Corporate social responsibility: in a global context

C h a p t e r 1
Corporate social responsibility:
in a global context
IN THIS CHAPTER WE WILL:
● Examine the rise to prominence of corporate social responsibility
● Analyze different definitions of corporate social responsibility
● Outline six core characteristics of corporate social responsibility
● Explore corporate social responsibility in different organizational contexts
● Explore corporate social responsibility in different national contexts
● Explain the approach to corporate social responsibility adopted in the rest of
the book
Introduction: the recent rise of CSR
The role of corporations in society is clearly high on the agenda. Hardly a day goes
by without media reports on corporate misbehaviour and scandals or, more positively,
on contributions from business to wider society. A quick stroll to the local cinema
and films such as Inside Job, Margin Call, and Wall Street 2, reflect a growing
interest among the public in the impact of corporations on contemporary life.
Corporations are clearly taking up this challenge. This began with ‘the usual
suspects’ such as companies in the oil, chemical, and tobacco industries. As a result
of media pressure, major disasters, and sometimes governmental regulation, these
companies realized that propping up oppressive regimes, being implicated in human
rights violations, polluting the environment, or misinforming and deliberately harming
their customers, just to give a few examples, were practices that had to be recon-
sidered if they wanted to survive and prosper. Today, however, there is virtually no
industry, market, or business type that has not experienced increasing demands to
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legitimate its practices to society at large. For instance, banking, retailing, tourism,
food and beverages, entertainment, and healthcare industries – for long considered
to be fairly ‘clean’ and uncontroversial – now all face increasing expectations that
they institute more responsible practices.
In the context of the global economic crisis, which began in 2008 and rever-
berated for a number of years thereafter, questions regarding the responsibilities of
business have moved still further to the fore of the media, political and public interest
The focus here has been on financial institutions primarily, whose imprudent practice
are largely held to blame for igniting a wave of economic recession. As governments
bailed out failing businesses and popular protests such as ‘Occupy Wall Street’
spread globally, companies in the financial sector faced a new era of scrutiny of their
values, goals, and purpose.
Companies have responded to this agenda by advocating what is now a
common term in business: corporate social responsibility. More often known simply
as CSR, the concept of corporate social responsibility is a management idea that
has risen to unprecedented popularity throughout the global business community
during the last decades. Most large companies, and even some smaller ones, now
feature CSR reports, managers, departments, or at least CSR projects, and the
subject is increasingly promoted as a core area of management, next to marketing,
accounting, or finance.
If we take a closer look at the recent rise of CSR, some might well argue that
this ‘new’ management idea is little more than a recycled fashion, or as the old saying
goes, ‘old wine in new bottles’. And, in fact, one could certainly suggest that some
of the practices that fall under the label of CSR have indeed been relevant business
issues at least since the Industrial Revolution. Ensuring humane working conditions,
providing decent housing or healthcare, and donating to charity are activities that
many of the early industrialists in Europe and the US were involved in – without
necessarily shouting out about them in annual reports, let alone calling them CSR.
The involvement of business in social issues is not the prerogative of the West. In
India, for example, companies such as Tata can pride themselves on more than
100 years of responsible business practices, including far-reaching philanthropic
activities and community involvement (Elankumaran et al, 2005). What we discover
then in the area of CSR is that while many of the individual policies, practices, and
programmes are not new as such, corporations today are addressing their role in
society far more coherently, comprehensively, and professionally – an approach that
is contemporarily summarized by CSR.
As well as the rise to prominence of CSR in particular companies, we have also
witnessed the emergence of something like a CSR ‘movement’. There has been a
mushrooming of dedicated CSR consultancies, all of which see a business oppor-
tunity in the growing popularity of the concept. At the same time, we are witnessing
a burgeoning number of CSR standards, watchdogs, auditors, and certifiers aiming
at institutionalizing and harmonizing CSR practices globally. More and more industry
associations and interest groups have been set up in order to coordinate and create
synergies among individual business approaches to CSR. Meanwhile, a growing
number of dedicated magazines, newsletters, social media and websites not only
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contribute to providing an identity to CSR as a management concept, but also help
to build a worldwide network of CSR practitioners, academics, and activists.
Defining CSR: navigating through the jungle of definitions
In the context of such an inexorable rise to prominence of CSR, the literature on the
subject, both academic and practitioner, is understandably large and expanding.
There are now thousands of articles and reports on CSR from academics,
corporations, consultancies, the media, NGOs, and government departments; there
are innumerable conferences, books, journals, and magazines on the subject; and
last, but not least, there are literally millions of web-based formal and social media
contributions dealing with the topic from every conceivable interest group with a
stake in the debate.
How then to best make sense of this vast literature so as to construct a coherent
account of what CSR actually is? After all, few subjects in management arouse as
much controversy and contestation as CSR. For this reason, definitions of CSR
abound, and there are as many definitions of CSR as there are disagreements over
the appropriate role of the corporation in society. Hence there remains a lack of
consensus on a definition for CSR (Lindgreen & Swaen, 2010). The CSR page on
Wikipedia, the online encyclopaedia, has been in more or less permanent dispute
since 2007 (Ethical Performance, 2007) and continues to be challenged for its
neutrality.
Table 1.1 provides just a few examples of the many different ways that CSR is
described and defined by different organizations across the globe. As this clearly
shows, there are some similarities in the way that different actors understand CSR,
as well as considerable differences. Moreover, although we often look to academic
research to provide clarity among so much ambiguity, this diversity is also reflected
in scholarly definitions of CSR. For example, one early writer on CSR, Keith Davis
described CSR as ‘the firm’s consideration of, and response to, issues beyond
the narrow economic, technical, and legal requirements of the firm’ (Davis, 1973),
while a few years later Archie Carroll (1979) defined it much more broadly to include
exactly those elements that Davis excluded: ‘the social responsibility of business
encompasses the economic, legal, ethical, and discretionary expectations that
society has of organizations at a given point in time.’
