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Running Head: Student Research Paper Corporate Social Responsibility
Corporate Social responsibility
Student Research Paper
Ardavan A. Shahroodi
Northeastern university
LDR 6135-The Ethical Leader
Dr. Hernan Murdock
Friday, October 10, 2014
Student Research Paper Corporate Social Responsibility
Introduction
This paper presents various definitions and theories that have been presented as
expressions of corporate social responsibility (CSR). In this paper attention has been paid to
present interpretations that support a CSR posture for companies as well as a particular narrative
that regards CSR as not in line with the true nature and responsibilities of a corporation. The
paper also discusses the business rationalization and many approaches and examples of CSR. In
the last section of the paper, an analysis of the CSR concept also includes the opinion of this
writer and the personal experience that became associated with such an effort in the workplace.
Most importantly, CSR is presented in the last section of this paper as a natural, proper and
urgently needed evolution of the leadership role companies play in our society and globally.
Definition
The search for producing a precise and mutually agreed upon definition of corporate
Social responsibility (CSR) may be highly elusive, since for a “subject that has been studied for
so long, it is unusual to discover that researchers still do not share a common definition or set of
core principles, that they still argue about what it means to be socially responsible, or even
whether firms should have social responsibilities in the first place” (Crane, McWilliams, Matten,
Moon & Siegel, 2008, p. 4). Importantly, it must be acknowledged that the research on CSR has
been largely “expansive [rather] than accumulative” (Crane, McWilliams, Matten, Moon &
Siegel, 2008, p. 4). Indeed, among researchers, the business community and the public at large
there remains a fundamental disagreement on “whether CSR is good for business or not” (Crane,
McWilliams, Matten, Moon & Siegel, 2008, p. 4). Nevertheless, in recent years, in spite of the
presence of a high “degree of ambiguity and disagreement” (Crane, McWilliams, Matten, Moon
& Siegel 2008, p. 4) on the very definition and benefits of such a corporate posture, an ever
Student Research Paper Corporate Social Responsibility
increasing number of organizations have adopted policies and practices that are presented as in
line with the general characteristics of CSR.
There are indeed numerous definitions of CSR generated from a variety of
sources. Sharp (2006) defines CSR as the “recognition that companies are social entities, with
explicit commitments beyond short-term-and even long-term shareholder profit maximization”
(p. 201). University of Washington Center for Leadership and Social Responsibility (UWCLSR)
(n. d.) observes in its Website that CSR “is a form of corporate self-regulation integrated into a
business model…functions as a built-in, self-regulating mechanism whereby a business monitors
and ensures its active compliance with the spirit of the law, ethical standards and international
norms…with the aim to embrace responsibility for the company’s actions and encourage a
positive impact through its activities on the environment, consumers, employees, communities,
stakeholders and all other members of the public sphere who may also be considered as
stakeholders” (Definition of Corporate Social Responsibilities). In relation to the concept of
sustainability and how it relates to CSR, the UWCLSR (n. d.) Website states that sustainable
business practices “…will not deplete, destroy, or completely use up natural resources…can
persist over long periods of time…are able to last perpetually” (Definition of Sustainability).
UWCLSR (n. d.) Website also describes philanthropy as a “core pillar of corporate citizenship”
(Philanthropy).
CSR is also described as the “voluntary assumption of responsibilities that go beyond the
purely economic and legal responsibilities of business firms” (Boatright, 2009, p. 352) but also
governed by considerations for “ethical standards or judgments of social desirability” (p. 352).
Here, CSR may be in line with the “corporate objective of earning a satisfactory level of profit,
but it implies a willingness to forgo a certain measure of profit in order to achieve noneconomic
Student Research Paper Corporate Social Responsibility
ends” (Boatright, 2009, p. 352). The Investopedia (n. d.) Website defines CSR as a “corporate
initiative to assess and take responsibility for the company’s effects on the environment and
impact on social welfare…efforts that go beyond what may be required by regulators or
environmental protection groups…can involve incurring short-term costs that do not provide an
immediate financial benefit to the company, but instead promote positive social and
environmental change” (Definition).
