The evolution of CSR

March 27, 2007 at 2:36 am 10 comments

Romanesco cauliflower from Free PhotosWe’re hearing a lot about Corporate Social Responsibility or CSR these days. CSR focuses on how business can continue its pursuit of wealth creation in harmony with the environment and society. I wondered when the term first popped up on the business landscape and who might have coined the term, so I decided to look into the evolution of the definitional construct.

A concern for social responsibility can be traced back to the 1930s. Chester Barnard’s 1938 publication, The Functions of the Executive, and Theodore Krep’s, Measurement of the Social Performance of Business, published in 1940 were two early references to the social responsibilities of executives and business.

The 1950s saw the start of the modern era of CSR when it was more commonly known as SR or social responsibility. In 1953, Howard Bowen published his book, Social Responsibilities of the Businessman, and is largely credited with coining the phrase ‘corporate social responsibility’ and is perhaps the Father of CSR. Bowen asked: “what responsibilities to society can business people be reasonably expected to assume?” Bowen also provided a preliminary definition of CSR: “its refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society“.

There were a few other landmark books during the 1950s, most notably Morrell Heald’s 1957 publication, Management’s Responsibility to Society: The Growth of an Idea; and Eell’s 1956 work, Corporate Giving in a Free Society. The literature expanded the definition during the 1960s with Keith Davis’ definition of CSR as referring to “..businessmen’s decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest“. Davis established the so-called Iron Law of Responsibility, which held that “social responsibilities of businessmen need to be commensurate with their social power”.

In 1963, Joseph W McGuire in his book, Business and Society, stated: “The idea of social responsibilities supposes that the corporation has not only economic and legal obligations but also certain responsibilities to society which extend beyond these obligations“. This is perhaps getting closer to the contemporary understanding of CSR as being an obligation to citizenry, the environment etc and not merely to shareholders or wealth creation.

The notion of voluntarism was perhaps first seen in Clarence C Walton’s 1967 book, Corporate Social Responsibilities, when he linked CSR with the idea that companies need to voluntarily acknowledge and accept they have relationships of responsibility beyond the corporate fortress.

The 1970s and 1980s saw attention being focused on articulating with more clarity exactly what were the responsibilities of a corporation. The grand old man of management theory, Peter Drucker, stepped onto the CSR stage in 1984 when he wrote, in the California Management Review, about the imperative to turn social problems into economic opportunities. And ice-cream manufacturers, Ben & Jerry’s, were the first company to publish a social report in 1989.

A watershed in CSR was 1971 when the Committee for Economic Development (CED) published its Social Responsibilities of Business Corporations. As a code of conduct, the CED outlined a three-tiered model of CSR:

  • the inner circle: the basic responsibilities an organisation has for creating profit and growth;
  • the intermediate circle: an organisation must be sensitive to the changing social contract that exists between business and society when it pursues its economic interests; and
  • the outer circle: the responsibilities and activities an organisation needs to pursue towards actively improving the social environment eg poverty or urban crowding issues.

I think this model is still a valid one. In an earlier post, I talked about viewing CSR through the lens of complexity and acknowledging that an organisation nestles within a broader ecosystem (which is comprised of diverse stakeholders such as the community, suppliers, competitors etc). CED’s three-tiered model is a similar construct with its inner, intermediate and outer circles. By focusing on the responsibilities within all rings of the model, a corporation is working within and caring for the ecosystem it belongs to.

In a future post, I want to explore the relationship between the social movements of the 1960s and CSR. I suspect there’s a whole lot of influence from societal changes and protests during the 1960s on attitudes to corporations and their social responsibilities.

Back to the history lesson :)- the 1970s also saw the use of the term “neighborliness”, which has hints of our contemporary use of metaphors such as “village” or “ecosystem” to describe a construct that is broader than just the boundaries of a particular system ie organisation, society etc. Eilbert and Parket defined CSR as: “...think of it as ‘good neighborliness’. The concept involves two phases. On the one hand, it means not doing things that spoil the neigborhood. On the other, it may be expressed as the voluntary assumption of the obligation to help solve neighborhood problems.”

By the 1980s and 1990s, corporate giants had woken up to the fact that attempts were being made to regulate them and the corporate backlash began. Most notably, corporate meddling in the 1992 Earth Summit in Rio impeded the Summit’s aim of finding ways to halt the destruction of the natural environment and its resources. 48 companies were specifically formed to participate in and influence the Summit’s outcomes, particularly trying to shift towards voluntary reporting.