This heterogeneity in CSR definitions has continued unabated. While the Carroll
definition given above is arguably the most commonly cited one, it remains contested,
as we will see later in Chapter 3. Therefore, others have taken a different route and
rather than specify particular responsibilities, have offered more general definitions
that seek to include the different opinions on CSR that are evident across the
literature, and across practice. For instance, Brown and Dacin (1997) define CSR
as a company’s ‘status and activities with respect to its perceived societal or, at
least, stakeholder obligations’, while Matten and Moon (2008) suggest that CSR
‘empirically consists of clearly articulated and communicated policies and practices
of corporations that reflect business responsibility for some of the wider societal
C S R I N A G L O B A L C O N T E X T5
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Visit the
companion
website for
links to CSR
organizations,
interest groups
and web
forums
CWS 1.1
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6 U N D E R S T A N D I N G C S R
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Table 1.1:CSR definitions
Name of the Type of Definition Source
organization organization
International Non- CSR as a way in which enterpriseswww.ilo.org/
Labour governmentalgive consideration to the impact ofwcmsp5/groups/
Organization organization their operations on society and public/---ed_
(international)affirm their principles and valuesemp/---emp_
both in their own internal methodsent/---multi/
and processes and in their documents/
interaction with other actors. publication/wcms
_116336.pdf
Corporate NGO Corporate Social Responsibility CORE (2011)
Responsibility coalition (CSR) has been promoted by
Coalition (UK) business as a way of realising its
(CORE) ‘social responsibilities’ beyond
making a profit for its shareholders.
In contrast to this view, NGOs and
trade unions tend to dismiss CSR as
a public relations tool at best, and at
worst a means for corporations to
avoid the creation of regulatory and
legal mechanisms as a means of
ensuring that they adhere to
acceptable standards of conduct.
Grameen Social Businesses are identifying themselves Yunus & Weber
Bank enterprise with the movement for Corporate(2009)
(Bangladesh) Social Responsibility (CSR), and
are trying to do good to the people
while conducting their business.
But profit-making still remains
their main goal, by definition.
Though they like to talk about
triple bottom lines of financial,
social, and environmental benefits,
ultimately only one bottom line
calls the shot: financial profit.
General Business GE businesses depend on the www.ge
Electric organization infrastructure, skills and institutionscitizenship.com/
(US) of stable, prosperous societies andabout-citizenship/
healthy environments. To succeed as
a global business, we need to be a
part of building these societies where
we operate. We do this through the
products and services we create, the
way we work with employees,
customers, suppliers and investors,
the public policies we advocate and
the philanthropic partnerships we
support.
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C S R I N A G L O B A L C O N T E X T7
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Table 1.1:Continued
Name of the Type of Definition Source
organization organization
Tata Business Jamsetji Tata and those who followedwww.tata.com/
organization in his immediate wake set the CSRpdf/COH_2009/
(India) mandate for Tata companies: to lookcoh_foreword.pdf
beyond the generation of products
and profits to serving the communities
in which they functioned.
Foreign GovernmentalCorporate Social Responsibility (CSR)www.
Affairs and organization is defined as the way companies international.gc.
International (Canada) integrate social, environmental, andca/trade-
Trade economic concerns into their valuesagreements-
and operations in a transparent andaccords-
accountable manner. It is integral tocommerciaux/ds/
long-term business growth and csr.aspx?view=d
success, and it also plays an
important role in promoting
Canadian values internationally
and contributing to the sustainable
development of communities
Chinese GovernmentalA concrete action taken by Chinesewww.ethicalcorp.
Ministry of organization companies to implement the politicalcom
Commerce (China) aspiration of the new Communist
Party collective leadership – putting
people first to create a harmonious
society
Department GovernmentalThe voluntary actions that businessBERR (2009)
for Business, organization can take, over and above compliance
Innovation (UK) with minimum legal requirements,
and Skills to address both its own competitive
interests and the interests of wider
society.
MVO Nederland NGO The Corporate Social Responsibilitywww.
(CSR (Netherlands)approach means that the companymvonederland.nl/
Netherlands) takes responsibility for the effects ofcontent/pagina/
the business’ activities on people andwat-mvo
the environment. The company makes
conscious choices in order to find a
balance between People, Planet and
Profit. Businesses can even go a step
further and focus on new market
opportunities, growth and innovation
with a view to profiting people, society
and the environment. Voluntary
commitment to society.
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8 U N D E R S T A N D I N G C S R
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Table 1.1:Continued
Name of the Type of Definition Source
organization organization
Nike Business It’s not just about getting better athttp://nikeinc.
organization what we do – addressing impactscom/pages/
(US) throughout our supply chain – it’sresponsibility
about striving for the best, creating
value for the business and innovating
for a better world.
World Business We believe that corporate global www.weforum.
Economic association citizenship is fundamentally in theorg/issues/
Forum (International)enlightened self-interest of globalcorporate-global-
corporations since their growth, citizenship
prosperity and sustainability is
dependent on the state of the global
political, economic, environmental
and social landscape.
European GovernmentalThe responsibility of enterprises forCommission of
Commission organization their impacts on society. the European
(EU) Corporate social responsibility Communities
concerns actions by companies over(2011)
and above their legal obligations
towards society and the environment.
