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What are the conceptual assumptions underlying ‘corporate social responsibility’? What are the implications for inequality and development? By Maame Serwah Oteng
Although Corporate Social Responsibility has brought many benefits and social responsibility to the environment and the society as a whole due to various reasons such as companies being able to apply the values of CSR to their action programs and commercial transactions (Corporate Social Responsibility CSR) for example, it also has a long and wide-ranging history (Crane, 2008, p. 19). It is however mostly a product of the 20th century, notably from the early 1950s up to the present time (Crane, 2008, p. 19). CSR went from focusing mainly on stakeholders to becoming more inclusive and having a global platform (Crane, 2008, p. 20). CSR was also seen during the 1800’s or notably during the Industrial Revolution (Crane, 2008, p. 19), when criticisms of the emerging factory system in Great Britain (Crane, 2008, p. 21) as well as the employment of women and children in America arose (Crane, 2008, p. 21). Reformers in Great Britain and America saw the factory system as a door for social problems (Crane, 2008, p. 21). Some of the social problems they perceived were labor unrest, poverty, child and female labor (Crane, 2008, p. 21). During the Industrial Revolution, one of the schemes that were used and were similar to the corporate social responsibility approach was the welfare scheme. The welfare scheme helped eliminate labor problems and to improve performance through taking adequate steps, which could be defined, as business and social (Crane, 2008, p. 21). Some of the ways they projected and implemented the welfare schemes in improving the society was by building hospitals, bathhouses and recreational facilities (Crane, 2008, p. 21). In present times, we see this same concept of CSR which begun during the 1800s or the industrial revolution being applied in businesses worldwide, whereby it helps companies to live up to their responsibilities as global citizens in a world that is expanding and interacting developmentally at a fast-space (Corporate Social Responsibility CSR). Companies today continue to use CSR in three stages such as through in-house codes of conduct, the UN global compact and through multi-stakeholder codes (Nasrullah & Rahim, 2014, p. 22) by setting labor standards, creating co-regulation amongst governments and trade unions and making more than 600 firms report their corporate record yearly to stakeholders. The conceptual assumptions of CSR has been a topic that has been widely discussed in the school of international relations as well as in other schools of thoughts and in the business and corporate sector. The implications of corporate social responsibility for inequality and development is also another subject that is greatly discussed due to the fundamental changes that businesses that have adopted CSR have brought to matters concerning inequality and development. To what extent can we argue that the conceptual assumptions of corporate social responsibility are not only true and beneficial for social progress and also can on the other hand have implications for inequality and development? In the first part of the essay will first begin by defining the term corporate social responsibility as well as focus on the historical background of this concept. The second part of the essay will focus on the conceptual assumptions of corporate social responsibility and on how true and beneficial these conceptual assumptions are. The final part of the essay will focus on the implications of corporate social responsibility on inequality and development in the corporate world as well as for the global community.
Corporate social responsibility has seen its roots since the 1800s and during the Industrial Revolution. Corporate social responsibility arose in different forms such as through welfare schemes and the tackling of issues and social problems such as labor unrest, poverty, child and female labor (Crane, 2008, p. 21). During these periods of time, one of the ways in which CSR was implemented was through what management historian Daniel A.Wren saw as a mixture of humanitarianism, philanthropy and business acumen (Crane, 2008, p. 21). The Welfare scheme carried the same tools like CSR that were seen as business and social (Crane, 2008, p. 21). The Welfare scheme provided profit sharing, recreational facilities, and hospitals (Crane, 2008, p. 21). These welfare conditions could have been assumed to be a means of perhaps improving social progress, workers’ conditions (Crane, 2008, p. 21), eradicating inequality and establishing a pathway of great development in the nation itself whiles positively impacting society as a whole. CSR today can be defined as “the continuing commitment by businesses to behaving ethically and contributing to economic development while improving the quality of life of the workforce and their families as well as of the community and society as large” (Sims, 2003, p. 43). It can also be defined as an organization’s obligation to engage in activities that protect and contribute to the welfare of society (Sims, 2003, p. 43). CSR has today become of great concern and interest to international organizations, business entities, national governments, religious organizations, and NGOs (Mullerat & Brennan, 2005, p. 447) CSR has however today had its own conceptual assumptions whereby businesses, different schools of thoughts and even researchers see CSR and its three stages as both beneficial for society based on the fact that it enables companies live up to their social responsibilities as global citizens, to have clear business benefits (Corporate Social Responsibility CSR) but on the other hand in terms of inequality and development it can create issues such as low wages, and poverty as its initiative focuses more on environmental issues, labor and human rights (Corporate Social Responsibility & Human Rights 2008) and less on poverty reduction (Jenkins, p. 528) in developing countries for example. The conceptual assumptions of CSR is something that has been widely studied and whether or not it is true and beneficial for society is something that should be of great interest for all international relations scholars.