But the climate turned nasty for corporations in 1995 when Shell was accused of complicity in the execution of Ken Saro Wiwa and eight other activists in Nigeria. Suddenly, corporations started to realise the importance of their public image and reputation. And they began to understand that they needed a strategy to convince the public that they could play a very valuable and socially meaningful role within the ecosystem they occupied.

Contemporary CSR was ushered in to give the corporation a caring, human face and get rid of any whiff of unethical conduct. But with the collapse of Enron in 2001, the claims of an organisation against the reality of its conduct entered the bright spotlight of public scrutiny. The call for greater accountability and transparency has also led to the current focus on CSR.

But I fear that CSR could suffer from a number of flaws inter alia:

  • too much hype and obsession over defining what CSR means (mmm…brings back memories of knowledge management!);
  • global companies wanting to get themselves out of the glare of public scrutiny, jumping on the CSR bandwagon and wanting to be seen as ‘leaders’ when in fact many are unethical in their business practices;
  • do voluntary codes of conduct work?
  • is CSR simply a very clever way to increase corporate power and global domination; and side-stepping regulation?
  • will CSR fall victim to the marketing/comms people who are smart enough to see CSR as a great opportunity for a public relations campaign?

Consider the Body Shop, often lauded as a shining example of CSR and fair trade. Its founder, Anita Roddick, described the Body Shop’s flotation on the stockmarket and move to being a multi-national as a ‘pact with the devil’. The Executive Chairman installed after Roddick commented: “we believe in social responsibility but we are hard-nosed about profit. We know that success is measured by the bottom line“.

So it could turn out to be business as usual but with a PR spin of CSR – nothing changes, corporations just get more powerful and pretend to embrace their social responsibilities.

You can read more about CSR here and here (but you will need online journal access for this last link to an article by Archie Carroll in 1999, which I relied on heavily to navigate my way through the evolution of CSR. Haven’t been able to locate a free copy to share).

Meanwhile, I am off to do more thinking on the topic! and I’ve included a fabulous image in this post of a romanesco cauliflower courtesy of the great site Free Photos, one of the few photos I haven’t taken for my blog posts – but I just love it!

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10 Comments Add your own

  • 1. Padma Bollapragada  |  August 22, 2007 at 7:56 am

    The article is really nice to help understand the CSR concept. Would like to have more on latest happenings in corporate sector. Articles on Green Corporate for better undestanding of the corporate sector.
    Tahk you.

    Reply
  • 2. thinkingshift  |  August 22, 2007 at 9:45 am

    Okay Padma, will try to bring an article like this to you soon.
    Kim

    Reply
  • 3. Neo  |  January 6, 2010 at 9:39 am

    very very nice article.

    Reply
  • 4. Bernie  |  April 23, 2010 at 7:26 pm

    Just working on my masters dissertation on this topic – thanks for this overview!

    Did you do any further work on this?

    Thanks

    Reply
  • 5. Abdul Hamid  |  October 17, 2010 at 10:57 pm

    Yes, its really useful and resourceful. For my project paper, I was searching an acceptable ‘evolution of CSR’ chapter….I have found it here. Thank you very much for this contribution.

    Reply
  • 6. SHISHIR RANJAN  |  April 14, 2011 at 2:43 pm

    A very good article for knowledge building on CSR. Would love to have more reading material. Thanks for posting.
    Cheers!

    Reply
  • 7. bastianmanalu  |  June 14, 2011 at 1:16 pm

    hi..this is such a great article to have a deeper understanding of CSR,
    my only suggestion is, you actually should have put some references to support your writing.

    That would make the article even greater : )

    Reply
  • 8. thinkingshift  |  June 15, 2011 at 2:07 am

    Thx bastianmanalu – the references are embedded in the article ie the books referenced plus the two journal articles. I particularly relied on the 1999 article by Archie Carroll as I said in the post. So I think you’ll find the post is supported by enough references :-)

    Reply
  • 9. Rillah stiner  |  October 1, 2012 at 8:11 am

    i really thank you for the information am also working on a paper about CSR. Rillah. more information on its impact on market competitiveness on banks.

    Reply
  • 10. Nisha Singh  |  June 20, 2013 at 4:43 pm

    Really very helpful to understand CSR better.

    Reply

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