Certain regulatory measures create
an environment more conducive to
enterprises voluntarily meeting their
social responsibilities.
World Bank International Corporate Social Responsibility http://info.world
organization (CSR) is the commitment of bank.org/etools/
(international)business to contribute to sustainabledocs/library/
economic development, working with57434/public
employees, their families, the localpolicy_
community and society at large toeconference.pdf
improve quality of life, in ways that
are both good for business and good
for development
Business for Not-for-profit Business decision making linked towww.forensic
Social business ethical values, compliance with legalsolutions.info/
Responsibility association requirements, and respect for people,page20.html
(US) communities, and the environment
around the world.
CSR Asia Social We believe CSR is a company’s www.csr-
enterprise commitment to operating in an asia.com
(Asia) economically, socially and
environmentally sustainable
manner whilst balancing the
interests of diverse stakeholders.
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good. Yet the precise manifestation and direction of the responsibility lie at the
discretion of the corporation.’
In this book, we will not seek to simply follow one of these definitions, nor will
we provide a new improved one that will simply add to the complex jungle of CSR
definitions. In the contested world of CSR, it is virtually impossible to provide a
definitive answer to the question of what CSR ‘really’ is. Therefore, our intention is
to identify some core characteristics of the CSR concept, which we hope will help
to delineate its essential qualities, and will provide a focus for the definitional debates
that continue to surround the subject.
Core characteristics of CSR
The core characteristics of CSR are the essential features of the concept that tend
to get reproduced in some way in academic or practitioner definitions of CSR. Few,
if any, existing descriptions will include all of them, but these are the main aspects
around which the definitional debates tend to centre. Six core characteristics are
evident (see Figure 1.1):
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Voluntary
Beyond
philanthropy
Managing
externalities
CSR
Practices and
values
Social and
economic
alignment
Multiple
stakeholder
orientation
Figure 1.1:Core characteristics of CSR
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10 U N D E R S T A N D I N G C S R
Voluntary
Many characterizations of CSR typically see it as being about voluntary activities
that go beyond those prescribed by the law. The Dutch group MVO Nederland (CSR
Netherlands) and the UK government follow this line. Although the Business for
Social Responsibility definition emphasizes CSR as legal compliance, many
companies are by now well-used to considering responsibilities beyond the legal
minimum, and in fact the development of self-regulatory CSR initiatives from industry
is often seen as a way of forestalling additional regulation as the NGO coalition
CORE argues. The case of companies such as McDonald’s, KFC, Pret A Manger,
and Pizza Hut agreeing in 2011 to introduce calorie labelling in the UK on out-of-
home food and beverage items (as part of a Department of Health voluntary
programme) is a good example of such a CSR initiative that has arguably been
introduced to head off potential regulatory action – such as New York’s mandatory
calorie labelling on menus introduced in 2008 (Triggle, 2011).
Critics of CSR, therefore, tend to see the element of voluntarism as CSR’s major
flaw, arguing that legally mandated accountability is where attention should really be
focused, as the CORE definition demonstrates.1 There are some indications,
however, of a shifting tide in this respect. The EU, for example, has revised its defi-
nition of CSR from ‘a concept whereby companies integrate social and environmental
concerns in their business operations and in their interaction with their stakeholders
on a voluntary basis’ (Commission of the European Communities, 2002) to
acknowledging the role that the legislative environment can make in enabling CSR
(Commission of the European Communities, 2011).
Internalizing or managing externalities
Externalities are the positive and negative side-effects of economic behaviour that
are borne by others, but are not taken into account in a firm’s decision-making
process, and are not included in the market price for goods and services. Pollution
is typically regarded as a classic example of an externality since local communities
bear the costs of manufacturers’ actions. Regulation can force firms to internalize
the cost of the externalities, such as pollution fines, but CSR would represent a more
voluntary approach to managing externalities, for example by a firm investing in clea
technologies that prevent pollution in the first place. Much CSR activity deals with
such externalities (Husted & Allen, 2006), including the management of human rights
violations in the workforce, minimizing carbon emissions, calculating the social and
economic impacts of downsizing, or reducing the health impacts of ‘toxic’ or other-
wise dangerous products, etc. For example, a study commissioned by the Egg
Corporation of Australia in 2011 maps out the carbon footprint of cage eggs
compared with free-range eggs, and other protein sources such as pork and beef.2
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Multiple stakeholder orientation
CSR involves considering a range of interests and impacts among a variety of
different stakeholders other than just shareholders. The assumption that firms have
responsibilities to shareholders is usually not contested, but the point is that because
corporations rely on various other constituencies such as consumers, employees,
suppliers, and local communities in order to survive and prosper, they do not only
have responsibilities to shareholders. While many disagree on how much emphasis
should be given to shareholders in the CSR debate, and on the extent to which other
stakeholders should be taken into account, it is the expanding of corporate respon-
sibility to these other groups that characterizes much of the essential nature of CSR,
as illustrated by the CSR Asia definition in Table 1.1. We will discuss stakeholder
management in much more depth in Chapter 4
Alignment of social and economic responsibilities
This balancing of different stakeholder interests leads to a fourth facet. While CSR
may be about going beyond a narrow focus on shareholders and profitability, many
also believe that it should not, however, conflict with profitability. Although this is
much debated, many definitions of CSR from business and government stress that
it is about enlightened self-interest where social and economic responsibilities are
aligned. See, for example, the definitions of the Canadian Foreign Affairs and
International Trade, and General Electric. This feature has prompted much attention
to the business case for CSR – namely, how firms can benefit economically from
being socially responsible.
