EVOLUTION OF CORPORATE SOCIAL
RESPONSIBILITY
HISTORY OVERVIEW OF CORPORATE SOCIAL RESPONSIBILITY APPROACHES
Ing. Pavel Adámek, Ph.D.
CORPORATE SOCIAL RESPONSIBILITY/PEM-NACSR
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
OUTLINE OF THE LECTURE
1. Introduction
2. CSR in the 1960s
3. CSR in the 1970s
4. CSR in the 1980s
5. CSR in the 1990s
6. CSR in the 21st century
7. European and international influences on CSR
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
1. INTRODUCTION
• The concept of CSR was originally coined in the 1930s by two
Harvard University professors A. A. Berle and C. G. Means. In
the book The Modern Corporation and Private Property, they
advocate upholding the rights of shareholders, and greater
transparency and accountability in large organisations where
‘ownership’ and ‘control’ are separated due to regulatory
instruments.
• The focus on this changing notion of ‘private property’ towards
public ownership of corporations was initiated soon after the
Wall Street crash of 1929 when the ideologies of capitalism
revealed corporate irresponsibility.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
1. INTRODUCTION
• In academic literature, formal writings on CSR are evident for
the first time in Bowen's (1953) Social Responsibilities of the
Businessman. He defines CSR as: 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.
• Bowen expected businesses to produce social goods:
1. higher standards of living;
2. widespread economic progress and security;
3. order, justice and freedom, and finally;
4. the development of the individual person.
• In his view, CSR includes responsiveness, stewardship, social
audit, corporate citizenship and rudimentary stakeholder theory.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
2. CSR IN THE 1960s
• There was significant formalisation of the concept during this
period.
• Some prominent important representatives of the decade were
Keith Davis, Joseph W. McGuire, William C Frederick and
Clarence C. Walton.
• Each has their own interpretations of CSR but all of them
unanimously agree on the fact that business responsibility
should exceed the economic interests of the organisation.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
2. CSR IN THE 1960s
• Davis (1960) suggests that ‘social responsibility refers to the
businessmen's decision and action taken for reasons, at least,
partially beyond the firm's direct economic and technical
interest’.
– CSR being a nebulous idea, he believed, could possibly bring
enduring economic gains to the organisation as a return for its
socially responsible stance.
– His ‘Iron law of responsibility' states: 'social responsibilities of
businessmen need to be commensurate with their social power',
echoing the significance of 'social values' and 'corporate power‚
• Frederick (1960) defines it as the use of society’s resources,
economic and human, in such a way that the whole society
derives maximum benefits beyond the corporate entities and
their owners. His explanation clearly indicates that the
responsibility of management is not just creating wealth for the
business, but for the society too.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
2. CSR IN THE 1960s
• Further attempts by McGuire (1963) to elaborate the construct
‘CSR’, support Frederick’s approach by focussing on the firm’s
obligations extending beyond the economic and legal domains,
to include employee and community welfare and the political and
educational needs of the society.
• Following this, the notion of 'voluntarism' was acknowledged for
the first time by Walton (1967) in his book Corporate Social
Responsibilities. Walton was of the opinion that the social
responsibility of a corporationa always includes a certain degree
of voluntarism, since companies have to accept that costs are
involved in social actions without any measurable economic
return.
• He also argues that external stakeholders have a different set of
priorities and enterprises have choices, voluntary actions to
meet the expectations of external stakeholders.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
2. CSR IN THE 1960s
• The real debate was instigated when Friedman (1962) strongly
opposed the doctrine of CSR as ‘fundamentally subversive’.
According to him, the only responsibility of the management
is to maximise the profits of its owners and shareholders.
As an economist, he believed, only individuals can have
responsibilities.
• These approaches indicate that firms and businessman are
expected to look at concerns that are wider than the
technical and economic aspects of the organisation.
• Such theories can be considered as the basic foundations of the
modern CSR.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
3. CSR IN THE 1970s
• The first reference to stakeholders was made in Harold
Johnson’s (1971) Business in contemporary society: framework
and issues. The conventional of CSR is identified by Johnson as
being that ‘a socially responsible firm is one whose managerial
staff balances a multiplicity of interests instead of striving only
for larger profits for its shareholders’.
