Bringing Back the Essence of the “S” and “R” to CSR: Understanding the Limitations of the Merchant Trade and the White Man’s Burden
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- Lorenzo-Molo, C.F. & Udani, Z.A.S. J Bus Ethics (2013) 117: 123. doi:10.1007/s10551-012-1513-1
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One of the fundamental struggles in corporate social responsibility (CSR) is the uncertainty and inherent contradictions that stem from a company being an individual legal entity and a community of persons. The authors contend that CSR has departed from the essence of “social responsibility.” The paper is a commentary on CSR, presented as two frameworks rooted in individualism—The Merchant Trade (the strategic view of CSR) and The White Man’s Burden (self-righteous CSR heroism that assumes the shackles of responsibility normally offered by others). Both, however, contradict the essence of “social responsibility” pitting individual against community, business against society, and economic needs and realities versus ethical reflection. The authors present a model that advocates a more moderate and realistic approach to CSR that goes back to the essence of social responsibility.
KeywordsCorporationSocial responsibilityMerchantWhite Man’s BurdenRelational capability
One of the fundamental struggles of corporate social responsibility (CSR) is the uncertainty and inherent contradictions that stem from a corporation being both an individual legal entity and a community of persons. The corporation’s societal role has been considered ambiguous, puzzling legal theorists for years (Ripken and Fordham 2009). Ripken and Fordham (2009) enumerated three general views of a corporation: (1) an artificial and dependent person or a legal construct created by people to serve public interest; (2) an aggregate person forged by the mutual agreement of individuals composing it, and whose rights should be respected by the state and the law; and (3) a real and independent person with legal, social, and moral responsibilities, and which exists separate from the state, merely granting it permission to oprate. With this, two things are clear. First, the corporation has multiple roles and touches lives in different and profound ways (Ripken and Fordham 2009). The authors contend that a corporation is both an artificial and dependent person as well as an aggregate person forged through agreement. It is composed of persons with a special privilege (legal liability) and should thus accept greater responsibility and accountability. Second, all three views of the corporation seem to have pitted the corporation as an individual legal entity against the notion that it is a community of persons. But as Ripken and Fordham stated, it fills multiple roles and serves many different purposes, which the authors posit includes shareholders, stakeholders, and society at large; and they need not conflict. Gibson (2011) tackled the difficulty with the view that “no specific person is the sole causal agent for an act, or if something comes about through aggregated action in a corporate setting” (p. 71). This is where CSR becomes particularly important. Corporations have been accorded a special feature—limited liability to shareholders who have the right to participate in the profits, but are not held personally liable for the company’s debts and other acts. One can view “limited liability” not only as protection but also as a kind of reward for greater sociability since it helps reduce risks in seeking to relate and commune with others. CSR should be regarded as that which will help ensure greater sociability. At the same time, it brings in the concept of “responsibility,” which helps sustain and maintain the unity created by those persons united for a purpose.
The authors contend that CSR seems to have departed from the essence of the terms “social” and “responsibility.” It has neglected the multiple roles a corporation plays and has pitted the corporation as an individual legal entity against the notion that it is a community of persons. In order to illustrate, the authors will investigate and present a notion of social responsibility in consonance with the terms “social” and “responsible.” In order to further demonstrate CSR’s departure from the essence of social responsibility, the authors will present two CSR theories they developed, which reflect the essence of current CSR practice. Both theories are metaphors; thus, better illuminating their referents’ sense of significance. The first, which the authors call the Merchant Trade, is derived from William Shakespeare’s Shylock from Merchant of Venice. It posits that corporations are entities that can profit from philanthropic and charitable work. Second, is the White Man’s Burden, a metaphor based on Rudyard Kipling’s poem. It posits that corporations are “heroic” and almost larger-than-life citizens that serve people through philanthropic and charitable work. It is our view that in practice, both frameworks create and maintain good business—but good in the tradition of individualism; thus, focused on profits and selfish interests while neglecting social responsibility itself. A corporation may do considerable public service work and charity but systematically pollute the environment, misappropriate money from their employees’ pension fund, or pursue discriminatory labor practices (Campbell 2006). The authors present a model, which advocates a more moderate and realistic approach for corporations in doing CSR that goes back to the essence of sociability and responsibility. By doing so, the article can properly contribute to CSR theory-building.
The first section entitled, The Corporation with the Essence of the “S” and “R” presents the problem of definition in CSR and explores the notion of social responsibility and community in light of the corporation. The second and the third sections, entitled, The Merchant Trade and The White Man’s Burden discuss two CSR theories rooted in individualism, which the authors have created to illustrate CSR’s departure from the essence of social responsibility. The fourth, entitled, Profit Efficiency, presents the case for a new way of viewing the creation of wealth. The fifth section, entitled, Relational Capability, presents the significance of tapping into human sociability. The sixth, entitled, Housing a Practice, focuses on the elements necessary for a good corporate practice in line with profit efficiency and relational capability. The last section, cSR presents the fruits of infusing the new model (based on the concepts discussed in the fourth to the sixth sections) into the life and work of a corporation. As cSR, the new model emphasizes the social responsibility aspect buried by the two previous frameworks.
The Corporation with the Essence of the “S” and “R”
Scholars agree that it is not easy to define CSR (Matten and Moon 2008). There is no consensus on a definition (McWilliams et al. 2006). Wang and Juslin (2009) identified three general approaches to CSR definition: (1) the shareholder approach, which focuses on the social responsibility of business to increase profits; (2) the stakeholder approach, which recognizes the need to balance interests of a firm’s other stakeholders as they can influence and can be influenced by a business; and (3) the societal approach, which acknowledges the responsibility companies have to society. Like Ripken and Fordham (2009), Wang and Juslin (2009) revealed CSR’s inclination to view business and society and individual and community as contradictory. While they acknowledge that there are numerous definitions of CSR, “the primary reason for CSR has rarely been well defined.” This is crucial since, similar to Melé’s (2012, p. 89) business ethos, which are “the guiding ideas and values which provide a ‘distinctive spirit’ in understanding business,” understanding the essence of CSR makes for a more effective and truthful discipline; and to grasp its essence, one has to get down to the basics by looking into the definition of the corporation, “social,” and “responsibility.”