One noted commentator, Carroll (1979) views CSR as transpiring on a “four-stage
continuum” (as cited in Boatright, 2009, p. 352). Carroll (1979) argues in addition to economic
and legal duties, firms must fulfill “ethical responsibilities, which are additional behaviors and
activities that are not necessarily codified into law but nevertheless are expected of business by
society’s members…At the far end of the continuum are discretionary responsibilities…not
legally required or even demanded by ethics, but corporations accept them in order to meet
society’s expectations” (as cited in Boatright, 2009, p. 352). Sethi (1975) observes that “in most
of the advanced nations of the world, fulfilling traditional economic and legal responsibilities is
no longer regarded as sufficient for legitimizing the activity of large corporations” (as cited in
Boatright, 2009, p. 352) consequently CSR must be understood as “bringing corporate behavior
up to a level where it is congruent with the prevailing social norms, values, and expectations of
performance” (as cited in Boatright, 2009, p. 352).
Jones, Wicks & Freeman(2002/2006) mention that Jones (1980) proposes that CSR is the
“notion that corporations have an obligation to constituents groups in society other than
stockholders and beyond that prescribed by law or union contract” (as cited in Bowie,
2002/2006, p. 21). The World Business Council for Sustainable Development (n. d.) describes
CSR as the “continuing commitment by business to contribute to economic development while
Student Research Paper Corporate Social Responsibility
improving the quality of life of the workforce and their families as well as of the local
community and society at large” (Corporate Social Responsibility, The WBCSD ‘s definition of
CSR, n. d.). An additional definition by Cramer & Karabell (2010) found in the Business for
Social Responsibility (n. d.) organization Website holds that “a sustainable business is one that
delivers for investors, customers, and employees; improves the living standards of its employees
and the communities it touches; make wise use of natural resources; and treats people fairly” (as
cited in Olson, BSR and the state of CSR, What We mean When We Say CSR). Furthermore,
the European Commission (n. d.) Website proposes that CSR “refers to companies taking
responsibility for their impact on society…CSR is increasingly important to the competitiveness
of enterprises…It can bring benefits in terms of risk management, cost savings, access to capital,
customer relationships, human resource management, and innovation capacity” (Corporate
Social Responsibility).
Arguments For and Against Corporate Social Responsibility
In regards to arguments for and against CSR, Mele (2008) cites Klonoski (1991) who
identifies three distinct types of general theoretical approaches(as cited in Crane, McWilliams,
Matten, Moon & Siegel, 2008, p. 47). Mele (2008) states that Klonoski (1991) labels the first
group of theories as having a “fundamentalism” (as cited in Crane, McWilliams, Matten, Moon
& Siegel, 2008, p. 47) orientation asserting that “corporations are only legal artifacts and the
only social responsibility of business is increasing profits in compliance with the law” (as cited
in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 47). Mele (2008) indicates that
Klonoski (1991) observes, the second cluster of interpretations “defend the corporations’ moral
personhood and point to its moral agency…can be held morally responsible for their actions” (as
cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 48). In a third group of theories,
Student Research Paper Corporate Social Responsibility
Mele (2008) holds that Klonoski (1991) has found “the social dimension of the corporation is
particularly relevant…the roots of these theories are in political and ethical theories (as cited in
Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 48).
In addition, Mele (2008) also mentions Windsor (2006) who separates approaches to
CSR into three separate categories (as cited in Crane, McWilliams, Matten, Moon & Siegel,
2008, p. 48). Mele (2008) states that the first category is called by Windsor (2006) the “ethical
responsibility theory…presents strong corporate self-restraint and altruistic duties and expansive
public policy to strengthen stakeholders’ rights” (as cited in Crane, McWilliams, Matten, Moon
& Siegel, 2008, p. 48). Mele (2008) holds that the second category is referred to by Windsor
(2006) as the “economic responsibility theory…advocates market wealth creation subject only to
minimalist public policy and perhaps customary business ethics” (as cited in Crane, McWilliams,
Matten, Moon & Siegel, 2008, p. 48). The third category, Mele (2008) mentions, is labeled by
Windsor (2006) as “corporate citizenship…invokes a political metaphor which provides neither
true intermediate positioning nor theoretical synthesis” (as cited in Crane, McWilliams, Matten,
Moon & Siegel, 2008, p. 48).
