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Topic Overview – Corporate Social Responsibility, Business Ethics, and Stakeholder’
LO.1 explain the theory and practice of businesses (COI, CID, SID)
LO.2 describe a range of current problems and changes that organizations face in being successful (COI,
CID, IC, SID).
LO.3 critically evaluate research and theory to support decision-making and explain progress (COI, CID,
LO.5 students will discuss good practice for organization success (COI, CID, SID).
LO.6 undertake a critical audit of skills and capabilities for a professional career and identify areas
required for improvement (COI, CID, EID).
1.Corporate Social Responsibility (CSR)
CSR has been in longer term use as an explicit framework to better understand the business and society
relationship. One research paper claimed to find at least 37 different definitions of CSR. Obviously, we
cannot consider them all. Early on, CSR was used as a general term arguing that managers ought to
seriously consider their impacts on society. It was later thought to embrace those actions which
managers and organizations take to protect and improve the welfare of society along with business’s own
interests. In this view there are two active aspects of CSR, protecting and improving. According to
Epstein (1987), to protect society implies that companies need to avoid their negative impacts (e.g.
pollution, discrimination, unsafe products). To improve the welfare of society suggests that companies
need to create positive benefits for society (e.g. philanthropy, community relations). Another early thought
was that companies not only had economic and legal obligations but also certain responsibilities that
extended beyond those obligations, though these were not spelled out. In an attempt to spell out more
clearly what responsibility business had to society, this led me to articulate a view of social responsibility
that argued that CSR had to encompass the economic, legal, ethical, and discretionary (largely
philanthropic) expectations that society has of organizations at a given point in time (Aguinis & Glavas,
2012). My position was that the economic and legal expectations were required of business by society
and that the ethical responsibility was expected and the discretion ary/philanthropic was desired of
business by society. This broader view of CSR was thought to begin with and embrace those
responsibilities companies had to themselves and their owner/shareholders (economic) and those that
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had been formalized by society through federal/state/administrative laws (legal). Businesses in their
various forms are creations of the public/government in that they receive their charters to operate in this
way. So, what are these ‘‘other’’ responsibilities that are not mandated by society? They are
encompassed by two additional categories of expectations: ethical and discretionary/ philanthropic.
Because laws are essential but not sufficient, society expects businesses to be ethical; that is, to
embrace those activities, practices and standardsthat are expected or prohibited by society even though
they may not (yet) be codified into laws. In this view, law may be seen as ‘‘codified’’ ethics (Carroll, 2015).
The ethical responsibility of business embodies the full scope of norms, standards, values and
expectations that reflect what consumers, employees, shareholders and other stakeholders regard as
fair, just and consistent with respect for protection of stakeholders’ moral rights. These expectations are
not codified into law, and there is a continuing debate as to what they are and how far they should be
carried. Finally, there are business’s discretionary or volun tary responsibilities. Though
notresponsibilities in a literal or legal sense, they are desired by society and over time they have come to
be expected of business by the public. Philanthropic contributions and community relations improvements
are the best examples of this category in which businesses seek to ‘‘improve’’ society or the community.
The amount and nature of these activities are voluntary or discretionary, guided only by business’s desire
to engage in social activities that are not mandated, not required by law and not generally expected of
business in an ethical sense, though this is changing. Today, the public has an expectation that business
will ‘‘give back,’’ and thus this type of responsibility is seen more and more to be expected as part of the
social contract between business and society. This discretionary/philanthropic category of expectations is
sometimes driven by ethical motives, but often it is driven by companies just wanting to be perceived as
good corporate citizens to enhance their reputational capital. As per Aguinis & Glavas (2012), today, CSR
is more commonly seen by consumers, employ ees and the public to embrace those activities that are
not required by law–—in other words, the ethical and discretion ary categories in the above four-part
definition. In this conception, however, the economic responsibility remains vital, because owners and
investors expect companies to provide them as a condition of existence fair-to-good returns, and the legal
responsibility continues to be relevant in that it clarifies and expresses minimum levels of behavior and
performance. By almost any measure, the number, breadth and depth of regulations being imposed on
business continues to proliferate. Regulations require compliance on the part of business, but not all
businesses comply with both the letter and the spirit of the laws, and this raises questions about their
ethics as well (Carroll, 2015).