• The second pluralistic definition according to Johnson (1971) is
that ‘social responsibility assumes that the prime motivation of
the business firm is profit maximisation; the business seeks
multiple goals rather than only profit maximisation’.
• This can be perceived as a forerunner of stakeholder theory on
CSR participation.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
3. CSR IN THE 1970s
• One of the most important contributions to the definition of CSR
was made by the Committee for Economic Development (CED)
in 1971. The CED articulated a triple concentric model of the
concept. The inner circle includes the clear-cut basic
responsibilities for the efficient execution of economic functions
like productivity, job and economic growth reflecting.
CED Model
• Inner circle: Clear- cut basic responsibilities.
• Intermediate circle: Exercise economic function with awareness
of social values.
• Outer circle: Newly emerging responsibilities that business
should strive to become more broadly involved in for
improvement of social environment.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
3. CSR IN THE 1970s
• This shift in the paradigm of CSR from ‘the philosophical and
moral obligation’ (CSR1) to ‘the managerial and organizational
action’ (CSR2) was later documented by Frederick (1978).
• While CSR1 tends to be reactive, responding to the business
environment and social pressures, CSR2 is proactive and
anticipatory, aiming to impact and change enterprise
environments and thereby business performance.
– Within a CSR2 conception of CSR, it is the business which decides on
the level of its social response and economic issues take clear
precedence over social issues.
• In response to the CED’s (1971) separation of economic and the
broader social responsibilities across stakeholders, Davis
(1973) contended that CSR is a firm’s response to issues
beyond the narrow economic, technical and legal requirements
of a firm and therefore it begins where the law ends.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
3. CSR IN THE 1970s
• Eells and Walton (1974) took a broader view of corporate
activities which could be assumed as moving towards the
concept of social license that was to emerge more fully nearly
thirty years later.
– They suggested that a corporate executive must remain grounded in his
philosophy, open in his attitude and able to take decisive actions that
are immediately profitable and compatible with the accepted values of
his society.
• Sethi (1975) expounded a similar idea based on enterprises as
an integral part of the society. He proposed a three-tiered
model that classified corporate behaviour in terms of increasing
levels of commitment by enterprises, namely, social obligation (a
response to legal and market constraints); social responsibility
(congruent with societal norms); and social responsiveness
(adaptive, anticipatory and preventive).
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
3. CSR IN THE 1970s
• Towards the middle of this period, Ackerman and Bauer (1976)
proposed a sociological view of CSR.
• They define the social responsibility of an enterprise in terms of
its impact on its constituencies: its employees, customers,
owners, vendors, and the immediate and larger communities.
• Three major contributions to the debate on CSR:
– the success of CSR programs is dependent on the chief
executive officers of large companies and owners in SMEs, who
should be champions in displaying business Responsibility,
– enterprises should be proactive,
– both external and internal stakeholders can participate in CSR.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
3. CSR IN THE 1970s
• A step towards addressing
this confusion was taken
by Carroll after putting
forward a comprehensive
explanation of CSR.
• Carroll (1979) developed
a four-part corporate
social performance
model that accommodates
Friedman’s (1970) view of
the responsibilities of the
firm. The component parts
are focused on the
capitalistic and societal
expectations.
Social Responsibility categories
Source: Carroll (1979)
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
4. CSR IN THE 1980s
• One of the first noteworthy definitions in the 1980s was that of
Thomas M. Jones. He defines CSR as the ‘notion that
corporations have an obligation to constituent groups and
society other than stockholders and beyond that prescribed by
law and union contract’.
• He acknowledges that business and society are interwoven
as opposed to being distinct entities. Carroll points out that a
key part of the above definition is how ‘this obligation is broad
and voluntary’.
• In 1981, Frank Tuzzolino and Barry Armandi developed a
more effective tool for assessing CSR using Carroll’s definition
of CSR and Maslow’s (1954) hierarchy of needs model.
– They explained the different needs of various organisations.
Their organisational need hierarchy did not redefine CSR, but
suggested that organisations, like individuals, have needs they
want to fulfil.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
4. CSR IN THE 1980s
• Numerous representatives had tried to develop tools for
assessing CSR by the time Freeman (1984) published his
landmark book Strategic Management: A Stakeholder
Approach.
• Freeman’s book provides the basis for stakeholder theory
which is widely accepted by contemporary business
organisations as a useful way of investigating an
organisational approach to CSR.