Mele (2008) recalls that Garriga & Mele (2004) have divided CSR theories into four
different general groupings (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p.
49). Mele (2008) explains that the first approach, called the “Corporate Social Performance” (as
cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 49) (CSP), is described by Wood
(1991b) as promoting “the configuration in the business organization of principles of social
responsibility, processes of response to social requirements, and policies, programs and tangible
results that reflect the company’s relations with society” (as cited in Crane, McWilliams, Matten,
Moon & Siegel, 2008, p. 49). Mele (2008) observes that CPS asserts that “business, apart from
Student Research Paper Corporate Social Responsibility
wealth creation, also has responsibilities for social problems created by business or by other
causes, beyond its economic and legal responsibilities” (as cited in Crane, McWilliams, Matten,
Moon & Siegel, 2008, p. 49).
In relation to this theory, Mele (2008) cites Bowen (1953), one of the most important
pioneers of CPS and indeed all CSR who has argued in his landmark work Social Responsibility
of the Businessman that “the social responsibility of the businessmen [at this time the presence of
women in management was rare] refers to the obligation of businessmen to pursue those policies,
to make decisions, or to follow those lines of action which are desirable in terms of the
objectives and values of our society” (as cited in Crane, McWilliams, Matten, Moon & Siegel,
2008, p. 50). In addition, Jones, Wicks & Freeman (2002/2006) observe that Bowen (1953)
contended that “business leaders are servants of society and that management merely in the
interests (narrowly defined) of stockholders is not the sole end of their duties” (as cited in Bowie,
2002/2006, p. 22). Interestingly, Jones, Wicks & Freeman (2002/2006) emphasize that in post
WWII, the concept of CSR “as an ideal at least, was imposed on business by business itself” (as
cited in Bowie, 2002/2006, p. 22).
As a further expression of CPS, in a landmark report, the Committee for Economic
Development (1971) explained the responsibilities of business as “consisting in three concentric
circles” (as cited in Boatright, 2002/2006, p. 352). The report stated that the “inner circle
includes the clear-cut basic responsibilities for the efficient execution of the economic function-
products, jobs, and economic growth” (as cited in Boatright, 2002/2006, p. 352). The report
adds that the “intermediate circle encompasses responsibility to exercise this economic function
with a sensitive awareness of changing social values and priorities: for example…environmental
conservation…hiring and relations with employees…fair treatment, and protection from injury”
Student Research Paper Corporate Social Responsibility
(as cited in Boatright, 2009, p. 352). Lastly, the report observes that the “outer circle outlines
newly emerging…responsibilities that business should assume to become more broadly involved
in actively improving the social environment…Society is beginning to turn to corporations for
help with major social problems such as poverty and urban blight” (as cited in Boatright, 2009,
p. 352).
Mele (2008) mentions, Garriga & Mele’s (2004) second grouping of CSR theories is
referred to as the “Shareholder Value Theory” (as cited in Crane, McWilliams, Matten, Moon &
Siegel, 2008, p. 55) (SVT) or “Fiduciary Capitalism” (p. 55). Mele (2008) states that these
category of theories argue that the “only social responsibility of business is making profits and,
as the supreme goal, increasing the economic value of the company for its shareholders” (as cited
in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 55). In addition, Mele (2008) observes
that the proponents of SVT hold that “other social activities that companies could engage in
would only be acceptable if they are prescribed by law or if they contribute to the maximization
of shareholder value” (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 55).
Here, Mele (2008) cites one of the most ardent promoters of the SVT, Milton Friedman
(1962) who insisted that “there is one and only one social responsibility of business-to use
resources and engage in activities designed to increase its profits so long as it stays within the
rules of the game, which is to say, engages in open and free competitions, without deception or
fraud” (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 55). In this light, Mele
(2008) cites a New York Times Magazine article where Friedman (1970) argued, “the only one
responsibility of business towards the society is the maximization of profits to the shareholders,
within the legal framework and the ethical custom of the country” (as cited in Crane,
McWilliams, Matten, Moon & Siegel, 2008, p. 55).
