CSR is not a new phenomenon, although it has experienced a renaissance in the last decade after 20 years in which it had largely been ignored. The importance of CSR, and the manner in which society regulates corporate behaviour is illustrated with two historical examples from Anglo-Indian history. Today, CSR is described as having an impact in four primary ways – organisational, institutional, individual and global. These are described and the modern-day anticipated outcome – social innovation – is explored. Two ongoing examples of corporate social responsibility playing a pivotal role in issues of inclusion are cited. We conclude with a challenge to readers, both as leaders within organisations and as stakeholders to others, to find ways in which they too can effect such change for a better world.
The Renaissance of CSR
To hear some people talk, it is as if Corporate Social Responsibility (CSR) was a new idea. It is, most emphatically, not. For as long as people have got together to achieve a bigger purpose, something more than they could achieve on their own, there has been a proportion of them who have sought to achieve positive social change as a parallel product of their endeavours. To some of these inspirational people, these social benefits were by-products, to others they were a direct and intended consequence, and to a small number they were the raison d’etre.
Look back to Quaker businesses in the 18th and 19th Century and you see some classic examples of such ‘social responsibility’. We have to set them in context, sometimes, in order to appreciate what they were doing – for often what was considered ‘right’ in society then, would most definitely not be right today. CSR is contextual.
The precise date of his comment isn’t clear, but Dave Packard, co-founder of Hewlett-Packard, was representative of successful business leaders in the middle of the 20th Century;
“I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company so that they are able to accomplish something collectively that they could not accomplish separately – they make a contribution to society, a phrase which sounds trite but is fundamental.”
CSR was popular in the 1960s and 1970s; it received academic attention; and there was an industry of social auditors and consultants. Classic papers were written on the theme by Cheit (1964), Heald (1970), Ackermann & Bauer (1976) and Carroll (1979). However, it was overshadowed in the 1980s by the ‘quality movement’ and only really came to surface through a handful of insightful and particularly thorough ‘total quality’ processes. The quality movement, by and large, were concerned with internally oriented change – with making things more efficiently, and delivering services with fewer errors. It often became overwhelmingly bureaucratic and innovation was, ironically, obstructed.
Despite appeals from popular authors, such as Tom Peters (1982, 1985), CSR vanished from the management radar in the 1980s (Dierkes & Antal (1986); Vogel (1986)). While his language focused on the benefits to enterprise, the axioms of Peters’ work were firmly embedded in CSR – the importance of delighting customers (and his definition of ‘customers’ was deliberately broad), the necessity of a transformed approach to leadership (one that sees the bigger picture, and is not afraid to pursue it), the applied energy of an empowered workforce, and the consequent explosion of innovation.
In the latter part of the 90s and into the last decade, CSR has reemerged largely in response to mounting public concern. This ranged from widespread alarm about the impacts of globalisation, marked out by riots at World Trade Organisation meetings in Seattle (1999) and Genoa (2001), the expectation that a firm should take responsibility for its supplier’s infringement of human rights, and demands from interest groups for greater corporate transparency.
Nearly two decades of neglect have undone many of the past achievements of CSR. For many years, an organisation’s social responsibilities were often only mentioned in passing within many business school curricula. Among contemporary firms and academics, there is limited understanding of the strategic implications of CSR.
The key themes of contemporary CSR
To many businesses, the entry point to CSR (identified by Freeman in 1974) is one of stakeholder management – the identification of, engagement with, and communication to and from, all kinds of stakeholders. As Freeman subsequently described it:
“The purpose of stakeholder management was to devise a framework to manage strategically the myriad groups that influenced, directly and indirectly, the ability of a firm to achieve its objectives.” (Freeman & Velamuri, 2006)
That CSR can be seen as a moral choice for executives (and employees) – although constrained by their work environment – was originally postulated by Ackermann (1975). That they have to weigh up the moral consequences of their choices has led to the progressive inclusion of this aspect in business ethics courses. (Jones, 1991; Donaldson & Dunfee, 1994; Crane & Matten, 2003).
It was Davis in 1973, who spelled out the nature of the ‘contract’ of responsibility that firms have to society. There have been countless examples of Governments effecting their policies through private organisations on a global basis, and with limited control over those firms’ activities. Perhaps one of the most extreme was the 250yr domination of the East India Company from 1600. Few people today would endorse the degree of freedom under which it operated, and yet, the effective power exercised by modern firms arguably even exceeds theirs.