• Though the book is classified as one focusing on strategic
management, its most substantial impact has been in the fields
of business and society, corporate social responsibility and
eventually business ethics.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
4. CSR IN THE 1980s
• Wartick and Cochran (1985) developed another model based
on Carroll’s (1979) construct of corporate social
performance, acknowledging the primacy of economic
performance.
• Their corporate social performance model extends the threedimensional
integration of responsibility, responsiveness
and social issues that Carroll (1979) had previously introduced
as a framework of principles, processes and policies.
• They argue that Carroll’s CSR definition embraces three ethical
components: social responsibility, which should be thought of as
principles; social responsiveness, which should be thought of as
processes; and social issues management, which should be
thought of as policies.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
4. CSR IN THE 1980s
• Epstein (1987) defines CSR as ‘achieving outcomes from
organizational decisions concerning specific issues which have
beneficial rather than adverse effects on pertinent corporate
stakeholders’.
• He viewed the three concepts – social responsibility, social
responsiveness and business ethics as ‘corporate social
policy processes’.
• He explains CSR as the achievement of certain outcomes but
when viewed with other constructs, such as business ethics and
social responsiveness, it was part of the proces.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
5. CSR IN THE 1990s
• The prominent themes which continued to grow and take centre
stage in the 1990s include corporate social performance (CSP),
stakeholder theory, business ethics, sustainability and corporate
citizenship.
• Wood (1991) criticises Carroll’s (1979) approach as involving
steps and phases of responsibility.
• She views the responsibilities defined by Carroll as being
delimited and therefore she considers them to be ‘isolated
domains’.
• Based on the interconnection between the firm and the society,
Wood (1991) superimposes the responsibility categories of CSR
with three levels of analysis and allocates principles to them
through her own interpretation.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
5. CSR IN THE 1990s
• Wood suggests that the principle of legitimacy becomes
effective on the ‘institutional’ level which states a business must
not use its power without justified reasons.
• From the ‘organisational’ level, the principle of public
Responsibility suggests firms will be responsible for their actions
which affect the society directly or indirectly.
• Finally, on the ‘individual’ level, managers need to be constantly
aware of the need to act according to moral points of view.
• Wood (1991) even turned Carroll's (1979) responsibility pyramid
upside down to include the interconnection between
corporations and society.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
5. CSR IN THE 1990s
• Simultaneously, Wood assigned the pyramid with three distinct
levels – the principle of corporate social responsibility, the
principle of corporate social responsiveness and the
outcomes of corporate behaviour.
• This model proposes that the moral responsibilities of
individual managers to make ethical decisions are the basis
of CSR components, followed by the organisation's obligation
to obey social and legal norms.
• Global influences on CSR continued in the 1990s as the roles of
business and government continued to blur. In 1997, Solomon
argued:
„New businesses are often the most powerful institutions in the
world and the expanse of social responsibility has enlarged to
include areas formerly considered as the domain of governments
... The more powerful businesses become, the more responsibility
for the well being of the world it will be expected to bear.“
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
5. CSR IN THE 1990s
• As the new millennium approached, Carroll (1999) also
suggested that the CSR concept will remain as an essential
part of the business language and practice because it is a
vital underpinning to many of the theories and is continually
consistent with what the public expects of the business
community today.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
6. CSR IN THE 21st CENTURY
• The 21st century has been dominated by several wide-ranging
topics including international trade, concerns over energy
supply, global warming, the explosion in telecommunications, a
growing concern with international terrorism and an escalation of
social issues which first became prominent in the 1990s.
• Along with the development of global business, recent
literature appears to be moving away from a US-dominated
discourse to a more international one.
• Representatives like Maignan and Ralston (2002), Aaronson
(2003), Perrini et al. (2006) and Lucas et al. (2001) studied
CSR in France, Netherlands, UK, Italy and Australia. They
extended the debate to other countries and compared national
perceptions of CSR along with its role in the global society.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
6. CSR IN THE 21st CENTURY
• Another group of researchers attempted to establish the
relationship between social performance and the financial
outcome of the organisations.
• Orlitzky (2005) found participation in socially responsible
activities reduces the financial risk of businesses.