Student Research Paper Corporate Social Responsibility
In defending the SVT approach, in one of his much cited passages, Friedman (1970)
holds,
“in a free-enterprise, private-property system, a corporate executive is an employee of the
owners of the business. He has a direct responsibility to his employers. That responsibility is to
conduct the business in accordance with their desires, which generally will be to make as much
money as possible” (as cited in Hartman, 2002, p. 226).
James & Rassekh (n. d.) state that Friedman (1970) believes, “corporate executives who
pursue any goal other than profit maximization, such as advancing social causes, may not know
what constitutes society’s best interest, and they may do it at the expense of some other people”
(as cited in Hartman, 2002, p. 253). Boatright (2009) observes that “Friedman’s [1970] main
argument against CSR is that corporate executives, when they are acting in their official capacity
and not as private persons, are agents of the shareholders of the corporation…As such,
executives of a corporation have an obligation to make decisions in the interests of the
shareholders, who are ultimately their employers” (p. 357).
Additionally, James & Rassekh (n. d.) observe that Friedman (1970) contends,
“a corporate executive who forgoes maximum profit by spending corporate money on
social causes is imposing taxes on the stockholders and is deciding how the tax proceeds shall be
spent…When this occurs…the executive ceases to be an employee of private enterprise and
instead becomes a self-selected public employee or civil servant…who seeks to attain by
undemocratic procedures what he cannot attain by democratic procedures” (as cited in Hartman,
2002, pp. 253-254).
Student Research Paper Corporate Social Responsibility
James & Rassekh (n. d.) add that “even if the actions can be justified as serving the
corporate interest because they promote the company’s product, Friedman (1970) rejects such
actions as hypocritical window dressing and considers them to be approaching fraud” (as cited
in Hartman, 2002, p. 254).
Nevertheless, James & Rassekh (n. d.) hold that Friedman (1970) does state that “the
pursuit of profit must be constrained by both legal and ethical considerations…Business
executives should maximize profits while conforming to the basic rules of the society, both those
embodied in law and those embodied in ethical custom” (as cited in Hartman, 2002, p. 254).
Mele (2008) holds, Garriga & Mele’s (2004) third approach to understanding CSR is
referred to as the “Stakeholder Theory” (as cited in Crane, McWilliams, Matten, Moon & Siegel,
2008, p. 62). Here, Mele (2008) mentions Jones’ (1980) (as has been referred to in the
Definition section of this paper) argument that “corporations have an obligation to constituent
groups in society other than stockholders and beyond that prescribed by law or union contract”
(as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 62). Significantly, it must be
stated that a number of the proponents of the Stakeholder Theory, Mele (2008) observes, such as
Freeman & Liedtka (1991) observe that “CSR is not a useful idea and it must be abandoned…the
question of social responsibility just doesn’t come up if stakeholders are…defined to include
suppliers, community, employees, customers, and financiers” (as cited in Crane, McWilliams,
Matten, Moon & Siegel, 2008, p. 62).
Mele (2008) notes that Freeman & Liedtka (1991) propose that “corporations have
responsibility to all the parties affected by business activity, that is, responsibilities towards the
stakeholders of the firm” (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 62).
In addition, Mele (2008) states that Evan & Freeman (1988) held that “the corporation ought to
Student Research Paper Corporate Social Responsibility
be managed for the benefit of its stakeholders: its customers, suppliers, owners, employees, and
local communities, and to maintain the survival of the firm” (as cited in Crane, McWilliams,
Matten, Moon & Siegel, 2008, p. 63). Indeed Mele (2008) observes that “there are a variety of
approaches to the stakeholder theory” (p. 63) and Clarkson (1995) may have captured the
essence of these interpretations by stating that “the firm is a system of stakeholders operating
within the larger system of the host society that provides the necessary legal and market
infrastructure for the firm activities…the purpose of the firm is to create wealth or value for its
stakeholders by converting their stakes into goods and services” (as cited in Crane, McWilliams,
Matten, Moon & Siegel, 2008, p. 63).
