CORPORATE SOCIAL RESPONSIBILITY OF LARGE CORPORATIONS WONG JIA YI

1.0 INTRODUCTION

This literature review employs insights to the studies and findings done by previous prominent

researchers on the topic of corporate social responsibility (CSR). In this literature review, the

main sources consulting are including books, journals and dissertations that related to CSR.This

topic is an extensive study and encompasses numerous concepts and related notions.

Nevertheless, the main objective of this literature review is to recapitulate the studies into three

main parts. Initially, history and terminology regarding CSR will be reviewed. Subsequent,

imperative changes and development of CSR have also been identified, illustrated by three well-

known models: Frederick’s model, Mohan’s model, and Carroll’s CSR pyramid. Thirdly, two

approaches are employed to clarify the growth of CSR in large corporations which are economic

approach and stakeholder theory.

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2.0 HISTORY AND TERMINOLOGY

The concept of CSR is actively discussed since 1950s. This view is agreed by Sriramesh et al.

(2009) and along with Maignan and Ferrell (2004) who recognized one of the earliest definitions

of CSR which is the Bowen’s definition. According to Bowen (1953, p.6), CSR defined as “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.”

Since then, profuse researches have been done on CSR and various definitions have been

discovered including Carroll (1979), McWilliams and Siegel (2001), and Whetten et al. (2002).

From readings, it is noteworthy that definition of CSR has been altered from the broad term

society that narrowed down to stakeholders. (deBakker et al., 2005) This is confirmed by Table

1, showing the evolution of CSR definition. In addition, Clarkson (1995) made a similar

observation which revealed that the term society is broadly defined, inclusive and obscured. The

same author further mentioned that responsibility of business is not toward society all in all but,

toward those who affected by the business, which is the stakeholders.

Furthermore, the newest concept of corporate citizenship (CC) is again a subject of debate

among CSR scholars. The term emerged since 1990s and one of the leading scholars, Post (2000)

defined the terms in deeper framework. (Table 1) As stated by Sriramesh et al. (2009), the term

of CC overlaps largely with the concept of CSR. The author noticed that the parameter of CC is

identical to what CSR comprises. Additionally, another scholar Matten et al. (2003) described

CC as a successor to CSR. As a contrary to the above-mentioned, Whitehouse (2003, p.299)

identifies that “Corporate citizenship should be viewed, not as a replacement for CSR, but as a

complement to it.” Nonetheless, the authors’ views aforementioned are subjective.

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3.0 EVOLVING NOTION OF CORPORATE SOCIAL RESPONSIBILITY

Form readings, transformation of CSR definition is undoubtedly related to the development of

CSR studies. Ample evidences show that CSR has evolved from 1950s until today.

3.1 Frederick’s Model

A leading scholar, Frederick, 2006 (cited in Lawrence and Weber, 2008) has developed four

evolving phases of CSR, as illustrated in Figure 1. The first phase is referred to as Corporate

Social Stewardship, which parallel to the Stewardship principle that contributed to the

explanation on how CSR began in the studies by Lawrence and Weber (2008). It is arguable that

the phases in Frederick’s model also included in Mohan’s model, however in different time

frame.

3.2 Mohan’s Model

Empirically illustrated by Mohan’s model cited in deBakker et al. (2005) as described in Figure

2, the latter model is begun with Business Ethics, and then Corporate Social Responsiveness in

year 1975.(cf. Frederick’s model) Nevertheless, both of the authors agreed that the new term of

Corporate Citizenship is begun since 1990s.

When looking at the two models, there is a missing gap in Frederick’s model. Frederick omits

the findings of the year 1970s to 1980s. In opposition, Mohan’s model fills the blind spot. The

author emphasises the CSR concepts throughout the years. Nonetheless, the emergence of the

numerous concepts is too complex and becomes a myriad. This implies that there are no

universal standard definitions of CSR. Various researchers use different terms in their studies

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and thus lead to different findings. For instance in deBakker et al. studies, the author did not use

the search terms, CC and corporate philanthropic in order to avoid conceptual ambiguity.