In its broadest sense, “social” means association, from the Latin word socius, meaning a companion or associate (Dolwick 2009). We define “responsibility” as the condition of being responsible or accountable; and based on Aristotle’s “theory of responsibility,” we are responsible for our voluntary actions when the origin and cause of the action is in us and desired by us. Based on these definitions, one can observe that the terms “social” and “responsibility” can connote something communal and individualistic, respectively. “Social” refers to something more extrinsic such as relations, community, and an association with others. “Responsibility” pertains to something intrinsic as it is rooted in the individual. At the same time both inherently share communal and individualistic ideas and values. “Social” stems from the nature of man, who is an individual. “Responsibility” stems from certain obligations an individual has based on man’s social nature. They are interdependent concepts particularly when one adopts a definition of the corporation that brings to fruition the notion of individual self-interest and the greater public good. At the same time, the very definitions of “social” and “responsibility” presuppose a definition of “corporation” that considers the interdependent concepts of “individual” and “communal.”
Random House Unabridged Dictionary Second Edition defines corporation as “an association of individuals created by law or under authority of law, having a continuous existence independent of the existences of its members, and powers, and liabilities distinct from those of its members” or “any group of persons united/regarded as united in one body.” The definitions are consistent with Ripken and Fordham’s (2009) first two views of a corporation as an artificial, dependent, and aggregate person. While the term “corporation” was primarily created as a legal definition, it is also significant to recognize its other reason for being. Coase (in Melé 2012) affirmed that the corporation came about as an instrument for economic efficiency. According to Coase, it was more efficient to have a hierarchical structure and an appropriate organization versus having a business conducted by individuals exchanging goods in the marketplace. This is consistent with Solomon (2004, p. 1026) who stated that corporations are communities—“people working together for common goals.” In the same tradition, Melé (2012) opined, “The business enterprise is a community of persons based on cooperative activity to provide goods and services in an efficient, competitive and profitable way” (p. 97). Melé pointed out that Pope John XXIII affirmed that the ideal enterprise is modeled on a community of persons working for the advancement of their mutual interests. Melé also added that the formation of a community is rooted in human sociability or the disposition to associate with fellows. This helps resolve the distinction between self and society, which Solomon (2004) stated as the cause of so much unhappiness and dissatisfaction. This also supports the authors’ proposition to view “limited liability” as a reward or incentive for greater sociability as it protects people (individuals, in particular) from the natural risks that come with having to commune with others. It is also important to point out the significance of utilizing a community of “persons” versus a community of “people.” Melé explained, “It helps us avoid a collectivist view of the firm in which the individual practically disappears” (p. 96). This resolves the issue, which Gibson (2011) brought up pertaining to the difficulty of not having a specific person as the sole causal agent for an act and the problem with aggregated action in a corporate setting.
With a definition that acknowledges corporations as communities of persons, the essence of what is “social” and “responsible” is better achieved. Both elements of community and individual are recognized. Melé (2012) asserted that, “When a human action is performed together with another or others, the action has an intrinsic social or communitarian dimension” (p. 96). Moreover, with such a definition, success is viewed as something shared and cooperation (as opposed to competition) is encouraged and valued. While Melé admitted that seeing a firm as a community is not very common in managerial literature, pioneers of management thought (i.e., Mary Parker Follett and Chester Bernard) highlighted cooperation as crucial for any business firm. Mitchell (1999) revealed how a similar lifestyle existed in eighteenth-century England. People lived in individual homes, but there was common land and different families pooled their earnings in a fund known as the “family wage economy.” Moreover, shared labor and enterprise bound families together. Taking off from this, the authors invoke Bolton et al. (2011) who opined, “Through CSR, employers can provide employees with opportunities to thoughtfully participate in the management of company affairs and to contemplate the ultimate meaning of things” (p. 64) such as the good life and virtue beyond the pursuit of wealth, and contribute to the formation of a morally driven community.