As an aside, it is worth noting two of the factors that contributed to the eventual demise of the East India Company. In 1770, popular support for the organisation in Britain was shaken by their failure to take any responsibility for the Bengal Famines from 1768-1772, in which roughly10 million people died. This resulted in the UK Government reining them in, to a degree, through the East India Company Act 1773.
Then in 1857, it was substantially the insensitivity of the Company and its officers that led to the Indian Rebellion. One of the consequences was that the British Government nationalised the Company, which lost all its administrative powers. Its Indian possessions, including its armed forces, were taken over by the Crown through the Government of India Act, 1858.
Davis argued that modern firms exercising power widely will be (indeed are) eventually held accountable by society. They have an obligation not to abuse the power invested in them. The measure of abuse being the degree to which they conform to (or exceed) what society expects of them at a given time. When a firm’s activities are congruent with society’s values and expectations then they are said to be “organisationally legitimate”. CSR has therefore become the means by which they prove their legitimacy.
More recently, the flexibility and monitoring of such a balance, and their efforts through CSR, have been described as a firm’s need to retain its ‘license to operate’ (Post, Preston, and Sachs, 2002:21).
It was the United Nation’s Brundtland Commission, in 1987, that defined ‘sustainable development’ as meeting the needs of the present without compromising the ability of future generations to meet theirs and firmly established the direct relationship between poverty, environmental degradation, and economic development.
CSR has become the means to achieve sustainability, with firms being responsible to stakeholders who cannot be represented directly – the environment and future generations.
In 1997, Elkington, popularised the phrase ‘Triple Bottom Line’ in his book, “Cannibals with Forks”, though it had first been explained in 1981, by Freer Spreckley in the book, “Social Audit – A management tool for cooperative working” when the traditional reporting framework of organisational success was expanded to take into account ecological and social performance in addition to financial performance.
With the ratification of the United Nations and ICLEI TBL standard for urban and community accounting in early 2007, this became the dominant approach to public sector full cost accounting. While conceptually endorsed by many organisations, legislatures and lobbying groups, there are many practical issues with the fair adoption of the TBL in the private sector (Wood (1991), Hockert and Morsing (2008)).
Present day focus of CSR
For the last decade, much of the literature on CSR has focused on what is called ‘Social Innovation’ – new strategies, concepts, ideas and organisations that meet social needs of all kinds – from working conditions and education to community development and health – and that extend and strengthen civil society.
Social innovation does not have one simple definition, but reflects at least four overlapping meanings;
1 The social processes of innovation, such as open source methods and techniques
2 Innovations which have a social purpose – like microcredit or distance learning
3 Social entrepreneurship (entrepreneurship is not necessarily innovative, but it can be a means of innovation)
4 Innovation in public policy and governance
How do we respond to CSR?
Thus, while CSR may have slipped beneath the radar for a couple of decades, its importance, and the need for every corporate leader to embrace it has never been removed, and is today even more significant.
Whether, we do so directly or as a by-product of our primary business, we have to take it seriously. Whether we are a sole-trader, the middle manager in a subsidiary of a larger business, or the leader of a trans-national enterprise, the pursuit of profit alone is simply no longer acceptable. As stakeholders in other organisations we need to exert our influence and give our voice to the importance of corporate social responsibility.
I shall give two, rather unusual examples of social innovation, instigated by individuals, and enabling inclusion that are having wider impacts within their communities.
Assistant Commissioner, Alfred Nawa, of the Zambian Police has effected extraordinary change among young boys in both rural and urban communities. Many of these young adolescents live on the streets, dependent on crime. They may have experienced sexual abuse, and domestic violence and they, and their siblings, are caught in a viscious spiral of economic and social entrapment. For some time, Nawa had established routes for such children not to be imprisoned for their petty crimes, but to be offered places in residential schools and homes. Recognising the need to develop greater trust (rather than discipline inspired respect) with the police officers who can help them, he is now encouraging police officers to form football teams challenging local youths to ongoing games.
Police Constable Usufono Latu is typical of police women in Western Samoa where male/female role divides make it very hard for women to be respected as equals in society. In the Samoan police, women rarely rise above the rank of constable, and are expected to perform mainly administrative roles. Even when accompanying male officers they are expected to take a purely passive role. Constable Latu has begun a slow process of persuasion of male colleagues and senior officers for this to change. Not only has she undertaken many of the courses she was previously precluded from attending, but now leads all-women patrols focused on drug related crime, acts as a conduit for women considering a career in the police, and is fast becoming a role model for the wider inclusion of women in society.
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Graham Wilson – 07785 222380
PS My Business ‘Book’ of the Week is The Net Delusion by Evgeny Morozov (08/04/11)
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