Corporate Social Responsibility: a Historical Overview
Introduction
Corporate Social Responsibility (CSR) - the firms’ policy that aims to mitigate or enhance their impact on society and the environment positively - is currently a widespread concern in most economic sectors (Latapí Agudelo et al., 2019). Cuora Consulting itself, as a pro bono student-led association, tailors its managerial consulting services specifically to organisations whose business model or mission aligns with social and environmental dimensions, as panned out by the Sustainable Development Goals (SDGs).
The current definition and procedures regarding CSR have passed many stages of development throughout the 20th and early 21st centuries, and the evolution of CSR itself has followed the evolution of social and political circumstances. For this reason, these articles aim to dive into the world of CSR, highlighting its pivotal role in business in the 21st century and casting light on its flaws and alternative definitions. Ultimately, this reading will offer the readers new insights on desirable direction changes in conceptualising and practising CSR. This first article, explaining its history through the words of its main thinkers, will act as a common ground to build such a conversation on CSR.
CSR in a Historical Perspective: from 1953 until the late 1980s
The foundational themes that today’s definition of CSR have been bluntly discussed since the 18th century (Carroll, 2008). However, the actual field of research started developing during the 1930s, and in 1953 CRS was codified as a set of principles and measures. It is indeed in 1953 that the economist and college president Howard R. Bowen published “Social Responsibilities of the Businessman”, which represents the first systematic review of business ethics and social responsibility (Bowen, 1953).
In the 1950s, the importance of business executives in making decisions taking into account the impact of their businesses started to gain momentum. However, at the time, it represented merely a rather specific school of thought. Even today, some argue that the only objective of a corporation should be maximising its profits, with little to no interest in its impact on society. Following Bowen’s publication, the 1960s and the 1970s were years of great proliferation of academic studies on CSR, and some organisations started incorporating such ideas into their business model. In particular, in the 1970s, favoured by the growing awareness concerning the environment, human and labour rights, corporate CSR models and the offspring of many governmental institutions with the scope of supporting social and environmental causes developed in unison.
However, in this period of experimentation and expansion, CSR lacked proper boundaries and definition, leading to the misuse of the term in many situations.
At the end of this decade, in 1979, professor Archie B. Carroll published his seminal paper “A Three-Dimensional Conceptual Model of Corporate Performance”, in which he paved the road ahead for CSR to assume a wider, not mutually exclusive, set of responsibilities of firms towards society at large (Carroll, 1979). His comprehensive definition of CSR states as follows:
“The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organisations at a given point in time.”
Carroll, Archie B. “A Three-Dimensional Conceptual Model of Corporate Performance.” The Academy of Management Review, vol. 4, no. 4, 1979, pp. 497–505, page 500.
His first 1979 model, called the Corporate Social Performance Model, served as a roadmap to address major issues towards CSR, encompassing a list of social issues involved, a list of social responsibility categories and the philosophy of social responsiveness adopted by corporations. The intent of the paper was to reconcile the economic aspect of the business model and its social impact. Indeed, during that period, advocates of the profit-oriented scope of a firm were arguing that the discourse on social responsibility was excluding its primary economic mission from the picture. Carroll also argues that this three-dimensional model could be used as a planning and diagnostic problem-solving tool, bringing the first strategic approach to CSR in a managerial setting.
Thus, due to Carroll’s influential work, during the 1980s, a series of frameworks that focused more on the operationalisation of CSR than on the concept itself began to rise: Jones’ (1980) work considering CSR as a decision-making process that influences corporate behaviour, Tuzzolino and Armandi’s (1981) need-hierarchy framework (5 criteria of social responsibility performance evaluation), and so on and so forth.
It is important to bear in mind that the late 1980s are the period in which emerged a series of societal concerns and the institutional response in the form of many new organisations and treaties (i.e., the creation of the Intergovernmental Panel on Climate Change in 1988, the adoption of the Montreal Protocol in 1987 to solve the ozone layer depletion, and many more). As a consequence of this shift, business ethics and stakeholder management became widespread and well-established in the business world, shifting the behaviour of corporations towards adopting social responsibility.
CSR in a Historical Perspective: From the 1990s to the present day
The 1990s were the decade of maximal expansion and refinement for the definition of CSR as we know it today, deeply entrenched in a close-knit web which includes corporations, organisations, governments, institutions, and the environment.
In 1991, Archie B. Carroll published another insightful essay, "The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders" (Carroll, 1991). The essay proposes a new framework to analyse and implement CSR in academic settings and business operations. Differently from his previous work, where corporate responsibilities were not ranked in order of importance among each other, he now proposes a rank relationship in the form of the pyramid illustrated below. Responsibilities are now reorganised as (1) economic (be profitable), (2) legal (obey laws & regulations), (3) ethical (do what is just and fair, avoid harm) and (4) philanthropic (be a good corporate citizen). Carroll argues that the first two are required by any well-functioning society, while the third is expected and the last only desired by society.
