LDR 6135 Student Research Paper Corporate Social Responsibility

Running Head: Student Research Paper Corporate Social Responsibility

Corporate Social responsibility

Student Research Paper

Ardavan A. Shahroodi

Northeastern university

LDR 6135-The Ethical Leader

Dr. Hernan Murdock

Friday, October 10, 2014

Student Research Paper Corporate Social Responsibility

Introduction

This paper presents various definitions and theories that have been presented as

expressions of corporate social responsibility (CSR). In this paper attention has been paid to

present interpretations that support a CSR posture for companies as well as a particular narrative

that regards CSR as not in line with the true nature and responsibilities of a corporation. The

paper also discusses the business rationalization and many approaches and examples of CSR. In

the last section of the paper, an analysis of the CSR concept also includes the opinion of this

writer and the personal experience that became associated with such an effort in the workplace.

Most importantly, CSR is presented in the last section of this paper as a natural, proper and

urgently needed evolution of the leadership role companies play in our society and globally.

Definition

The search for producing a precise and mutually agreed upon definition of corporate

Social responsibility (CSR) may be highly elusive, since for a “subject that has been studied for

so long, it is unusual to discover that researchers still do not share a common definition or set of

core principles, that they still argue about what it means to be socially responsible, or even

whether firms should have social responsibilities in the first place” (Crane, McWilliams, Matten,

Moon & Siegel, 2008, p. 4). Importantly, it must be acknowledged that the research on CSR has

been largely “expansive [rather] than accumulative” (Crane, McWilliams, Matten, Moon &

Siegel, 2008, p. 4). Indeed, among researchers, the business community and the public at large

there remains a fundamental disagreement on “whether CSR is good for business or not” (Crane,

McWilliams, Matten, Moon & Siegel, 2008, p. 4). Nevertheless, in recent years, in spite of the

presence of a high “degree of ambiguity and disagreement” (Crane, McWilliams, Matten, Moon

& Siegel 2008, p. 4) on the very definition and benefits of such a corporate posture, an ever


increasing number of organizations have adopted policies and practices that are presented as in

line with the general characteristics of CSR.

There are indeed numerous definitions of CSR generated from a variety of

sources. Sharp (2006) defines CSR as the “recognition that companies are social entities, with

explicit commitments beyond short-term-and even long-term shareholder profit maximization”

(p. 201). University of Washington Center for Leadership and Social Responsibility (UWCLSR)

(n. d.) observes in its Website that CSR “is a form of corporate self-regulation integrated into a

business model…functions as a built-in, self-regulating mechanism whereby a business monitors

and ensures its active compliance with the spirit of the law, ethical standards and international

norms…with the aim to embrace responsibility for the company’s actions and encourage a

positive impact through its activities on the environment, consumers, employees, communities,

stakeholders and all other members of the public sphere who may also be considered as

stakeholders” (Definition of Corporate Social Responsibilities). In relation to the concept of

sustainability and how it relates to CSR, the UWCLSR (n. d.) Website states that sustainable

business practices “…will not deplete, destroy, or completely use up natural resources…can

persist over long periods of time…are able to last perpetually” (Definition of Sustainability).

UWCLSR (n. d.) Website also describes philanthropy as a “core pillar of corporate citizenship”

(Philanthropy).

CSR is also described as the “voluntary assumption of responsibilities that go beyond the

purely economic and legal responsibilities of business firms” (Boatright, 2009, p. 352) but also

governed by considerations for “ethical standards or judgments of social desirability” (p. 352).

Here, CSR may be in line with the “corporate objective of earning a satisfactory level of profit,

but it implies a willingness to forgo a certain measure of profit in order to achieve noneconomic


ends” (Boatright, 2009, p. 352). The Investopedia (n. d.) Website defines CSR as a “corporate

initiative to assess and take responsibility for the company’s effects on the environment and

impact on social welfare…efforts that go beyond what may be required by regulators or

environmental protection groups…can involve incurring short-term costs that do not provide an

immediate financial benefit to the company, but instead promote positive social and

environmental change” (Definition).

