Culture and Ethics Resource Centre – Definitions
Corporate Social Responsibility (CSR) is a phrase used to describe the extent to which corporations have an ethical obligation to their various stakeholders. As corporations influence and power has increased over time, so has the debate about whether they have a responsibility beyond that of making profit for their shareholders. This debate now centres on the question of whether they have a responsibility to act ethically towards the wider community.
There are two fundamental perspectives of CSR: the Broad and Narrow Views. If we relate these two perspectives to a sporting context we might indentify the narrow view as a sporting league only concerning itself with ensuring attendances, revenue, profit, television viewers etc are high and the game is enjoyable; whereas the broad view may encompass the sporting league thinking about all the aforementioned issues plus its role in society, influence over children (role models), the need to ‘give-back’ and be a leader in addressing social issues.
Below you will find some of the arguments which are often presented to support the broad and narrow approaches to CSR.
The Narrow View argues against organisations displaying CSR and there are five main reasons presented:
1. The ‘invisible-hand’ argument:
This argument is based on Adam Smith’s contention that in a free market people/organisations should be left to promote their own economic self-interest and in doing so they will then be guided by an ‘Invisible-hand’ to promote the general greater good. Corporations should be left to this as they are not moral agents.
Corporations were formed to create greatest good through the pursuit of self interest, therefore leave them alone and they will. If we force corporations to worry about CSR, that will reduce their ability to meet the material needs of society; thus reducing our wellbeing. This isn’t to say corporations aren’t accountable; they are held to account when they fail to fulfil their economic role, just not a moral one.
AGAINST:
Modern corporations bear little-to-no resemblance to the corporations which existed in Smith’s time. Therefore, we need to adapt our views as things evolve. Corporations today have more power over government, society and the economy than ever before.
2. The let-government do-it argument:
This argument contends that it is the responsibility of government to regulate the behaviour of corporations to ensure they are acting ethically.
AGAINST:
Arguments against this position are that it will lead to big and intrusive government. Furthermore, it is doubtful that government will be able to be across and regulate all the potentially unethical behaviours of organisations. They also aren’t in a great position to predict likely behaviours and actions and are therefore very reactive. Lastly, who can confidently say that the government are the best ‘check-up’ option when we consider all the political scandals etc.
3. The Business can’t handle it argument:
The argument contends that organisations are not suited to, nor should they be trusted with the responsibility of promoting the well-being of society. They lack the necessary expertise and will likely project their materialistic views onto society.
AGAINST:
We have many examples of private organisations that have shown themselves capable of acting in their own interests and the well-being of society, for example: the body shop.
4. Corporations lack the expertise:
This follows on from point three and focuses primarily on the argument that corporate executives lack the moral and social expertise to make anything other than economic decisions. They would be inept custodians.
AGAINST:
The question is posed: who is adept? We often see people acting morally in areas other than their specific area of expertise i.e. the school teacher who promotes the use of seatbelts. Why should organisations be any different?
5. Corporations will impose their values on us:
This argument contents that if we allow organisations to have this CSR sort of power and influence, they will use it to make society more commercial and materialistic, aiding their profit motive, as opposed to humanising themselves.
AGAINST:
This argument forgets that organisations already have immense social power and they often exercise it to commercialise and materialise us.
Broad View: it should be noted that the Broad View is not against the profit motive of organisations; it simply states that this shouldn’t be their sole motivation.
1. Stakeholder Model:
This argument contents that corporations have obligations to all the stakeholders who are affected by their actions; these include all parties affected by what a corporation does or doesn’t do. Therefore, this goes beyond simply their shareholders and encompasses their employees, customers, suppliers, the environment etc. Organisations should evaluate the ramifications of their actions and choices with relation to their wider stakeholders.
2. Power involves responsibility:
This argument contents that with great power comes great responsibility. Organisations today are often large and influential entities. With this power comes a responsibility to behave ethically towards those who are affected by the actions of organisations.
3. Social contract:
This argument contents that there is a social contract between society and business; always has been, always will be. This contract is predicated on the fact that society allows organisations to exist. It does so, so that organisations can serve society through the production of necessary goods and services. As part of this contact society sets the rules, guidelines and responsibilities within which organisations need to operate. What these rules, guidelines and responsibilities entail changes over time in line with social expectations. For example, in the 19th century the prime interest of society was growth, now however, we are more focused on sustainable growth, quality of life and environmental issues.
4. Business part of Society:
Finally this argument is predicated on the fact that under the law an organisation is classified as a ‘person’. This means they have the right to: free speech, to own property, enter into contracts, make decisions, and have vested interests. Whilst they are obviously not a ‘person’ in the way you or I am, this legal status, according to this argument, is reason enough to suggest that organisations should also take on board the social and moral responsibilities of a person, not just those that are commercially beneficial.
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