Practices and values
CSR is clearly about a particular set of business practices and strategies that deal
with social issues, but for many people it is also about something more than that –
namely a philosophy or set of values that underpins these practices. This perspective
is evident in both the BSR and Chinese Government definitions of CSR given in
Table 1.1. The values dimension of CSR is part of the reason why the subject raises
so much disagreement – if it were just about what companies did in the social arena,
it would not cause so much controversy as the debate about why they do it.
Beyond philanthropy
In some regions of the world, CSR is mainly about philanthropy – i.e. corporate
largesse towards the less fortunate. But the current debate on CSR has tended to
emphatically claim that ‘real’ CSR is about more than just philanthropy and com-
munity giving, but about how the entire operations of the firm – i.e. its core business
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functions – impact upon society. Core business functions include production, mar-
keting, procurement, human resource management, logistics, finance, etc. This
debate rests on the assumption that CSR needs to be integrated into normal
business practice rather than being left simply to discretionary activity. The attempt
to consider how CSR might be ‘built in’ to the core business of firms as opposed
to ‘bolted on’ as an added extra has become a major theme in the CSR practitioner
world (Grayson & Hodges, 2004). According to Wayne Visser (2010), for example,
CSR needs to become the ‘new DNA’ of business.
These six core characteristics, we would suggest, capture the main thrust of
CSR. However, as we will now discuss, the meaning and relevance of CSR will vary
according to organizational and national context.
CSR in different organizational contexts
The variety of definitions and perspectives on CSR discussed in the previous section
is partly credited to the fact that CSR is practised in a broad range of different
organizational contexts. In the following we will explore these contexts by analysing
the role and relevance of CSR in all three main sectors of modern economies, i.e.
the private sector, the public sector, and the civil society or third sector (including
non-governmental organizations, social enterprises, charities). It should be noted
that there is an issue of terminology here, since the ‘corporate’ aspect of CSR does
not in a literal sense apply to small businesses, public sector organizations, NGOs
and the like, but the acronym is nevertheless commonly used in a generic sense and
we continue to do so here.3
CSR and the private sector
The main arena of CSR, as indicated by the ‘corporate’ in CSR, is the business
world. Within that arena, however, we have a plethora of different types, industries
and organizational forms. In the following section, we will have a look at one of the
main distinctions, namely between large corporations and small- and medium-sized
enterprises (SMEs) – see Table 1.2.
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Table 1.2:Differences in CSR among large and small firms
Large firms Small firms
Formalization of CSRFormal, bureaucratized Informal
Main actors in CSR Shareholders, external Owner-manager, employees
stakeholders
Aims of CSR Build corporate brand andBuild trust, networks and
manage public legitimacypersonal relations
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Arguably, the language of corporate social responsibility indicates that CSR is
predominantly a concept that applies to large corporations, typically owned by
shareholders and run by employed managers. Certainly the seminal contributions
on CSR, as discussed in Chapters 2 and 3 of this book, conceive CSR against the
backdrop of these large corporations. Therefore, as entities in which ownership and
control are separated (Berle & Means, 1932), one of the prominent issues for thinking
about CSR in the context of large corporations is the question of whose interest the
company should be run on behalf of by managers: just the interests of the owners
or also the interests of society at large, represented by different groups such as
customers, employees or local communities?
One could also argue that large corporations are far more visible and thus far
more vulnerable to criticism from the public than smaller firms (Spence, 2007). A
large company that wants to behave socially responsibly therefore may well have
formal policies on its responsibilities and how these are managed. On the whole,
then, CSR in large corporations typically results in a fairly structured and formalized
approach. CSR policies will be translated into codes of conduct for employees or
suppliers; there will normally be committees and managers responsible for CSR;
and many large companies involved in CSR will document their engagement in a
dedicated annual report. In such a report, the corporation discharges accountability
for how exactly they have dealt with different interests and expectations of society.
If we turn to SMEs, however, we will find a rather different picture, with evidence
suggesting that they tend not to communicate externally about their CSR activities
(Nielsen & Thomsen, 2009). There are a number of reasons that account for these
differences (see Spence, 1999). First, SMEs are informal in nature, lacking the need
for bureaucratic systems and structures due to the advantages of small size and the
proximity of business partners and stakeholders. All business systems, including
CSR, are rather informal and ad hoc in nature as opposed to the structured,
formalized and codified approach of large corporations.
Second, unlike large corporations – who, due to size and branding, are often
quite visible and vulnerable to criticism – SMEs are generally rather invisible and fall
under the radar of wider society. Their key relationships with society are the personal
relations developed between the owner/manager and, for instance, his or her
employees, suppliers, customers, or neighbours. These personal relations, however,
are of crucial importance to the SME and therefore much of what we could identify
as CSR in this context is targeted at building good personal relations, networks, and
trust (Spence & Schmidpeter, 2002).
Third, the common owner-managed nature of the small firm means that there is
no separation of ownership and control, unlike in publicly traded large firms.
Accordingly, managers are not obliged to serve shareholders or seek to maximize
their return on investment. Owner-managers typically enjoy the autonomy of running
their own firm and are not seeking to maximize profit as their reward (Spence &
Rutherfoord, 2001). This frees them to invest time and resources according to their,
and importantly their employees’ (seen as key stakeholders) interests. As noted
above, however, the CSR activities embedded in the firm are not reflected in external
reporting. Nielsen & Thomsen (2009) capture this paradox poetically, ‘SMEs have
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no interest in turning their local and authentic practice into a forced marketing and
branding exercise.’
