Managers at firms have a long history of seeing their role as more than just making money for their owners. Indeed, many business owners don’t just see business as only a source of profits. One way of discussing the obligations of firms is to discuss Corporate Social Responsibility (CSR). Today I’m looking at a history of CSR written by Archie Carroll.
Corporate Social Responsibility
In many ways discussing the idea of CSR might strike some as strange. Surely all firms have a social responsibility, who is in favor of irresponsible firms? Even Milton Friedman seemed to have base standards that he expected from firms. After all, he invoked norms, ethics, and customs even while lambasting corporate philanthropy, see here.
CSR is a bit of an old-fashioned term nowadays. Amongst other things, it seems a bit too negative. It seems to focus more on avoiding doing bad things while not necessarily taking the initiative to do good things. This is worth bearing in mind. Still, the terminology is less important than the actions. If a manager is committed to CSR, and does all the good stuff that caring about social responsibility implies, that is great with me.
Separating The Good From The Business?
A challenge in the field is trying to understand what actions managers take because they are good business (positive for the world) and what actions they take because they are good for business (positive for profits).
Then, and now, it is sometimes difficult to differentiate what organizations are doing for business reasons, i.e., making the workers more productive, and what organizations are doing for social reasons, i.e., helping to fulfill their needs and make them better and contributing members of society.
Carroll, 2009, page 20
In some ways, trying to differentiate between the two can be a bit of a mug’s game. We can’t stare into people’s souls. Furthermore, the motivations might not be thought to matter if the result is good enough. If a firm does well financially while making the world a better place then I’m all for it.
More On The History Of Socially Responsible Business
Socially responsible business is not a new idea. There are numerous examples of business leaders looking out for workers. (You may worry about paternalism — they generally didn’t). Carroll discusses how George M. Pullman, of railway cars fame, built a community for the firm’s workers that still exists south of Chicago. This featured a much higher level of accommodation than would be typical. Think Bournville (Cadbury) or Port Sunlight (Unilever) in England. Things were not perfect by a long stretch but it does represent an interesting example of an attempt to make the world better through the power of business.
Finally, Archie Carroll writing about the history of CSR describes the community chest movement. I must confess I never knew why that term was used in the game of Monopoly. Apparently, Community Chest was an early form of corporate philanthropy, which morphed into the United Way. Carroll doesn’t mention whether I have won second place in a beauty contest. (I would obviously have been cheated).
Views of what makes for a good business have changed but the idea that business should serve stakeholders beyond the owners is not a new idea at all.
For more on business history see here, here, and here.
Read: Archie B. Carroll (2008) 2 A History of Corporate Social Responsibility: Concepts and Practices, pages 19-46 in The Oxford Handbook of Corporate Social Responsibility, Edited by Andrew Crane, Dirk Matten, Abagail McWilliams, Jeremy Moon, and Donald Siegel