Somewhere along the way, however, social responsibility lost its way—particularly when it became well organized, as the case is with CSR. CSR began as a survivalist reaction to crisis (Brown 2008). It began in the 1960s and was further fanned by events and issues in the 1970s such as environmentalism, feminism, and consumerism. Moreover, Shaker (1970) revealed that CSR was installed as a result of public relations counsel to improve corporate image when events in the field of international business led to growing conflict between nation-states and the multinational corporation. To further add, Pohle and Hittner (2008) reported that companies believe that if they place social responsibility at the core of their business, they will become more competitive. Some scholars believe it was invented as “a way of putting a positive gloss on a minimal threshold of good deeds” (Neron and Norman 2008, p. 17). They can even turn crises into branded, competitive advantage, and in some cases utilize them to cover-up serious malpractices. Polonsky and Wood (2001, p. 20) opined, “strategic giving may be used to the detriment of consumers and society.” According to Whitley (2005), globalization is likely to produce more individualistic business systems based on opportunistic relationships. Tengblad and Ohlsson (2010) found that the discourse on CSR in annual reports has changed from a national and communitarian view to an international and individualistic view of social responsibility. They also discovered that the dominant stream of CSR research on business practices supports an individualistic philosophy. This is not surprising since business is largely dominated by American managerial practices, which has its roots in individualism and secular humanism borne out of the Protestant Reformation (see Bay et al. 2008). Individualism lies at the very heart of CSR’s problem. It is that which creates the ironies, paradoxes, and ambiguities in CSR and neglects the essence of social responsibility. In fact, it is also that which creates ironies, paradoxes, and ambiguities that serve as stumbling blocks in conceptualizing the corporation as a community of persons. Haake (2002) opined that individualistic business systems safeguard individual autonomy through loose interfaces, meaning, relationships between employees, firms, and sector associations is looser since they each strive for self-reliance. Communitarian business systems, on the other hand, share tight interfaces that turn parties into interconnected communities. They enable more stable relationships between actors and act more interdependently (Tengblad and Ohlsson 2010); thus, creating opportunities for actors to monitor and counteract opportunism. The difference between individualistic systems versus communitarian systems is similar to the difference that has been framed between economics and ethics. As Windsor (2006) explained, “The contest pits efficiency-oriented utilitarianism, investor property rights, and minimalist public policy in the economic viewpoint against strong corporate duties of self-restraint and altruism and expansive public policy strengthening stakeholder rights in the ethical viewpoint” (p. 96). Thus, Windsor suggested, “a satisfactory theoretical synthesis must place profitable business in a moral framework acceptable to utilitarianism-based economics and broader ethical notions of duties, rights, and just consequences” (p. 94). It is interesting, however, to further look into Windsor’s insights into the defects of ethical CSR—“that it is a broad principle, covering differing situations, and an amalgam of several ethical theories, so that substantive content of business decisions must be addressed case by case” (p. 100). Here lies the great difficulty those more concerned with economics (versus ethics) have—that it is impossible to measure what they think they cannot define (McWilliams et al. 2006). The problem is, they want to treat ethics as a set of rules; but ethics, by its very nature is only partially deontological. The other half is teleological, which is guided by general principles from its deontological dimension. But what is particularly important to note is how something partially deontological better respects human beings as individuals and social creatures with responsibilities. It is ironic how business seems to be averse to broad and general principles at the same time, uphold individualistic ideals.
In the next section, the authors will present two theories rooted in individualism, which can illustrate the ironies, paradoxes, and ambiguities in CSR that can help explain the difficulty with theory and practice.
The Merchant Trade
William Shakespeare’s Merchant of Venice is perhaps most famous for the character of Shylock, the moneylender, who agreed to loan money but set security (in a contract) as a pound of flesh. But what is particularly interesting is in the end, as a kind of trial ensued due to the debtor’s failure to deliver and Shylock demanded his pound of flesh and rejected all pleas for mercy, a flaw is discovered in the contract. The bond only allows Shylock to remove the flesh and not the blood and exactly the removal of only one pound. Failure to remove just a pound would result in the confiscation of Shylock’s goods and death. Today, Shylock is used to describe those who lend money at excessive rates. While there are numerous other themes for the character (e.g., tolerance, since the character is Jewish and the Christians in the play often disrespected him simply because he was a Jew), what is useful for this paper’s purpose lies in the way Shakespeare portrayed the absurdity of a contract, most especially given the character of Shylock—one who utilizes the letter of the law to do what he wants.
Melé (2012) identified “nexus of contracts”—“a mere aggregate of individuals united exclusively for reasons of power and interests, through a set of contracts” (p. 90)—as one of three current views of the firm. The second view, he opined, is that a firm is a set of concurrent interests—that it is a center of coordination of stakeholder interests. Like Melé, the authors posit that both views forward a very negative, dark, and gloomy view of the human being almost devoid of the essence of what it means to be “social” and “responsible.” Such theories “assume that human behavior is based on a view of the human individual defined as a rational, self-interested, and utility-maximizing” (p. 90) being. As Melé opined, this “’economism-based business ethos’” generally sees the firm as a set of contracts. But as Shakespeare seems to have portrayed in Shylock and his pound of flesh, contracts can be absurd. Solomon (in Melé 2012) explained, the “contractrian” view muddles the picture of corporations comprising relationships between people. Shylock’s success in being able to write a contact for a pound of flesh in case of the debtor’s failure to deliver can be a metaphor for corporations successfully crossing the line of what is acceptable. Gross (1980) argued that corporations are criminogenic—hospitable to and tending toward criminal behavior. But as the twentieth century drew to a close, corporations began to feel the backlash of their activities. Bolton et al. (2011, p. 62) opined, “The right of business simply to do business is being widely questioned” and “the firm needs to satisfy investors and regulators that they can behave responsibly.” But the shareholder/owner dimension continues to dominate both the strategy and legitimacy issues of CSR. Even CSR as stakeholder management ultimately has a shareholder orientation. Richter (2010) explained that stakeholder management concentrates on internal and external relationships of corporations with the underlying assumption that “satisfying the interests of all stakeholders will eventually improve corporate performance and contribute to maximizing shareholder value” (p. 636). He stressed that the emphasis on performance is based on mainstream economics “following the predominant neoclassical assumptions of the homo economicus as a rational, informed, ego-centric, profit-maximizing actor” (p. 628). Krumwiede et al. (2012) identified the more practical aspect of strategy and declared, “Firms may voluntarily adopt components of CSR because they believe it provides benefits” (p. 391) such as “to meet regulatory requirements” and “may be less costly than government intervention.” Moreover, “The activities of legitimate global business create havoc” (Collier and Esteban 2007, p. 19) and as businesses themselves have realized “their future profitability and ‘license to operate’ depend on their willingness to assume responsibility.”