One noted commentator, Carroll (1979) views CSR as transpiring on a “four-stage

continuum” (as cited in Boatright, 2009, p. 352). Carroll (1979) argues in addition to economic

and legal duties, firms must fulfill “ethical responsibilities, which are additional behaviors and

activities that are not necessarily codified into law but nevertheless are expected of business by

society’s members…At the far end of the continuum are discretionary responsibilities…not

legally required or even demanded by ethics, but corporations accept them in order to meet

society’s expectations” (as cited in Boatright, 2009, p. 352). Sethi (1975) observes that “in most

of the advanced nations of the world, fulfilling traditional economic and legal responsibilities is

no longer regarded as sufficient for legitimizing the activity of large corporations” (as cited in

Boatright, 2009, p. 352) consequently CSR must be understood as “bringing corporate behavior

up to a level where it is congruent with the prevailing social norms, values, and expectations of

performance” (as cited in Boatright, 2009, p. 352).

Jones, Wicks & Freeman(2002/2006) mention that Jones (1980) proposes that CSR is the

“notion that corporations have an obligation to constituents groups in society other than

stockholders and beyond that prescribed by law or union contract” (as cited in Bowie,

2002/2006, p. 21). The World Business Council for Sustainable Development (n. d.) describes

CSR as the “continuing commitment by business to contribute to economic development while


improving the quality of life of the workforce and their families as well as of the local

community and society at large” (Corporate Social Responsibility, The WBCSD ‘s definition of

CSR, n. d.). An additional definition by Cramer & Karabell (2010) found in the Business for

Social Responsibility (n. d.) organization Website holds that “a sustainable business is one that

delivers for investors, customers, and employees; improves the living standards of its employees

and the communities it touches; make wise use of natural resources; and treats people fairly” (as

cited in Olson, BSR and the state of CSR, What We mean When We Say CSR). Furthermore,

the European Commission (n. d.) Website proposes that CSR “refers to companies taking

responsibility for their impact on society…CSR is increasingly important to the competitiveness

of enterprises…It can bring benefits in terms of risk management, cost savings, access to capital,

customer relationships, human resource management, and innovation capacity” (Corporate

Social Responsibility).

Arguments For and Against Corporate Social Responsibility

In regards to arguments for and against CSR, Mele (2008) cites Klonoski (1991) who

identifies three distinct types of general theoretical approaches(as cited in Crane, McWilliams,

Matten, Moon & Siegel, 2008, p. 47). Mele (2008) states that Klonoski (1991) labels the first

group of theories as having a “fundamentalism” (as cited in Crane, McWilliams, Matten, Moon

& Siegel, 2008, p. 47) orientation asserting that “corporations are only legal artifacts and the

only social responsibility of business is increasing profits in compliance with the law” (as cited

in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 47). Mele (2008) indicates that

Klonoski (1991) observes, the second cluster of interpretations “defend the corporations’ moral

personhood and point to its moral agency…can be held morally responsible for their actions” (as

cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 48). In a third group of theories,


Mele (2008) holds that Klonoski (1991) has found “the social dimension of the corporation is

particularly relevant…the roots of these theories are in political and ethical theories (as cited in

Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 48).

In addition, Mele (2008) also mentions Windsor (2006) who separates approaches to

CSR into three separate categories (as cited in Crane, McWilliams, Matten, Moon & Siegel,

2008, p. 48). Mele (2008) states that the first category is called by Windsor (2006) the “ethical

responsibility theory…presents strong corporate self-restraint and altruistic duties and expansive

public policy to strengthen stakeholders’ rights” (as cited in Crane, McWilliams, Matten, Moon

& Siegel, 2008, p. 48). Mele (2008) holds that the second category is referred to by Windsor

(2006) as the “economic responsibility theory…advocates market wealth creation subject only to

minimalist public policy and perhaps customary business ethics” (as cited in Crane, McWilliams,

Matten, Moon & Siegel, 2008, p. 48). The third category, Mele (2008) mentions, is labeled by

Windsor (2006) as “corporate citizenship…invokes a political metaphor which provides neither

true intermediate positioning nor theoretical synthesis” (as cited in Crane, McWilliams, Matten,

Moon & Siegel, 2008, p. 48).

