"corporate social responsibility," by steven g. anderson

Corporate Social Responsibility

a s d i s c u s s e d i n c h a p t e r 1 , corporations are omnipresent in the mod-

ern world, and their power in most societies has increased dramatically

over time. Corporate ascendancy has been magnified with the rise of the

globalized economy and the related growth of large and often poorly regu-

lated transnational corporations with business operations spanning many

countries (Bakan, 2004; Stiglitz, 2007). Corporate power also is being mani-

fested in the context of heavily constrained governments competing to

attract corporate investments to bolster economic growth, which often has

left disadvantaged populations vulnerable to negative impacts associated

with unrestrained corporate practices. The 1984 chemical leak in the Union

Carbide plant in Bhopal, India, is among the most notable examples of the

disastrous effects that can accompany poorly regulated corporate practices.

Thousands of people were killed or seriously injured in this incident, and

criminal court cases and litigation continue 30 years later (Fortun, 2009).

The total scope of corporate involvement in the world economy is dif-

ficult to capture, because laws of incorporation vary across societies. How-

ever, the number of corporations worldwide has risen dramatically, and the

growth of transnational corporations has been especially important from a

development perspective. According to a United Nations Conference on

Trade and Development report (2007), there are more than 78,000 trans-

national corporations, and these in turn have many more foreign affiliates.

The size of the largest of these transnational corporations is striking. For

example, it has been estimated that 51 of the 100 largest economies in the

world are corporations, and that the largest 500 multinational corporations

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c o r p o r at e s o c i a l r e s p o n s i b i l i t y 7 9

account for nearly 70% of worldwide trade (World Trade Organization,

2013). Some analysts have gone so far as to suggest that corporations are

replacing governments as the most powerful institutions in society, and

that this has far-reaching and largely negative ramifications for the provi-

sion of social benefits (Bakan, 2004; McMillian, 2007).

Given this extensive corporate reach, as well as limitations in govern-

mental effectiveness in regulating corporate excesses, it should not be

surprising that many persons interested in social development focus on

strategies designed to influence corporate behavior. Although approaches

and orientations differ, the basic idea is that affecting corporate practices

can result in substantial benefits to disadvantaged populations. This chap-

ter describes and assesses the principal approaches that have been pro-

moted in this respect, which I will collectively refer to as corporate social

responsibility (CSR).

overarching corporate social responsibility

change ideas

Although there has been an explosion of interest in CSR in academia and

in the broader public in the past 30 to 40 years, there is no widely accepted

definition of what CSR should encompass. In fact, the scope and nature

of CSR is widely contested, with varying viewpoints regarding what the

responsibilities of corporations should be beyond producing products and

making profits for shareholders (Dahlsrud, 2008; Lindgreen, Swaen, &

Johnston, 2009). CSR proponents likewise vary in their perspectives about

how best to influence corporate behavior. They also focus upon many dif-

ferent beneficiary groups and specific benefits expected to be conveyed

through influencing corporate behavior. Nonetheless, they share recogni-

tion that corporate activities have major social impacts and that identifying

and responding to these is important to social development.

Regardless of the particular approach that is emphasized, CSR basi-

cally is an intermediary model in which corporations and their decision-

making officials are the primary targets of change activities, with the belief

that changing the behavior of these targeted intermediaries in turn will

result in benefits accruing to selected groups. This conceptual idea has been

developed in rich and diverse ways, with respect to the particular benefits

argued to accrue to targeted groups and in terms of the political strategies

8 0 c o r p o r at e s o c i a l r e s p o n s i b i l i t y

used to influence corporate behavior. In particular, CSR approaches vary

substantially in terms of whether they are internally or externally directed.

