Does Corporate Social Responsibility rest on a mistake?

Dr Paul Griseri Middlesex University Business School

The aim of this lecture

To critique Corporate Social Responsibility (CSR) on the basis that it mistakenly attributes moral values to institutions

Key steps in the argument

Corporate Social Responsibility (CSR) distinguished from Business Ethics (BE) Trend of studies in this area to treat CSR independently of BE BE addresses moral values in relation to individual people (correctly) CSR only gains plausibility when the organisation is seen in metaphorical not literal terms

Definitions
BE - the application of philosophical and socialpsychological concepts to business dilemmas and practices CSR - the study of business strategy in relation to the firms impact on and contribution to society as a whole

Are these two different disciplines?

BE - origins in behavioural and philosophical studies; more individually focussed
CSR - origins in strategic management theory; more firm-wide focus BUT . Both fields require an understanding and acceptance of social/moral values, and apply these to business situations

Key assumptions behind BE and CSR

universal applicability of values market basis to economy social model of the firm Idea of a responsible action

General criticisms of BE and CSR

Ethics - assumptions CSR in the face of globalisation Limitations of market theory

Assumptions of philosophical theories of ethics

That there is an underpinning common stock of value judgements Foundationalism - the idea that this stock is explained by reference to a set of statements or a basic model BUT Variations in values at individual and collective levels Failure to find a single model or principle that explains all value judgements

Globalisation - the reality

Macdonaldisation or US imperialism in soft focus Fully functioning capitalism as the aspiration of most developing nations Social dumping - the choice of the weaker economy

Limitations to markets
Larger corporations dont want free markets
Relative balance of power between major global firms and governments

Government intervention

Is CSR necessary?
The social responsibility of business is to increase its profits
Milton Friedman (1970), economist

Not anti-society, but locates responsibility as a governmental and individual area, NOT a corporate one

Key concepts of CSR

Stakeholder Theory

Sustainability Corporate social performance

Corporate citizenship

Characteristic phenomena handled in CSR discussions

Corporate giving/philanthropy Human rights abuses Pollution Poverty

Characteristic phenomena handled in BE discussions

Bribery and corruption Corporate Governance Integrity and trust Honesty Whistleblowing

Are corporations different?

Models of organisation A machine or black box A legal person A little nation

The idea of an action

A co-ordination of beliefs and needs/wants which define the arena for acting and its purposes A process of deliberation carried out by the agent, potentially in consultation with others A choice - identifiable with some form of assent by an agent A series of movements that comprise the material embodiment of the action A commitment to being identified as the cause of the consequences of the act

co-ordination of beliefs and needs/wants

Idea of a single summation of needs or wants In practice choices arise out of a compromise between different competing interests

process of deliberation
Wide variations between corporations in how decisions are made Deliberation suggests a well formed rational mechanism Decision making is often as much about political manoeuvering as it is about working out what is the best solution

choice - identifiable with some form of assent by an agent

Emergence and implementation drift undermine possibility of a conscious assent Sometimes no one person knows exactly what has happened - there are too many aspects Multiple contributions to a strategic choice mean that often no one individual or group could be said to have chosen what happened

Responsibility - commitment to being identified as the cause of the action

Multiple contributors to the action Multiple environments that undermine the idea of informed choice Long stretched out supply chains that diminish control

Carrolls model of corporate social responsibility

Philanthropic Responsibilities Ethical Responsibilities Legal Responsibilities Economic Responsibilities
Source: Carroll (1991)

Stakeholder theory (Freeman)

Government Competitors

Shareholders Firm Suppliers

Customers

Employees Civil society

source: Crane and Matten

Typologies of stakeholders salience

Degree of exposure to corporate failures Amount of knowledge of organisational processes Influence over decisionmaking

Shortcomings of stakeholder theory

How many different kinds of investor are there? How many different kinds of worker? How many different kinds of customer?

Shortcomings of stakeholder theory

A philosophical issue
use of a noun - existence of a thing convenience for attributing values and judgements - e.g. the firm is right/wrong, the organisation is virtuous, the corporation is psychotic (?)

How can we call an organisation a thing?

Convenient summary - a rough target
Reflecting the legal definition - a point to aim at for litigation

Expressing the experience of community

What space does an organisation occupy?

Discursive spaces for stakeholders to be involved in decisions Operational spaces to create and deliver services Distinct areas for specific functions, departments, with their own rivalries and perspectives In other words, an organisation is not a point but a volume, with different areas that are not homogenous with respect to strategy or culture

Anatomising a corporate decision

Roles of different stakeholders - investors, government, customers, employees, directors Time periods over which a decision happens - initial deliberation, leading to a formally expressed choice, which is put into practice by a range of organisational members In other words, a corporate decision is not an act, but a process undulating over time

Example: crisis of the subprime mortgage market

Players - investors, directors, salespeople, financial compliance officers, legal officers, marketing and PR managers Process of developing the policy - bright idea, evaluation and refinement, design, piloting, roll-out emergent amendments to the policy as it is implemented widely, implementation drift Feedback slowly filters through to senior management; not necessarily the whole truth

The corporation as a social player

Society is a construct to help us understand how citizens can collectively take decisions that meet their needs
Implication of a range of free agents who participate voluntarily in decision making

The corporate citizen - should they have voting rights?

The idea of society as defining CSR

Pluralist, elective representational politics Possibility to collect together divergent values as a totality of expectation Idea that business and society are separate and have different aims

In short
Moral values are attached to human deeds Corporations are not humans, and their collective activities do not resemble human choices in ways that are relevant to moral evaluation

Finally
Any questions? Comments?

Some illustrative literature

A Crane, D Matten Business Ethics OUP 2007 M Blowfield, A Murray Corporate Responsibility: A Critical Introduction OUP 2008 P Griseri, N Seppala Business Ethics and Corporate Social Responsibility Cengage (forthcoming) 2010
Journal of Business Ethics Business Ethics Quarterly Business and Society