Mele (2008) recalls that Garriga & Mele (2004) have divided CSR theories into four

different general groupings (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p.

49). Mele (2008) explains that the first approach, called the “Corporate Social Performance” (as

cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 49) (CSP), is described by Wood

(1991b) as promoting “the configuration in the business organization of principles of social

responsibility, processes of response to social requirements, and policies, programs and tangible

results that reflect the company’s relations with society” (as cited in Crane, McWilliams, Matten,

Moon & Siegel, 2008, p. 49). Mele (2008) observes that CPS asserts that “business, apart from


wealth creation, also has responsibilities for social problems created by business or by other

causes, beyond its economic and legal responsibilities” (as cited in Crane, McWilliams, Matten,

Moon & Siegel, 2008, p. 49).

In relation to this theory, Mele (2008) cites Bowen (1953), one of the most important

pioneers of CPS and indeed all CSR who has argued in his landmark work Social Responsibility

of the Businessman that “the social responsibility of the businessmen [at this time the presence of

women in management was rare] refers to the obligation of businessmen to pursue those policies,

to make decisions, or to follow those lines of action which are desirable in terms of the

objectives and values of our society” (as cited in Crane, McWilliams, Matten, Moon & Siegel,

2008, p. 50). In addition, Jones, Wicks & Freeman (2002/2006) observe that Bowen (1953)

contended that “business leaders are servants of society and that management merely in the

interests (narrowly defined) of stockholders is not the sole end of their duties” (as cited in Bowie,

2002/2006, p. 22). Interestingly, Jones, Wicks & Freeman (2002/2006) emphasize that in post

WWII, the concept of CSR “as an ideal at least, was imposed on business by business itself” (as

cited in Bowie, 2002/2006, p. 22).

As a further expression of CPS, in a landmark report, the Committee for Economic

Development (1971) explained the responsibilities of business as “consisting in three concentric

circles” (as cited in Boatright, 2002/2006, p. 352). The report stated that the “inner circle

includes the clear-cut basic responsibilities for the efficient execution of the economic function-

products, jobs, and economic growth” (as cited in Boatright, 2002/2006, p. 352). The report

adds that the “intermediate circle encompasses responsibility to exercise this economic function

with a sensitive awareness of changing social values and priorities: for example…environmental

conservation…hiring and relations with employees…fair treatment, and protection from injury”


(as cited in Boatright, 2009, p. 352). Lastly, the report observes that the “outer circle outlines

newly emerging…responsibilities that business should assume to become more broadly involved

in actively improving the social environment…Society is beginning to turn to corporations for

help with major social problems such as poverty and urban blight” (as cited in Boatright, 2009,

p. 352).

Mele (2008) mentions, Garriga & Mele’s (2004) second grouping of CSR theories is

referred to as the “Shareholder Value Theory” (as cited in Crane, McWilliams, Matten, Moon &

Siegel, 2008, p. 55) (SVT) or “Fiduciary Capitalism” (p. 55). Mele (2008) states that these

category of theories argue that the “only social responsibility of business is making profits and,

as the supreme goal, increasing the economic value of the company for its shareholders” (as cited

in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 55). In addition, Mele (2008) observes

that the proponents of SVT hold that “other social activities that companies could engage in

would only be acceptable if they are prescribed by law or if they contribute to the maximization

of shareholder value” (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 55).

Here, Mele (2008) cites one of the most ardent promoters of the SVT, Milton Friedman

(1962) who insisted that “there is one and only one social responsibility of business-to use

resources and engage in activities designed to increase its profits so long as it stays within the

rules of the game, which is to say, engages in open and free competitions, without deception or

fraud” (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 55). In this light, Mele

(2008) cites a New York Times Magazine article where Friedman (1970) argued, “the only one

responsibility of business towards the society is the maximization of profits to the shareholders,

within the legal framework and the ethical custom of the country” (as cited in Crane,

McWilliams, Matten, Moon & Siegel, 2008, p. 55).