Overall, it is probably fair to say that given the importance of SMEs, which in
much of the world account for the majority of private sector employment and GDP
in their countries, the CSR literature has so far paid disproportionate attention to
larger organizations (Morsing & Perrini, 2009). This gap in research is highlighted
further where family businesses – also a majority form in the private sector and
relevant to both large and small firms – are taken into account. A range of issues
related to the mixing of public and private objectives and the influence of succession
issues and family legacy have important impacts on CSR which are yet to be fully
understood (Mitchell et al, 2011).
CSR and the public sector
At first sight, one would not necessarily expect CSR to be an issue for public sector
organizations, such as government ministries, agencies or local administrative bodies
After all, it is ‘corporate’ social responsibility. However, in most industrialized
countries, governments still supply a large amount of all goods and services, some-
where between 40–50 per cent of the GDP in many countries. Consequently, the
same demands made upon corporations to conduct their operations in a socially
responsible fashion are increasingly applied to public sector organizations as well.
For example, public sector organizations face the similar environmental demands,
similar claims for equal opportunities for employees, and similar expectations for
responsible sourcing as do private companies. Consequently, we increasingly find
public sector organizations adopting CSR policies, practices and tools very similar
to those found in the private sector.
In some ways, these demands for social responsibility in the public sector could
be considered more pronounced due in part to the public service ethos (Van der
Wal et al, 2008). Public organizations, such as schools, hospitals, or universities,
by definition have social aims and are mostly run on a not-for-profit basis. This
establishes the social dimension of their responsibility at the core of their operations.
Furthermore, given the size of many public bodies and agencies, as well as their
quasi-monopolistic position in many areas of services, they are likely to have an
impact on society that is often far beyond the impact of a single large corporation.
Consequently, the claim for responsible behaviour on the part of public bodies has
grown, as has the demand for greater accountability to society in the public sector.
Just as private sector companies are exhorted to become more accountable in their
reporting and communication to the public, so we now witness a steady rise in the
use of typical CSR instruments, such as social auditing and reporting, by public
bodies (Ball, 2004). The United States Postal Service, for example, has been
publishing social responsibility and sustainability reports since 2008.4
Apart from incorporating CSR into their own operations, many government
organizations also take an active role in promoting CSR within their sphere of
influence, including going beyond their borders. For example, the Sino-German CSR
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project is the first bilateral project of its kind to focus exclusively on CSR in China.
One of the major objectives of the project is to strengthen key government institutions
in their efforts to improve framework conditions for CSR in China.5
A similarly pronounced role in promoting CSR has been adopted by the
European Union. In a part of the world where CSR is still largely considered a novel,
Anglo-Saxon idea, the European Commission has invested considerable effort in
defining and promoting CSR in Europe, convening a multi-stakeholder dialogue
which resulted in a widely discussed White Paper in 2002 (Commission of the
European Communities, 2002) and a new CSR strategy in 2011 (Commission of
the European Communities, 2011). We will discuss in more depth the broader role
of government in CSR in Chapter 11.
CSR and civil society organizations
Intractably linked to the rise of CSR is the role of civil society organizations (CSOs).
These non-governmental organizations (NGOs) have primarily social goals and may
include social enterprises, charities, and community organizations. The sector is also
sometimes called the third sector (alongside the private and the public) or the not-for-
profit sector. Many of the initial demands for more responsible business behaviour –
such as the protection of the environment, improvements in working conditions in
sweatshops in the developing world, or prevention of human rights violations in
countries with oppressive regimes – have been brought to the attention of the wider
public by CSOs such as Greenpeace, Save the Children, or Amnesty International.
Traditionally then, the role of NGOs in the CSR arena has been more that of a police
officer or watchdog, a constant critic exposing corporate misbehaviour and mobilizing
pressure against allegedly irresponsible practices. This role continues to be an impor-
tant function of those CSOs whose skills in raising awareness and publicly exposing
corporations can be such a major reputational risk for ‘responsible’ companies.
Increasingly, however, companies have responded to these challenges and
have tried to take on board the criticisms of CSOs. In a considerable number of
cases, this has resulted in a changing relation between business and CSOs: rather
than just being critic and opponent, CSOs have also built partnerships with business
in order to contribute to more socially responsible behaviour on the part of cor-
porations. Although such relationships are not without their challenges (Jamali &
Keshishian, 2009), within these partnerships, corporations can bring their consid-
erable financial resources to the table while CSOs can offer their expertise and public
legitimacy, among other things (Elkington & Fennell, 2000). Moreover, a number
of broader industry- or countrywide standards for responsible corporate behaviour
have emerged from business-CSO partnerships. A prominent example here is the
Marine Stewardship Council,6 a set of rules and practices for sustainable fisheries,
which was initially set up by the NGO Worldwide Fund for Nature (WWF) and
the company Unilever (Clay, 2005). Indeed, many of the voluntary approaches
to self-regulation seen today come into existence with some degree of NGO
involvement (Doh & Teegen, 2003).
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Another civil society organizational form which has prospered in recent years is
the social enterprise (see Chapter 12 for more details). Social enterprises and social
entrepreneurs vary in type and form with as many definitions as CSR, but have a
clear primary goal of social or environmental benefit, although they may operate in
the private sector (Zahra et al, 2009). One of the most readily recognized social
enterprises globally is the Grameen Bank,7 which is a community development bank
and gives very small loans (microcredit) to those at the very bottom of the economic
scale – usually women – initially in Bangladesh but now further afield. While not
uncontroversial, the work and ideas behind the Grameen Bank (Yunus & Weber
2009) have had such an impact globally that its founder, Mohammad Yunus was
awarded the Nobel Peace Prize in 2006. Challenging the developed-developing
country divide, Grameen Bank also operates in developed countries with, for
example, Grameen Scotland opening in 2012.