In Godfrey (2005), one can observe the marriage between CSR as strategy and CSR for legitimacy through philanthropy. Godfrey’s argument is that good deeds earn chits and contribute to shareholder wealth. The bottom-line, however, is still the bottom-line (profit) and the various ways in which to maximize it. While Wang and Juslin (2009) enumerated six drivers of CSR in China, market drivers might be the most prevalent among the six; most especially in light of globalization and increased consumption that have propelled businesses in developed nations to outsource labor and resources from developing nations and to seek bigger, newer, and less saturated markets to purchase their wares. This is also propelled by two phenomena: (1) strategic issues as a consequence of business’s pervasiveness and size, which has pushed merchants to find more novel ways of attracting and keeping customers; and (2) legitimacy issues also as a consequence of the pervasiveness and size of global business, which has called attention to itself. The authors posit that strategic and legitimacy issues, which comprise CSR governed by the framework of the Merchant Trade, can be likened to warfare and propaganda. Like warfare and propaganda, both (strategic and legitimacy issues) do not seek to protect, defend, and inform or educate their targets. They seek to target their targets to sustain and propagate what pervasive and big business does—to maximize profits—that which they continue to refer to as the bottom-line. CSR in the tradition of the Merchant Trade is built on the premise of a rational, self-interested, and utility-maximizing human being who does not seem to do things for their own sake.
Tengblad and Ohlsson (2010) opined, “The rise of CSR discourse and activities in the last 10 years does not have to imply an increased commitment and interest in corporate responsibility per se, only that there are increased societal expectations that corporations should develop the capability to act more independently as moral agents” (p. 653); and for behaving more independently as moral agents, corporations gain or maintain legitimacy. Matten and Moon (2008) found that the worldwide adoption of CSR policies and strategies is part of the global spread of management concepts, ideologies, and technologies resulting in the “Americanization” of management practices. It seems that the new global concept of CSR disregards the essence of self-regulation as voluntary and discretionary. Moreover, it fails to appreciate the essence of philanthropy versus taxation steered by a government, and the very spirit of free enterprise as explained by the liberal tradition. The argument for and against state intervention in enterprise is old; and there are indeed equally good arguments for both. But what is important to point out is the manner in which state intervention was rationalized as a stumbling block to free enterprise. As Wang and Juslin (2009) found, stumbling blocks can also be prevalent in a system that operates within the very premises and prescriptions of a minimalist state set up. For instance, Richter (2010) found “it is common practice by MNCs to apply transfer pricing to shift profits out of a high corporate tax country into a low corporate tax one to increase companywide profitability” (p. 636), which of course, “endangers the effectiveness of national policies and their effect on labor markets and capital allocation.” As Ron and Surendra (2010) opined, CSR should allow government to ensure that “CSR activities are properly aligned with national development objectives so they can deliver real benefits to society” (p. 21). Tengblad and Ohlsson (2010) also found that this new framing of CSR, which stems from an individualistic business system, is framed as ethical rather than a political issue over time. While CSR is of course an ethical issue, framing it as such does not remove the fact that as practiced, CSR is political; and whether or not ethics has become more important for corporate decision makers is a question well beyond the concept of framing. A case in point is Nike, which was pressured to follow higher workplace standards for their factories and suppliers in Asian nations (Tengblad and Ohlsson 2010) by social activists and religious groups in the 1990s. Nike created a Division of Corporate Responsibility with the goal to counter claims that could affect the organization’s brand equity by counterframing media constructions of Nike as a human rights violator to catalyst for positive change by empowering women in underdeveloped countries. The company was lauded by media outlets and the academic community even if it did not actually change anything. Moreover, consumers financially rewarded Nike as it regained its earnings and former momentum. But CSR failed to properly capture and reflect the essence of “social” and “responsibility” in the struggle for community and efficiency.
The White Man’s Burden
The aim of most of the victors who began arriving in Paris after armistice in November 1918 was to create an imperial peace. This was tailor-made to maintain British hegemony on the high seas, thereby protecting its global empire. It helped France dust itself off and reestablish its claim as the preeminent Continental power. And it mandated the rest of the world—especially those less powerful but no less endowed with natural or material wealth—to dispatch their tribute to the victors in the form of commodities, cheap labor, and expanding markets (p. 13).
The world will say that the Great Powers first parceled out the helpless parts of the world, and then formed the League of Nations. The crude fact will be that each of these parts of the world has been assigned to one of the Great Powers. (in Andelman 2008, p. 5)
This is what Wolff (1970) revealed as the strategy of the British Empire (1870–1914) in its effort to secure lines of dependence, which historically accelerated the oligopolization of industry. The Great Powers then, as they continue today (through corporations), make all the crucial decisions on economic development, which systematically determine the international offer curves of other countries, particularly those which were crafted to be dependent on them. But some historians opined, “all were made to play under rules that for them were all but impenetrable, dooming their goals to defeat” (Andelman 2008, p. 6). It seems imperialism was merely reframed in the guise of the principle of self-determination. One thing the Allies in Paris were right about is that imperialism could no longer be upfront; but given the aftermath of Versailles, it seems they were not ready to relinquish control but instead reframed power as aid and righteousness.
The nature of this power reframing in the guise of aid and righteousness can be illustrated by an infamous poem in 1898 by Rudyard Kipling. He wrote a poem entitled The White Man’s Burden, to convince his government to take over the Philippines from the Spanish and rule it with what he believed, was the same kind of benevolence the British Empire extended to the nonwhite populations of India and Africa (Brantlinger 2007). It echoed the doctrine of Manifest Destiny, which came out in the mid-1800s, and led to the annexation of Texas, Arizona, New Mexico, and California to the US. The doctrine forwarded the idea that it was the destiny of the white, Anglo-Saxon race (being racially dominant) to conquer and “civilize” the “uncivilized” world. For decades, both Filipinos and Americans were led to believe that the US liberated the natives from Spanish colonial rule; but actual historical records reveal otherwise—that the country had been turned into a colony (Brantlinger 2007). Even today, well after 1946, when the country was granted independence, US policies have continued to colonize through their lines of dependence—systems that have been set in place that benefit and support US policies.
