Corporate Social Responsibility: A Literature Review

Introduction

Despite the few cases when the option of abandoning the corporate social responsibility (CSR) concept is being voiced, CSR is becoming increasingly wide-spread and popular, which can be justified by the benefits that it offers and promises (Pava, 2008). In this paper, a review of the literature that is devoted to the concept, theory, and practice of CSR is presented and applied to a workplace-based case.

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Literature review

CSR in Modern Business

In the 1970s, an opinion was expressed that profit-making is the only social responsibility of an organization since it is a means of contributing to the societal welfare (Galbreath, 2009, p. 111). However, in response to this point of view, a new approach appeared and extended the responsibilities of a firm to embrace the economic, legal, ethical, and “discretionary” responsibilities (Galbreath, 2009). The differences between legal, ethical and discretionary activities consist in the level of obligation: legal actions are required by the law (for instance, the employment law defines the responsibilities of an employer with relation to the employees), ethical ones are established by the ethical norms (for example, taking care to avoid harming the environment or the society is an ethical responsibility), and the discretionary ones are not strictly obligatory, but they would be appreciated (for instance, charity). This idea of multiple corporate responsibilities became the ground for the CSR and the stakeholder theory, which suggests that an organization needs to take into account its responsibilities to internal and external stakeholders as all of them can influence the competitive position of the organization (Galbreath, 2009; McManus, 2011).

Porter and Kramer (2006) explain that the justifications of CSR include the “moral obligation, sustainability, license to operate, and reputation” (p. 81). According to Pava (2008), the expected outcomes of a correctly implemented (incorporated) CSR are supposed to include “promoting transparency, more nuanced accountability, integrity, better communication, mutually beneficial exchange, and sensible development” (p. 805). It is apparent, therefore, that CSR can be extremely advantageous for a modern company.

Mainline and Emerging Theory and Practice

Initially, the aim of the CSR theory consisted in describing the relevant terms and determining the CSR responsibilities of modern businesses based on the definition of their role and importance to the society and environment. As the materials were accumulated, the theory started moving forward while also getting more in touch with practice. In particular, the evidence-based research of the impacts of CSR on performance is a relatively new field of study as well as that of the strategic CSR (Galbreath, 2009, p. 109; McManus, 2011). Pava (2008) and Milne and Gray (2012) highlight the significance of the understanding of CSR that is exhibited by the society and businesses. However, apart from the theoretical perspective, the incorporation of CSR into the company’s practice is required for it to be able to inform ethical decision-making.

The practice of CSR embraces various tools, some of which include PR campaigns (that are aimed at demonstrating a particular CSR action) and triple bottom line (TBL) reports (that are meant for transparency improvement and include not only the economic but also social and environmental impacts of an organization) (Milne & Gray, 2012). In fact, an ethics code can be regarded as a CSR tool as well (Galbreath, 2009). However, Galbreath (2009) criticizes these traditional CSR approaches as being detached from the companies’ strategy. Milne and Gray (2012) discuss TBL specifically and consider its potential in CSR and sustainability improvement. They point out that the tool has been promoted and developed, reflecting the increasingly complicated understanding of CSR and introducing the ideas of sustainability into business practice. However, they also highlight the fact that reporting and performance are not equal and warn against substituting environment-related CSR with TBL, which, in their view, is already happening. It is apparent that this warning related to other aspects of sustainability, including ethics sustainability and social impact. Apart from that, Milne and Gray (2012) mention Global Reporting Initiative, which is similar to TBL, and presupposes the development of globally applicable voluntary indicators for sustainability reporting. It is a developing tool, though, which is why it may be difficult to assess its effectiveness at the moment.

Galbreath (2009) insists that, despite being largely undeveloped in practice nowadays, a strategic approach to CSR is possible and, apart from that, required by the modern environment as another competitive advantage. The author believes that this end can be achieved if CSR is considered within various strategy dimensions. Similarly, McManus (2011) and Porter and Kramer (2006) agree with the potential of strategic CSR and also suggest that the initial detachment of business from society in the theory and practice was counterproductive. They recommend paying attention to the fact that the two are interrelated, which is why CSR can be easily connected to a company’s strategy. In particular, Porter and Kramer (2006) point out the fact that certain social issues can be of direct consequence for a company’s business processes and even provide them with a competitive advantage. For instance, diversity management is vital for a business with a diverse workforce, and diverse hiring can be regarded as a competitive advantage in a country with a diverse population. While it is customary to view diversity at the workplace and diversity management as an economically relevant factor that contributes to the bottom line, the ethical component of the creation of an inclusive environment cannot be denied (Jones, King, Nelson, Geller, & Bowes-Sperry, 2013). As a result, this example demonstrates that even a company which cannot afford dispersing scare resources can find a way of contributing to the sustainability of the society and environment while also fulfilling its primary aim of maximizing profit.