In defending the SVT approach, in one of his much cited passages, Friedman (1970)

holds,

“in a free-enterprise, private-property system, a corporate executive is an employee of the

owners of the business. He has a direct responsibility to his employers. That responsibility is to

conduct the business in accordance with their desires, which generally will be to make as much

money as possible” (as cited in Hartman, 2002, p. 226).

James & Rassekh (n. d.) state that Friedman (1970) believes, “corporate executives who

pursue any goal other than profit maximization, such as advancing social causes, may not know

what constitutes society’s best interest, and they may do it at the expense of some other people”

(as cited in Hartman, 2002, p. 253). Boatright (2009) observes that “Friedman’s [1970] main

argument against CSR is that corporate executives, when they are acting in their official capacity

and not as private persons, are agents of the shareholders of the corporation…As such,

executives of a corporation have an obligation to make decisions in the interests of the

shareholders, who are ultimately their employers” (p. 357).

Additionally, James & Rassekh (n. d.) observe that Friedman (1970) contends,

“a corporate executive who forgoes maximum profit by spending corporate money on

social causes is imposing taxes on the stockholders and is deciding how the tax proceeds shall be

spent…When this occurs…the executive ceases to be an employee of private enterprise and

instead becomes a self-selected public employee or civil servant…who seeks to attain by

undemocratic procedures what he cannot attain by democratic procedures” (as cited in Hartman,

2002, pp. 253-254).


James & Rassekh (n. d.) add that “even if the actions can be justified as serving the

corporate interest because they promote the company’s product, Friedman (1970) rejects such

actions as hypocritical window dressing and considers them to be approaching fraud” (as cited

in Hartman, 2002, p. 254).

Nevertheless, James & Rassekh (n. d.) hold that Friedman (1970) does state that “the

pursuit of profit must be constrained by both legal and ethical considerations…Business

executives should maximize profits while conforming to the basic rules of the society, both those

embodied in law and those embodied in ethical custom” (as cited in Hartman, 2002, p. 254).

Mele (2008) holds, Garriga & Mele’s (2004) third approach to understanding CSR is

referred to as the “Stakeholder Theory” (as cited in Crane, McWilliams, Matten, Moon & Siegel,

2008, p. 62). Here, Mele (2008) mentions Jones’ (1980) (as has been referred to in the

Definition section of this paper) argument that “corporations have an obligation to constituent

groups in society other than stockholders and beyond that prescribed by law or union contract”

(as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 62). Significantly, it must be

stated that a number of the proponents of the Stakeholder Theory, Mele (2008) observes, such as

Freeman & Liedtka (1991) observe that “CSR is not a useful idea and it must be abandoned…the

question of social responsibility just doesn’t come up if stakeholders are…defined to include

suppliers, community, employees, customers, and financiers” (as cited in Crane, McWilliams,

Matten, Moon & Siegel, 2008, p. 62).

Mele (2008) notes that Freeman & Liedtka (1991) propose that “corporations have

responsibility to all the parties affected by business activity, that is, responsibilities towards the

stakeholders of the firm” (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 62).

In addition, Mele (2008) states that Evan & Freeman (1988) held that “the corporation ought to


be managed for the benefit of its stakeholders: its customers, suppliers, owners, employees, and

local communities, and to maintain the survival of the firm” (as cited in Crane, McWilliams,

Matten, Moon & Siegel, 2008, p. 63). Indeed Mele (2008) observes that “there are a variety of

approaches to the stakeholder theory” (p. 63) and Clarkson (1995) may have captured the

essence of these interpretations by stating that “the firm is a system of stakeholders operating

within the larger system of the host society that provides the necessary legal and market

infrastructure for the firm activities…the purpose of the firm is to create wealth or value for its

stakeholders by converting their stakes into goods and services” (as cited in Crane, McWilliams,

Matten, Moon & Siegel, 2008, p. 63).