In the former case, officials working within corporations serve as change

agents and try to move the corporations for which they work in more

socially responsible directions. In the latter case, change agents are external

to the corporation and attempt to pressure corporations to change through

organized appeals to consumers and investors. I will turn to these differing

approaches to CSR and related considerations after a brief historical review

of the evolution of CSR as a social development approach.

corporate social responsibility

in historical perspective

Efforts to promote responsible behavior by corporations are not new. In fact,

they extend to the Industrial Revolution, when concerns about unabated

corporate power and exploitation of workers led to public pressures for

restrictions on corporate practices (Welford, 2002). Although there were

relatively few publicly traded corporations by the end of the nineteenth

century, corporate ascendancy then progressed rapidly (Bakan, 2004). In

fact, by the end of World War I, large and powerful corporations not only

had emerged but were actively engaged in public relations attempts to por-

tray themselves as socially responsible agents (Bakan, 2004).

The concept of CSR was articulated more explicitly by Bowen (1953)

during the period of corporate growth after World War II. Early writings

often used the term “social responsibility” in writing about desirable cor-

porate actions. Bowen’s definition is reflective of perspectives on CSR dur-

ing this period: “It refers to the obligations of businessmen to pursue those

policies, to make those decisions, or to follow those lines of action which

are desirable in terms of the objectives and values of our society” (p. 6).

Socially oriented behavior was seen as a civic responsibility of business, as

opposed to deriving primarily from self-interest.

Since that time, there have been ebbs and flows in attention to CSR,

which scholars have suggested stem from factors such as the aggregate state

of the economy or the relative prominence of corporate scandals (Cheney,

Roper, & May, 2007). Most analysts agree, however, that there has been

a new wave of attention to CSR since the early 1990s ( Jenkins, 2005).

This is partly due to the now well-understood reach of corporate power


throughout the world and its corresponding widespread influence on most

societies. It consequently is reasonable to assume that prominent attention

to CSR issues will continue.

The rise of global economic development likewise has been widely

viewed as a critical contributor to the recent interest in CSR (Cheney,

Roper, & May, 2007; Jenkins, 2005). Globalization has been especially

important for two reasons. First, it has rendered governments less powerful

in controlling corporate impacts, and hence, it has created increasing inter-

est in establishing alternative forms of control (Welford, 2002). Second,

with the advent of modern communications technology that has made the

world “smaller,” diverse publics have growing access to information on cor-

porate impacts around the world (Stiglitz, 2007). At the same time, interest

in social issues related to corporate production impacts, such as environ-

mental degradation or the exploitation of corporate workers, has steadily

risen (Cheney, Roper, & May, 2007; Welford, 2002). Working together,

these forces have helped fuel major increases in the level of activists and vol-

untary groups interested in changing corporate practices (Bendell, 2004).

In addition to rising overall interest in CSR, the prominent models of

CSR also have changed. Especially in the 1980s and 1990s, academic and

corporate attention increasingly turned to models of CSR that focused on

corporations engaging in socially responsible behavior due to perceptions

that it could be beneficial to the corporation in the longer term (Wood,

2010). These more self-interested conceptions formed the basis for what

became known as “double bottom line” and “triple bottom line” CSR (Elk-

ington, 1998) or the “business case” for CSR (Carroll & Shabana, 2010).

The triple bottom line involves systematic consideration of economic,

social, and environmental factors in corporate decision making.

The growing interest in CSR is recognizable in many ways, some of

which will be elaborated in later sections. For example, before 1970, univer-

sity business programs rarely focused on business ethics, but in the United

States and many other countries nearly all strong business programs now

include such courses (Christensen, et al., 2007; Shaw, 1996). Further, some

programs include entire courses or even entire programs related to corporate

social responsibility.1 Corporations have responded to the internal inter-

ests of some officials and to rising external pressures by establishing more

sophisticated corporate strategies for considering and demonstrating social

impacts, and increasingly have created units tasked with implementing such


strategies and interacting with stakeholders around them (Weaver, Trev-

iño, & Cochran, 1999). These corporate efforts have been at least partially

driven by a perceived need to protect and improve corporate imaging with

the public. Further, media interest in corporate practices and impacts has

grown steadily in the last 20 to 30 years, and has included many investi-

gative reports that have resulted in external pressures being generated for

corporate change (McWilliams & Siegel, 2001).