This paper posits that CSR within the framework of the White Man’s Burden may be viewed as a new attempt to maintain the goals at Versailles; and just like Kipling’s White Man’s Burden, it fails to properly recognize the true role of corporations and the unity between business (specifically, shareholders) and society. Instead of bringing shareholders and society together, as it should given the context of social responsibility, it sets them apart. Like the Treaty of Versailles, the Doctrine of Manifest Destiny, and the White Man’s Burden, CSR within this tradition creates division when it should be encouraging greater sociability and responsibility given the context of the corporation’s creation and the privileges it has been accorded. Like the Merchant Trade, the White Man’s Burden is rooted in the same kind of individualism borne out of the Protestant Reformation, which pitted people against one another as it forwarded the belief that a certain group is way above the rest. In the case of CSR, it is the shareholder.
The authors also posit that, like the Treaty of Versailles, CSR is political. In discussing taboos in CSR scholarship, Kallio (2007) identified the political nature of the field as one of those taboos. He defined the term political as “the promotion of actors’ own interests, and the pursuit of social legitimacy for business” (p. 170). The political nature of CSR can be problematic given the reasons why explicit CSR is spreading globally, as enumerated by Matten and Moon (2008): (1) coercive isomorphisms, where there is a rush of governmental strategies and initiatives fostering its spread as well as environmental and supply chain requirements; (2) mimetic processes, where managers consider practices as legitimate when they are regarded as “best practice”; and (3) normative processes, where educational and professional authorities set the standards. All three can lead to injustices most especially due to the political nature of CSR; and as Fairbrass and Zueva-Owens (2012) opined, access to or command of resources produces unequal distribution of power. In developing nations, where CSR has tended to focus on the average well-being of stakeholders, inequalities may have increased in strategic attempts at philanthropy that might have just maximized the situation of the worse off (Renouard 2011).
At this point, it is significant to invoke Midttun (2005) who conceptualized governance as an outcome of interaction between three broad actors—the state, industry, and civil society. Fairbrass and Zueva-Owens (2012), however, “contend that there is an imbalance in power between the three sets of actors” (p. 330) and argued, “that it is the differential in the access to, or command of, resources that produces the unequal distribution of power” (p. 330). This is the contention of disciples of capitalism, particularly the more liberal kind, who believe in a minimal state and allowing the market to be a kind of natural arbiter for the flow of goods and the creation of wealth. They think the market is the most reliable and accurate judge versus the politics that comes with state governance and intervention. But today, the authority of many governments is threatened by corporate power in a world where the turnover of the largest MNCs surpasses the GDP of some middle-sized countries (Richter 2010). In Trinidad and Tobago, Ron and Surendra (2010) affirmed that the development of CSR depends on a joint approach between the State and the private sector. But what if there ceases to be a real difference between who the State is and those who control industries in the private sector? It is interesting to note that while the CSR concept is widespread in the Carribean Community (CARICOM), the twelve independent nations in the region who share a similar historical experience as former British colonies are “economically vulnerable and depend heavily on tourism, agriculture and offshore financial services with the exception of Trinidad and Tobago” (Ron and Surendra 2010, p. 18).
In his critique of foreign aid, Easterly (2006) declared how aid is neither necessary nor sufficient to raise living standards in developing countries. He explained how poor development outcomes are not always the result of poverty traps, and that most poor countries are not stuck in these poverty traps, which are framed as inescapable, except through foreign aid. Easterly revealed that there are developing countries, which have attained economic growth without large foreign aid. Growth happened through homegrown entrepreneurs and ordinary citizens relying on free market forces. For Easterly, homegrown solutions are preferred over foreign benevolence. This led him to conclude how aid has instead caused so much ill and so little good. In fact, Renouard (2011) opined, as far as CSR is concerned “some programs implemented by multinationals in order to foster better living conditions around their industrial sites have led to paternalistic behaviors, without increasing the freedoms of the people who are dependent on the good will of the company” (p. 87). Even at its most positive, discounting its political nature, benevolent CSR might attempt to usurp society’s ordinary functions and set a corporation to be this larger-than-life, heroic entity that will work wonders where state and other institutions have failed. At the same time, corporations might be calling too much attention to themselves, broadening the range of already such gargantuan complaints about such large economic entities. In their critique of marketing, Laczniak and Michie (1979) declared that when a phenomenon has social order it is unambiguous and that the general concept of order is fundamental to the maintenance of any system. They chronicled the rapidly growing domain of marketing and concluded that it had become so extensive that it was occurring almost everywhere, rendering “distinctions between marketing and any free mutual exchange among persons as meaningless” (p. 220). They explained that “the discipline of marketing is asking to play the role of a symbolic Atlas with the weight of the world upon its theoretical shoulders” (p. 226). Like marketing, CSR may be taking on too much. To this, the authors present another model rooted in individualism. The White Man’s Burden suffers from the same symptom as the banality of wrongdoing (see Balch and Armstrong 2009)—specifically, its notion of the missionary zeal—“an exaggerated commitment to mission” (p. 296). The notion of being different and set apart from the rest, can spiral into a kind of tunnel vision, which might just bring CSR further from the essence of social responsibility.
In the next sections, the authors will discuss the elements in a model that will address the limitations of the Merchant Trade and the White Man’s Burden—profit efficiency, relational capability, and the elements comprising a culture that creates and sustains a practice—a good dream, sound reflection, a flexible moral code, and virtue.