Mele (2008) states that Garriga & Mele (2004) label the fourth CSR interpretations as
“Corporate Citizenship” (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 68)
(CC) theories. Here, Mele (2008) cites Carroll (1991) who asserts being “a good corporate
citizen includes actively engaging in acts or programs to promote human welfare or good will”
(as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 68). In addition, Mele (2008)
observes, Carroll (2004) also argues that, “be a good global corporate citizen is related to
philanthropic responsibility, which reflects global society’s expectations that business will
engage is social activities that are not mandated by law nor generally expected of business in an
ethical sense” (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 69).
Furthermore, Mele (2008) holds that an expanded understanding of CC proposes that “while
CSR is more concerned with social responsibilities as an external affair, CC suggests that
business is a part of society” (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p.
69). In this light, Mele (2008) mentions Lodgsdon & Wood (2002) who observe such an
evolution involve “a profound change in normative understanding of how business organization
Student Research Paper Corporate Social Responsibility
should act in respect to stakeholders” (as cited in Crane, McWilliams, Matten, Moon & Siegel,
2008, p. 69).
The Business Rationalization and Contemporary Examples of Corporate Social
Responsibility
The Economist magazine in a 2008 special report observes, “One way of looking at CSR
is that it is part of what businesses need to do to keep up with (or, if possible, stay slightly ahead
of) society’s fast-changing expectations…It is an aspect of taking care of a company’s
reputation, managing its risk and gaining a competitive advantage…This is what good managers
ought to do anyway…Doing it may simply involve a clearer focus and greater effort than in the
past” (as cited in Boatright, 2009, p. 361). Porter & Kramer (2006) propose that CSR if woven
competently into the strategic posture of the company may potentially offer dividends internal to
the organization in addition to facilitating positive social contributions externally. In this light,
Porter & Kramer (2006) argue,
“The fact is, the prevailing approaches to CSR are so fragmented and so disconnected
from business and strategy as to obscure many of the greatest opportunities of companies to
benefit society…If, instead, corporations were to analyze their prospects for social responsibility
using the same frameworks that guide their core business choices, they would discover that CSR
can be much more than a cost, a constraint, or a charitable deed-it can be a source of opportunity,
innovation, and competitive advantage” (as cited in Boatright, 2009, p. 364).
In general, there are various “types of corporate activities that show social responsibility”
(Boatright, 2009, p. 353). A first approach may concentrate on “choosing to operate on an
ethical level that is higher than what the law requires…For example Motorola’s code of ethics
Student Research Paper Corporate Social Responsibility
prohibits payments of any kind to a government official, even when the payments are permitted
by U.S. and local law” (Boatright, 2009, p. 353). Donaldson (1996) also cites Motorola’s “code
of conduct” (p. 55) that states “funds and assets of Motorola shall not be used, directly or
indirectly, for illegal payments of any kind…the payment of a bribe to a public official or the
kickback of funds to an employee of a customer” (pp. 55-56). Donaldson (1996) emphasizes
that codes of conduct and statements of values must be “unambiguous” (p. 55), “explicit” (p. 55,
56) and “specific” (p. 56).
A second type of corporate CSR activity emphasizes “making contributions to civic and
charitable organizations and nonprofit institutions…American companies contribute, on average,
1 percent of pre-tax net revenues to worthy causes, and many larger corporations operate
nonprofit foundations that fund grant applications from worthy philanthropic organizations”
(Boatright, 2009, p. 353). The third category of corporate CSR posture is in “providing benefits
for employees and improving the quality of life in the workplace beyond economic and legal
requirements…Examples include family-friendly programs such as flexible work and childcare,
and time off for volunteer work” (Boatright, 2009, p. 353).
A fourth approach to CSR proposes “taking advantage of an economic opportunity that is
judged to be less profitable but more socially desirable than some alternatives…For example,
Starbucks pays an above-market rate for fair-trade coffee that benefits growers in poor countries”
(Boatright, 2009, p. 353). The fifth kind of effort in emphasizing CSR underscores “using
corporate resources to operate a program that addresses some major social problems…AT&T
devotes substantial resources to promoting diversity among its employees, suppliers, and local
communities” (Boatright, 2009, p. 353). Here a number of organizations’ codes of conduct
mentioned under the first general type of CSR activity concern themselves with addressing the
Student Research Paper Corporate Social Responsibility
manifestations of social problems in the workplace such as “freedom of association, child labor,
discrimination, harassment, wages, working hours, and health and safety, all under the rubric of
CSR” (Marihugh, Corporate Social Responsibility: An Insider’s View, Dollars & Sense,
May/June 2006).
