CORPORATE SOCIAL RESPONSIBILITY (Encyclopedia)

1. Definition
The expression Corporate Social Responsibility (CSR) describes the relation between firms, understood as major economic actors, and society. Even though, in the last decades, the growing interest towards these issues has opened the door for a great deal of studies and for an intense international debate, at present a univocal definition of CSR is still missing ( Correll 1999; Snider et al., 2003; and Dahlsrud 2008). However, it might be useful to reconstruct briefly the debate regarding CSR in order to clarify some common characteristics deriving from such different positions.
When in the Sixties people started to discuss about social responsibility and the relations between market and society, the economist Milton Friedman defended free market by asserting that “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engage in open and free competition without deception or fraud (Friedman 1962)” 1.
Friedman’s thesis, defined as “moral minimalism” (Friedman and Werhane 2005), gave rise to a wide literature in business ethics, regarding the extension and the content of economic subjects’ social responsibility. In general, critics of Friedman’s position believe that corporations ought to relate to society through more than just marketplace transactions and serve a wider range of values than the traditional economic values that are prevalent in the marketplace.
However, as noted by Freeman and Werhane (2005) since their very first studies, the central question of the research on “social responsibility” is concerned with the impossibility of splitting the social aspect from the economic one. Actually, critics of Friedman’s moral minimalism and of supporters of the free market would not have been able to underestimate the importance of the economic aspect. To this end, in 1979, Carroll identified four components of CSR: economic, legal, ethical, discretionary and philanthropic. According to this framework, Friedman’s thesis can only partially explain the content of CSR.
From a theoretical point of view, however, the answer to moral minimalism was formulated only in the Eighties thanks to Friedman’s stakeholder approach (Evan and Freeman 1988; Freeman 1994). This new approach replaced the minimalist idea according to which the firm must be responsible only towards shareholders. According to this approach, the corporation has a broader constituency and, consequently, it is responsible towards a wide group of stakeholders, which includes suppliers, customers, shareholders and the local community. In Freeman’s opinion, this group includes all individuals or groups who have a legitimate interest in the activities of a firm (Freeman 1994).
In the last two decades, scholarly works on CSR have offered a wide range of theories and approaches, from the Integrative Social Contracts theory to Corporate Citizenship and the theory of Corporate Sustainability. The following paragraphs are aimed at offering a general introduction on the development of the concept of CSR. They also offer a brief description of the main contemporary ethical theories on CSR2.

2. Evolution of the CSR notion
The concept of CSR was born in the United States in the second half of the last century. Generally speaking, Bowen’s text, Social Responsibilities of the Businessman of 1953, is considered as the first work where it is possible to find the ethical structure of the  contemporary notion of CSR. Bowen, considered by many scholars as the “father of CSR” (Carroll 1999, Garriga and Melé 2004), refers to “the obligations of businessmen to purse those policies, to make those decisions or to follow those lines of action which are desirable in terms of the objectives and values of our society” 3.
Some years later, following Bowen’s footsteps, a wide literature on the subject of social responsibility was developed. Nevertheless, in this phase, the corporation wasn’t considered as the main subject of research yet; a great deal of those years’ studies, indeed, show that the businessman is the subject who is socially responsible for one’s actions, while the main object of research concerns the relations between business and society. In 1960, Keith Davis, linked social responsibility to those businessmen’ s actions and decisions that are not tightly linked to their economic interest. During the same period, another author, William Frederik, argued that social responsibility implicitly asks businessmen to consider society’s needs and demands in their transactions (quoted in Carroll 1999, p.271). Some years later, in 1967, the firm was associated for the first time to society, in terms of social responsibility, in Clarence C. Walton’s work, Corporate Social Responsibilities. According to Walton, the notion of social responsibility recognizes the deep link existing between corporation and society and imposes on businessmen to consider this relation in transactions (quoted in Carroll 1999, p.272).
In the Seventies, the notion of social responsibility became more specific and the role of the corporation, understood as an economic actor responsible towards society, was broadened; therefore, these were the years that saw the passage from social responsibility to CSR. In 1976, H. Gordon Fitch defined CSR as the ability of the enterprise to solve social problems; in this sense, he emphasised the distinction between social problems and economic issues (quoted in Carroll 1999, p.281).
The link between corporations and society was also developed in 1979, when Carroll gave a definition of CSR that went beyond the mere idea of profit and of obedience to state laws.
According to Carroll, “the social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organizations at a given point in time” (Carroll 1999, p.283).
However, twenty years later, the notion of CSR was revised from a conceptual and theoretical point of view. Starting from the Eighties, CSR became the object of interest for economic and social sciences; in particular, the firm and all the questions linked to social responsibility assumed a central position in business ethics. Moreover, the most important empirical studies aimed at testing the performances of corporate responsibility date back to the Eighties and the Nineties. The first and most relevant normative reply is the stakeholder theory, formulated for the first time by Freeman at the very beginning of the Eighties.

