibility is to think of it as ‘good “Social responsibility usually refers to the
neighborliness.’ The concept involves two phases. objectives or motives that should be given For purposes of this discussion it [CSR] refers to the “…social responsibility in business is the pursuit of “In short, the newconcept
of social responsibility On one hand, it means not doing things that spoil weight by business in addition
“I take responsibility to mean a condition in which the firm’s consideration
socioeconomic goals through the elaboration of social recognizes the intimacy of
the neighborhood. On the other, it may be “Social responsibility, therefore, refers to a person’s obligation to to those dealing with economic “[Social responsibilities] mean that businessmen should oversee corporation is at least in some measure a free agent. of, and response to, issues beyond the narrow norms in prescribed business roles; or, to put it more the relationships between the corporation and society expressed as the voluntary assumption of the consider´the
effects of his decisions and actions on the whole performance…” ( Backman 1975, p.2, cited by the operation
To the extent that any of the foregoing social “The idea of social responsibilities supposes that the corporation has economic, technical, and legal
simply, business takes place within a socio‐cultural system and realizes that such
gare
pon the
obligation to help solve neighborhood y system
pp
pgcertain
y law they
social system. Businessmen apply social responsibility when they ((Carroll 1999, p.279)
, pyexpectations
) (Davis
“It
It refers to the obligations of businessmen to pursue
refers toof an economic system that fulfills the expectations of the public. the
ofobjectives are imposed on the corporation by law, the businessmen
toof
pursue
of
anobligations
economic
that
fulfills
the public
objectives
imposed
not
not only economic and legal obligations but also certain only
economic
and
legal
obligations
but
requirements
requirements of the firm. (Davis,1973, p. 312)
the
firm
1973
th
that outlines through norms and business roles particular t
tli
th
hthe
dalso
bcorporation
i of
lpby312)
ti l
relationships must be kept in mind by top managers as “businessmen’s decisions and actions taken for reasons at least problems….” (Eilbert
& Parket, 1973, p. 7)
consider the needs and interest of others who may be affected by those policies, to make those decisions, or to follow those lines of And this means in turn that the economy’s means of production corporation exercises no responsibility when it responsibilities to society which extend beyond these obligations” ways of responding to particular situations and sets out in the corporation and
partially beyond the firm’s direct economic or technical interest” business actions. In so doing, they look beyond their firm’s narrow action which are desirable in terms of the objectives and values of should be employed in such a way that production and implements them.” (Manne & Wallich, 1972, p. 40)
(Joseph W. McGuire, 1963 p. 144).
some detail the prescribed ways of conducting business the related groups pursue their respective goals.” (Davis, 1960, p. 70)
economic and technical interests.” (Keith Davis and Robert our society” (Bowen 1953 p.6)
distribution should enhance total socio‐economic welfare…”
affairs.” (Johnson, 1971, p.51)
(Walton, 1967, p. 18)
Blomstrom, 1966 p. 12)
(Frederick, 1960, p. 60)
Theoretical Problems
1950’
H. Bowen
(Carroll 1999)
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1960’
K. Davis
W. C. Frederick
J. W. McGuire
R. Blomstrom
C. C. Walton
1970’
1980’
H. Johnson (x3)
H
Johnson (x3)
…
H. G. Manne &
H. C. Wallich
K. Davis
Eilbert & Parket
J. Backman
S. P. Sethi
Preston & Prost
Fitch
Zeniseck
CSR Seminar ‐
FS 2012 UZH ‐ Theoretical Foundation
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1990’
…
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Too many definitions ?!