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The Government

Nowadays, the government, together with the society and varied activist organizations, exerts pressure for businesses to incorporate CSR. However, the governmental intervention needs to be well-planned and efficient, which is not always the case. For instance, Porter and Kramer (2006) point out that pressuring companies into generic means of CSR is likely to be counterproductive; instead, they suggest demonstrating that CSR can be adapted to a corporate strategy and produce competitive advantage rather than only costs. Desrochers (2010) offers examples of governmental failures in the field and those of the environmental damage which resulted from adverse governmental practices and insists that the lack of governmental intervention would be more beneficial since the market, the pursuit of maximum profitability, and clearly defined property rights would suffice for sustainability improvement. However, this conclusion can be regarded as radical; more balanced options have been proposed by modern researchers. In particular, Pava (2008) and Porter and Kramer (2006) insist that governmental action is required for the solution of many social and environmental issues, which means that the market, society, and government need to cooperate to achieve the best results in the field.

Conclusion

The review shows that the implementation of CSR in practice has often been rather disappointing so far, but a number of researchers believe that the reasons for the issues can be found in the detachment of CSR from the strategy and the business from the government and society. They invite to develop strategic CSR and unite the efforts of the market, society, and government to improve the sustainability of the modern world.

Workplace-Based Case

I am working at a large international oil and gas company; its number of employees exceeds 100,000, and the number of the location equals 88. In a multinational organization, the employees are diverse in multiple ways (from the point of view of their culture, social status, religion, and so on), which complicates the development of an international organizational ethics code with universally acceptable CSR principles. Despite this issue, the idea of CSR is not unknown to our organization, and efforts are being made to meet the responsibilities that an organization is believed to have in the diverse societies where the company operates. As a result, the current literature review is capable of informing the workplace-based case investigation and problematizing process.

In general, the works that were considered in this paper demonstrate the interest of the modern theorists and practitioners towards CSR and similar concepts (for example, stakeholder theory) that broaden the understanding of the responsibilities of a company. However, as pointed out by Pava (2008) and Milne and Gray (2012), the interpretation of CSR can differ from company to company and, a particular interpretation may be ineffective in maintaining sustainability and informing ethical decisions. For example, the issue of the outsourcing may be regarded as a violation of CSR principles in certain cases including that when insufficient payment is offered to the population of the host country, but the understanding of “insufficient payment” may vary. The interpretation of CSR that our organization employs apparently considers our outsourcing practices (that may also differ in the level of their fairness) to be acceptable. In this respect, a more extensive investigation of the practices and the managers’ attitudes to them might help to determine if there is a flaw in our CSR interpretation and if it is necessary, possible and feasible to further improve our outsourcing methods to achieve better CSR-relevant results.

Apart from the theoretical perspectives, the literature review provides an overview of CSR practices, including the TBL, which is mostly criticized but can still be regarded as a means of benchmarking and reporting a company’s CSR achievements. Also, the review and points out an important fact: as long as CSR is not incorporated into a company’s strategy, it is unlikely to yield results. The reasons for this conclusion include the fact that detachment from the strategy makes CSR less attractive from the point of view of profit-making (Porter & Kramer, 2006), less understandable and attainable (Galbreath, 2009), and, as a result, more perfunctory and detached from practice (Milne & Gray, 2012).

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At the same time, Galbreath (2009), Porter and Kramer (2006) and Pava (2008) insist that CSR principles may be incorporated into the strategy of an organization and implemented in cooperation with the society and the government. As a result, the workplace-based case is provided with a significant insight and direction for future investigation: the relationship between the company’s ethics and CSR and its strategic management needs to be researched. The preliminary assessment, which is based entirely on my personal experience and which, therefore, should be extended through a more thorough research, appears to indicate that issues in the alignment of the CSR tools (ethics code included) with the strategy are not unlikely to be encountered. The perfunctory implementation of CSR tools seems to be the indicator of the potential problems, and this supposition may be tested with the help of the interviews with the managers of the organization.

References

Desrochers, P. (2010). The environmental responsibility of business is to increase its profits (by creating value within the bounds of private property rights). Industrial and Corporate Change, 19(1), 161-204. Web.

Galbreath, J. (2009). Building corporate social responsibility into strategy. European Business Review, 21(2), 109-127. Web.

Jones, K., King, E., Nelson, J., Geller, D., & Bowes-Sperry, L. (2013). Beyond the Business Case: An Ethical Perspective of Diversity Training. Human Resource Management, 52(1), 55-74. Web.

McManus, J. (2011). Revisiting ethics in strategic management. Corporate Governance: The International Journal Of Business In Society, 11(2), 214-223. Web.

Milne, M. & Gray, R. (2012). W(h)ither Ecology? The Triple Bottom Line, the Global Reporting Initiative, and Corporate Sustainability Reporting. Journal Of Bussiness Ethics, 118(1), 13-29. Web.

Pava, M. (2008). Why Corporations Should Not Abandon Social Responsibility. Journal Of Business Ethics, 83(4), 805-812. Web.

Porter, M. E., & Kramer, M. R. (2006). Strategy & society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78-92.

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