Corporate Social Responsibility

Corporate social responsibility (CSR) is the idea that businesses have obligations to society that extend beyond making profit and obeying the law, and the debate over the nature and limits of those obligations.

Definition

A firm's responsibilities toward society and stakeholders beyond its legal and direct economic obligations, and the body of theory assessing those responsibilities.

Scope

This topic covers the concept of CSR, its principal models (such as economic, legal, ethical, and discretionary responsibilities), the arguments for and against it, and its relation to stakeholder and shareholder theories. It also covers criticisms that CSR is incoherent, a distraction, or a form of 'greenwashing'. The treatment describes these positions and the reasoning offered for them rather than prescribing corporate behavior.

Core questions

• Do corporations have moral responsibilities beyond maximizing returns within the law?
• What kinds of responsibilities, if any, does CSR encompass?
• Is CSR compatible with, or opposed to, the duty managers owe shareholders?
• Can corporations be moral agents that bear responsibility at all?

Key theories

Carroll's pyramid of CSR

Archie Carroll's framework distinguishing economic, legal, ethical, and discretionary (philanthropic) responsibilities, presenting them as layered categories of corporate obligation.

The profit-maximization objection

Milton Friedman's argument that managers acting on broad social responsibilities spend others' money without authorization, and that business best serves society by pursuing profit within legal and ethical rules.

History

Debate over corporate responsibility intensified after Friedman's 1970 essay rejecting broad social responsibilities. Carroll's 1979 model offered an influential taxonomy, and CSR became a major topic in management and business-ethics scholarship through the following decades, increasingly intertwined with stakeholder theory.

Debates

Whether CSR conflicts with managers' duties

Critics in the Friedman tradition hold that pursuing social goals beyond profit oversteps managers' mandate, while stakeholder theorists argue that responsible conduct toward affected parties is itself part of good management.

Key figures

• Archie Carroll
• Milton Friedman
• R. Edward Freeman

Seminal works

• carroll1979
• friedman1970

Frequently asked questions

Is CSR legally required?

Generally CSR refers to responsibilities beyond what law requires, though some jurisdictions impose reporting or due-diligence duties. The ethical debate concerns voluntary responsibilities rather than legal compliance.

What is 'greenwashing'?

Greenwashing is the practice of presenting a misleadingly positive image of a firm's social or environmental conduct. It is one of the criticisms raised against superficial or merely reputational CSR.