Sunday, August 29, 2010

Social Responsibility: Who's Got it Right and Who Hasn't?

Only 3% of 4,238 business executives surveyed by McKinsey believed that their companies were doing a good job of being socially responsible (cited in Glavas and Piderit, 2009, p.54). “There are four domains of corporate social responsibility (CSR): economic, legal, ethical and philanthropic. The basic idea of CSR is that business and society are interwoven rather than distinct entities; therefore, society has certain expectations for appropriate business behaviour and outcomes, (Lee, Fairhurst and Wesley, 2009, p.141-142).

CSR is becoming a ‘hot’ topic of research and debate, yet is there more talk than action - are organisations really trying to become socially responsible or simply playing to their audiences?

Marjorie Kelly and Allen White highlight how some organisations are changing their fundamental design to embrace the effective principles of CSR and site the examples of Novo Nordisk, Organic Valley, and the John Lewis Partnership.

These organisations have evolved to integrate business principles with social responsibility; Novo Nodisk, for example, is a multi-million dollar pharmaceutical company, with a turnover in excess of $7 billion, based in Denmark that is owned by a foundation whose primary aim is to find a cure for diabetes. Organic Valley, in the US, with a turnover in excess of $300 million, has established a co-operative that is owned by the 1,200 farmers who produce the organic products; and the John Lewis Partnership in the UK, with a turnover in excess of $9 billion, is a 100% owned by its employees, and its stated purpose is ‘serving the happiness of its employees,’ (Kelly and White, 2009, p.25).

Yet at the other extreme you have organisations like BHP-Billiton who often rank high in formal CSR surveys (such as the Global Reporting Initiative) but aren’t similarly supported by many environmental/sustainability groups, because of their perceived impact on the environment.

Timothy Devinney (2009) highlights a more complex problem with L’Oreal, a company that engages in limited animal testing, but who owns the Body Shop, which of course actively promotes its animal-friendly orientation. Devinney raises the question; “is society not better off with a schizophrenic L’Oreal rather than no Body Shop at all?” (p.45); yet what does this say about an organisations commitment to CSR and where does it leave the consumer. By supporting the Body Shop, like it or not, the consumer is supporting L’Oreal that engages in animal testing.

At Nike and Proctor & Gamble (P&G), “social and environmental considerations are deeply embedded in decision making; where corporate responsibility is one of Nike’s nine strategic goals. At Nissan North America, 99% of the staff have gone through green training to gain understanding and sustainability awareness, which the company views as integral for acceptance of CSR initiatives”, (Epstein, Buhovac and Yuthas, 2010, p.44-45).

However, what seems to be clear is that most organisations are moving too slowly in embracing the true values of CSR and are now able to blame the current global recession, for their slow progress in this important area.

In a 2009 report, Lee, Fairhurst and Wesley, confirm that many organisations and researchers are confident that “there is a positive relationship between CSR activities and corporate performance citing that often the costs are small while the benefits are potentially high.” They cite research from Waddock and Graves in 1997; Margolis and Walsh in 2001; and Price Waterhouse Coopers in 2004, that confirm that CSR positively influences profitability, through factors including, improved customer loyalty and employee job-satisfaction, (2009, p.144).

So let’s hope more organisations make corporate social responsibility a strategic priority in the months ahead.


Devinney, T.M. (2009). Is the Socially Responsible Corporation a Myth? The Good, the Bad, and the Ugly of Corporate Social Responsibility. Academy of Management Perspectives, Vol. 23 Issue 2, p. 44-56.

Epstein, M.J., Buhovac, A.J. and Yuthas, K. (2010). Implementing Sustainability. The Role of Leadership and Organisational Culture. Strategic Finance, Vol. 91, Issue 10, p.41-47.

Glavas, A. and Piderit, S.K. (2009). How Does Doing Good Matter? Effects of Corporate Citizenship on Employees. Journal of Corporate Citizenship, Issue 36, p.51-70.

Kelly, M. and White, A. (2009). From Corporate Responsibility to Corporate Design: Rethinking the Purpose of the Corporation. Journal of Corporate Citizenship, Spring, Issue 33, p.23-27.

Lee, M-Y., Fairhurst, A. and Wesley, S. (2009). Corporate Social Responsibility: A Review of the Top 100 US Retailers. Corporate Reputation Review, Vol. 12, Issue 2, p.140-158.

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