A Typology of CSR
Corporations have come a long way since Francis Edgeworth wrote in 1881 that “the first principle of economics is that every agent is actuated only by self-interest” (p. 16). However, for more than three decades now, economists have come to accept that homo economicus does not stand up as an empirical proposition and that humans are social animals who value trust and have a tendency to reciprocate trust with trust, kindness with kindness, and unkindness with punishment. The experimental evidence casting doubt on the validity of the homo economicus assertion indicates that economic theory needs major revisions “for it to be predictive of behaviour in situations where cooperation and trust might play important roles” (Ben-Ner and Putterman 2010, 412).
Conceptualizing CSR as both a social and political phenomenon and a social and political process, British authors Tombs and Smith (1995) utilized terms from political and social theory and suggested a schematic typology along three dimensions:
- 1. Liberal form of CSR, which is best exemplified by Milton Friedman’s view that the only responsibility of corporation officials is “to conduct the business in accordance with [the employer’s] desires, generally will be to make as much money as possible while conforming to the basic rules of society” (Friedman 1970, 33). A major criticism that can be leveled against this view is that corporations have a significant impact on laws that are meant to regulate them and, equally important, have the power to define what constitutes compliance with existing legislation (Tombs and Smith 1995, 137).
- 2. Paternalist form of CSR arises because of the essentially “social” nature of corporations, which leads them to take on commitments beyond what they need to do in response to the markets and their stakeholders and because of what they are obliged to do by law. One limitation here is that while such a CSR approach refers to a dialogue with groups of stakeholders, it is the corporation that decides which ones are legitimate and which ones are not (p. 138).
- 3. Democratic form of CSR “recognizes the existence of conflicts and cleavages within society and thus requires a fundamental examination of the bases of a just and legitimate social order” (p. 139). This form of CSR is predicated on a more general democratization of the societies in which corporations operate—“it is a form of responsibility which ultimately would question the very existence of ‘corporate America’ ” (pp. 139—140). It becomes obvious, of course, that a democratic form of CSR “cannot simply be an adjunct to existing corporate norms, values and practices” (p. 140). Thus, strictly speaking, as Tombs and Smith, (1995, 140) made clear, this is not another form of CSR but rather a radical democratization within and around corporations. Tombs and Smith maintained that the democratization of corporations is likely to lead to more socially responsible decision making.
Two decades later, corporations around the world do not reflect Tombs and Smith’s democratic form of CSR, and some would say, they are unfortunately unlikely to do so in the foreseeable future. As far as measuring the business and societal benefits of CSR is concerned, Drews (2010) argued that for such measurement to be comprehensive, it should combine both quantitative and qualitative evaluations.