“it means something but not always the same thing, to everybody” (Votaw 1973, p.11)
Classification
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CLASSIFICATIONS OF CSR THEORIES 2/28/2012
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Different Classifications
• CSR 1‐4 based on conceptual transition by William C Frederick (Frederick 1987 1998)
William C. Frederick (Frederick 1987, 1998)
• Focus on interaction between business and society by Elisabeth Garriga and Domènec Melé
(Garringa and Melél 2004) • Concept tree for Corporate Citizenship by Sandra Waddock (Waddock 2008)
(Garringa and Melé 2004)
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Garringa and Melé Classification
Idea:
Business
Roots:
four aspects of social systems
of social systems
by Parsons
Society
Society Economic aspects
Political aspects (corporation p
( p
has social duties and rights…) Social integration
(Garringa and Melé 2004)
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Ethic values
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CSR Theories: Four groups
Instrumental
Political
• CSR: means to the end (=economic objectives)
• P
Power of corporations f
ti
‐> responsibility
Integrative
Ethical
• Business depends on society ‐> should integrate social demands
• CSR as ethical obligation • Political analysis / consideration (Garringa and Melé 2004)
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Instrumental Theories • Milton Friedman: ‘‘the only one responsibility of business towards society is the fb i
t
d
i t i th
maximization of profits to the shareholders within the legal framework and the ethical custom of the country’’ ( Friedman 1970, cited by: Garriga
and Melé 2004, p. 53)
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Instrumental Theories – three groups
• Maximizing shareholder value (Friedman 1970 Jensen and Meckling 1967) 1970, Jensen and Meckling
1967)
• Strategies for achieving competitive advantages
– e.g. Strategies for the bottom of the pyramid, (P h l d 2002, Hart and Christiansen 2002)
(Prahalad
2002 H
d Ch i i
2002)
• Cause‐related marketing (CRM)
(Garringa and Melé, 2004)
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Political Theories • Corporate Constitutionalism / Davis’ two laws
– Social power equation: Social power ‐> social responsibilities – Iron law of responsibilities using social power irresponsibly ‐> loosing it
(Davis 1967)
• Integrative social contract theory
– Macrosocial (Hypernorms) and Microsocial level
(D
(Donaldson and Dunfee
ld
d D f 2000)
• (Global) Corporate citizenship [next week]
– Reaction to rising power of MNC
(Garringa and Melé 2004)
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Integrative Theories
• Issues Management
– “process for making a corporate response to a social issue” (G i
(Garringa
and Melé
d M lé 2004 p.58)
2004 58)
• The principles of social public responsibility – stresses ‘public process’ not personal morality view – Law + ‘social direction’ (Preston and Post 1981) • Stakeholder management Stakeholder management
• Corporate Social Performance (CSP) (Garringa and Melé 2004)
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Ethical Theories
• Normative Stakeholder theory
– R. E. Freeman
R E Freeman
• Universal Rights
– UN Global Compact • Sustainable development – Triple bottom line
• Common good approach (Garringa and Melé, 2004)
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TWO CONTRADICTING THEORIES 2/28/2012
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Cause‐related marketing
“the practice of marketing a product, service, b d
brand, or company through a mutually th
h
t ll
beneficial relationship with a non‐profit or social cause organization” (Berglin and Nakata 2005 p. 444)
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CRM = win‐win ? Business
•
•
•
•
•
NPO
Profits
Brand
Reputation
Goodwill
Employee moral and retention
• Funding
• Exposure & message efficacy
• Non financial resources
(Berglin and Nakata 2005)
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CRM examples
http://standrew‐parish.com/cause‐related‐
marketing.html
http://www.pinklotusbreastcenter.com/breast‐cancer‐101/wp‐
content/uploads/2010/04/kfc‐pink‐bucket.jpg
Pink buckets: April 14th to May 23rd 2010
‐> over 4.2 m $ donation (http://ww5.komen.org/KomenNewsArticl
e.aspx?id=6442452377)
2/28/2012
http://bonner
bonner‐wirtschaftsgespraeche
wirtschaftsgespraeche.de/wp
de/wp‐
content/uploads/Image/KeyVisual_RW‐%283%29.jpg
Cost of the campaign: 8‐9m €
1m € for WWF 1m € million for Günther Jauch
(http://www.spiegel.de/spiegel/print/d‐
47134772.html)
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Corporate Social Performance (CSP)
• CSP = CSR
+ Corporate Social Responsiveness + socially beneficial activities
“…emphasizes concern for corporate action and accomplishments in the social sphere” (Carroll 1991 40)
1991 p.40)
(Carroll 1991) 2/28/2012
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CSR ‐ Pyramid (close to CSP)
expected from society necessary conditions (Carroll 1991, Introduction CSR Seminar UZH 2012) 2/28/2012
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EVALUATION OF THEORIES 2/28/2012
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CSR increase vs. “blue‐washing” United Nations Global Compact Annual Review 2010
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Ethical issues and social implications of CRM
• differing interests ‐> compromises goals
• advocacy or exploitation?
