Arguments for CSR

In my last post I summarised a survey analysing business executives attitudes regarding CSR. I realise however, I failed to, in my previous two posts, give a general introduction to CSR and why corporations incorporate it into their strategic planning. Therefore, this post will backtrack a bit and briefly describe and analyse CSR and three different arguments supporting the need for CSR. My apologises if these are common knowledge, but I feel it is necessary for this blog.

There are various academic definitions of CSR, but I believe my corporate communications professor Kate Watts sums them up quite well when she says, "CSR is about how companies manage their business processes to produce a more positive impact on society." From what I have researched on the topic, CSR seems to vary from corporation to corporation. Professor Watts once again provides a good explanation for this by arguing that this is because CSR is about voluntary initiatives codes of conduct and reporting, and because there is no formal framework or definition for businesses to follow.

So why do corporations participate in CSR and not follow Milton Friedman's argument that by corporations accepting a responsibility to society other than making as much money as possible for their stakeholders, they were undermining the very foundations of a free society? In their book Strategic Corporate Social Responsibility: Stakeholders in a Global Environment, Werther and Chandler challenge this viewpoint and provide three arguments for CSR.

1. A moral argument - They explain that although a company needs profits to survive they are only able to obtain these profits because of the society they work within. Society provides corporations with educated and healthy workers, a safe and stable physical and legal infrastructure, and a consumer market for their products. Without these societal contributions businesses would flop, and therefore a business has an obligation to society to function in a socially responsible manner based on the expectations and values defined by society.
2. A rational argument - While the moral argument is based on subjective values, the rational argument is based on avoiding societal sanctions. By voluntarily addressing socially responsible issues a corporation is saving the hassle of public scrutiny, excess costs and activist attention. CSR is a way to anticipate and act upon societal concerns before they present financial, reputation and operational burdens on an organisation.
3. An economic argument - To put it simply, CSR can add value to a corporation financially. It allows companies to reflect the concerns and needs of their stakeholders which can lead to increased social acceptance and financial benefits over the long term. There is a growing market of consumers and investors who base their investment or purchasing decisions on the reputation and social responsibility of a business. A company that is perceived as socially irresponsible could lose these important stakeholders.

These three arguments have helped solidify the argument for CSR, but arguments two and three are based on corporations acting only in self-interest. As CSR increasingly becoming necessary for corporations to invest in, will society begin to separate corporations who are motivated by self-interest from those who are truly dedicated to social responsibility? I believe, with society becoming ever more aware of public relations and spin, corporations who participate solely in CSR for economic interests, or to avoid being targeted by activists, risk a societal backlash if the corporation's true motivations become publicly known.