Mele (2008) states that Garriga & Mele (2004) label the fourth CSR interpretations as

“Corporate Citizenship” (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 68)

(CC) theories. Here, Mele (2008) cites Carroll (1991) who asserts being “a good corporate

citizen includes actively engaging in acts or programs to promote human welfare or good will”

(as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 68). In addition, Mele (2008)

observes, Carroll (2004) also argues that, “be a good global corporate citizen is related to

philanthropic responsibility, which reflects global society’s expectations that business will

engage is social activities that are not mandated by law nor generally expected of business in an

ethical sense” (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p. 69).

Furthermore, Mele (2008) holds that an expanded understanding of CC proposes that “while

CSR is more concerned with social responsibilities as an external affair, CC suggests that

business is a part of society” (as cited in Crane, McWilliams, Matten, Moon & Siegel, 2008, p.

69). In this light, Mele (2008) mentions Lodgsdon & Wood (2002) who observe such an

evolution involve “a profound change in normative understanding of how business organization


should act in respect to stakeholders” (as cited in Crane, McWilliams, Matten, Moon & Siegel,

2008, p. 69).

The Business Rationalization and Contemporary Examples of Corporate Social

Responsibility

The Economist magazine in a 2008 special report observes, “One way of looking at CSR

is that it is part of what businesses need to do to keep up with (or, if possible, stay slightly ahead

of) society’s fast-changing expectations…It is an aspect of taking care of a company’s

reputation, managing its risk and gaining a competitive advantage…This is what good managers

ought to do anyway…Doing it may simply involve a clearer focus and greater effort than in the

past” (as cited in Boatright, 2009, p. 361). Porter & Kramer (2006) propose that CSR if woven

competently into the strategic posture of the company may potentially offer dividends internal to

the organization in addition to facilitating positive social contributions externally. In this light,

Porter & Kramer (2006) argue,

“The fact is, the prevailing approaches to CSR are so fragmented and so disconnected

from business and strategy as to obscure many of the greatest opportunities of companies to

benefit society…If, instead, corporations were to analyze their prospects for social responsibility

using the same frameworks that guide their core business choices, they would discover that CSR

can be much more than a cost, a constraint, or a charitable deed-it can be a source of opportunity,

innovation, and competitive advantage” (as cited in Boatright, 2009, p. 364).

In general, there are various “types of corporate activities that show social responsibility”

(Boatright, 2009, p. 353). A first approach may concentrate on “choosing to operate on an

ethical level that is higher than what the law requires…For example Motorola’s code of ethics


prohibits payments of any kind to a government official, even when the payments are permitted

by U.S. and local law” (Boatright, 2009, p. 353). Donaldson (1996) also cites Motorola’s “code

of conduct” (p. 55) that states “funds and assets of Motorola shall not be used, directly or

indirectly, for illegal payments of any kind…the payment of a bribe to a public official or the

kickback of funds to an employee of a customer” (pp. 55-56). Donaldson (1996) emphasizes

that codes of conduct and statements of values must be “unambiguous” (p. 55), “explicit” (p. 55,

56) and “specific” (p. 56).

A second type of corporate CSR activity emphasizes “making contributions to civic and

charitable organizations and nonprofit institutions…American companies contribute, on average,

1 percent of pre-tax net revenues to worthy causes, and many larger corporations operate

nonprofit foundations that fund grant applications from worthy philanthropic organizations”

(Boatright, 2009, p. 353). The third category of corporate CSR posture is in “providing benefits

for employees and improving the quality of life in the workplace beyond economic and legal

requirements…Examples include family-friendly programs such as flexible work and childcare,

and time off for volunteer work” (Boatright, 2009, p. 353).