3.3 Carroll’s CSR Pyramid

Carroll’s CSR pyramid (1991) provides further explanation of CSR development as shown in

Figure 3. The model is often quoted in literature. (E.g. Sriramesh et al., 2009; Maignan and

Ferrell, 2004) However, the model is fit to the circumstances in 1990s and obsolete for today

global world. Therefore, by the same model, Carroll integrated the concept of stakeholders in

year 2004. Empirical evidences support the usefulness of the model. (CSRQuest, 2009) On

contrary, Visser (2005) argued that Carroll’s model has limitations that not appropriate for all

circumstances, as the author use Africa context as debate.

The models aforementioned are useful and essential to explicate the development of large

corporations in pursuing CSR. In the past, corporations are emphasised on environmental and

social CSR that concerns the society as a whole. Pragmatically illustrated by Coca-cola (HIV

program) and Nike (Nike’s Reuse-A-Shoe program) that supports this view. (Kotler and Lee,

2005) Nowadays, large corporations has transformed to practices global citizenship. Hockerts

and Morsing, 2009 building on Wood (1991) analysis, presenting a more updated detail, that

adds on global issues. Empirical examples also provided by the same author such as Novo

Nordisk that implementing DAWN program which takes considerations of global stakeholder

issue.

From the readings, hence, growth of CSR in large corporations comprises various factors and

issues. In this literature review, the two main issues which are economic approach and

stakeholder theory will be discussed in later sections.

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4.0 ECONOMIC APPROACH

The main role of business is to maximize profits. This conventional fact is supported by Adam

Smith, 1863 (cited in Lantos, 2001) and Nobel laureate economist Milton Friedman (1970).

Therefore, the concern of profits creates a debate between CSR and Corporate Financial

Performance (CFP). A study by Aupperle et al. (1985) stated there was no relationship between

social responsibility and profitability. Nevertheless, this study is published in 1980s, which is

obsolete and no longer relevant.

There are other more recent studies that in contradiction, which showed positive relationship

between CSR and CFP. (Pedersen and Neergaard, 2007; Kotler and Lee, 2005; Baue, 2002)

Overall, there is no conflict between CSR and maximizing shareholder value, and hence

encouraging large corporations to pursuing CSR. For instance, Chiquita adopting CSR that

practising pallet recycling program, are saved more than $3 million annually and lead to good

financial performance. (Kotler and Lee, 2005)

Nonetheless, the studies and surveys can be questioned in that the costs and benefits are hard to

measure as it is differ among companies and industries. The methodology and approaches used

in the studies may vary as well, which could have confounded the results. Furthermore, even

though empirical researches show the relations between two variables, there is a possible

confusion between the correlation and causation. It is arguable that whether CSR activities

contributed to superior financial performance or vice versa.

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5.0 STAKEHOLDER THEORY

Likewise abovementioned, corporation’s objective is to maximize profits. This implies that the

organisation is responsible to the shareholders. Originator of stakeholder theory, Freeman (1984)

stated, however, corporations must also attend to the interests of stakeholders. The reason is

business depends on the stakeholders to operating and for its continued survival, which referred

to as resource-dependence theory. Hence, corporations engage in CSR activities to satisfy and

benefit all stakeholders, in order to obtain their supports to the business. (Maignan and Ferrell,

2004) Nonetheless, all this tends to demonstrate that contrary to business ethics and altruistic

moral.

5.1 Business Ethics

Another Friedman’s view is if the organization pursuing philanthropic contributions to maximize

the firm’s market value, it should not be given the label of social responsibility, but as another

corporate strategy. (Baron, 2003) Consequently, there is ambiguity and vagueness that CSR

practices should maximize the firm’s value to shareholder, or overall emphasises on the benefits

of all stakeholders, in altruistic motive. Therefore, every corporation have different perspectives

on CSR and seems paradoxical (Campbell, 2006), and this lead to the development of CSR

practices in the large corporations. Some corporations perceive CSR as strategy that integrated to

management framework in these days. (Katsoulakos and Katsoulakos, 2007; Burnell, n.d.)