2.Business Ethics (BE)
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Although concerns about business ethics have been around for centuries, business ethics became a
popular framework in the 1980s and beyond. From the standpoint of academic philosophers, BE became
popular as an academic field and was rooted in moral philosophy. From the standpoint of practitioners
and the public, BE came to describe the illicit activities of firms and managers that were increasingly
becoming visible and offensive to all as technology and media expanded. Joyner & Payne (2002), stated
that business ethics may be seen as a management problem that was embedded in how stakeholders
were treated and managed. Business ethics is a system of thought that is rooted in moral duty and
obligations. It can also be seen as principles or values. Business ethics is concerned with the rightness or
fairness of business, manager and employee actions, behaviors and policies taking place in a
commercial context. Even as compliance has become more important in the past two decades, strong
business ethics has taken its place as a bellwether of successful companies. As a result of highly
publicized scandals, particularly those which could be attributed to named corporate leaders (Joyner &
Payne, 2002), the framework and terminology of business ethics took its place side by side with CSR as
a popular framework for evaluating business activity. Some analysts differentiated the two by arguing that
CSR referred to companies as a whole, whereas BE addressed the behaviors of specific corporate
leaders, but quite often the two terms were used interchangeably and their use hinged often on their
faddish status rather than any real technical difference. Having said this, business ethics as a concept
does help to capture and embrace the activities of middle and lower level managers and employees who
might not be as accurately accounted for using the CSR terminology (Carroll, 2015). Certainly, the CSR
framework presented earlier is replete with ethical issues and dimensions which cut through the
economic, legal, ethical and discretionary expectations. This is because business ethics is typically seen
as normative; that is, it prescribes what companies and managers ought to be doing or ought not to be
doing. However, business ethics does tend to place its greatest focus on the ethical and discretionary
responsibilities rather than the economic and legal categories, although they are intertwined. When seen
in this light, the complimentary nature of BE and CSR become evident. The business ethics framework
and language for describing and analyzing business behavior has taken its rightful place in the current
discussion and it does not appear to be slackening. At the same time it remains as a competitor to CSR
as a worthwhile framework for describing and analyz ing organizational behavior.
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3.Stakeholder Management (SM)
As per Hillman & Keim (2001), the stakeholder approach to business and society relation ships became
popular in the middle 1980s and continues strongly today. It grew up side by side with the exploding field
of business ethics. The term stakeholder is a variant of the more familiar and traditional concept of
stockholder or shareholder. Like CSR, stakeholder theory or its more applied business nomenclature,
stakeholder management, is built upon the idea that there are multiple constituencies— individuals and
groups—that have a stake or interest in business decisions and operations. Primary stakeholders might
include those who have an official or legal stake in the enterprise—owners, employees, customers, local
communities. Secondary stakeholders might include those who have a general interest in the outcome of
business functioning—government, regulators, social pressure groups, activist groups, competitors,
media, and so on (Carroll, 2015). Over time the concept of the firm has transitioned through stages
wherein more stakeholders have become relevant to business functioning, and they have increasingly
voiced their stake in the business operations. These different stakeholder groups have varied in their
legitimacy (validity of their claims), power (ability to affect the organization) and urgency (timeliness of
their expectations)so the challenge to management has been to work through such vital questions as:
who are the firm’s stakeholders, what are the stakeholders’stakes, what opportunities/challenges are
posed, what responsibilities does the firm have toward its stakeholders and what strategies or actions the
firm should best take to address the different stakeholder groups. Stakeholder thinking or effective
stakeholder management is built upon managers and companies being able to improve their relationships
with stakeholders and to balance their responses so that stakeholders are fairly and effectively dealt with.