3. Stakeholder approach
The notion of stakeholder is one of the most prominent contributions to recent business ethics. Since the introduction of this concept by Edward Freeman in 1984, a concern for the interests of all stakeholder groups has become a widely recognized feature of ethical management and it has been employed in order to give an explanation to the general idea, supported by numerous economists, according to which the main responsibility of businessmen was tied to profit maximization. Although the stakeholder approach has been developed in various ways, it has been expressed most often in the moral prescription that managers, in making decisions, ought to consider the interests of all stakeholders (Freeman and Werhane 2005).
 “The true purpose of the firm is to serve as a vehicle for coordinating stakeholder interests. It is through the firm that each stakeholder group makes itself better off through voluntary exchanges. The corporation serves at the pleasure of its stakeholders, and none may be used as a means to the ends of another without full rights of participation in that decision”. 4
Generally speaking, stakeholders could be defined as any group or individual who can affect or is affected by the achievement of a corporation purpose, but also as people holding specific rights (Freeman and Werhane 2005) 5. In this sense, in order to determine how a firm should behave in specific situations, it is necessary to identify the parts that interact with the firm and all the interests involved. Normally, the stakeholder group includes workers, managers, shareholders, consumers, customers and the local community. The role played by stakeholders is double: on one hand, their claims are restrictions to business legitimacy, in the sense that they indicate the purpose and the priority of the firm itself; on the other hand, the focus on stakeholders implies a relation of responsibility and mutual trust between the different stakeholders. To this end, some authors point out that the relations established between stakeholders introduce additional obligations regarding the business organization itself (Freeman and Werhane 2005). For instance, a firm has some duties towards its workers as they are both workers and human beings. Workers, on the contrary, have some obligations that derive from the role they play within the firm, in addition to the general moral obligations that bind the relations between individuals and between workers and firms (Freeman and Werhane 2005). The stakeholder theory, thus, develops a thick grid of relations based on trust that binds the firm towards its stakeholders and vice versa, both inside and outside the firm.
In literature, it is possible to distinguish at least two critical positions in relation to the stakeholder theory. According to some authors, the stakeholder theory risks not solving the moral problem that is bound after all to the firm’s activity. In other words, it would be possible to think of a firm that, although respecting the bonds between all stakeholders, practices economic activities that are not acceptable from a moral point of view. Actually, the stakeholder theory, since its very first formulations, has required a reference to Kant’s moral theory. In this perspective, since the relations between stakeholders are relations between individuals or groups of individuals, it is supposed that each decision they take for their own interest should be bound to an equal respect towards people and everybody’s rights. Moreover, in an honest agreement scheme between stakeholders, individuals should keep some kind of independence when they judge the activities of the firm from an ethical point of view (Freeman and Werhane 2005, p.562).
The second criticism, in one way linked to the first one, focuses on the fiduciary relation between stakeholders 6. According to Goodpaster, for instance, stakeholders’ multi-fiduciary approach does not consider the relational differences existing between the different subjects. To be more precise, the relation between the managers and the shareholders of the firm would be different and stronger than the one between managers and other stakeholders and, thus, in case of conflict, the first relation would take over the other ones. (Goodpaster 1991). Actually, in addition to Kant’s theoretical structure, the stakeholder theory introduces a normative scheme aimed at removing the possibility of any of the conflicts mentioned above. In 1994, Freeman and Evan formulated a theory based on Rawls social contract theory (Freeman and Evan 1994; Rawls 1971). According to this new formulation, the equality principle is guaranteed by Rawl’s “veil of ignorance”. In other words, stakeholders do not know exactly “their class position or social status nor do they know their fortunes in the distribution of natural assets and abilities within the firm” (quoted in D’Orazio 2003, p.22).
This system brings the two philosophers to think that all stakeholders are assigned the task of choosing, from a series of alternatives, the conception of justice that best advances their interests in establishing conditions that enable them to effectively pursue their final ends and fundamental interests. The stakeholders’ theory can be considered as the most relevant reply to the moral minimalism of Corporate Social Responsibility, which is typical of the economic approach. As it has already been said, this theory has the merit of introducing the issue of the social impact of the firm’s economic activities without underestimating the importance of economic issues of profit growth and development of the firm. This theory, indeed, is based on the idea that the firm gives some value to stakeholders, just like each group of stakeholders attributes value to the firm, and this mechanism of mutual exchange enables the firm, conceived as an organization, to grow in a safe way.