Profit often conflicts with elements of social responsibility. But the concern for profit cannot be divorced from business since it is essential for business to sustain itself (see MacIntyre 1985). Arjoon (2000, p. 168) opined, business “is a natural means that people can and should use to fulfill themselves in order to reach their ultimate goal.” But he stressed the importance of “reasonable” profitability in the quest to reach our full potential. Key in attempting to moderate the influence of utilitarianism and individualism is to ponder on what exactly wealth creation means. Kelly and White (2009, p. 25) opined, “Most people assume, without explanation, that profit-making and shareholder value are the corporation’s inviolable core—something akin to natural law, like gravity or thermodynamics.” In this section, the authors attempt to place the profit motive within the context of a corporation as a community of persons and thus, frame profit as a legitimate and necessary target for businesses seeking to act in socially responsible ways. The authors propose the idea of designing corporations in a way that encourages human flourishing by shifting focus from profit maximization to profit efficiency. Like Bragues (2006, p. 342) the authors believe that “financial success is properly defined by what is necessary to support a virtuous life.” This is consistent with MacIntyre’s (1985, p. 187) definition of a practice, “Any coherent and form of socially established cooperative human activity through which goods internal to that form of activity are realized in the course of trying to achieve those standards of excellence which are appropriate to, and partially definitive of, that form of activity, with the result that human powers to achieve excellence, and human conceptions of the ends and goods involved, are systematically extended.” It is important to stress the significance of these “cooperative human activities” together with Arjoon’s (2000) recommendation for reasonable profitability. This way, the essence of social responsibility in CSR is best ensured. Moreover, the Merchant Trade’s focus on profit is safeguarded; and the White Man’s Burden is kept in check since the need to cooperate (not dominate) is essential. With this, the authors define profit efficiency as: “The process of ensuring a good and profitable practice—that is, determining and sustaining cooperative human activities to ensure that goods internal to a practice are sought in order to also guarantee that external goods will enable the maintenance and further flourishing of the institution that houses the practice.” This reinforces the social mission of an enterprise. It is defined by the United Kingdom (UK) government’s Department of Trade and Industry (DTI) as, “a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholder and owners” (DTI 2002, p. 13). Cornelius et al. (2008) explained that with this definition, the “double bottom line” (of economic and social accountability) and even the “triple bottom line” (with environmental accountability) are addressed. But they also pointed out that “the focus of attention among these scholars is largely the social impact of social enterprises on the communities they serve” (pp. 355–356). Hence, they called for attention to internal CSR practices by bringing together internal and external aspects utilizing Aristotelian-informed capabilities approach—the individual’s freedom to achieve what he has reason to value and the right to fully function and flourish. This is similar to MacIntyre’s (1985) virtues–goods–practice–institution schema on organizational virtue. This is also similar to Moore and Beadle (2006) who utilized the virtues (justice, courage, and truthfulness), which MacIntyre (1985) identified necessary to illustrate how such virtues would work in their agent-institution-environment schema. They opined that justice is needed to properly distribute external goods, weigh their advantages with the community, and foster excellence. Both are similar to this article’s model of profit efficiency. With profit efficiency, however, corporations are called to better ensure that their traditionally profit-oriented goals are not taking a toll on the business itself, particularly since any business is composed of and run by people. It encourages businesses to pause and think whether profit maximization is actually not profit squandering. It is significant to recall that the corporation was created as an instrument of economic efficiency. If the creation of wealth is taking a toll on other aspects of a corporation (i.e., its people, other communities, cost of maintaining the business as a consequence of corporate irresponsibility and wrongdoing), then the efficiency aspect is compromised. Moreover, with profit efficiency, being virtuous is not just an opportunity. It is a necessity. At the same time, with virtue, profit efficiency is more easily appreciated and realized.
Flynn (2007) explained that for Aristotle, a fulfilled or successful life is living virtuously together with moderate good fortune. Virtuous business needs to moderate its pursuit of wealth (Hadreas 2002). In fact, Graafland (2009) discussed that in Aristotle’s mentions of the virtues of character the common characteristic is that “they stand midway between the vice of going too far in one’s actions and the vice of not going far enough” (p. 2). Graafland further declared, “The quality of character tends to be ruined by excessiveness or deficiency” (p. 2). Thus, based on Graafland’s example that generosity is the middle ground between avarice and extravagance, the authors posit that seeking profit efficiency is the middle ground between profit loss/operating at cost and profit maximization. For Renouard (2011), corporations should be concerned with the maximization of relational-social capability and not the maximization of individual material utility. Thus, Renouard explained that the contribution of companies to the communities close to their industrial sites is not from the viewpoint of material resources and growth, but from the viewpoint of the quality of the social environment and of empowerment. The kind of CSR the authors propose is consistent with the essence of social responsibility since it finds ways of promoting greater sociability by increasing people’s relational capabilities. Relational inequalities emerge as one of the major explanatory factors for the degradation of the social environment (Renouard 2011). This is consistent with Aristotle whom Melé (2012) affirmed believes “that the social order is not based on social contracts, as the individualistic view of the society suggests, but on the existence of human communities the roots of which are in human sociability” (p. 95). Simply put, profit efficiency is figuring out how much profit to achieve in the context of maintaining a business as a community of persons seeking efficiency in a trade and ensuring human flourishing. In the next section, another aspect crucial to forming a socially responsible CSR is discussed.