With the continued growth of NGOs such as Oxfam, Greenpeace, or Amnesty
International – many of which are global organizations with multimillion budgets and
thousands of members and employees – CSR has also becomes a topic for these
organizations to apply to themselves. Since they claim to campaign ‘in the public
interest’, there is a growing demand to improve their public accountability (Unerman
& O’Dwyer, 2006). The relationship of social enterprises to CSR is similarly a
complex one, with research still emerging, not least because of the assumption that
social enterprises are inherently ‘doing good’ (Nicholls, 2009). In addition, social
enterprises are as varied in size as private sector organizations, with vast multi-
nationals such as Ashoka and Grameen grouped together with many and varied
micro community-based organizations.
CSOs as well as corporations need to be transparent about their causes, their
funding, and their tactics, and to provide their supporters and the general public
with some degree of say in how they represent these causes. This becomes more
pronounced as business itself has increasingly moved towards setting up CSOs
that represent specific business interests, such as the World Business Council
for Sustainable Development (WBCSD), the Global Business Coalition on HIV/
AIDS (GBC) or the Global Climate Coalition (GCC). While on the outside, these
organizations often look like CSOs, they are in fact far different from normal
grassroots CSOs, and have therefore been dubbed by some as ‘astroturf NGOs’
(Gray et al, 2006). Arguably, the challenge of putting policies and practices in place
for enhanced public accountability and transparency – in other words, implementing
CSR – is one of the key future tests for CSOs.
CSR in different regions of the globe
The meaning of CSR not only differs from sector to sector (as we have discussed
in the previous section), but it also differs quite substantially from country to country
(Freeman & Hasnaoui, 2011). To put CSR ‘in a global context’ (as our subtitle
suggests) it is essential to understand the specific regional and national contexts in
which companies practise CSR. In the following section, we will therefore discuss
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some basic characteristics of CSR in different regions of the globe. It should be
noted that the categories developed/developing/transitional/emerging – are not
definitive. In particular, the rise in economic power of the ‘BRIC’ economies – Brazil,
Russia, India and China – where economic growth is far greater than in the US and
Western Europe at the beginning of the 2010s, leaves a global economy in flux and
transition.
CSR in developed countries
In its most well-known guise, CSR is essentially an American idea. It was in the US
that the language and practice of CSR first emerged. Also, most of the academic
literature on the topic, and most of the key ideas discussed in the first section of this
book, originate from there, although they have been built on and developed by
contributors from around the world. The main reason for this lies in the specific
characteristics of the US business system (Matten & Moon, 2008). That is, American
society is characterized by fairly unregulated markets for labour and capital, low levels
of welfare state provision, and a high appreciation of individual freedom and respon-
sibility. Consequently, many social issues, such as education, healthcare, or
community investment have traditionally been at the core of CSR. Philanthropy is high
on the agenda with, for instance, corporate community contributions by US companies
being about ten times higher than those of their British counterparts (Brammer &
Pavelin, 2005).
In other parts of the world, most notably Europe, the Far East, and Australasia,
there has always been a stronger tendency to address social issues through
governmental policies and collective action. Many issues that US companies would
typically boast about as CSR on their websites, such as the provision of healthcare
or fighting climate change, have not appeared until recently on the screens of
continental European companies. The reason for this is that these issues have
traditionally been considered a task for governments. In other words, the corporate
responsibility for social issues has been the object of codified and mandatory
regulation. CSR for European companies, therefore, has predominantly come on the
agenda through their overseas operations (where regulatory frameworks are different
from Europe), and it is fair to say that even until the present day, multinational cor-
porations (MNCs) rather than domestic companies can be considered to be the
leading actors in European CSR. The US-Europe differences in CSR are likely to
persist and the way corporations address CSR issues, such as global warming, the
provision of affordable medicine to the developing world, or the use of genetically
modified organisms in food production, remains markedly different on both sides of
the Atlantic (Doh & Guay, 2006).
Countries such as Japan, and to a lesser degree South Korea and Taiwan, are
considered fairly similar to continental Europe in terms of the institutional context for
CSR. They are characterized by high bank and public ownership, patriarchal and
long-term employment, and coordination and control systems based on long-term
relations and partnerships rather than on markets. The Japanese ‘Keiretsu’, the
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Korean ‘Chaebol’, or the (mostly state-owned) Taiwanese conglomerates have a
legacy of CSR similar to European companies – including life-long employment,
benefits, social services, and healthcare – not so much as a result of voluntary
corporate policies, but more as a response to the regulatory and institutional
environment of business.
The reasons for the rise of CSR in Europe and in these developed economies
in the Far East in recent years are several. To begin with, MNCs with their home
base in such countries are challenged to implement more CSR in their operations
located in countries with poor governance and low levels of state provision of public
services, human rights protection, or environmental protection. Furthermore, some
of these developed economies have undergone substantial overhauls of their welfare
systems and regulatory frameworks, resulting in lesser degrees of state attention to
social issues and more discretion for private actors. The United Kingdom is probably
the best example here, where radical reforms that liberalized labour and capital
markets, together with the privatization of public services and publicly owned
companies, contributed to a significant surge in CSR (Moon, 2004). Increasingly,
corporations in the UK have assumed responsibility for regenerating local com-
munities, addressing unemployment, sponsoring schools and education, as well as
improving public transparency and accountability. This shift was formalized in the
flagship commitment for the ‘Big Society’ – i.e. local community empowerment – by
Prime Minister David Cameron in the early 2010s.8
In addition to these domestic political changes, globalization also represents a
powerful booster of CSR. The rise of global investors linking their investment decision
to ‘socially responsible investment’ criteria, the growth in global NGO activism
scrutinizing corporate behaviour, and intensified exposure of business by the media
have all boosted growing attention to CSR in Europe and elsewhere (Matten & Moon,
2008). It can also be observed that in most developed countries we have specific
domestic CSR issues that shape the debate in the respective context. For instance,
many European countries see CSR specifically with regard to the protection of the
natural environment, while the CSR debate in the Far East prominently features issue
of corporate governance and transparency in large conglomerates (Webb, 2006).
