Topic: Culture, Ethics
Publication: Academy of Management Perspectives
Article: Is the socially responsible corporation a myth? The good, the bad and the ugly of corporate responsibility.
Author: T.M. Devinney
Featured by: Lit Digger
Is it even possible to have a corporation that is truly socially responsible? Sure, some companies like Johnson & Johnson and Ben & Jerry’s are perceived to demonstrate more corporate social responsibility (CSR) than others, but let’s stop pointing fingers for a moment and instead think critically about what CSR actually means, shall we? Timothy Devinney has added his two cents to an ongoing debate about CSR, a topic that has been difficult to scientifically examine in part due to the looseness of its definition.
Devinney presents three perspectives in his examination of the issue, which I will broadly summarize below.
First of all, “Who is Sanctioning Whom?” The traditional idea is that that society morally sanctions corporations, such that corporations must then operate within the rules and ethical practices of that society. However, this is confusing because societies are often not comprised of one crystal clear set of norms (e.g., liberals and conservatives, people of various ethnicities, and those of differing sexual orientations could live on the same neighborhood block). So the question becomes: to whom should the corporation really be responsible, especially when societal groups or ideals are in conflict?
Secondly, Devinney considers “The Good of CSR” versus “The Bad of CSR.” On the bright side, corporations can help identify the needs of society. If people are shopping at a shoe store, and the shoe store is doing well, then the business must be addressing a need and everyone has happy feet, right? Through research, corporations know about the societal trends and the current technology available, so they are also able to experiment with new ideas, and let brutal competition decide what will stick.
This opens up the possibility of solving new, social problems! On the dark side, it is likely that they “manipulate that society for their own benefit,” says Devinney. Let’s not forget that a corporation’s ultimate goal is to achieve bottom-line profit. Corporations use political power to best serve their most important constituencies, and they largely do not represent society’s poor people and may contribute fewer resources to less-populated areas (e.g., the boonies).
Thirdly, Devinney takes a hard look at the so-called “Ugly of CSR” by asking, “Where’s the Performance?” Little evidence exists in support of CSR’s relationship to corporate performance, including support for the notion that CSR leads to corporate performance. Devinney cites Margolis, et al. (2007 & 2008), suggesting that CSRs don’t necessarily hurt performance, but the reality is that a corporation will not seriously engage in every possible aspect of CSR unless there is real value to be gained at the bottom line.
The article ends by pointing out that corporations are naturally complex, so we should be sensitive to and somewhat accepting of their good and bad qualities . . . much like people, the author concludes.
Margolis, J.D., & Elfenbein, H.A., & Walsh, J.P. (2007). Does it pay to be good? A meta-analysis and redirection of research on corporate social and financial performance (Working Paper). Boston: Harvard Business School.