In regards to CSR approaches to environmental protection and climate policy, Evan Juska
(2014), “head of US policy at the Climate group, which organizes Climate Week NYC” (Kho,
Sea Change: Big Businesses Now Support Climate Policy, The Guardian, September 26, 2014)
commenting on the 2014 United Nations Climate Summit has observed, “this year, there are far
more stakeholders-including companies-engaged, and [support for carbon regulation] has
rebounded from the low point of 2010” (as cited in Kho, September 26, 2014). The World Bank
(2014) has stated recently that “it had received pledges of support for carbon pricing from 1,000
companies and investors, as well as 73 national and 11 regional governments, while 31
companies committed to being carbon pricing champions” (as cited in Kho, September 26,
2014).
Juska (2014) believes the increasing support for climate policies are rooted in the reality
that “clean energy has grown a lot cheaper and has become far more mainstream investment” (as
cited in Kho, September 26, 2014). Here, Michael Liebreich (2014), “head of Bloomberg New
Energy Finance” (Kho, September 26, 2014) emphasizes that there is a “sense of inevitability”
(as cited in Kho, September 26, 2014) surrounding the debate on climate policy and “a growing
appetite and interest in finding ways to harness the great growth industry of the 21st century,
which is clean energy’ (as cited in Kho, September 26, 2014). All these are influencing a
gradual “change in business attitude from viewing climate change only as a risk to also viewing
it as an opportunity” (Kho, September 26, 2014).
Student Research Paper Corporate Social Responsibility
Crucially, the reality remains that “global emissions continuing to rise instead of shrink…
there’s still plenty of skepticism about whether business growth will be able to bring about the
needed cuts” (Kho, September 26, 2014). As the matter of fact, a series of industry specific
reports by University of Cambridge Institute of Sustainability Leadership in cooperation with
European Climate Foundation have projected “widespread disruption, even for industries that are
not normally considered vulnerable to environmental hazard” (as cited in LaMonica, What
Businesses Need to Know About the Latest Climate Science, The Guardian, September 23,
2014). Wittington (2014), “the climate change director at the Institute for Sustainability
Leadership” observes that climate change must not only be regarded by business as a “ drag on
future prosperity” (as cited in LaMonica, September 23, 2014) rather it must also be understood
as creating “new businesses and market opportunities” (as cited in LaMonica, September 23,
2014).
Some prominent businesses have also come to the realization that the general public must
be viewed as a partner thereby motivated, encouraged and mobilized in order to effectively assist
in efforts to prevent climate change. In this spirit, a group of major companies ‘have jointly
created a digital platform for young people to take action against climate change” (Confino, The
Guardian, October 6, 2014). The organization called Collectively.org sponsored and supported
by conglomerates such as Coke, Pepsi, Unilever, Nestle, Johnson & Johnson, Google, WPP,
Omnicom, Microsoft and others does not allow branding and corporate logos in the
accompanying Website. This effort represents “an increasing willingness to join forces in the
public arena” (Confino, The Guardian, October 6, 2014) by the aforementioned corporations
who stated, “the pace and scale of what’s required now demands new business models, based on
Student Research Paper Corporate Social Responsibility
radical collaboration with each other, with NGOs and with consumers” (as cited in Confino, The
Guardian, October 6, 2014).