Often the CSR debate in a country reflects longstanding and ongoing deliberations
in society at large: for instance in Australia and South Africa, considerable expectation
have been directed towards companies to address and uphold rights of aboriginal
and black people respectively, or to contribute to their economic empowerment
more generally.
CSR in developing countries
The activities of Western MNCs in developing countries have also been a major
driver behind the recent surge in CSR over the last two decades. Many companies
use developing countries as a source of cheap raw materials and, in particular, cheap
labour. Against this backdrop, campaigns against Shell’s role in Nigeria and Nike’s
poor labour practices in its Asian supply chains in the 1990s triggered significant
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changes toward more responsible practices in many MNCs. Problems still persist,
however, with Apple facing substantial criticism for the low pay in one of its major
suppliers Foxconn in China resulting in a spate of suicides in 2010, and front-page
headlines in the New York Times in 2012.
Developing countries are broadly characterized by various features that can offer
considerable scope for the exercise of CSR. These include low standards for working
conditions and environmental protection, high corruption, oppressive regimes with
low regard for human rights, poor provision of healthcare and education, as well as
low levels of per capita income and foreign direct investment. Although this is not a
fair representation of all developing country contexts at all times, the main challenge
for MNCs from the developed world when they are faced with such circumstances
lies in conducting their business in a way that would be considered socially respon-
sible in their respective home countries
It is important to recognize though that a growing number of domestic com-
panies in developing countries have also developed an interest in CSR. The main
CSR issues these companies are concerned with include contributions to enhance
the infrastructure of health, education, and transport, and to serve as examples of
good governance. The development of microfinance has been an important
contribution in this respect, encouraging small scale enterprise and the empower-
ment of marginalized groups. Such initiatives have moved beyond the realm of CSOs
and are now engaged with by mainstream commercial banks such as HSBC (see
Integrative case 2).
The debate in the Global South has begun to shift from understanding CSR as
aid, towards thinking of responsible behaviour more in terms of development.
Arguably, one of the main reasons why these countries are poor is the absence of
economic activity and growth – and it is here where one of the main responsibilities
of business can be seen. Implementing CSR in this sense would therefore require
MNCs to conduct business and bring foreign direct investment to developing
countries in the first place, and then ensure that the wealth created is locked into
development. So, for instance, the World Business Council for Sustainable
Development issued an in-depth report on how business supports the implemen-
tation of the United Nations’ Millennium Development Goals9 (WBCSD, 2005). Many
of the points raised in the report do not refer to business ‘sharing’ its wealth with
these countries but business being present in these countries and contributing to
economic growth and prosperity.
This role of MNCs, however, is not uncontested. Many critics argue that profit-
maximizing corporations have only very limited interest in these more political goals,
and that evidence of MNCs contributing positively in the developing world is at best
sketchy (Frynas, 2005). Ultimately, according to the sceptics, responsible corporate
behaviour in the developing world is an issue that cannot be left to the voluntary
discretion of business people but needs to be addressed by more stringent regu-
lation in their home countries in the global North (Aaronson, 2005).
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CSR in emerging/transitional economies
Between those two major categories of developed and developing countries there
is a third category that deserves attention from a CSR perspective. Most countries
of the former communist bloc have changed from a planned and government run
economy to a capitalist market system. While the social responsibility of state-
operated business in the former model was far-reaching, including broad provision
of education, healthcare, housing and a plethora of other services, the transition to
a market economy has seen many of these former conglomerates dismantled and
transformed into shareholder-owned companies. While there is a range of different
approaches to CSR in these countries, one might argue that in some respects,
Russia and China represent the more extreme cases. In the Russian context, the
societal acceptance of the market remains an issue with large corporations often
tainted by an image of fraud and corruption, and where mutual suspicion between
business, the state and the people is rife. Perhaps unsurprisingly in this context,
research has found that Russian managers do not see CSR as a relevant topic for
business or for other stakeholders. Challenging the Western understanding of CSR,
Russian managers are more likely to perceive CSR in terms of responsibilities that
are taken for granted elsewhere, such as abiding by the law, paying taxes and
providing employment (Kuznetsov et al, 2009).
In China, the CSR movement has emerged since the new millennium, in a context
of a legal framework for companies to abide by ethical and socially responsible
codes, and the beginning of a wave of CSR reports by State Owned Enterprises
starting in 2006 when the Shenzhen Stock Exchange also published its ‘Socially
Responsible Guidelines for Listed Companies’. Po (2009) attributes all these
developments and the rise of CSR to supply chain demands and China’s increasingly
important role in the world and the desire to match this role with an appropriate
national image in terms of social responsibility. There is also the argument that the
cultural legacy of Confucianism is in keeping with many elements of CSR. Against
this positive backdrop, however, it should not be forgotten that there remain serious
and seemingly intractable problems relating especially to the environment, labour
and human rights and product safety in China (Po, 2009).