• For the first time, several studies of this period aimed to
examine CSR in SMEs (Grayson 2004; Spence et. al. 2000;
Spence and Rutherford 2003; Tilley 2000). Jenkins (2004) and
Castka et al. (2004) criticise the word 'corporate' in the term
CSR as misleading because it fails to accommodate and
appreciate socially responsible actions undertaken by smaller
organisations.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
6. CSR IN THE 21st CENTURY
• After exploring the characteristics of SMEs in comparison to
large organisations, Spence (2007) justifies implementing CSR
policies that consider the capacities and capabilities of both the
business sectors.
• In 2006, Francesco Perrini came up with a suggestion for the
use of theories to investigate CSR. He suggested that CSR in
large firms should be based on stakeholder theory while CSR in
SMEs should be understood through the application of social
capital theory.
• Later, Russo and Perrini (2009) modified the above conclusion
and restated it as ‘social capital and stakeholder theory should
be taken as alternative ways of explaining CSR in large
organisations and SMEs’. They also opined that SME-CSR
relations are better explained in terms of social capital, although
it should be accompanied by the stakeholder view of the firm.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
6. CSR IN THE 21st CENTURY
• Finally, the following statement of Horrigan (2007, p. 85) best
portrays the status of CSR at the end of 21st century’s first
decade:
– It is also a story of the emergence of a distinctive CSR movement.
Both the developer and developing worlds are rapidly reaching the point
where they must decide if today’s global CSR movement is a
passing social fad, a threat to economically efficient corporate
capitalism, an intrinsic element of corporate responsibility, or
even a key to humanity’s long-term survival.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
7. EUROPEAN AND INTERNATIONAL INFLUENCES ON
CSR
• In the context of national and international developments,
Corporate Social Responsibility is becoming an
increasingly important element on national and
transnational policy agendas.
• An ever more diverse range of businesses are adopting CSR
strategies as a core part of their business model. In addition
to heightened publicity around this issue, the profile of CSR is at
least partly due to the emphasis placed on responsible business
conduct on the EU policy agenda.
• The adoption and dissemination of international standards is
also mirrored in developments at the national level. These have
gained further recognition as a result of a number of high profile
examples of human rights violations in business practice with
devastating consequences.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
7. EUROPEAN AND INTERNATIONAL INFLUENCES ON
CSR
• The 2011 Commission Communication invited Member States to
“develop or update their own plans or national lists of priority
actions to promote CSR in support of the Europe 2020 strategy,
with reference to recognised CSR principles and guidelines and
in cooperation with enterprises and other stakeholders…”.
• In this context, the Commission also undertook to “create with
Member States in 2012 a Peer Review mechanism for national
CSR policies”.
• This compendium is one of the outcomes of the Peer Reviews
on CSR which took place throughout 2013.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
SUMMARY OF THE LECTURE
• The concept of corporate social responsibility (CSR) has a long
and varied history. It is possible to trace evidences of the
business community’s concern for society for centuries. Formal
writing on social responsibility, however, is largely a product of
the 20th century, especially the past 50 years.
• Howard Bowen’s (1953) book Social Responsibilities of the
Businessman, stands out during this period. It was proposed
that Bowen deserves the appellation of the Father of Corporate
Social Responsibility.
• The most notable contributions to the definitional construct
during the 1970s included the works of Johnson, the CED,
Davis, Steiner, Eells and Walton, Sethi, Preston and Post, and
Carroll.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
SUMMARY OF THE LECTURE
• In the 1980s, we witnessed fewer original definitions of CSR,
more attempts to measure and conduct research on CSR, and
alternative thematic frameworks.
• Wood (1991) expanded and set forth a CSP model that
captured CSR concerns. During that time, there was a
continuation of a trend begun earlier to operationalize the CSR
concept and to articulate other concepts that were consistent
with CSR theory.
• The CSR concept will remain as an essential part of business
language and practice, because it is a vital underpinning to
many of the other theories and is continually consistent with
what the public expects of the business community today.
EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
SUMMARY OF THE LECTURE
• It appears that the CSR concept has a bright future because at
its core, it addresses and captures the most important concerns
of the public regarding business and society relationships.
Recomended study
– Naomi Williamson, Astrid Stampe-Knippel, Tina Weber, 2014.
Corporate Social Responsibility - National Public Policies in the European
Union, CSR Compendium 2014, European Commission
– Blowfield, Murray, 2014. Corporate Responsibility, Oxford
University pres, (chapter 2)