A fourth approach to CSR proposes “taking advantage of an economic opportunity that is

judged to be less profitable but more socially desirable than some alternatives…For example,

Starbucks pays an above-market rate for fair-trade coffee that benefits growers in poor countries”

(Boatright, 2009, p. 353). The fifth kind of effort in emphasizing CSR underscores “using

corporate resources to operate a program that addresses some major social problems…AT&T

devotes substantial resources to promoting diversity among its employees, suppliers, and local

communities” (Boatright, 2009, p. 353). Here a number of organizations’ codes of conduct

mentioned under the first general type of CSR activity concern themselves with addressing the


manifestations of social problems in the workplace such as “freedom of association, child labor,

discrimination, harassment, wages, working hours, and health and safety, all under the rubric of

CSR” (Marihugh, Corporate Social Responsibility: An Insider’s View, Dollars & Sense,

May/June 2006).

In regards to CSR approaches to environmental protection and climate policy, Evan Juska

(2014), “head of US policy at the Climate group, which organizes Climate Week NYC” (Kho,

Sea Change: Big Businesses Now Support Climate Policy, The Guardian, September 26, 2014)

commenting on the 2014 United Nations Climate Summit has observed, “this year, there are far

more stakeholders-including companies-engaged, and [support for carbon regulation] has

rebounded from the low point of 2010” (as cited in Kho, September 26, 2014). The World Bank

(2014) has stated recently that “it had received pledges of support for carbon pricing from 1,000

companies and investors, as well as 73 national and 11 regional governments, while 31

companies committed to being carbon pricing champions” (as cited in Kho, September 26,

2014).

Juska (2014) believes the increasing support for climate policies are rooted in the reality

that “clean energy has grown a lot cheaper and has become far more mainstream investment” (as

cited in Kho, September 26, 2014). Here, Michael Liebreich (2014), “head of Bloomberg New

Energy Finance” (Kho, September 26, 2014) emphasizes that there is a “sense of inevitability”

(as cited in Kho, September 26, 2014) surrounding the debate on climate policy and “a growing

appetite and interest in finding ways to harness the great growth industry of the 21st century,

which is clean energy’ (as cited in Kho, September 26, 2014). All these are influencing a

gradual “change in business attitude from viewing climate change only as a risk to also viewing

it as an opportunity” (Kho, September 26, 2014).


Crucially, the reality remains that “global emissions continuing to rise instead of shrink…

there’s still plenty of skepticism about whether business growth will be able to bring about the

needed cuts” (Kho, September 26, 2014). As the matter of fact, a series of industry specific

reports by University of Cambridge Institute of Sustainability Leadership in cooperation with

European Climate Foundation have projected “widespread disruption, even for industries that are

not normally considered vulnerable to environmental hazard” (as cited in LaMonica, What

Businesses Need to Know About the Latest Climate Science, The Guardian, September 23,

2014). Wittington (2014), “the climate change director at the Institute for Sustainability

Leadership” observes that climate change must not only be regarded by business as a “ drag on

future prosperity” (as cited in LaMonica, September 23, 2014) rather it must also be understood

as creating “new businesses and market opportunities” (as cited in LaMonica, September 23,

2014).

Some prominent businesses have also come to the realization that the general public must

be viewed as a partner thereby motivated, encouraged and mobilized in order to effectively assist

in efforts to prevent climate change. In this spirit, a group of major companies ‘have jointly

created a digital platform for young people to take action against climate change” (Confino, The

Guardian, October 6, 2014). The organization called Collectively.org sponsored and supported

by conglomerates such as Coke, Pepsi, Unilever, Nestle, Johnson & Johnson, Google, WPP,

Omnicom, Microsoft and others does not allow branding and corporate logos in the

accompanying Website. This effort represents “an increasing willingness to join forces in the

public arena” (Confino, The Guardian, October 6, 2014) by the aforementioned corporations

who stated, “the pace and scale of what’s required now demands new business models, based on


radical collaboration with each other, with NGOs and with consumers” (as cited in Confino, The

Guardian, October 6, 2014).

