The Challenge of Organizing and Implementing Corporate Social Responsibility

The way in which business organizations operate in contemporary society has become an established field of investigation. There is a growing yet ‘fuzzy’ societal, organizational and political movement that is often referred to as corporate social responsibility (CSR). This often emerges at the boundary of the business organization and is expressed in changing relations with stakeholders and society at large, leading to an array of new activities that range from philanthropy to debates on social capital and cohesion in business-community Partnerships in, for example, less-developed countries. The picture emerging from this diversity is rich but rather confusing. At a fundamental level CSR appears to be a complex and multidimensional organizational phenomenon. The essence is re-evaluating and recalibrating the relationship between the organization and its wider context. In this respect CSR can be defined as the extent to which and the way in which an organization is consciously responsible for and accounts for its action and nonaction(s) and the impact of these on its stakeholders.

This chapter considers some of the scholarly works and thinkers who have been influential in corporate social responsibility (CSR) debate during the past 50 years or so. It offers an academic narrative of the key social, economic and political concepts and themes from the very diverse and not always coherent discussion on corporate social responsibility. It does not provide a chronological history, but brings together fundamental thoughts in the field of CSR that have considerable resonance for contemporary business practice. Our central proposition is that fundamental change is a prerequisite for the advancement of corporate social responsibility; change that touches at the heart of the established social and economic paradigms.

This chapter describes and critiques emerging discourses of corporate citizenship, social responsibility and sustainability, discusses some of the key assumptions that frame these discourses. It is argued that despite their emancipatory rhetoric the discourses are defined by narrow business interests and serve to curtail the interests of external stakeholders.

The way in which the business enterprise operates in the global market has become the subject of a lively debate in Western society. Trying to redefine the role of organizations, and particularly the business enterprise, is a crucial element of this debate. The concept generally relates to the need for more responsible behaviour, increased social commitment and greater environmental care — in short, corporate social responsibility (CSR). On the surface the debate is supported by growing awareness of the need to protect the environment, concern about the depletion of natural resources and awareness of social inequality around the world. More fundamentally CSR is about organizations taking greater social responsibility and becoming good corporate citizens. The central notion is that organizations should act beyond their traditional business boundaries, their purpose no longer restricted to generating profit but extended to include a contribution to the cohesion of society and consideration of the social and ecological environment. This challenges the firmly established belief in Anglo-Saxon economies that social issues are secondary to the priority challenges of corporate management.

This chapter underlines the significance of social capital for business and the contribution that corporate social responsibility (CSR) can make to investment in social capital. We follow Adler and Kwon (2002, p. 17), who state that social capital can be ‘understood roughly as the goodwill that is engendered by the fabric of social relations and that can be mobilized to facilitate action’. It generates mutual confidence and stimulates actions that would not otherwise be possible, as noted in Putnam’s (1993, p. 167) definition of social capital as a set of ‘features of social organization, such as trust, norms and networks that can improve the efficiency of society by facilitating coordinated actions’.

An increasing number of businesses are applying the concept of corporate social responsibility (CSR) to the organization of their activities. While the idea that companies should have an explicitly stated approach to CSR is relatively new in continental Europe, examples of responsible business practice can be traced back nearly two centuries in many European countries. These earlier examples often focused on the provision of good working and/or living conditions for employees or, as in the case of the cooperative movement, sought to ensure that consumers’ demand for products of reliable quality was met. In contrast the practices that contribute to contemporary CSR are found in a wider constituency of companies and CSR has gathered support in the form of policy commitments by national governments and the European Commission.

The theory of social dialogue and practice of public engagement are founded on democratic ideals of participation that remain elusive, despite a connection with established principles of Western democracy, a century of social science enquiry and more recently the growing practice of corporate stakeholder consultation. In theory and practice, dialogues are difficult to characterize and actual evidence for their effectiveness is difficult to separate from interrelated drivers of change. As the explicit communication technique behind many newly minted statements of corporate social responsibility, the latest practice of social dialogue appears too weak to maintain the questioning attitude that dialogue implies. This chapter draws on Jurgen Habermas’s (1968, 1984, 1987) discourse ethics and some original research techniques to assess the controversial issues behind corporate dialogue practice. We conclude that new forms of public consultation offer some promise of change by employing democratic communication processes implied in dialogue and through this a promise to further restore fundamental human rights, or at least the values that lead and protect them. To restore freedoms and define new rights through dialogue is a practice to be welcomed, even while practitioners are challenged to prove the ability of dialogue to deliver such promise. Still, where claims for dialogue are insufficiently evidenced, or imbalanced by inappropriate power relations, public consultation may be considered not as a liberating, democratic communication technique but merely an extension of the power, privilege and control that mark many forms of Western political and economic activity and their miscommunication.