External advocates, many of whom are located in nonprofit organiza-

tions or very loosely affiliated groups, likewise have emerged in increasing

numbers to challenge corporate practices along many dimensions (Kend-

all, Gill, & Cheney, 2007). These advocates often have engaged in large-

scale and widely publicized demonstrations and boycotts directed either at

broad corporate practices or at those of specific corporations. For example,

the Royal Dutch Shell oil company suffered significant sales losses in 1995

in the face of protests by Greenpeace and other activists related to Shell

created environmental damages and the hanging of Nigerian activists

associated with this struggle (Schwartz & Gibb, 1999). The boycott of the

Nike Corporation in the late 1990s due to its heavy use of sweatshop labor

practices in Southeast Asia is another prominent example (Knight, 2007).

These and other boycotts of or demonstrations against corporations have

received considerable media attention, which has been an important factor

in the success of these efforts (Greenberg & Knight, 2004).

Collectively, these diverse stakeholders have created rich possibilities for

promoting changes related to the social impacts of corporate production.

At the same time, the previously alluded to weakening governmental reg-

ulation of many corporate activities has led change advocates to consider

mechanisms for controlling corporate behavior outside of the governmen-

tal realm (Cheney, Roper, & May, 2007). I turn next to a more detailed

examination of the behavioral logic and related political development of

CSR approaches, including some of their principal variations.

changing corporate practices: the behavioral

dimensions of corporate social responsibility

Thinking through the behavioral dynamics of CSR models can be com-

plicated. This stems from the fact that CSR approaches not only focus

upon diverse benefits and beneficiary groups, but also differ with respect


to how various stakeholders are perceived to influence corporate behav-

ior. Thus, the specific outcomes sought and the associated behavioral logic

through which changes are hypothesized to occur vary in different CSR

characterizations.

Intellectual debates concerning the appropriate reach of corporate

responsibility to society have been central to considerations of the nature

and scope of CSR initiatives (Werhane, 2007). The Nobel-prize winning

economist Milton Friedman is famous for his article, “The Social Responsi-

bility of Business is to Increase its Profits” (Friedman, 1970), and for related

statements arguing that business officials should not be oriented to social

concerns in their professional roles. Although many view such “greed is

good” statements with cynicism, serious thinkers like Friedman believe that

such a unitary focus creates otherwise unobtainable efficiencies that enlarge

the collective benefits ultimately possible in a society. The most benign form

of this argument is that corporations should focus on what they do best,

which is to produce goods and services that result in profits for their share-

holders. It is argued that other more socially or environmentally oriented

behaviors serve as distractions from this primary purpose, and are unlikely

to be done well at any rate; it is best to leave such tasks to governmental or

voluntary sectors that focus on such collective values and benefits.

Many corporate scholars have balked at this narrow view of corporate

behavior. They argue that corporations are products of societies and there-

fore incur important societal obligations. As Lindblom (2001) and others

aptly describe, governments create the broad rules of the game by establish-

ing and enforcing general market structures, private property rights, and

the more specific operating environments in which corporations function.

It is reasonable to assume that such favorable treatment should only be

granted with the expectation that resulting societal benefits will result, and

additionally, that externalities that seriously diminish the quality of life for

affected groups will be avoided or paid for (Blomström & Kokko, 1998).

Free market enthusiasts counter that the jobs and products that corpora-

tions produce represent sufficient social returns.

These arguments are complex. But as Werhane (2007) has argued, cor-

porations cannot be expected to solve all of society’s problems, and the

breadth of their responsibilities may be very extensive if broadly construed.