Your Personal and Professional Experience and Your Opinion About the Role of
Organizations in Our Society as it Relates to Corporate Social Responsibility
One of the most important statements that has been presented in this course is the
following argument by Sharp (2006) that “a society is able to function only if its members adopt
a code of behavior under which individuals restrict their self-interest for the greater long-term
good of the society (Introduction, XV). Sharp (2006) also observes that “traditional economic
analysis essentially ignores the cost imposed by firms on the environment, treating it as an
externality-in effect beyond analysis…Financial reporting, which takes a shareholder/owner
perspective, is equally flawed, in that the only costs that it includes in the calculation of profit are
those incurred by firm” (p. 201). Consequently, in these analysis, the “costs that the firm
imposes on others (such as the cost of pollution) are excluded (as is the value of inputs that the
environment provides without cost, such as clean air and water)” (Sharp, 2006, p. 201).
A further crucial learning in this course is the observation by Donaldson (1996) that
managers and leaders must be guided by a collection of “core human values, which define
minimum ethical standards for all companies” (p. 53). Donaldson (1996) refers to these core
human values as the “respect for human dignity, respect for basic rights and good citizenship” (p.
54). Here, Donaldson (1996) emphasizes that leaders and managers “must not treat others
simply as tools…they must recognize a person’s value as a human being…treat people in ways
that respect people’s basic rights …members of a community must work together to support and
improve the institutions on which the community depends” (p. 53). Donaldson (1996) concludes
these “core values establish a moral compass for business practice” (p. 54).
Student Research Paper Corporate Social Responsibility
The aforementioned observations illustrate that progress and effective management of
crisis remain very much elusive if members or certain relevant sections of society are incapable
or unwilling to actively engage in the act of cooperation and problem solving. In light of the
economic, social and political challenges that loom in the horizon, these observations also
indicate that whereas in the past we were willing or able to disregard factors such as externalities
or the cost of business operations on the environment, we no longer possess the luxury of such
neglect. This is not to call for imposing draconian restrictions on business activity, rather to
bring attention on a desperate need for cooperation and coordination among societies’ productive
forces in order not to compromise future prosperity or sustainability. Consequently, I
understand CSR, as the ability and willingness of one of the most productive forces in our society
(corporations) to cooperate with other groups and sectors including stakeholders in order to
preserve and promote mutual welfare.
In our own society, we have offered great leeway to businesses in the conduct of
commerce in line with our understanding of liberty and the pursuit of happiness and facilitated
their operation and growth within the parameters of an evolving legal and regulatory framework.
Simultaneously, our society has maintained a deep belief over time in the promise and ability of
businesses and the free enterprise system to act as the most efficient and resilient engines of
wealth creation and economic opportunity. Nevertheless, crucially, in periods of national
emergency, whether during the 1930s Great Depression/New Deal Era, the WWII campaign or
even the more recent 2007/2008 Financial Crisis, in order to promote wider national priorities,
we have deemed it necessary to implement greater governmental oversight of business activity.
The future reality that we are fast approaching is an overpopulated and resource hungry
planet, where its productive forces and centers are unable to cooperate and coordinate their
Student Research Paper Corporate Social Responsibility
efforts sufficiently towards promoting sustainability and environmental preservation. Scharmer
(September 26, 2014) observes, “we live in an age of profound disruption. Global crisis-
financial, food, fuel, natural resources, poverty-challenge almost all societies…Yet over the
coming decades these disruptions will also create, and are creating, opportunities for profound
personal, social and global reward” (8 Institutional Innovations that Could Update the Economic
System, The Guardian). As has been indicated earlier in this paper, many companies and
organizations are searching for and locating opportunities in place of economic dislocation in
coming to terms with the effects of climate change and environmental degradation. As a related
CSR practice that has been adopted by many major global firms, “surveys of corporate
disclosure practices consistently find that more than 90% of the world’s 250 largest companies
now publicly report on aspects of their sustainability performance” (Searcy & Ahi, Reporting
Supply Chain Sustainability: A Myriad of Metrics, The Guardian, September 26, 2014).
The fact remains that whether we understand CSR in terms of cooperation and
coordination with other sectors and groups in society in order to face future challenges or in
relation to the commercial opportunities that are presented to the firm or for that matter as a
purely marketing, advertising and public relations posture, presently the ideologically tainted
refrains of Friedman (1970) have been proven to be largely irrelevant and simply outdated. As
the matter of fact a BusinessWeek/Harris (1996) “poll of over 1,000 Americans found that 95
percent reject the notion that a corporation’s role is limited to profit maximization” (as cited in
Hartman, 2002, p. 222). The important point being that the aforementioned poll was conducted
in 1996 when the very concept of CSR did not enjoy the present overwhelming acceptance in
American society.