• too little transparency?
• disadvantaging disadvantaging “less
less attractive
attractive” causes causes
• desensitization ‐> CRM grants decline without traditional giving regenerating
(Berglin and Nakata 2005, Smith and Higgins 2000)
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Globalization changes everything…
• Scherer and Palazzo (2011):
globalization changes the role of businesses 2/28/2012
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DISCUSSION
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CRM or CSP ?
Integrative or instrumental? … Or ethical? 2/28/2012
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CSR = utopia ? “the CSR firm should strive to make profit, obey the law, be ethical, and be good b th l
b thi l d b
d
corporate citizen” (Carroll 1991, p.43) (Carroll, 1991) 2/28/2012
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Does the instrumental view enable green‐ / blue‐
washing?
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references
Berglind, M./ Nakata, C. (2005): Cause‐related marketing: More buck than bang?, in: Business Horizon, Vol.48, pp. 443 – 453. Carroll, A.B. (1991): The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders, in: Business Horizons, Vol. 34, No.4, pp. 39 – 48.
Carroll, A.B. (1999): Corporate Social Responsibility Evolution of a Definitional Construct, in: Business & Society, Vol.38, No.3, pp. 268 – 295. Davis, K. (1967): Understanding The Social Responsibility Puzzle, in: Business Horizons, Vol.10, No.4, pp. 45 – 51.
Donaldson, T./ Dunfee T. W. (2000): Pre´cis for Ties that Bind, in: Business and Society, Vol. 105, pp. 436 – 444.
Friedman, M. (1970): The Social Responsibility of Business is to Increase its Profits, in: New York Times Magazine, September
13th, pp. 32 – 33.
Garriga, E./Melé, D. (2004): Corporate Social Responsibility Theories: Mapping the Territory, in: Journal of Business Ethics , Vol.53, pp. 51 – 57.
Hart, S. L./Christensen C. M. (2002): The Great Leap. Driving Innovation from the Base of the Pyramid, in: MIT Sloan Management Review, Vol.44, No.1, pp. 51 – 57.
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references
Jensen, M. C./ Meckling W. (1976): Theory of the Firm: Managerial Behavior, Agency Cost, and CapitalStructure, in: Journal of Financial Economics Vol.3, pp. 305 – 360.
Prahalad, C. K. (2002): Strategies for the Bottom of the Economic Pyramid: India as a Source of Innovation Reflections, in: The SOL Journal, Vol.3, No.4, pp. 6 – 18.
Preston, L. E./ Post J. E. (1981): Private Management and Public Policy, in: California Management Review, Vol.23, No.3, pp. 56 –
63.
63
Scherer, A.G. /Palazzo, G. (2011): The new political role of business in a globalized world: A review of a new perspective on CSR and its implications for the firm, governance, and democracy, in: Journal of Management Studies, Vol.48, No.4, pp. 899 ‐
931.
Smith, W/ Higgins M. (2000): Cause‐Related Marketing: Ethics and the Ecstatic, in: Business and Society, Vol.39, No.3, pp. 304 –
322.
Votaw, D. (1973): Genius becomes rare. In: D. Votaw & S. P. Sethi (Eds.): The corporate dilemma. Englewood Cliffs, NJ: Prentice Hall.
Waddock, S. (2008): Corporate Responsibility/Corporate Citizenship: The Development of a Construct. In: Scherer, A.G./Palazzo, G. (Eds.): Handbook of Research on Global Corporate Citizenship, Cheltenham, pp. 25 – 49.
KFC Presents to Susan G. Komen for the Cure® a Check for more than $4.2 Million: Single Largest Donation in Organization’s History, http://ww5.komen.org/KomenNewsArticle.aspx?id=6442452377
y, p //
g/
p
retrieved on Feb. 27th 2012.
Kritik an Krombacher, in: Der Spiegel, June 3rd 2006, http://www.spiegel.de/spiegel/print/d‐47134772.html retrieved on Feb. 27th 2012. United Nations Global Compact Annual Review 2010, http://www.unglobalcompact.org/docs/news_events/8.1/UN_Global_Compact_Annual_Review_2010.pdf , retrieved on Feb 27th 2012.
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