For example, should CSR extend mainly to corporate consumers, work-

ers, and the communities in which corporations operate? Are corporations

84 c o r p o r at e s o c i a l r e s p o n s i b i l i t y

responsible for the dealings of corrupt governments where they have an

operating presence? Should they be responsible for the business practices

of their suppliers as well as their own employees? These are just a few of

the thorny questions raised in the literature that illustrate the difficulty in

defining the scope and limitations of CSR.

Although definitional issues remain largely contested, there does appear

to be a broadening of the concept of CSR over time. For example, Stohl, Stohl,

and Townsley (2007) argue that CSR has evolved in three stages, much akin

to broadening conceptions of human rights. In the first stage, CSR advocates

focused on assuring that corporations did not deny access to certain corpo-

rate benefits. Then, a second stage concentrated more proactively on what

it is the corporation should provide to various groups, such as the right to a

living wage, health benefits, or free assembly. Finally, attention recently has

extended to the impacts of corporate operations beyond their own operations

and markets, and to their attendant broader societal responsibilities. This

more collective orientation considers longer-term sustainability issues, such as

environmental impacts that extend well beyond corporate locations.

Debates about the specific actions that corporations should or should

not take occur in this broader context of disagreements about the scope

of corporate responsibilities. The list of potential social impacts resulting

from corporate actions is long, and discussions concerning those social

domains with which corporations should be most concerned are complex.

I am unaware of any work in the literature that attempts to prioritize or

rank which corporate behaviors should be or are the most common targets

for those promoting CSR. A useful first step therefore may be to define

and classify the range of behaviors that CSR advocates have focused upon.

It then is the task of empirical research to measure whether CSR initia-

tives appear to meaningfully impact any of these corporate behaviors and,

in turn, to determine if some behaviors may be more affected by these

approaches than others.

Some analysts have attempted to at least crudely classify the domains

in which corporations are influential, and so to stake the broad terrain in

which corporate responsibilities can be characterized. For example, Dahl-

srud (2008) assessed existing CSR definitions and identified five dimen-

sions of CSR that were most prevalent: environmental, social, economic,

stakeholder, and voluntariness. Carroll (1979) defined four CSR categories:

economic, legal, ethical, and philanthropic. For the purpose of thinking


table 3.1 .� Potential Beneficiaries of Corporate Social Responsibility Initiatives

b e n e f i c i a ry g r o u p b e n e f i ts o f g r e at e s t i n t e r e s t

Corporate employees and subcontractors

Wages, fringe benefits, working conditions, hiring practices, gender and racial equity

Consumers Product safety and quality, psychic values related to production practices

Community members in corporate locations

Environmental effects on local communities—air, traffic, congestion, water, noise, and other quality of life indicators; effects on local businesses

Broader community members Nonlocal environmental effects, such as global warming, depletion of nonrenewable resources or other production activities with far-reaching externalities

through the dynamics of CSR change models, it is preferable to think of

corporate impacts on different beneficiary or stakeholder groups and, in

turn, to consider how corporate behaviors are most likely to influence these

groups. Table 3.1 consequently summarizes the range of social concerns that

CSR advocates have focused upon in attempting to affect corporate behav-

iors in relation to different beneficiary groups. Four broad groups are seen

as being impacted by corporate actions: employees and contractors, con-

sumers, corporate location community members, and broader communi-

ties. I will describe here how corporate social actions most often are argued

to affect each of these groups.

Many CSR initiatives have focused narrowly upon those who work for

the corporation, either as direct employees or as subcontractors; I will refer

to such individuals collectively as employees. A wide range of employee

concerns have been the subject of CSR initiatives, with wages and related

compensation perhaps the most prominent. This issue has been most

dramatically portrayed in CSR campaigns that pressure corporations to

improve wages to subcontractors who either produce goods or serve as sup-

pliers. The aforementioned boycott of Nike in 1996 due to the low wages

paid to subcontractors in Southeast Asia is a good example of this type of

CSR initiative (Wang, 2005). More recently, CSR advocates have focused


on wages and working conditions in Bangladesh garment factories; a fatal

2012 fire at a factory making clothes for global retailers including Walmart

and Sears served as an important galvanizing event in this area (New York

Times, 2012).