Individualism has been at the heart of business for centuries (see Bay et al. 2008); and this has been a great stumbling block to sociability. Moreover, the origin of the term “corporation” from the legal field, seeking to limit shareholder liability in the face of doing business seems to encourage the corporation to exonerate itself from taking responsibility and thus, properly communing with others. This is more likely if a corporation were to operate within a utilitarian and individualistic framework such as the Merchant Trade and the White Man’s Burden. The result has been conflict–conflict between nation-states and multinational corporations (Shaker 1970), business and society (Solomon 2004), management and employee, economics and ethics (Windsor 2006), and corporation and other businesses and corporations. Earlier, however, the authors posited that “social” and “responsibility” are interdependent concepts particularly when one adopts a definition of the corporation that brings to fruition the notion of individual self-interest and the greater public good. The authors also revealed that the corporation came about as an instrument for economic efficiency. A hierarchical structure and an appropriate organization versus having a business conducted by individuals exchanging goods in the marketplace was thought to be more efficient. This strengthens the point that a corporation is a community of persons as they have been brought together to work for common goals. Moreover, the authors proposed to view “limited liability” as a reward or incentive for greater sociability as it protects people (individuals, in particular) from the natural risks that come with having to commune with others. This addresses Renouard’s (2011) concern about finding openness to a relational anthropology within the utilitarian tradition. Like Renouard, the authors posit that human progress is rooted in the strengthening of social bonds and the care for the interests of others, which in turn is a source of personal flourishing and happiness. Renouard opined, “Mill stresses that the highest level of self-fulfillment and happiness is reached when relating to others” (p. 89). But according to Renouard, for Mill “the aim is not a total self-renunciation of the individual, but his fulfillment in the care for both the other’s good and the common good.” Renouard stressed, “Being is relational and a flourishing human life is experienced in autonomy and interdependence.” This is similar to the relationship between what it means to be “social” and “responsible.” Thus, corporations “can build equitable and resilient organizations committed to long-term wealth creation for the benefit of employees, communities, the environment and investors” (Kelly and White 2009, p. 25). By directing efforts toward profit efficiency, corporations will be able to provide people with opportunities and venues for human flourishing and to properly commune with others. In other words, with profit efficiency, relational capabilities are better ensured and even maximized; and the essence of social responsibility is achieved. In the same manner, an appreciation of relational capabilities makes profit efficiency easier to accept.
Housing a Practice
But one must ensure that this community of persons does not revert back to individualism and is able to work toward a common goal for the common good. This community of persons must help the persons in this community appreciate the value of profit efficiency and the maximization of relational capabilities. Moreover, this community should guard against the almost inevitable trap of collectivistic systems, borne out of the tendency to aggregate situations, where the individual can be lost and forgotten. Thus, this community should encourage the flourishing of its members as human beings engaged in a craft—a practice. Taking off from the old adage, the authors believe that “Practice Makes Perfect”; and a good practice, as it makes perfect, will achieve the best goals for the institution. This practice is based on MacIntyre’s (1985) definition of a practice. Thus, the authors propose that a corporation be more precisely defined as: “A community of persons engaged in a profitable practice working toward a common goal with the privilege of legal liability in order to encourage greater sociability but greater accountability and responsibility to its community and society.” Greater accountability, however, should be properly understood. A wrong notion can easily lead to the ethos of the White Man’s Burden, which views social responsibility as self-righteous heroism. Like Davis (1960), social responsibility should be regarded as commensurate with the amount of social power corporations posses. Simply put, with great power comes great responsibility; and this “great responsibility” is a consequence of a privilege. In order to further guard against the trap of the Merchant Trade (as well as the White Man’s Burden), the authors would like to propose certain key elements from leadership scholar, Badaracco (2006), to help ensure that a corporation house a good practice—a good dream, sound reflection, a flexible moral code, and virtue.
A Good Dream
Badaracco (2006) stated that dreams drive us but wrong dreams are slow-acting poisons. Corporations have to have the right dream; and since human beings are social creatures, a good dream involves living satisfactorily in a congenial community (Hartman 2007). The Merchant Trade does not have a good dream. It does not even have a dream as it is consumed by the idea of maximizing profit. The White Man’s Burden, while it has a dream does not have a good dream. Its dream acts as a slow-acting poison since it professes self-righteous heroism that: (1) creates division among people and communities toxic to the wellbeing of people and communities; and (2) usurps the role, function, and independence of others (i.e., blurring of lines between government and industry) in the quest for growth and flourishing. The authors propose this good dream to be based on Aristotle’s concept of telos (the good for man) and the possession of which will enable one to achieve eudaimonia (well-being or happiness). Aristotle also believed that since individuals are part of a larger community, the telos of the individual man is defined by that larger community. Therefore, as Solomon (2004) put it, there is “no ultimate split or antagonism between individual self-interest and the greater public good” (p. 1021). Badaracco (2006, p. 23), however, opined, “Commitment to a dream for life or work usually has real costs.” From Bragues (2006), one can surmise that one of these costs is reduced economic activity. From Aristotle, one can conclude, it is reduced profits. But these are short-term worries that can be overcome once businesses take to heart the essence of social responsibility and the benefits of reframing profit maximization as profit efficiency with relational capabilities within a community that houses a practice. But to do so, businesses need to think long-term, which contemplation and sound reflection might achieve.
