Should businesses bother with Corporate Social Responsibility? In fact is it ethical for them to do so? Clive Crook argues that “Managers, acting in their professional capacity, ought not to concern themselves with the public good”(Crook, 2005). He believes that managers are “not competent to do it, they lack the democratic credentials for it, and their day jobs should leave them no time to even think about it”(Crook, 2005). The aim of this report is demonstrate that these assertions are misguided and to prove the case that there are sound business reasons for businesses investing both time and money in CSR.
1 What is CSR?
Interestingly Crook also states “Managers should think much harder about ethics than they appear to at present”(Crook, 2005). This apparent contradiction is derived from His interpretation of the term Corporate Social Responsibility, or CSR, as one where social welfare is raised but profits are reduced, most typically through the giving of gifts(Crook, 2005). Crook is of the opinion that businesses cannot claim any behaviour that benefits both the business and society as CSR. He states that “[s]ome of the business practices that are often (perhaps misleadingly) labelled as CSR …raise profits and advance society’s well-being at the same time … This is the win-win kind of CSR … Perhaps it would be better to call it simply “good management””(Crook, 2005). If Crook’s definition of CSR is accurate then the aims of this report are impossible as, as soon as an argument is presented to demonstrate that CSR benefits business, he would argue that this is no longer CSR. So is Crook correct, is CSR just philanthropy or is there evidence that suggests that CSR is more? A B Carroll suggests that there are four kinds of responsibility, economic, legal, ethical, and philanthropic and that these four categories or components of CSR can be depicted as a pyramid. (Carroll, 1991)
Furthermore Carroll believes that “the total corporate social responsibility of business entails the simultaneous fulfilment of the firm's economic, legal, ethical, and philanthropic responsibilities. Stated in more pragmatic and managerial terms, the
CSR firm should strive to make a profit, obey the law, be ethical, and be a good corporate citizen”(Carroll, 1991) Therefore, in complete contrast to Crook, Carroll believes that a businesses economic and legal behaviour should be included in its CSR portfolio as well as the ethical and the philanthropic. I would argue that CSR does not include the economic and the legal responsibilities as these are required of all businesses. Businesses are obliged to make profits for the shareholders and they must obey the law. By virtue of the separation of ethical from legal, businesses do not have to behave ethically and there is much evidence to demonstrate that businesses are able to continue to operate in an unethical fashion perfectly legally with no formal repercussions. Take, for example, the case of Child World versus Toys ‘R’ Us. Child World ran an offer where a $25 gift certificate was handed out when over $100 was spent in the store. Child World alleged that Toys ‘R’ Us staff were purchasing products that were sold by Child World at only marginally above the wholesale price. They were then using the $25 voucher to acquire further free merchandise. All these products were then sold on in Toys ‘R’ Us stores at a profit. This practice is legal, despite Child World’s statement that the promotion excluded dealers, wholesalers and retailers, and Toys ‘R’ Us do not deny it, however many would call this foul play.(Alexander, 1991) So, for the purposes of this report I will be looking for a definition of CSR which includes both ethical and philanthropic responsibilities but not legal and economic.
Is it ethical for businesses to engage in philanthropy? Carroll is of the belief that “philanthropy...