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Exploring Corporate Social Responsibility's New Rules of the Road for Business
“Conversations about the obligations of business in society go back at least as far as John Locke, with his focus on human rights in the late 1600's, as well as to Adam Smith and his focus on morality in The Theory of Moral Sentiments in 1759,” says Bentley Associate Professor of Management Jill Brown. Terms like ‘corporate social responsibility’ are simply the modern language around long-percolating ideas.”
The difference today, she says: Corporate social responsibility (CSR) is accepted as a norm in business. This paradigm shift has moved businesses from a sole focus on bottom-line profits, with the shareholder as the primary stakeholder, to a focus on multiple stakeholders beyond the shareholder. Brown cites widespread acceptance that “rules of the road” for businesses include at least some attention to CSR.
Brown’s research and teaching center on strategic management, corporate governance, ethics, strategic leadership and, of course, corporate social responsibility.
She has written for Business Ethics Quarterly, Organization Science, The Journal of Business Ethics, and Strategic Organization, among others. One notable contribution is serving as co-author of a leading textbook in the CSR field, Business and Society: Ethics, Sustainability, and Stakeholder Management (Cengage Learning), to be published in January 2017. Brown joins longtime co-author Archie B. Carroll (University of Georgia) and builds on the work of the late Ann K. Buchholtz (Rutgers University), for the 10th edition.
Business and Society is a touchstone textbook for business students worldwide, and regularly ranks among the top books in business, leadership, and management categories.
“Archie Carroll was one of the earliest management scholars to focus in on the practice and study of CSR,” explains Brown, who is revising chapters and writing case studies for the new edition, updating a number of the offerings for both the print and digital components. “It’s an honor to be participating in this project with him.”
Views of CSR among students
Working with Bentley students as they learn the complexities of CSR informs Brown’s own studies.
“Often, you need to find case studies and examples that prompt undergrads to dig deeper into companies’ CSR statements and profiles. Having grown up with CSR as a presumed norm, undergraduate students are not initially as critical of CSR reports as they are of, say, a company’s financial statements,” observes Brown, who helps these business students “reach the next level of sophistication” in their thinking about CSR issues.
Graduate students, conversely, raise concerns about CSR common in the public at large: namely, the suspicion that much or all of what is presented as CSR is just window-dressing, a public relations gambit by any given company. Certainly, recent examples of ethics breaches and leadership failures at companies such as Volkswagen lend fuel to such cynicism.
Many dimensions; many stakeholders
As Brown explains it, CSR works — or fails to — in multiple dimensions: economic, ethical, legal, philanthropic, fiduciary, and more. When something is amiss in one of these dimensions, it often is amiss in more.
“What happened at VW was in some sense no doubt ‘allowed’ or ‘encouraged’ to happen in more than one way,” says Brown. “Time, and investigations, will tell exactly where the breakdowns occurred.
“There’s still a great deal of work to be done incorporating the ‘new normal’ of CSR into company culture,” she adds, noting that CSR reporting is increasingly part of corporate transparency and accountability. CSR, by definition, involves stakeholders other than shareholders, and gathering information from them, as well as reporting out to them is an essential component of CSR.
“Broader” stakeholders in the CSR model include business partners, supply-chain partners, international communities where businesses are located, governments and consumers . . . really, anyone with a relationship to the business at hand, whether it’s making widgets or processing information.
“Even shareholders are thinking in this model,” says Brown. “They understand there being multiple ‘legitimate’ stakeholders for any given business.”
CSR’s multiple obligations
CSR is not to be confused with social entrepreneurship, which is sometimes defined as doing well by doing good. That is, creating value (and engaging philanthropically) via a business model that addresses an identified social need, like poverty. Rather, CSR is the new rule of basic good behavior and good strategy for all companies; increasingly, there is a business case to be made for it. Brown and her colleagues in the field have shown, through multiple studies, a correlation between financial performance and social performance. She contends that the oft-cited “people, planet, profit” mantra of the “new triple bottom line” is now a financial reality.
“Yes, businesses have an obligation to make money,” Brown explains. “But now it is also presumed that they have an obligation to do so ethically. On top of that there are legal obligations, which is where the debate about regulation comes in. These economic and legal obligations are required of business. Now they have ethical and even philanthropic expectations as well. Failing to do well by any of these elements affects bottom-line profitability.”
Tensions between these various dimensions of CSR go back to Adam Smith’s examinations of the definition of a “good business.” Explicit CSR, e.g., meeting government regulations, can be relatively easy to demonstrate; implicit CSR, e.g., being a good neighbor to a community that houses your business, can be much more difficult.
“Regulation certainly plays a role in ‘explicit’ CSR,” notes Brown. “In Europe these types of regulations have been institutionalized at the national levels. Here in the U.S., they’ve been interpreted at the industry or firm levels, which can lead to mere ‘check listing’ — doing the bare minimum to meet required regulations only.”
With implicit CSR, there are few if any codified norms. Consider, says Brown, the accepted principle of good philanthropic CSR that employees should volunteer their time in the local community. “But how much? Where? Doing what? For how long?” she asks. “These are tricky questions.”
CSR vs. short-term profit
Perhaps the biggest tension in current thinking about CSR is the abiding pressure of bottom-line profit in the short term.
“Quarterly earnings reports are often cited as a reason that businesses put aside their CSR obligations that might be costly,” says Brown. “That pressure isn’t going away. In too many situations, from environmental regulations to consumer safety and beyond, the broader stakeholders that CSR includes are highlighted only when they’re harmed in the name of short-term profit.”
At Bentley, Brown guides students to become “sophisticated wielders of the CSR framework.” One approach to that goal involves teaching Bentley students according to the framework of the UN Global Compact’s Principles for Responsible Management Education (PRME). Another involves working with Bentley's Alliance for Ethics & Social Responsibility and Sustainability Office to make sure students continue to improve their sustainability literacy.
“It’s important that Bentley students understand the principles, applications, and implications of CSR,” says Brown. “It’s going to be a reality in the business world they’ll inherit and go on to shape.”
BENTLEY UNIVERSITY is one of the nation’s leading business schools, dedicated to preparing a new kind of business leader – one with the deep technical skills, broad global perspective, and high ethical standards required to make a difference in an ever-changing world. Our rich, diverse arts and sciences program, combined with an advanced business curriculum, prepares informed professionals who make an impact in their chosen fields. Located on a classic New England campus minutes from Boston, Bentley is a dynamic community of leaders, scholars and creative thinkers. The Graduate School emphasizes the impact of technology on business practice, in offerings that include MBA and Master of Science programs, PhD programs in accountancy and in business, and customized executive education programs. The university enrolls approximately 4,100 full-time undergraduate, 140 adult part-time undergraduate, 1,430 graduate, and 43 doctoral students. Bentley is accredited by the New England Association of Schools and Colleges; AACSB International – The Association to Advance Collegiate Schools of Business; and the European Quality Improvement System, which benchmarks quality in management and business education. For more information, please visit www.bentley.edu.
Bentley University’s Co-Provost and Dean of Arts and Sciences Daniel Everett talked with us recently about a wide range of topics, including being featured in a new book by Tom Wolfe, two of his own upcoming books, the importance of studying the origins of language, and the value of a fusion approach to business education.