Rethinking the new corporate philanthropy

doi:10.1016/j.bushor.2006.05.002

Business Horizons

Volume 50, Issue 1, January–February 2007, Pages 29-38

https://doi.org/10.1016/j.bushor.2006.05.002 Get rights and content

Abstract

More than ever, corporations are expected to practice “citizenship” by engaging in various community or social philanthropy programs. These corporate social responsibility (CSR) programs have broad appeal among business scholars, business executives, and the public. After first setting some theoretical boundaries for CSR as it relates to the legal and strategic management fields, the authors examine how CSR (both its implementation and expectations) can lead to unintended results, compromising the distinct roles business and government play in market-driven, democratic systems.

Section snippets

The expanding corporate social responsibility bundle

In speaking to an audience at Stanford University's business school, Timberland CEO Jeffrey Schwartz prefaced his talk by asserting that selling boots and other merchandise to meet Wall Street profit expectations was absolutely necessary. He went on to say that, based on any number of quantitative measurements, Timberland was the number one public company in the industry. Nonetheless, Schwartz pointed out, while profits are necessary to sustain a business, they are not sufficient comprehensive

Legal obligations of the corporation

The corporation is a legal entity, managed by people who act as agents for the firm's owners, the shareholders. Therefore, a legislative and case history of the corporation exists that is relevant when considering its responsibilities. Many scholars have studied the corporation from this legal perspective, seeking to answer questions such as the one Friedman addressed in 1970; that is, what is the purpose and obligation(s) of the corporation? What boundaries does the law set in seeking these

Strategic management: Models for using CSR

While corporate leaders have strong legal reasons for paying attention to shareholder interests, they also are pressured to pursue CSR. Big business has responded to the call for more social responsibility, as over 80% of Fortune 500 companies specifically cite CSR spending in their annual reports (Bhattacharya & Sen, 2004). Additional pressure for promoting CSR is driven, in part, by the globalization of business, through which political boundaries are blurred and big corporations are asked to

Unintended results from corporate philanthropy

Warren Buffett, Chairman of Berkshire Hathaway, announced in the holding company's 2003 annual report the termination of Berkshire's modest charitable program. Originally instituted as a means for shareholders to more conveniently give individual donations to their preferred charities, Buffet terminated the program after certain interest groups began boycotting Berkshire business units. In particular, the independent associates of Pampered Chef were targeted by boycotting groups and experienced

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Indeed, CSR activities listed on the Business Roundtable website shows a continuing predominance of the prior approach of using CSR primarily to help the firm. For instance, philanthropy accounts for a significant number of CSR initiatives listed on the website; philanthropy is CSR that is optional and usually undertaken to enhance corporate reputation (Sasse & Trahan, 2007). This emphasis on philanthropy is not unique to the signatories of the statement.
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¹: Present address: University of Texas Law School, 727 E. Dean Keaton St., Austin, TX 78705, USA.

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Rethinking the new corporate philanthropy

Abstract

Section snippets

The expanding corporate social responsibility bundle

Legal obligations of the corporation

Strategic management: Models for using CSR

Unintended results from corporate philanthropy

In defense of the shareholder wealth maximization norm: A reply to Professor Green

Washington and Lee Law Review

Director primacy: The means and ends of corporate governance

Northwestern University Law Review

The corporation: The pathological pursuit of profit and power

Doing better at doing good: When, why, and how consumers respond to corporate social initiatives

California Management Review

The firm, the market, and the law

The essential Drucker

The corporate contract

Columbia Law Review

Finding strategic corporate citizenship: A new game theoretic view