Moreover, large corporations today shifted to corporate citizenship such as ExxonMobil, Ford,

Nike, Nokia and Toyota. (Lawrence and Webber, 2008)

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6.0 CONCLUSION

This literature review intends to provide the review of the empirical works done by eminent

researchers and scholars in the topic of CSR. Numerous authors have different scrutiny and

perspectives on the issues of CSR, and thus created questions and arguments. Consequently, the

concern of this literature review is to recapitulate their views and clarify the issues, which

emphasises on three parts aforementioned. In nutshell, Table 1 in Appendix provides a summary

of this literature review that presents a clearer picture of the researches conducted.

WORD COUNT: 1497

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7.0 REFERENCES AND BIBLIOGRAPHY

Books

1. Baron, D.P., 2003. Business And Its Environment. 4th ed. New Jersey: Pearson Prentice

Hall.

2. Bowen, H.R., 1953. Social Responsibilities of the Businessman. New York: Harper &

Row. p.6.

3. Carroll, A.B., 1979. A three-dimensional conceptual model of corporate social

performance. Academy of Management Review, 4, pp. 497-505.

4. Clarkson, Max B.E., 1995. A Stakeholder Framework for Analyzing and Evaluating

Corporate Social Performance. Academy of Management Review, 20 (1), pp. 92-117.

5. Freeman, R.E., 1984. Strategic management: A stakeholder perspective, Englewood

Cliffs, NJ: Prentice Hall.

6. Kotler, P. and Lee, N., 2005. Corporate Social Responsibility: Doing the most good for

your company and your cause. New Jersey: John Wiley & Sons.

7. Lantos, G. P., 2001. The boundaries of strategic corporate social responsibility. The

Journal of Consumer Marketing, 18 (7), pp. 595-639.

8. Lawrence, A.T. and Weber, J., 2008. Business and Society: Stakeholders, Ethics, Public

Policy. 12th ed. New York: McGraw Hill.

9. Matten, D. et al., 2003. Behind the mask: Revealing the true face of corporate citizenship.

Journal of Business Ethics, 45 (1-2), pp. 109-120.

10. McWilliams, A., and Siegel, D., 2001. Corporate social responsibility: A theory of the

firm perspective. Academy of Management Review, 26(1), pp. 117-127.

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11. Pedersen, E.R. and Neergaard, P., 2007. The Bottom Line of CSR: A Different View. In

Hond, F.D. et al., ed. Managing Corporate Social Responsibility in Action: Talking,

Doing and Measuring. Hampshire: Ashgate, 2007, pp. 77-91.

12. Post, J.E., 2000. Meeting the Challenge of Global Corporate Citizenship. Center

Research Report. Chestnut Hill, MA: Boston College Center for Corporate Community

Relations. p.8.

13. Whetten, D.A. et al., 2002. What are the responsibilities of business to society? In A.

Pettigrew, H. Thomas,&R. Whittington, ed. Handbook of strategy and management.

London: Sage. pp. 373-408.

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Online Sources

1. Aupperle, K.E. et al., 1985. An Empirical Examination of the Relationship between

Corporate Social Responsibility and Profitability. The Academy of Management Journal,

[online]. 28 (2), pp. 446-463. Available from: http://www.jstor.org/stable/256210 [cited

18 October 2009].

2. Baue, W., 2002. Business Ethics' 100 Best Corporate Citizens Outperform S&P 500.

[online]. Available from: http://www.goodcorporatecitizen.com/beinggood.html [cited 18

October 2009].

3. Burnell, S.H., n.d. Corporate Social Responsibility: The Business of Every Company.

[online]. Available from: http://www.forbescustom.com/DiversityPgs/CSRBusinessof

EveryCompany.html [cited 18 October 2009].