Employee-related CSR efforts also have focused on a variety of corpo-

rate working conditions. In some cases, these include considerations such

as the number of hours that employees work, safety of working facilities,

and other measures affecting the quality of the work environment for indi-

vidual employees. In others, CSR initiatives emphasize broader composi-

tional issues in the workforce, such as workforce diversity or employment

of specific disadvantaged groups. Some CSR initiatives also have focused

on discouraging corporations from hiring workers considered at risk of

being exploited, especially children.

Despite responding to a wide range of corporate practices, these

employee-related CSR activities share a focus on improving benefits for

employee and contractor groups. The ultimate intended outcome of such

CSR initiatives is to improve income or related material circumstances for

these groups, usually with the general idea that these improvements will

allow groups to better move forward in whatever manner they choose.

The behavioral dynamics of consumer participation in CSR is more

complex and may involve a mix of tangible and psychological benefits. Ini-

tiatives targeted at consumers most directly result in tangible benefits for

specific consumer groups based on the resulting production of safer, more

effective, or longer lasting products. For example, encouraging or pressur-

ing corporations to assure that children’s toys are safe is one example of a

strategy to promote consumer-related CSR, as are attempts to stimulate

corporations to provide product quality and safety related information

about the products they sell.

However, consumers also may be more idealistically interested in CSR if

they believe they carry responsibilities to consume products that are made

in responsible ways. In this sense, consumers may be seen as attaching psy-

chic value to selected corporate production practices, and they may derive

either positive or negative value from consuming various products. These

psychic benefits may be related to the wages and working conditions of

corporate employees or to issues such as the environmental imprint of cor-

porate production practices. As will be discussed in the following section,

psychic benefits extend beyond improving life satisfaction for individual


participants; they are the driving force in aggregating interests to improve

benefits for corporate employees or broader communities.

In addition to employees and consumers, other community members

may be affected by corporate actions. Such effects often are viewed by econ-

omists and corporate officials alike as externalities, in that persons outside

of the immediate realm of market exchange nonetheless bear some costs

due to corporate activities. Most obvious in this sense are persons living in

communities in which corporate production or distribution activities are

common. For example, corporate presence in a community may result in

increased traffic or noise or other inconveniences that may diminish qual-

ity of life. More dramatically, corporate production practices may result in

high levels of air or water pollution, and the impacts are likely to be con-

centrated most heavily in the immediate vicinity of corporate production.

In addition, corporations such as Walmart often have been argued to have

unfair competitive advantages over locally owned small businesses, and to

ruthlessly exploit such advantages in attempts to run local competition out

of business (Dukes, Zhu, & Singh, 2005). This also has been contended to

have related effects such as the removal of profits from communities, the

loss of local business role models, and the diminishment of community

spirit and voluntary participation (Goetz & Rupasingha, 2006; Haltiwanger,

Jarmin, & Krizan, 2010).

Although typically less concerned than employee-driven CSR initiatives

with providing money or immediately tangible benefits to a well-defined

group, CSR initiatives aimed at influencing corporate effects on commu-

nities generally focus on providing benefits in a specifically defined loca-

tion. For example, an initiative that seeks to reduce the noise emitted by a

local factory during production processes would have the primary intent

of improving the quality of life for nearby community residents. Similarly,

efforts to convince a corporation to change its building plans in a manner

that is friendlier to local traffic patterns are intended to have a targeted

effect on local residents.