Companies have done thisthrough the development of a stakeholder culture and improving stakeholder
engagement and interactions. The stakeholder management framework is effortlessly consistent with
both CSR and business ethics. In a real sense, the stakeholder concept has given firms and managers
language and concepts for carrying out their missions with respect to people and groups with which they
interact and hold responsibilities. Stakeholder theory has continued to have a steady and growing
presence in academic circles and the language and practices of managing stakeholders has become
useful in both business and nonbusiness organizations. Whereas many major companies today have
CSR Officers or Business Ethics Officers, few of them have institutionalized Stakeholder Management in
terms of slots on organizational charts. Nevertheless, SM, in practice, has become a complimentary
language and concept to CSR and business ethics (Hillman & Keim, 2001).
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According to Quarshie, Salmi, & Leuschner (2016), the concept of sustainability has become one of
business’s most pressing mandates in recent years. Sustainability discussions began with a concern
forthe natural environment. In its most prominent first use, sustainability was derived from the concept of
sustainable development when the Brundtland Commission, in 1987, coined what has become the most
often quoted definition of sustainable development: ‘‘Development that meets the needs of the present
without compromising the ability of future generations to meet their own needs.’’ The key to sustainability
is the future. Later, it became apparent that a broader concept than just the natural environment was
needed that embraced the wider scope of business’s operations and processes and applied to business’s
global role in development. Today, sustainability is understood to embrace environmental, economic and
social criteria depending on the user’s intent when articulating the concept. The framework of
sustainability began to gain adherents and popularity in the 1990s. It became very popular in the late
nineties when John Elkington introduced the notion of the ‘‘triple bottom line’’ and linked it to the idea of
sustain ability. In the triple bottom line, the emphasis was placed on the simultaneous pursuit of
economic prosperity, environmental quality, and social equity–called by some a concern for profits,
planet, and people. Like the other frameworks we have discussed, sustainability has experienced
hundreds of definitions as well, and some criticssay the conceptis still fuzzy, elusive and somewhat
ideological and controversial (Carroll, 2015). In spite of this, the concept and terminology has been
significantly adopted in both the business and academic communities. One reason for this may be that
the term does not elicit immediate objections from business people like the term CSR does, which implies
trying to pinpoint ‘‘responsibility.’’ Likewise, it does not try to concentrate on malevolent behavior as
business ethics is often perceived to do. Sustainability is somewhat neutral in that it seems so logical—
take care of the present, take care of the future—that virtually no one opposes it as a concept. Its primary
advantage is that it tends to stress the long-term perspective, encompasses economic, social and
environmental factors, and explicitly incorporates a concern for future generations, which have for
decades been a primary concern of environmentalists. Increasingly, businesses are using the concept in
a multitude of ways (Quarshie, Salmi, & Leuschner, 2016). Certainly, business has adopted the language
of sustainability even when carried no further. But, one of the most important realms in which business
has bought into the concept has been through its efforts to be transparent as it publishes annual social
reports. Today, about 95 percent of the Global Fortune 250 and many other companies volunta rily
(though often pressured by activist groups) publish reports that disclose their performance in social,
economic and environmental realms. These reports have been called many names over the years, but
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Sustainability Reports seems to be one of the most recent and most popular descriptors. They variously
have been referred to as social reports, CSR reports, Corporate Citizenship reports and Corporate
Responsibility reports; but in recent years more firms have been adopting the Sustainability Report
language. If you look at these reports, they all seem to cover the same topics, and they seldom
specifically address details related to sustain ability definitions; you are left with the impression
businesses have just jumped on the sustainability bandwagon and are trying to select the most recent
buzzword to describe their CSR activities.
5.Corporate Citizenship (CC)
According to Hejazi & Nasiri (2015), it is stated that along with sustainability, corporate citizenship (CC) is
among the most recent and most popular of the terms adopted by business to characterize their CSR. It
became widespread in the ‘90s and has carried forward to today. Since the term was first adopted in the
business community, no strong definition was ever presented that clearly differentiated it from CSR. It
appeared in the business nomenclature as a more suitable collective term that for the most part was used
synonymously with CSR. If you think about companies as citizens of the communities and countries in
which they reside, corporate citizenship means that these companies, like people, have certain duties
and responsibilities they must fulfill to be perceived as legitimate and to be accepted. Good citizenship
suggests that one ‘‘gives back’’ to the community and strives to fit in as a good neighbor would—getting
along with everyone. Corporate citizenship, like sustainability, is one of those ideas that no one would
rightly oppose (Carroll, 2015). It was left to academics to try to make some specific sense of the
corporate citizenship language and to endeavor to give it some specific meaning other than as a
substitute for CSR. The citizenship metaphor is pretty straightforward, and attempting to explain it
through technical language is not space well spent. The framework has been thought of in two primary
ways, however, as a broad view and as a narrow view. The broad view presents it as a wide-ranging,
inclusive term that essentially embraces all that is implied in the concept of CSR (Hejazi & Nasiri, 2015).