4. Integrative Social Contracts Theory
Apart from the stakeholders theory, another approach to CSR has recently drawn the attention of the international debate, the Collective Social Contracts Theory. In this respect, the reference to contractarianism is evident; however, in such a context, contractarian theory is put forward again in order to explain and justify the “status” of firms within society rather than firms’ setting up rules (Freeman and Werhane 2005 p. 559).
Donaldson was the first to consider the relation between market and society in terms of a social contract (Donaldson 1982; quoted by Freeman and Werhane 2005 and Garriga and Melé 2004). According to the American philosopher, there would be a tacit social contract between society and the firm. To be more precise, when a firm is authorized by society to act in a certain community, it adopts some obligations towards it; these obligations form the basis of the contract between firm and society (Freeman and Werhane 2005 p. 559).
If on the one hand society engages in guaranteeing the firm’s economic free will, on the other the firm has to respect society’s expectations, that, in Donaldson’s opinion, concern the improvement of the general welfare through “the satisfaction of consumer and worker interests” (Donaldson 1982, p.44ff). The contractarian idea carried out by Donaldson had a great impact on CSR literature, because it offered a theoretical structure to the idea of corporate moral responsibility 7. However, his proposal did not consider the internal relations of the firm, namely stakeholders, since it focused on the firm’s obligations outwards, that is to say society as a whole.
In 1994, Donaldson and Dunfee resumed the social contract theory applied to the relation between society and firms in order to offer a more mature version, the Integrative Social Contracts Theory. This new theory aimed to integrate the first proposal of 1982 and to go beyond its limits. This goal was reached through the decomposition of the agreement between society and firms in two different contractarian phases: the first general phase, the macro-social contract, guarantees the moral standard for each social negotiation; while the second one, the following micro-social contracts, guarantees the autonomy of the members of the single economic communities in specifying one’s internal rules of behaviour. According to the two philosophers, it is possible to believe that a community of rational individuals would accept a hypothetical general macro social contract that would preserve a significant moral free space for individual economic communities, where it is possible to generate one’s norms of economic behaviour through micro social contracts (Donaldson and Dunfee 1995, p.95-6). As explained before, in the scheme of the integrative social contracts theory, the macro social contract provides a moral standard that is valid for all the ensuing agreements. However, the content of its general norms has not been clearly defined yet. According to Donaldson and Dunfee, it could include sufficiently general and universal principles such as the respect of contracts, good faith, the respect of individuals’ fundamental rights and the right to non-discriminatory treatment, etc. (Donaldson and Dunfee 1995, p.95-6). 
Even if not very clear about the content of general moral norms, the idea of a moral standard, even if still minimum, proposed by the ICST offers an important contribution to the literature on CSR. The macro social contract, indeed, guarantees the justification of CSR on an international scale, though respecting cultural or organizational differences existing in different territorial contexts.

5. Corporate Citizenship
Finally, a recent development of CSR is that of corporate citizenship. Although the idea of considering the firm as a citizen at the same level as other individuals has existed in literature since the Seventies (Davis 1973), as it was noted by Garriga and Melé, this concept has only recently become more relevant due to a series of factors, such as the crisis of the welfare system, the globalisation phenomenon and its deregulation, which have contributed to make multinational firms become stronger than whole countries from an economic as well as social point of view (Garriga and Melé 2004, pp.56-57).
This approach is based on the analogy with the concept of citizenship, valid for all citizens (Valor 2005). However, the concept of citizenship applied to firms, and all the obligations and rights that are mutually related to it, is confined to the economic activities carried out by the firm within a determined social and political community. In this sense, the idea of citizenship has the purpose of emphasizing the firm’s duty to support and cooperate with the government for the general welfare and social justice (Freeman and Werhane, p.563). 
Although an univocal definition of corporate citizenship does not exist in literature, it is possible to find some elements, shared with several studies, among which the emphasis on the idea of responsibility towards the territorial community where the firm acts and the attention towards environmental issues (Garriga and Melé 2004).
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1Quoted in D’Orazio (2003).
2The theories here examined are the Stakeholder theory, the Integrative Social Contracts Theory and the Corporate Citizenship theory. As far as Sustainability Theory is concerned, see Sustainability.
3Quoted in Carroll (1999:270) and Freeman (2005:553).
4In Evan and Freeman (1988/1993, p.262).
5As it was noted by D’Orazio, in this theory, stakeholders are considered as “moral subjects holders of rights” (D’Orazio 2003, p.14).
6This theory has been discussed in D'Orazio (2003).
7Regarding the meaning of corporate moral responsibility, with the corporation conceived as a moral agent, see also paragraph 3.1 of Donaldson 1982. The analysis of the firm in business ethics can be found at the entry Business Ethics.
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Editor: Valentina GENTILE
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