0
()

It is fair to say that among the largest US public companies and multinationals in general, CSR has become quite important if not already firmly embedded. But that misses privately held companies and the vast majority of business enterprises that are not “large” but which are responsible for the bulk of national output in most countries. There is some “trickle down” effect via supply chain relationships, but unfortunately we know very little about the CSR activities of small and medium-size enterprises.

In any event, to the extent that CSR has become “embedded”, it must have passed the standard hurdles imposed by firms for business investment and is producing business value. This relates to the “business case” for CSR, of which financial performance is one aspect. Next we review the empirical literature on the relationship between CSP and CFP, covering four primary research streams:- portfolio studies, event studies, cross-sectional analyses, and meta-analyses – all of which aim to shed light on the general question of whether a firm’s environmental and social performance (good or bad) is associated with changes in its financial performance (and of what direction and magnitude) and, if it is, whether that association in turn can be further refined to reveal causal information.

Some of the largest US and multinational business entities tend to believe that improved social and environmental performance has enough momentum behind them to drive good business activity overall. More and more literature is appearing that documents the rationale for CSR and other things that fall under the rubric of “the business case for sustainability” (Blackburn, 2006; Yankelovich, 2006; Andersen and Zaelke, 2003; Holliday et al., 2002).

New business organizations have been established around sustain- ability themes and sets of principles, some of the most visible being the World Business Council for Sustainable Development (WBCSD), the GEMI or also widely known as Global Environmental Management Initiative, the CERES or also known as Coalition for Environmentally Responsible Economies and the Global Reporting Initiative (GRI), which aims to establish a common accounting framework for reporting the environmental and social performance of firms. In the past several years individual firms have also adopted leadership positions on many significant environmental issues of the day, the most visible being greenhouse gas emissions.

Read:  Introduction to Lean Product Development | eBook | AudioBook

Also to be mentioned are the UN Global Compact, a corporate citizenship and sustainability initiative launched in 2000 that now counts approximately 8000 business firms from 145 countries as participants, and ISO 26000, a set of guidelines which aims to help businesses and other organizations understand what social responsibility is to take up appropriate actions in order to implement the same. Within the academic literature, several recent papers document and rationalize, from various perspectives, the “modern” history of CSR from its inception just after the Second World War up to the present.

Lee (2008) traces the evolution of management thought regarding CSR beginning with the seminal book by Bowen (1953).

It is interesting to see how the arguments for and against CSR have progressed, from explicitly normative and ethics-based arguments to those oriented toward the business case for CSR.

Yet Lee concludes that the current focus on business case arguments for CSR is potentially dangerous because it misses the broader question of society’s responsibility in keeping corporations accountable.

Moreover, if the business case is what drives CSR, according to Lee, then some socially responsible behaviors will be downplayed if the market demand for them is less. This is a spurious argument because it is precisely in the process of interacting with stakeholders (“society”) that CSR strategies are vetted. In light of the evolution of CSR in concept and practice, these authors call for a more nuanced argument supporting the business case, one that can break the “stalemate” between the ethical and “economic” approaches. In this regard, they present four domains of focus and develop the theoretical and empirical aspects of each.

Read:  Aging of the Brain: How does the Brain Get Older

These are by now quite familiar in the literature if by other (closely related) names: cost and risk reduction, competitive advantage, reputation and legitimacy, and “synergistic value creation” that is, seeking opportunities to work closely with stakeholders to fulfill their expectations while simultaneously creating value for the business. Next, these authors present a general critique of the business case for CSR at a primarily theoretical level, organized by the level of justification (firm, society), the logic of justification (economic, ethical, political, social) and grounds of justification (positive, normative, pragmatic), and they attempt to build a better business case for CSR by emphasizing the role of business as a “social actor”.

This is less than completely successful because the authors venture into mainly esoteric waters by way of considering ill-defined “non-linear outcomes” and fundamental questions about the self and communities that allow for new forms of social and economic life (Kurucz et al., 2008). Carroll has been working in this area for a long time, trying to frame the theoretical and empirical discussion to emphasize the ethical (“expected”) and discretionary (“desired”) nature of CSR from the viewpoints of business and society (Carroll, 1979). These authors, in a similar vein to Lee (2008) and Kurucz et al.(2008), trace the development of CSR from just after the Second World War to the present, lay out the arguments pro and con, and engage them from a theoretical and empirical perspective. In explicating the business case, they rely primarily on Carroll’s previous work, the work of Zadek (2000), Vogel (2005) and Kurucz et al. (2008), culminating in the observation that CSR has become a core business function in many large firms, and is now central to their overall strategy and ultimate business success for a long time to come.

Read:  Financial Crisis 2008 Explained

This, of course, has been the central theme in many of Porter’s writings on competitive advantage since 1995 (Porter and Kramer, 2006; Porter and Van der Linde, 1995. But it must be recognized that CSR is hardly a panacea for longterm business success and, even in industries where it has the greatest potential for making a meaningful contribution, the ability of firms to leverage CSR investments varies as a result of differences in intangible assets (capacity for innovation, stakeholder relationships, reputation and legitimacy, human capital, and organizational culture), their “absorptive capacity” (Delmas et al.,2011), and what Carroll and Shabana call “situational contingencies” which, roughly translated, means being in the right place at the right time. Moving away from the debate regarding the business case for CSR, Kitzmueller and Shimshack (2012) shift from asking whether CSR should exist (most scholars now agree that there are social justifications for CSR, but not in all instances) to why it does exist and its effect on the economy.

Would you like to read more about this topic? This book might interest you: Corporate Social Responsibility.

How useful was this?

Click on a star to rate it!

Average rating / 5. Vote count:

No votes so far! Be the first to rate this post.