RCM301: Corporate Social Responsibility in a Global Context Analysis

This assignment delves into the critical topic of Corporate Social Responsibility (CSR) within a global framework. It meticulously examines the escalating prominence of CSR, scrutinizing its various definitions and core characteristics. The analysis extends to exploring CSR's application across diverse organizational and national contexts, providing a comprehensive understanding of its multifaceted nature. The assignment also investigates the evolution of CSR from its early roots in addressing worker conditions and philanthropy to its current, more coherent and professional approach, which is now central to business management. The report highlights the emergence of a CSR 'movement' with dedicated consultancies, standards, and interest groups, contributing to a worldwide network of CSR practitioners. It references key definitions from various organizations like the International Labour Organization and General Electric, and explores differing perspectives on CSR, from Davis's focus on responsibilities beyond economic requirements to Carroll's broader inclusion of economic, legal, ethical, and discretionary expectations. The assignment aims to provide a coherent account of CSR, navigating through the vast and often contested literature on the subject.

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
C S R I N A G L O B A L C O N T E X T11
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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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