4. Campbell, J.L., 2006. Institutional Analysis and the Paradox of Corporate Social

Responsibility. American Behavioral Scientist, [online]. 49 (7), pp. 926-937. Sage.

Available from: http://abs.sagepub.com/cgi/content/abstract/49/7/925 [cited 7 October

2009].

5. CSRQuest, n.d. Carroll’s CSR Pyramid. [online]. Available from:

http://www.csrquest.net/default.aspx?articleID=13124&heading=[cited 18 October

2009].

6. deBakker, et al., 2005. A Bibliometric Analysis of 30 Years of Research and Theory on

Corporate Social Responsibility and Corporate Social Performance. Business & Society,

[online]. 44 (3), pp.283-317. Sage. Available from: http://bas.sagepub.com/cgi/content/

abstract/44/3/283 [cited 6 October 2009].

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7. Friedman, M., 1970. The Social Responsibility of business is to increase its profits. New

York Times Magazine. [online]. pp.32 -33. Available from: http://www.goodyear.com.my

/social_responsibility.html [cited 6 October 2009].

8. Hockerts, K. and Morsing, M., 2009. A literature Review on Corporate Social

Responsibility in the Innovation Process. Copenhagen Business School (CBS), Center for

Corporate Social Responsibility. [online]. pp. 4-7. Available from:

http://www.designforum.fi/files/dff/Projektit/Literature_review_on_CSR_driven_innovat

ion.pdf [cited 27 September 2009].

9. Katsoulakos, T. and Katsoulakos, Y., 2007. Strategic management, corporate

responsibility and stakeholder management integrating corporate responsibility principles

and stakeholder approaches into mainstream strategy: a stakeholder-oriented and

integrative strategic management framework. [Online]. 7(4), pp.355-369. Emerald.

Available from http://www.csrquest.net/uploadfiles/4CR%20C2.pdf [cited 20 October

2009].

10. Maignan, I. and Ferrell, O.C., 2004. Corporate Social Responsibility and Marketing: An

Integrative Framework. Journal of the Academy of Marketing Science, [online]. 32 (1),

pp. 3-19. Sage. Available from: http://jam.sagepub.com/cgi/content/abstract/32/1/3 [cited

7 October 2009].

11. Sriramesh, K. et al., 2009. Corporate Social Responsibility and Public Relations:

Perceptions and Practices in Singapore. [online]. Available from:

http://www.allacademic.com/meta/p91926_index.html [cited 27 September 2009].

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12. Visser, W., 2005. Revisiting Carroll’s CSR Pyramid: An African Perspective. [online].

Available from: http://www.waynevisser.com/chapter_wvisser_africa_csr_pyramid.pdf

[cited 15 October 2009].

13. Whitehouse, L., 2003. Corporate Social Responsibility, Corporate Citizenship and the

Global Compact: A New Approach to Regulating Corporate Social Power? Global Social

Policy, [online]. 3 (3), pp. 299-318. Sage. Available from: http://gsp.sagepub.com/

cgi/content/abstract/3/3/299 [cited 7 October 2009].

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8.0 APPENDIX

Phases of Corporate Social Responsibility

CSR 1 Corporate Social Stewardship

1950s – 1960s Corporate philanthropy – acts of charity

Managers as public trustee – stewards

Balancing social pressures

CSR 2 Corporate Social Responsiveness

1960s – 1970s Social-impact analysis

Strategic priority for social response

Organizational redesign and training for responsiveness

Stakeholder mapping and implementation

CSR 3 Corporate / Business Ethics

1980s – 1990s Foster an ethical corporate culture

Establish an ethical organizational climate

Recognize common ethical principles

CSR 4 Corporate / Global Citizenship

1990s – 2000s Stakeholder partnerships

Integrate financial, social, and environmental performance

Identify globalization impacts

Sustainability of company and environment

Figure 1 Evolving Phases of Corporate Social Responsibility

Source: Adapting form William C. Frederick, 2006. Corporation Be Good! The Story of
Corporate Social Responsibility. (Cited in Lawrence and Weber, 2008, p.59)