Your Personal and Professional Experience and Your Opinion About the Role of

Organizations in Our Society as it Relates to Corporate Social Responsibility

One of the most important statements that has been presented in this course is the

following argument by Sharp (2006) that “a society is able to function only if its members adopt

a code of behavior under which individuals restrict their self-interest for the greater long-term

good of the society (Introduction, XV). Sharp (2006) also observes that “traditional economic

analysis essentially ignores the cost imposed by firms on the environment, treating it as an

externality-in effect beyond analysis…Financial reporting, which takes a shareholder/owner

perspective, is equally flawed, in that the only costs that it includes in the calculation of profit are

those incurred by firm” (p. 201). Consequently, in these analysis, the “costs that the firm

imposes on others (such as the cost of pollution) are excluded (as is the value of inputs that the

environment provides without cost, such as clean air and water)” (Sharp, 2006, p. 201).

A further crucial learning in this course is the observation by Donaldson (1996) that

managers and leaders must be guided by a collection of “core human values, which define

minimum ethical standards for all companies” (p. 53). Donaldson (1996) refers to these core

human values as the “respect for human dignity, respect for basic rights and good citizenship” (p.

54). Here, Donaldson (1996) emphasizes that leaders and managers “must not treat others

simply as tools…they must recognize a person’s value as a human being…treat people in ways

that respect people’s basic rights …members of a community must work together to support and

improve the institutions on which the community depends” (p. 53). Donaldson (1996) concludes

these “core values establish a moral compass for business practice” (p. 54).


The aforementioned observations illustrate that progress and effective management of

crisis remain very much elusive if members or certain relevant sections of society are incapable

or unwilling to actively engage in the act of cooperation and problem solving. In light of the

economic, social and political challenges that loom in the horizon, these observations also

indicate that whereas in the past we were willing or able to disregard factors such as externalities

or the cost of business operations on the environment, we no longer possess the luxury of such

neglect. This is not to call for imposing draconian restrictions on business activity, rather to

bring attention on a desperate need for cooperation and coordination among societies’ productive

forces in order not to compromise future prosperity or sustainability. Consequently, I

understand CSR, as the ability and willingness of one of the most productive forces in our society

(corporations) to cooperate with other groups and sectors including stakeholders in order to

preserve and promote mutual welfare.

In our own society, we have offered great leeway to businesses in the conduct of

commerce in line with our understanding of liberty and the pursuit of happiness and facilitated

their operation and growth within the parameters of an evolving legal and regulatory framework.

Simultaneously, our society has maintained a deep belief over time in the promise and ability of

businesses and the free enterprise system to act as the most efficient and resilient engines of

wealth creation and economic opportunity. Nevertheless, crucially, in periods of national

emergency, whether during the 1930s Great Depression/New Deal Era, the WWII campaign or

even the more recent 2007/2008 Financial Crisis, in order to promote wider national priorities,

we have deemed it necessary to implement greater governmental oversight of business activity.

The future reality that we are fast approaching is an overpopulated and resource hungry

planet, where its productive forces and centers are unable to cooperate and coordinate their


efforts sufficiently towards promoting sustainability and environmental preservation. Scharmer

(September 26, 2014) observes, “we live in an age of profound disruption. Global crisis-

financial, food, fuel, natural resources, poverty-challenge almost all societies…Yet over the

coming decades these disruptions will also create, and are creating, opportunities for profound

personal, social and global reward” (8 Institutional Innovations that Could Update the Economic

System, The Guardian). As has been indicated earlier in this paper, many companies and

organizations are searching for and locating opportunities in place of economic dislocation in

coming to terms with the effects of climate change and environmental degradation. As a related

CSR practice that has been adopted by many major global firms, “surveys of corporate

disclosure practices consistently find that more than 90% of the world’s 250 largest companies

now publicly report on aspects of their sustainability performance” (Searcy & Ahi, Reporting

Supply Chain Sustainability: A Myriad of Metrics, The Guardian, September 26, 2014).

The fact remains that whether we understand CSR in terms of cooperation and

coordination with other sectors and groups in society in order to face future challenges or in

relation to the commercial opportunities that are presented to the firm or for that matter as a

purely marketing, advertising and public relations posture, presently the ideologically tainted

refrains of Friedman (1970) have been proven to be largely irrelevant and simply outdated. As

the matter of fact a BusinessWeek/Harris (1996) “poll of over 1,000 Americans found that 95

percent reject the notion that a corporation’s role is limited to profit maximization” (as cited in

Hartman, 2002, p. 222). The important point being that the aforementioned poll was conducted

in 1996 when the very concept of CSR did not enjoy the present overwhelming acceptance in

American society.