Finally, corporate activities commonly extend well beyond the commu-

nities in which production is located. In the simplest case, production often

results in externalities that transcend narrow spatial boundaries, such as

when industrial pollutants get into the air or water and carry their damage

to distant localities. More recent concerns with worldwide environmen-

tal degradation have made the definitions of such extended communities


broader and more difficult to demarcate. In particular, CSR advocates have

increasingly focused on examining the sustainability of corporate pro-

duction practices, and on advocating for changes in sustainability related

practices that are national or international in scope (Marrewijk, 2003;

McIntosh, 2007). Examples in this respect are initiatives to encourage

corporations to more sustainably manage global fishing resources, or to

decrease practices that may contribute to global warming such as deple-

tions of rain forests and inadequate industrial pollution controls (Cum-

mins, 2004; Stohl, Stohl, & Townsley, 2007). This emphasis may increase

the potential for CSR change agents to more extensively aggregate interests

regarding corporate behavior, and at the same time makes geographic foci

on bringing together such interests somewhat less important.

The benefits thought to result from CSR efforts targeted on such non-

place-specific environmental or social outcomes often are more difficult to

identify precisely. In this sense, they are more likely to be largely ideologi-

cally driven and to have the intent of affecting broader patterns of practice

as opposed to conveying narrowly defined benefits. For example, if a corpo-

ration makes a decision to use only wood harvested using sustainable for-

estry techniques, the short-term effects on consumers or local communities

may be negligible or even result in additional costs. However, CSR advo-

cates in this case are likely to be driven by the belief that such practices will

result in more diffuse benefits that will be shared across society over time.

A similar argument can be made with respect to most initiatives directed

at stimulating corporations to engage in sustainable production practices;

in essence, corporations are being asked to forsake some level of immediate

profit to enhance or preserve longer-term benefits. The difficulty of such

actions is that the immediate costs are fairly easy to define and measure,

while the longer-term benefits are more diffuse and uncertain.

Regardless of whether the benefits of CSR actions are narrowly targeted

on particular employee groups or are broader and more diffuse, one other

aspect of many CSR initiatives is notable. That is, CSR advocates often

view the corporate practices targeted for action to be pattern setting in

that if one corporation acts, others may follow. I will return to this issue

momentarily when discussing political strategy, but the point with respect

to behavioral logic is that CSR change agents often are hoping to bring

about changes in corporate practices that extend beyond the confines of

the particular corporate interaction in which they are engaged.


the political development of corporate social

responsibility approaches

CSR approaches share an emphasis on influencing corporations to focus

on selected social issues in addition to profit-making. However, CSR advo-

cates follow very different strategies in pursuing their objectives. In par-

ticular, three strategic variations emerge most clearly in previous literature,

with the differences in approaches mainly related to who the primary insti-

gators are and how they view the driving motivations for corporate change.

I will turn next to an elaboration of these issues.

The first two of these, which I will refer to as internally driven CSR

approaches, emanate largely from within the business and corporate world.

One emphasizes attempting to improve corporate ethics through inculcat-

ing corporate leaders with broader perspectives on social values, while the

other involves the more strategic consideration of social values as a part of

corporate planning. Both of these internal approaches to improving cor-

porate social practices have received extensive treatment in the business

literature, and are exemplified by growing attention to social responsibil-

ity plans, corporate philanthropy offices, or to comparable vehicles for pro-

moting community or service endeavors within corporations.

The third approach instead emphasizes the potential of external agents

to affect corporate behavior, largely by influencing consumption and invest-

ment decisions of those on whom corporations depend for support. This

approach, which will be referred to as externally directed or pressure-driven

CSR, involves strategies such as boycotts, buycotts, and socially conscious

investing designed to either economically punish or reward selected cor-

porations for particular practices. Many case examples of externally driven

CSR strategies have been presented in the literature, but more generalized

conceptualizations regarding the mechanics of such approaches have been

limited. I therefore will develop a general model of externally driven CSR

in conjunction with describing that approach.

Internally Driven Corporate Social Responsibility Approaches

Many corporate scholars have balked at a narrow view of short-term profit

maximizing behavior, and instead have developed approaches intended to

broaden corporate decision-making perspectives to include attention to