The Business Case for Social Responsibility

Topics: Corporate social responsibility, Social responsibility, Sociology Pages: 22 (14376 words) Published: November 3, 2014
The Business Case for Corporate Social Responsibility

EditedbyAndrewCrane,DirkMatten,AbagailMcWilliams,JeremyMoon,andDonaldSiegel PrintPublicationDate: Feb2008
OnlinePublicationDate: Sep

Subject: BusinessandManagement,BusinessPolicyand
DOI: 10.1093/oxfordhb/9780199211593.003.0004

Thepurposeofthisarticleistoprovideageneralsummaryofthekeyvaluepropositionsevidentintheresearch onthebusinesscaseforcorporatesocialresponsibility(CSR),describedasfourgeneral‘types’ofthebusiness case,orfourmodesofvaluecreation.Itthenpresentsacritiqueoftheseapproaches(includingidentifyingsome problemsinherentintheconstructofCSRitself)andofferssomeprinciplesforconstructinga‘better’business case.ItsintentisnottoconductathoroughreviewofstudiesanalyzingtherelationshipbetweenCSRandfinancial performance,asthathasbeenwelldoneelsewhere.Ratheritseekstounearthassumptionsunderlyingdominant approachesinanefforttobuildamorerobustbusinesscaseforCSRthatcanmovebeyondexistinglimitations. Keywords:research,businesscase,corporatesocialresponsibility,valuecreation,financialperformance

Theoldthinkingwasthatifyoumakemoneyyoucandothispositivesocialandenvironmentalstuff—butI thinkthetruephilosophyofsustainabilityistheinterdependence.It'snotaboutcharity;it'saboutthefact thatifyoudotherightthingsinthecommunity,thecommunitywilldotherightthingsforyou.Ifyoudothe rightthingsfortheenvironment,you'llhaveastrongerbusinesssothatyoucanmakemoremoney.It'snot aboutsortofacondescendingview…Idon'tknowifthat'ssubtleorifpeopledon'tgetit,butit'svery important.It'saboutinterdependenceratherthanbalance.It'saboutmutualdependenceor interdependence,ratherthancharity.It'sfundamental.

IN businesspractitionerterms,a‘businesscase’isapitchforinvestmentinaprojectorinitiativethatpromisesto

yieldasuitablysignificantreturntojustifytheexpenditure.Inwhathasbecomeknownasthe‘businesscasefor CorporateSocialResponsibility(CSR)’thepitchisthatacompanycan‘dowellbydoinggood’:thatis,canperform betterfinanciallybyattendingnotonlytoitscorebusinessoperations,butalsotoitsresponsibilitiestoward creatingabettersociety.Alongtraditionofscholarshaveexaminedthisproposition,boththeoretically(Carroll, 1979;Swanson,1995,1999;Wood,1991),andempirically(CochranandWood,1984;GravesandWaddock, 1994;MattinglyandBerman,2006;RussoandFouts,1997),primarilywithafocusonconceptualizing,specifying, andtestingsomerelationshipbetweencorporatesocialperformance(CSP)andcorporatefinancialperformance (CFP).Theresultsaredecidedlymixed:afirmthatdedicatesresourcestofulfillingwhatareperceivedtobeits socialresponsibilitieswillfinanciallyperformeitherbetter,worse,orthesameasitmighthavedoneotherwise, dependingonwhichstudieswelineupandconsult.

Inameta‐analysisofCSP–CFPstudiescorrectingforsamplingerrorandmeasurementerror,Orlitzkyetal.(2003) foundsupportforagenerallypositiverelationshipbetweenCSPandCSFacrossindustriesandstudycontexts,and PrestonandO'Bannon(1997)foundevidencethatpositivefinancialperformanceeitherlaggedoroccurred synergisticallywithpositivesocialperformance.Attheleveloftheindividualfirm,however,thequestionpersists

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