The irony of the present circumstances in the face of insurmountable future challenges is

the poignant reality that the adoption of business practices and leadership conduct that is in line

with Donaldson’s (1996) core human values may prove to be the sole remaining effective and

competent solution in securing a sustainable existence for our planet. When “respect for human

dignity, respect for basic rights and good citizenship” (Donaldson, 1996, p. 54) are inculcated in

the ideals of CSR, the resulting authenticity and good will may prove to be the most resilient and

long lasting of corporate assets. Here, two particular understanding in the practice of leadership

may prove to be indispensable in an honest execution of CSR. In the first, labeled as

Transformational Leadership, the act of,

“leadership occurs when one or more persons engage with others in such a way that

leaders and followers raise one another to higher levels of motivation and morality…Their

purposes, which might have started as separate but related, as in the case of transactional

leadership, become fused…Power bases are linked not as counterweights but as mutual support

for common purpose” (Burns, 1978/2010, p. 20).

The second approach to leadership, referred to as Servant Leadership,

“begins with the natural feeling that one wants to serve, to serve first…Then conscious

choice brings one to aspire to lead…he is sharply different from the person who is leader first,

perhaps because of the need to assuage an unusual power drive or to acquire material

possessions…The difference manifests itself in the care taken by the servant first to make sure

that people’s highest priority needs are being served …The best test, and difficult to administer,

is: do those served grow as persons; do they, while being served, become healthier, wiser, freer,

more autonomous, more likely themselves to become servants?” (Greenleaf, 1970/2008, p. 15).


Both Transformational and Servant approaches are voluntary and self-generated states of

conduct where the act of leadership is deemed to be more effective when implemented through

cooperation, coordination and a sincere regard for ethical conduct. When CSR policies and

practices are adopted and implemented in combination with good faith interpretations of

Transformational and Servant leadership, the resulting set of behavior will become more

competent is addressing present and future intractable global problems.

In my own CSR oriented activity that I performed voluntarily in the Hospitality and

Tourism Industry resulting in the training of numerous entering service providers, the need for

competent and effective service to the public was ever present and critical. However, this need

did not confine itself to the welfare of the public or customers/guests for that matter; rather the

intention was to also help these future service providers themselves in their goal of achieving

high levels of competency and proficiency in their chosen profession. Additionally, the industry

and the municipality benefited from acquiring service providers who had been trained in the

basic elements of service, conflict resolution, professionalism and other workplace or business

related matters.

Crucially, the training that I continued for a number of years benefited me in my ability

to help others reach their potential and simultaneously provide for their families. This work

offered me great psychological satisfaction and greatly enhanced my feelings of ethical

legitimacy. Nevertheless, I am also very cognizant of the reality that without the cooperation of

the municipality, the industry, others who were involved in the administration of the school or

training of these future service providers, my own personal efforts in training these individuals

would have never come to fruition


Conclusion

CSR is first and foremost an ethical mind set concerned with the responsibilities of a firm

towards society. Traditionally, it has been argued that companies’ sole responsibility must be

seen in terms of profit maximization, adherence to the law and the practice of society’s moral

standards. As necessary and indispensable these duties remain for corporations, our planet is

expeditiously approaching a phase where a much higher level of dedication for problem solving

and performance is necessary among all productive entities. In this highly critical environment,

CSR must move companies in cooperation and coordination with governments, NGOs, other

firms, stakeholders and the public into a serious state of collaboration in order to address the

world’s most pressing needs such as climate change, environmental degradation, poverty, hunger

and incessant/destructive conflict. Here these coordinated efforts must be implemented with the

realization that time is of the essence and the hour of opportunity is increasingly fleeting.


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LDR 6135 Student Research Paper Corporate Social Responsibility

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