The ‘Arab Spring’, which started at the end of 2010, saw a wave of protest and
a string of dictators overthrown, leading to the emergence of several new governmen
across North Africa and the Middle East. The economic, business and socio-political
outcomes of these transitions have yet to fully take shape, but it is notable that
companies, especially technology firms, played a significant role both in supporting
and constraining pro-democracy movements at this time. The Egyptian revolution, for
example, was lauded as a ‘Facebook revolution’ and one of its more prominent leader
was a Google executive (Smith, 2012). Internet service providers and mobile phone
providers (including Vodafone, see Integrative case 1), however, across the region
were at various times forced by the authorities to close down service in order to restr
protestors’ ability to organize. Social responsibility (or the lack of it) might therefore
go further than just adapting to the existing institutional context, but also include pla
a role in the transformation of political systems in transitional economies.
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Conclusion
In this chapter we have discussed the development of CSR, and its rise to
prominence. We have also examined the maze of definitions that have been used
to delineate CSR in order to develop some core characteristics of the concept.
Finally, we explored the meaning and relevance of CSR in different national and
organizational contexts.
What should certainly be clear by now is that the term ‘corporate social
responsibility’ is very difficult to pin down precisely – it can have many meanings,
applications, and implications, and these are rarely agreed upon by those who take
an interest in the debate. This may not make our lives any easier when studying CSR,
but it certainly makes it more interesting!
In this book, we have adopted a deliberately broad perspective on CSR in order
to provide a well-rounded introduction to the subject. Included in the following chapters
are those that espouse a view of CSR thoroughly embedded in a pro-corporate
‘business case for CSR’ as well as those that argue for a more political view of CSR
that attends to the need to make corporations more accountable to the societies in
which they operate. The point of this text is not so much to suggest that any of these
perspectives is necessarily ‘better’ or more ‘correct’ than another. Rather it is to provide
an insight into the richness and diversity of the CSR literature. Editing a collection of
readings on CSR allows us to present some of this heterogeneity whilst simultaneously
providing some guidance as to how to ‘read’ and contextualize the different contribu-
tions. After all, it is clear that many of the authors writing about CSR in this book are
engaging in a discussion about CSR for different ends, and bring with them very diverse
assumptions about the nature and purpose of the corporation. The introductions to
the readings will offer some useful insight on these purposes and assumptions, at least
as far as we see them.
The book is organized into three sections, dealing with respectively:
● Understanding CSR
● Applying CSR
● Managing CSR
In designing this structure, it is evident that our main focus is around the actual
performance of CSR by organizations, although the book also offers considerable
theoretical insight on CSR by bringing out key conceptual issues as they pertain to
particular CSR practices and principles. The applied approach that we take is also
demonstrated by the three integrative case studies that appear at the end of each
section. These are intended to bring together some of the main issues that arise in
the different chapters in each section, and offer some fascinating insights into the
challenges of CSR in a global context.
Ultimately, the theory and practice of CSR as presented in this book represents
a work in progress. The subject has risen to prominence only relatively recently, and
has been disseminated across the globe with remarkable speed. The way in which
CSR is understood, practised, and institutionalized in the global context is
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ever-changing and open to substantially different interpretations. This book offers a
multifaceted, and relatively comprehensive account of CSR as it stands today, but
this account is by no means the only or the final one.
Study questions
1. What is CSR and why has it risen to prominence in the past decade?
2. What are the six main characteristics of CSR? How do definitions of CSR vary
around the core characteristics?
3. Select four corporations and four NGOs and research their perspectives on
CSR on the web. To what extent is there overlap and divergence in their view
of CSR? What can account for these similarities or differences?
4. ‘CSR is only relevant for large private sector companies.’ Critically discuss,
providing examples from SMEs, the public and civil sectors.
5. Can or should CSR be transferred to developing and emerging economies?
What are the benefits and drawbacks of this for the countries concerned?
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Challenges for practice
Take a close look at a company you work for or with which you are familiar.
1. Is CSR part of the stated company mission?
a) If not, where if anywhere does CSR make an appearance in the
business? Does this match your experience?
b) If CSR is a part of the mission, what relative importance is assigned
to it? Does this match your experience?
2. Who is assigned responsibility for CSR and how do you think this affects
CSR in practice?
a) Is the system hierarchical or a more matrix-based approach?
b) To whom do those responsible for CSR report and at what level are
they in the organization?
c) How much resource is assigned to CSR compared to, say, marketing?
3. Would you say that CSR is integrated into the business?
a) Do performance appraisal and reward mechanisms include CSR
measures?
b) Are the financial and CSR reports integrated?
c) Are sanctions applied if codes are not complied with?
d) Is there regular training and discussion on CSR issues?
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Endnotes
1 The Corporate Responsibility (CORE) Coalition is a collection of UK NGOs
including WWF (UK), Amnesty International, Action Aid, and Friends of the
Earth, that ‘work to make changes in UK company law to minimize companies’
negative impacts on people and the environment and to maximize companies’
contribution to sustainable societies’ (www.corporate-responsibility.org).
2 www.abc.net.au/rural/content/2011/s3395026.htm (Accessed 30 August,
2012).
3 This limited applicability of the ‘corporate’ label might contribute to the
preferred use of terminology such as ‘sustainability’ in many organizations,
which has many common features with CSR and is often used interchangeably.
For details on the various terms for CSR see Chapter 3.
4 http://about.usps.com/what-we-are-doing/green/report/2010/welcome.htm
(Accessed 30 August, 2012).
5 www.chinacsrproject.org/ (Accessed 30 August, 2012).
6 www.msc.org (Accessed 30 August, 2012).
7 www.grameen-info.org (Accessed 30 August, 2012).
8 www.cabinetoffice.gov.uk/big-society (Accessed 30 August, 2012).
9 www.un.org/millenniumgoals (Accessed 30 August, 2012).
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