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Corporate Social Responsibility from SAGE Key Concepts Series: Key Concepts in Critical Management Studies

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And yet, for Friedman, this was precisely the problem: the very fact that corporate executives were taking socio-political matters into their own hands was something which, for him, threatened the very foundations upon which free-market societies are built (see also Friedman, 1962/2002). Many CSR initiatives are nothing other than a set of scenarios within which corporate executives take the capital invested by the shareholder, who expects the highest possible return from his or her investment, the budget of the customer, who

Corporate Social Responsibility from SAGE Key Concepts Series: Key Concepts in Critical Management Studies

Added on 2021-03-23

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Corporate Social ResponsibilityfromSAGE Key Concepts series: Key Concepts in Critical Management Studies, by Mark Tadajewski (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 the responsibility to make a profit, or not.The most (in)famous thing ever written about corporate social responsibility (CSR) came from the pen of the Nobel Prize winning Chicago School economist Milton Friedman. In a short article published in theNew York Times Magazine,Friedman (1970) notoriously argued, straightforwardly but nonetheless virulently, that theonlysocial responsibility of business is to increase its profits. That is to say, for Friedman, corporate representatives should concern themselves with profit maximisation andnothingelse.Such a sentiment strikes us as almost apocryphal today. This is because today, it seems that not a moment goes by where we do not hear of some corporation or other engaging in some act of seeming benevolence or other. Indeed, social responsibility is something which we 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 global citizens. This is no mean feat, for sure. And yet, for Friedman, this was precisely the problem: the very fact that corporate executivesweretaking socio-political matters into their own 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 capital invested by the shareholder, who expects the highest possible return from his or her investment, the budget of the customer, who expects the lowest possible prices, and the income of the employee, who expects the highest possible wages, andwastesit upon endeavours of his or her own misdirected fancy. In this sense, CSR can be understood as identical to theft or, when it is used for the sake of window dressing, which he argued that it routinely was, it can be understood as identical to fraud. In the pursuit of CSR, Friedman argues that corporate representatives deviate from their obligations to shareholders, customers, and employees alike. Instead of doing what they are contractually and morally bound to do for each of these groups, they self-righteously pursue the ends of their own private fancy in the name of public philanthropy. For Friedman this is of course something which 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 his work 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 way of attempting to negotiate the hurdle that is Friedman today is to be found in the ongoing attempt to connect CSR with financial performance. That is to say, today there exists an ongoing debate to refute Friedmanempiricallythrough demonstrating that, in the end, CSRshouldbe undertaken by corporate representativesprecisely becausethey will be rewarded in the form of financial gain. The work of Orlitzky et al. (2003) offers one of the most elaborate examples of such an argument, insisting, on the basis of an extensive overview of the burgeoning academic literature devoted to the topic of the potential profit worthiness of CSR endeavours, that there is a positive connection between ‘corporate social

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