It is all about serving stakeholders well by being an integral part of their lives. At one time I framed my
four-part definition of CSR as embracing the ‘‘four faces of corporate citizenship’’—economic, legal,
ethical and discretionary/ philanthropic. In this conception of CC, each ‘‘face,’’ or type of responsibility
category reveals an important facet that contributes to the whole. In this view, companies are expected to
fulfill these responsibilities just as individual citizens are. At the narrow end of the spectrum, CC typically
points to ‘‘corporate community relations’’ or just the discretionary/ philanthropy category of the four-part
definition of CSR. In this narrow view, CC suggests an interaction primarily with community groups—
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citizens, nonprofits, and other entities at the community level. However, the framework of CC has also
been poised as Global Corporate Citizenship, in which the implication isthat companies need to fitinto the
counties and communitiesin which they do business whereverthis may be in the world. This is the beauty
of the word ‘‘community’’—it can be defined in many different ways to fit the needs of the user. In the final
analysis, the framework of CC has become popular because it carries with it a positive aura of companies
striving to be a good citizen, including paying their own way, abiding by the law, creating jobs, products
and services the community wants, living according to rights and duties understood in the community,
and giving back to others. Who could disagree with this? It is easy to see how the framework of
Corporate Citizenship, as an umbrella term, has become so popular among businesses even though its
precise meaning is somewhat vague and left open to interpretation. In summary, it is easy to see how
these five different frameworks–Corporate Social Responsibility, Business Ethics, Stakeholder
Management, Sustainability and Corporate Citizenship have so much in common that they often have
been used interchangeably by business organizations and managers (Carroll, 2015). Experience has
demonstrated that executives latch onto a term that seems to be in vogue and from time to time change
language and frameworks to always appear to be on the cutting edge (Hejazi & Nasiri, 2015). Doubtless
this trend will continue and other concepts will arrive on the scene and compete for popularity. Whether
they will ever be sufficiently distinct from CSR remains to be seen. Today, CSR, Sustainability and
Corporate Citizenship seem to have the most in common and are most frequently used by companies,
but other ideas and frameworks are always coming along serving as complementary or competing
notions those in this field are tempted to grasp upon. None of these frameworks, however, appear to be
sufficiently distinctfrom CSR thatthey are able to dislodge the traditional and accepted term of CSR. All of
these will continue in popular usage.
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Aguinis, H., & Glavas, A. (2012). What we know and don’t know about corporate social responsibility: A
review and research agenda. Journal of management, 38(4), 932-968.
Carroll, A. B. (2015). Corporate social responsibility. Organizational dynamics, 44(2), 87-96.
Epstein, E. M. (1987). The corporate social policy process: Beyond business ethics, corporate social
responsibility, and corporate social responsiveness. California management review, 29(3), 99-114.
Hejazi, R., & Nasiri, S. S. (2015). Corporate Citizenship and Corporate Social Responsibility. Journal of
Accounting Research, 4(4), 163-183.
Hillman, A. J., & Keim, G. D. (2001). Shareholder value, stakeholder management, and social issues:
What’s the bottom line?. Strategic management journal, 22(2), 125-139.
Joyner, B. E., & Payne, D. (2002). Evolution and implementation: A study of values, business ethics and
corporate social responsibility. journal of Business Ethics, 41(4), 297-311.
Quarshie, A. M., Salmi, A., & Leuschner, R. (2016). Sustainability and corporate social responsibility in
supply chains: The state of research in supply chain management and business ethics journals. Journal
of Purchasing and Supply Management, 22(2), 82-97.
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