However, reviewing its framework in 2016, Carroll claims that these responsibilities should not be considered in any hierarchical and sequential ordering, but all four components must be simultaneously fulfilled by a company (Carroll, 2016). Thus, one could argue that the pyramid is not the most suitable shape to encompass such intuition. Nevertheless, the pyramid should be considered a sustainable stakeholder framework, addressing multiple issues at once and trying to solve tensions that may arise from misaligned interests between the management of a corporation and the functioning of its business model and its societal obligations and expectations.
Another notable take on CSR is that of Lee Burke and Jeanne M. Logsdon, who in 1996 published “How corporate social responsibility pays off” (Burke and Logsdon, 1996). The title of this paper encompasses a new argument in favour of CSR, namely that such programmes can be mutually beneficial by offering strategic benefits for firms, ultimately resulting in identifiable and measurable economic value creation. Moreover, the authors find five strategy dimensions (centrality, specificity, proactivity, voluntarism and visibility) and draft a comprehensive set of guidelines for managers to incorporate these dimensions into a strategic analysis.
The beginning of the 21st century marks the advent of CSR as a strategic necessity for corporations of all sectors alike, with implemented policies adapted to each different scenario. The increasing importance and activism of intergovernmental and supranational institutions such as the European Commission and the United Nations, with the adoption of the Millennium Development Goals (MDGs) in the year 2000 and the Sustainable Development Goals (SDGs) in 2015, marked the institutionalisation of CSR in the business setting as an accepted reality.
In this period, it is agreed that companies can generate shared value while improving their competitive position in the economy through a holistic implementation of CSR policies. Some insightful contributions can be found in this regard in Porter and Kramer’s (2006) view of competitive advantage for firms that engage in CSR, in Heslin and Ochoa’s (2008) seven common principles for CSR, which add more emphasis on its role to mitigate environmental issues, and in Chandler and Werther’s (2013) call for CSR to be put at the core of both long-term strategic decisions and day-to-day operations, and by doing so offering efficient and socially responsible products and services, and many more.
Conclusion
This article has synthetically and concisely illustrated the main influential papers of what is nowadays considered corporate social responsibility. Although the critical role of CSR is evident in the present business world and society at large, many theoretical and practical questions remain unanswered. A case for what exactly ethical and philanthropic concerns entail, as well as how far corporations should be held accountable for their social and environmental responsibilities. Additionally, both the current and historical discourse on CSR stem from a western approach to economic production and social and environmental impacts. However, developing countries will represent an ever-increasing share of the global GDP and population alike, with many socio-political and economic consequences, which make the study of the application of CSR in emerging markets particularly insightful yet leaves many concerns, ethical and operational.
The next articles of this series will touch upon many of these points and much more; we invite you to follow along.
Sources
Bowen, H. R. (1953). Social responsibilities of the businessman. University of Iowa Press.
Burke, L., & Logsdon, J. M. (1996). How corporate social responsibility pays off. Long Range Planning, 29(4), 495–502.
Carroll, A. B. (1979). A three-dimensional conceptual model of corporate performance. Academy of management review, 4(4), 497–505.
Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34(4), 39–48.
Carroll, A. B. (2008). A history of corporate social responsibility: concepts and practices. In A. M. Andrew Crane, D. Matten, J. Moon, & D. Siegel (Eds.), The Oxford handbook of corporate social responsibility (pp. 19–46). New York: Oxford University Press.
Carroll, A. B. (2016). Carroll’s pyramid of CSR: taking another look. International Journal of Corporate Social Responsibility, 1(3).
Chandler, D., & Werther, W. B. (2013). Strategic corporate social responsibility: stakeholders, globalization, and sustainable value creation (3rd ed.). United States of America: SAGE Publications.
Heslin, P. A., & Ochoa, J. D. (2008). Understanding and developing strategic corporate social responsibility. Organizational Dynamics, 37(2), 125–144.
Jones, T. M. (1980). Corporate social responsibility revisited, redefined. California Management Review, 22(3), 59–67.
Latapí Agudelo, M. A. et al. (2019). A literature review of the history and evolution of corporate social responsibility. International Journal of Corporate Social Responsibility, 4(1).
Porter, M. E., & Kramer, M. R. (2006). Strategy & Society. Harvard Business Review, December, 1–16.
Tuzzolino, F., & Armandi, B. R. (1981). A need-hierarchy framework for assessing corporate social responsibility. The Academy of Management Review, 6(1), 21–28.