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Figure 2 Developments in CSR-related Concepts

Source: Mohan, 2003. Strategies for the management of complex practices in complex
organizations: A study of the transnational management of corporate responsibility. (Cited in
deBakker et al., 2005, p. 288)

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Figure 3 Carroll’s CSR Pyramid

Source: CSRQuest, 2009. Available from: http://www.csrquest.net/default.aspx?articleID=1

3124&heading=

Table 1 Summary of literature review

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Topic Statement/ Citation/ Comments/ Arguments References

Definition of CSR as the obligation “to pursue those policies, to make Bowen (1953,
CSR (The term those decisions, or to follow those lines of action which p.6)
broad society has are desirable in terms of the objectives and values of our
altered to society.”
narrowed term of
The social responsibility of business encompasses the Carroll (1979,
stakeholders)
economic, legal, ethical, and discretionary expectations p.500)
that society has of organizations at a given point in time.

Actions that appear to further some social good, beyond McWilliams and
the interests of the firm and that which is required by Siegel (2001,
law. p.117)

Societal expectations of corporate behavior; a behavior Whetten et al.

that is alleged by a stakeholder to be expected by society (2002, p.374)
or morally required and is therefore justifiably demanded
of a business.

Definition of Global corporate citizenship is the process of identifying, Post (2000, p.8)
global corporate analyzing, and responding to the company’s social,
citizenship (CC) political, and economic responsibilities as defined
through law and public policy, stakeholder expectations,
and voluntary acts flowing from corporate values and
business strategies. Corporate citizenship involves actual
results (what corporations do) and the processes through
which they are achieved (how they do it).

The term of CC overlaps largely with the concept of Sriramesh et al.

CSR, and the parameter of CC is identical to what CSR (2009)
comprises.

Corporate citizenship is a successor to corporate social Matten et al.

responsibility. (2003)

Corporate citizenship should be viewed, not as a Whitehouse

replacement for CSR, but as a complement to it. (2003, p.299)

Frederick’s CSR Comprises four simple phases that begun since 1950s. Lawrence and
model Nevertheless, the model is not complete that omits the Weber (2008)
findings in year 1970s – 1980s. This model is useful as

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general guidelines to understand the evolvement of CSR.

Mohan’s model Mohan’s model fills the blind spot of Frederick’s model. deBakker et al.
It is more convincing than the first model since it shows (2005)
the evolvement throughout the years. However, the
model comprises too many terms that lead to more
complicated and become myriad.

Carroll’s CSR Carroll provides a clearer hierarchy of CSR that CSRQuest

Pyramid performed in a pyramid. The earliest model was in 1970s (2009)
and reformulated in year 1991 and 2004. This is due to
the changes and development of circumstances and
globalization.

Visser critics the Carroll’s CSR pyramid as the model did Visser (2005)
not fit to all contexts, as he uses Africa context to support
his arguments.

Economic The main role of business is to maximize profits and Smith (1863);
Approach market value. Friedman (1970)

CSR and CFP relationship:

CSR practices did not have any relationship with the Aupperle (1985)
corporation’s financial performance.
Pedersen &
There are studies shows the positive relationship between Neergaard
CSR and financial performance. (2007); Kotler
and Lee (2005);
Baue ( 2002)

Stakeholder Corporations engage in CSR activities to satisfy and Maignan and

Approach benefit all stakeholders, in order to obtain their supports Ferrell (2004)
to the business – resource-dependence theory

CSR strategy that aim to maximize market value should Friedman (1970)
distinguished from altruistic or morally CSR.

Some corporations perceived CSR as strategy that Katsoulakos

integrated to management framework in these days. (2007)

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