Student Research Paper Corporate Social Responsibility
The irony of the present circumstances in the face of insurmountable future challenges is
the poignant reality that the adoption of business practices and leadership conduct that is in line
with Donaldson’s (1996) core human values may prove to be the sole remaining effective and
competent solution in securing a sustainable existence for our planet. When “respect for human
dignity, respect for basic rights and good citizenship” (Donaldson, 1996, p. 54) are inculcated in
the ideals of CSR, the resulting authenticity and good will may prove to be the most resilient and
long lasting of corporate assets. Here, two particular understanding in the practice of leadership
may prove to be indispensable in an honest execution of CSR. In the first, labeled as
Transformational Leadership, the act of,
“leadership occurs when one or more persons engage with others in such a way that
leaders and followers raise one another to higher levels of motivation and morality…Their
purposes, which might have started as separate but related, as in the case of transactional
leadership, become fused…Power bases are linked not as counterweights but as mutual support
for common purpose” (Burns, 1978/2010, p. 20).
The second approach to leadership, referred to as Servant Leadership,
“begins with the natural feeling that one wants to serve, to serve first…Then conscious
choice brings one to aspire to lead…he is sharply different from the person who is leader first,
perhaps because of the need to assuage an unusual power drive or to acquire material
possessions…The difference manifests itself in the care taken by the servant first to make sure
that people’s highest priority needs are being served …The best test, and difficult to administer,
is: do those served grow as persons; do they, while being served, become healthier, wiser, freer,
more autonomous, more likely themselves to become servants?” (Greenleaf, 1970/2008, p. 15).
Student Research Paper Corporate Social Responsibility
Both Transformational and Servant approaches are voluntary and self-generated states of
conduct where the act of leadership is deemed to be more effective when implemented through
cooperation, coordination and a sincere regard for ethical conduct. When CSR policies and
practices are adopted and implemented in combination with good faith interpretations of
Transformational and Servant leadership, the resulting set of behavior will become more
competent is addressing present and future intractable global problems.
In my own CSR oriented activity that I performed voluntarily in the Hospitality and
Tourism Industry resulting in the training of numerous entering service providers, the need for
competent and effective service to the public was ever present and critical. However, this need
did not confine itself to the welfare of the public or customers/guests for that matter; rather the
intention was to also help these future service providers themselves in their goal of achieving
high levels of competency and proficiency in their chosen profession. Additionally, the industry
and the municipality benefited from acquiring service providers who had been trained in the
basic elements of service, conflict resolution, professionalism and other workplace or business
related matters.
Crucially, the training that I continued for a number of years benefited me in my ability
to help others reach their potential and simultaneously provide for their families. This work
offered me great psychological satisfaction and greatly enhanced my feelings of ethical
legitimacy. Nevertheless, I am also very cognizant of the reality that without the cooperation of
the municipality, the industry, others who were involved in the administration of the school or
training of these future service providers, my own personal efforts in training these individuals
would have never come to fruition
Student Research Paper Corporate Social Responsibility
Conclusion
CSR is first and foremost an ethical mind set concerned with the responsibilities of a firm
towards society. Traditionally, it has been argued that companies’ sole responsibility must be
seen in terms of profit maximization, adherence to the law and the practice of society’s moral
standards. As necessary and indispensable these duties remain for corporations, our planet is
expeditiously approaching a phase where a much higher level of dedication for problem solving
and performance is necessary among all productive entities. In this highly critical environment,
CSR must move companies in cooperation and coordination with governments, NGOs, other
firms, stakeholders and the public into a serious state of collaboration in order to address the
world’s most pressing needs such as climate change, environmental degradation, poverty, hunger
and incessant/destructive conflict. Here these coordinated efforts must be implemented with the
realization that time is of the essence and the hour of opportunity is increasingly fleeting.
Student Research Paper Corporate Social Responsibility
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Student Research Paper Corporate Social Responsibility