(PDF) Defining corporate social responsibility

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Corporate Social ResponsibilityfromSAGE Key Concepts series: Key Concepts in Critical Management Studies, by MarkTadajewski (2011)Definition:The concept of corporate social responsibility emerges out of a series of ongoingdebates as to whether the corporation has additional responsibilities over and above theresponsibility to make a profit, or not.The most (in)famous thing ever written about corporate social responsibility (CSR) camefrom the pen of the Nobel Prize winning Chicago School economist Milton Friedman. In ashort article published in theNew York Times Magazine,Friedman (1970) notoriouslyargued, straightforwardly but nonetheless virulently, that theonlysocial responsibility ofbusiness is to increase its profits. That is to say, for Friedman, corporate representativesshould concern themselves with profit maximisation andnothingelse.Such a sentiment strikes us as almost apocryphal today. This is because today, it seemsthat not a moment goes by where we do not hear of some corporation or other engaging insome act of seeming benevolence or other. Indeed, social responsibility is something whichwe have now largely come to expect of corporations, irrespective of whether this expectationcomes from our role as corporate critics, as commodity consumers or even as globalcitizens. This is no mean feat, for sure. And yet, for Friedman, this was precisely theproblem: the very fact that corporate executivesweretaking socio-political matters into theirown hands was something which, for him, threatened the very foundations upon which free-market societies are built (see alsoFriedman, 1962/2002).So just what is it about CSR that Friedman is so opposed to? Simply put - CSR initiatives arenothing other than a set of scenarios within which corporate executives take the capitalinvested by the shareholder, who expects the highest possible return from his or herinvestment, the budget of the customer, who expects the lowest possible prices, and theincome of the employee, who expects the highest possible wages, andwastesit uponendeavours of his or her own misdirected fancy. In this sense, CSR can be understood asidentical to theft or, when it is used for the sake of window dressing, which he argued that itroutinely was, it can be understood as identical to fraud. In the pursuit of CSR, Friedmanargues that corporate representatives deviate from their obligations to shareholders,customers, and employees alike. Instead of doing what they are contractually and morallybound to do for each of these groups, they self-righteously pursue the ends of their ownprivate fancy in the name of public philanthropy. For Friedman this is of course somethingwhich must be condemned, rather than condoned, hence the notorious statement with whichhis work has become synonymous at least on the part of CSR advocates.Friedman was not the first to argue against CSR along such lines, of course. But what hiswork does offer, indeed what itcontinuesto offer advocates of CSR, is a hurdle which simplyhas to be negotiated in one way or another. In this regard, perhaps the most prominent wayof attempting to negotiate the hurdle that is Friedman today is to be found in the ongoingattempt to connect CSR with financial performance. That is to say, today there exists anongoing debate to refute Friedmanempiricallythrough demonstrating that, in the end,CSRshouldbe undertaken by corporate representativesprecisely becausethey will berewarded in the form of financial gain. The work of Orlitzky et al. (2003) offers one of themost elaborate examples of such an argument, insisting, on the basis of an extensiveoverview of the burgeoning academic literature devoted to the topic of the potential profitworthiness of CSR endeavours, that there is a positive connection between ‘corporate social
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