Discussions of Corporate Social Responsibility often descend into vague do-goodism.
In contrast, Geoffrey Heal takes a useful approach in his paper Corporate Social Responsibility: An Economic and Financial Framework (pdf). He writes,
“I analyse corporate social responsibility (CSR) from economic and financial perspectives, and suggest how it is reflected in financial markets. CSR is defined as a programme of actions to reduce externalized costs or to avoid distributional conflicts. It has evolved in response to market failures, a Coasian solution to problems associated with social costs. The analysis suggests that there is a resource-allocation role for CSR programmes in cases of market failure through private–social cost differentials, and also where distributional disagreements are strong. In some sectors of the economy private and social costs are roughly in line and distributional debates are unusual: here CSR has little role to play. Such sectors are outnumbered by those where CSR can play a valuable role in ensuring that the invisible hand acts, as intended, to produce the social good. It can also act to improve corporate profits and guard against reputational risks.”
This is certainly a much more useful definition than others such as the one from the European Union which defines Corporate Social Responsibility as a program in which ‘‘companies decide voluntarily to contribute to a better society and a cleaner environment.”
September 19, 2006 at 9:31 pm |
[...] They find that a voluntary agreement changes the industry’s dynamic abatement investment pattern, eliminating investment in an early period but increasing it in a later period. Their analysis provides a new rationale for the use of voluntary agreements that may be of considerable importance in developing and transition countries where regulatory capacity is weak. One could also examine corporate social responsibility (CSR) as a Coasian solution, and Geoffrey Heal does just that (see Conservation Finance). Heal’s definition is useful but how much currency does CSR have? Not much according to van Oosterhout and Heugens. They argue that “the case for CSR as a theoretical concept in social science and the humanities is weak if not outright fatal”. They go on to show that: that no satisfactory intensional definition of CSR—one that specifies with precision and clarity which conjunction of attributes makes up the concept—is available or to be expected. Equally pitiful is that each of the available extensive definitions of CSR—which are supposed to point out the real-life phenomena to which the concept refers—is troubled by one or several of four operationalization problems…An even more serious, however, is that more than fifty years of CSR research and theory building has not resulted in a systematic relationship between the notion’s intension or theoretical conceptualizations, on the one hand, and its extension or empirical operationalizations, on the other. In the absence of such a systematic relationship one can take neither CSR theory building, nor empirical research on CSR, very seriously. But what seals CSR’s fate, in our view, is the notion’s redundancy in both positive and normative theorizing in business and society. We have demonstrated only its redundancy in positive theorizing in the present contribution, but there is no reason to assume that it will fare better in normative theory. [...]