There have been many positive and negative conceptual assumptions of CSR. On the positive side, there are some who assume that the implementation of CSR rules is an essential tool for having clear business benefits. The World Business Council for Sustainable Development is an international organization, which strongly believes that a coherent CSR strategy that focuses on sound ethics and core values creates a table for clear business benefits (Mullerat & Brennan, 2005, p. 449) What the WBCSD sees as integral to CSR are matters such as employee rights, supplier relations, shareholder rights, community development and environmental protection (Mullerat & Brennan, 2005, p. 449). Another international organization that supports the ideas of CSR is the organization for Economic Cooperation and Development (OECD). The OECD has also created OECD guidelines for multinational enterprises (Mullerat & Brennan, 2005, p. 449). The purpose of these guidelines are to ensure that, the activities of MNE are in coherence with government policies as well as strengthens the basis of mutually beneficial confidence between enterprises and the societies and communities in which they operate (Mullerat & Brennan, 2005, p. 449). The OECD also has policies on CSR which states that enterprises should take fully into account established policies in the countries in which they operate and therefore should contribute to economic, social and environmental progress with a view to achieving sustainable development (Mullerat & Brennan, 2005, p. 449). This business beneficial conceptual assumption made by the WBCSD has been proven to be true. Companies that have been proven to have gained great business benefits confirmed by private global consulting firms such as Reputation Institute in New York who invited more than 40,000 consumers across 15 markets to participate in a study that ranked the world’s most reputable multinational businesses who carry a worldwide presence include Microsoft, Google and Volkswagen (Forbes). These companies are highly reputable and well-known companies who for many years have continued to deliver customer satisfaction around the world. Indeed the conceptual assumption of CSR being a door opener for business benefits is true because the services and sales of these reputable companies show the diverse ways in which business benefits and corporate social responsibility have become a saving pioneer for many reputable companies across the globe. Another example of how CSR has created business benefits and good reporting practices for many firms is the case of Nestle. Nestle in December’2013 was named by KPMG as one of the world’s top 10 companies that reported on CSR (p. 10). Nestle was applauded for their good reporting practices on their suppliers and value chain, as well as their level of transparency and balance in their reporting (p. 10). Another interesting conceptual assumption is that CSR creates transparency and accountability among top brands (Schlaikjer, 2015). This conceptual assumption of CSR creating transparency and accountability is true because even in a top company such as Nestle, the global head of public affairs at Nestle stated that, “transparency helps Nestle to address problems and contributes to better interactions with external stakeholders. Nestle also holds regular forums as well as face-to-face meetings with key stakeholders, which include NGO and civil society representatives (p. 11). This statement is clear evidence that even though Nestle has adopted CSR as a means of creating business benefits, they also practice transparency and focus on the welfare of the society and as well being involved in humanitarianism.
Even though there are positive views of CSR, there are other conceptual assumptions of CSR that place CSR in a negative limelight. Economist Theodore Levitt for instance criticized CSR in one of his writings titled “the dangers of social responsibility” (1958). He saw CSR as a self-flattery approach (Pillay, 2015, p. 62), which allows businesses to think more of how they can succeed in their businesses rather than on the welfare of the society. He also believed that the main function of a business is to focus on profit maximization (Pillay, 2015, p. 62) and not on following any schemes of profiting when engaging in socially responsible behavior. Another subject he mentioned was that corporations should not take pride in making money but rather it should focus on being a great innovator as well as a great public benefactor in serving society (Pillay, 2015, p. 62). Moreover he saw CSR as a bridge for uncontrollable powers to fall into the hands of management thus defeating the purpose of the creation of a company (Pillay, 2015, p. 62). Indeed although CSR has been proven to be of great benefit to society, it also has its negative connotations. Even though CSR creates business benefits and great reporting practices and transparency it has also been described to be a tool that can destroy a free society (Pillay, 2015, p. 62). It has also been seen as a door for solving issues relating to inequality and development. The subject concerning the implications of CSR for inequality and development and the different ways in which CSR has proven to be a solution in the areas of inequality and development has been a subject of discussion in many schools of thoughts. The various ways in which CSR can create safe working conditions, establish gender equality and affect development in a positive view is something that is of great interest to many in the corporate and academic world.
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