The involvement of stakeholders in organizations has been the subject of considerable research and debate since Freeman wrote his seminal work in 1984. Building on the work of contingency theorists, engagement with stakeholders has come to be seen as a mechanism by which the organization can learn to adapt to what is happening in the world around it. This adaptation is often viewed in an adversarial way as the organization tries to steer its way towards its own ends. In this regard stakeholders have generally been perceived as a negative force that can disrupt the operations and goals of the organization. This perspective reflects a particular organismic view of an organization as an isolated, self-contained entity that interacts with its (hostile) environment through the auspice of various (organismic) stakeholder groups in order to achieve its legitimate goals.

In recent years a number of multinational companies, including Ikea, Home Depot and Nike, have become agents of social change by convening or joining networks of stakeholders to address complex socioeconomic and environmental issues. In attempting to deal with sustainability and corporate responsibility they have gradually shifted their change efforts from their own operations (that is, improving eco-efficiency) to upstream and downstream stakeholders (that is, supply-chain compliance with environmental and social policies) and, finally, to working with networks of governments, civic societies and businesses to change entire economic or social systems.

The traditional divide between the state and the market is fading. Companies are increasingly, being held accountable for issues such as fair trade, environmental degradation and local or regional socioeconomic matters. They are being required to expand their corporate agenda, and the corporate world realizes that it cannot ignore society is demand for greater responsibility. It also recognizes that companies can themselves benefit from corporate social responsibility (CSR). When developing CSR the organization takes into account additional values and long-term responsibilities in order to meet the expectations and address the critical viewpoints of all parties involved. Implementing CSR requires a company’s perspective to be reoriented so that new relationships can be formed, new values defined and new strategies developed. This is more than just another business project. Ultimately, it involves revisiting the very core of the organization, and this poses some difficult challenges for organizations.

Previous chapters have explored the different lenses through which CSR can be viewed — that is, the philanthropical, compliance, structural and sense-making approaches. In this chapter we shall not revisit the discourses on these approaches. However, it is evident that if CSR is taken seriously by a business there will have to be fundamental and transformational changes to its core paradigms. What is increasingly evident is that CSR is a somewhat ill-defined and ‘fuzzy’ concept. It is a complex phenomenon and one that often emerges at the boundary of the business enterprise — that is, where the organization interacts with its stakeholders. It is also clear that the changes an emergent CSR agenda implies are difficult to manage, and there is growing evidence that a fundamental shift in the business paradigm cannot occur without a significant commitment by the leadership and a change in the focus and behaviour of leaders (Williams, 2002; Edelman, 2004). Given this it is important to reflect on how change can be implemented most effectively and the consequences for leaders.

Corporate social responsibility (CSR) is becoming a key issue in business. It involves companies consciously orienting their activities towards value creation along three dimensions — people (the establishment of wellbeing within and outside the organization), planet (ecological stewardship) and profit maximization — while maintaining an open and communicative relationship with diverse stakeholders. How companies can properly respond to this endeavour cannot be addressed by adopting a single approach, strategy or scenario. The starting point here is that CSR can only be anchored in the organization if those involved can make sense of the concept.

Corporate social responsibility (CSR) in Europe can be viewed as a social movement that includes leading companies, policy makers, advocates, pressure groups, knowledge institutes (universities and consulting companies), business associations and sections of the investment community (see Chapter 6 of this volume). This movement has many roles and functions. Its main concern is to address the position and responsibilities of business in society. It provides an institutional framework to support and legitimize CSR and its relationship to modern business, a means to develop a better understanding of thinking and practice, and a network through which ideas and practices can be diffused. For example, the European Commission (2002) continues to push for the inclusion of CSR as a key factor in the drive for competitiveness by European companies. A number of leading companies and knowledge institutes have begun to address the theory and practice of CSR and growing number of advisory bodies and groups are promoting corporate responsibility, for example the UN Global Compact and the Global Reporting Initiative.

In response to unprecedented changes in the business and social environment, corporate social responsibility (CSR) has emerged as an important managerial consideration. In recent years companies around the world have introduced CSR, as evidenced by the avalanche of CSR reports, the growth of networks such as BITC, Econsense and Aderse, stakeholder dialogues, reports by the EU and so on. However, companies now have to put the notion of CSR into organizational practice, thus going beyond the relabelling of existing activities.