Aristotle saw serious problems with what he referred to as the money-making art because unlike other arts (i.e., medicine), it sets no limits to the means to the goal (Hadreas 2002). Moreover, Hadreas posited that if practiced for its own purpose, the money-making art absorbs the limits imposed by the virtues, which Aristotle believed were necessary to apprehend the telos and eventually happiness. It is important for business to place itself into a grander picture of human fulfillment; and to do so corporations should be designed in ways that engage individuals in philosophic reflection (Bragues 2006) or contemplation. For Aristotle, it is the highest good, which safeguards the virtues and enables the reasonable ordering of goods (Hadreas 2002). But good deliberation is a messy process—zigzagging among feelings, thoughts, facts, and analysis; is discursive rather than linear; looks forward, with vivid imagination to possible consequences; acknowledges duties and open-ended responsibilities; and does not seize a single grand principle (Badaracco 2006). A case in point is the bottom of the pyramid approach, which has been framed as a kind of Holy Grail for alleviating poverty. Corporations, however, should pay attention to the fact that for every well-meaning CSR goal, there might also be an unintended and more serious consequence that could just further contribute to the essence of the problem one is seeking to address. The basic concept is that people should stop looking at the poor as victims but as resilient and creative entrepreneurs and value-demanding consumers. But the approach can have detrimental effects on the inner dimension of man. For instance, the extension of the concept of credit to the poor and the wider availability of goods in tinier amounts may further the effects of consumerism. Marketing cheap instant noodles may have long-term health consequences, especially since many are packed with unhealthy ingredients to allow companies bigger profits. Ultimately, one should ask if such moves might just be quick fixes deluding the poor and thus, not according them the dignity and freedom they deserve. The answer is not easy requiring much deliberation, which can be achieved with guidance from a flexible moral code.
A Flexible Moral Code
Badaracco (2006, p. 31) defined a moral code as “a set of values and principles that guide behavior.” He explained that corporations need moral codes that are as complex and complicated as the situations they confront without falling into moral relativism. We need leaders who are successfully able to mix principles with pragmatism (Badaracco 2006). We propose Catholic Social Teaching (CST) as the flexible moral code that can suit business well as it is also the most pragmatic (Klein and Laczniak 2009) and perhaps most comprehensive moral framework in the world. It is important to mention how CST has managed to remain consistent and true to the original essence of its purpose and mission—Christianity. In Bay et al.’s (2008) analysis of the relationship between business ethics and Christianity, they illustrated how conflict between business and religion only exploded after the Reformation and the Enlightenment—two periods in history that departed from the original message of Christianity, reflected in CST today. At the same time, CST’s prescriptions are encompassing and general enough to enable people to exercise that freedom to develop themselves within the inevitable context of community in the tradition of developing a good dream, sound reflection, a flexible moral code, and the formation of virtue.
The significance of virtue is not new to business; but its application remains to be desired. This is perhaps so because of the possibly diminished role of commerce and exchange in a virtue-focused enterprise. Bragues (2006) pointed out that given Aristotle’s premise that the purpose of money is to facilitate exchange and not to spawn more money, companies would be stripped of a major source of financing and there would be a significant reduction in economic activity. But Bragues declared, “The more than adequate return for paying this price, according to Aristotle, is virtue” (p. 344). MacIntyre (1985, p. 191) defined virtue as “an acquired human quality the possession and exercise of which tends to enable us to achieve those goods which are internal to practices and the lack of which effectively prevents us from achieving any such good.” Virtues provide the perfect rationale for focusing on external goods since they are needed to sustain the practice that enables one to achieve the goods internal to practices in the first place. Virtuous workers will create good and valuable products that will sell and help sustain the practice that enables people to develop virtues and seek the good life.
To summarize, when a corporation has a good dream, engages in sound reflection, is guided by a flexible moral code, and works to acquire and sustain virtue, then a good practice can be at hand. As a consequence, it will be efficient in its allocation, use, and reception of profit, better enabling the tendency to maximize relational capabilities. At the same time, its support for profit efficiency helps maintain the elements that create an organizational culture proper to a practice, which will encourage the true essence of a corporation through cSR.
In this section, the authors would like to discuss the fruits of infusing the new model into the life and work of a corporation. As this article attempted to explain the essence of social responsibility, the authors find it significant to stress this essence by instead referring to the fruits of the framework as cSR, giving more emphasis on the latter concepts. But what exactly does this caring and responsible CSR look like? Badaracco (2006) opined that maximizing profits is the primary task of executives and leaders. But he explained, “the most admirable people, whether they are heroic or quiet leaders, live and work for themselves and for others” (p. 86). In his discussion of just how much people care about what they do in his book, Questions of Character: Illuminating the Heart of Leadership through Literature, Badaracco (2006) chose the novel The Love of the Last Tycoon by Scott Fitzgerald. He focused on the character of Monroe Stahr, a business executive who was told by his doctor that he did not have long to live. Despite this warning, Stahr continued to work at a relentless pace; and even after meeting a woman and he is given a chance to rethink the direction of his life, he chooses his work because thousands of people are relying on him. Badaracco pointed out how Fitzgerald compared Stahr to Icarus, who flew too high and was burned by the sun. But for Badaracco, Icarus and Stahr are different because the former flew high out of sheer exhilaration while the latter pushed himself hard because he deeply cared about his work. For Badaracco, good leaders neither take on hard challenges nor test their character to make life easier and more pleasurable. They do it as it makes their lives more authentic and gratifying. This is similar to what Aristotle referred to as human flourishing with the intention to reach eudaimonia. Stahr continued to work very hard in spite of all the odds and the chance for a new life because he believed his work made his life deeper and fuller (Badaracco 2006). This is the spirit of cSR; and to some extent there are already variations of this practice. In Japan, managers and business leaders recognize the unity between business and society as Japanese companies “live in harmony with society, have a social purpose in earning profits, pursue the common good as a way of life, have a moral purpose in running a business” (Nonaka and Takeuchi 2011, p. 61). But with the Merchant Trade and the White Man’s Burden, there are dangers in imbuing business with a social purpose—especially when individualism and utilitarianism are the guiding principles. Of course, the profit efficiency model is supposed to guard against this; but it is important to stress it and keep track of it. This is particularly important given the level of vanity that pervades society and business today. The concept of the narcissistic leader, one with a larger-than-life-ego (Kodish 2006), has for so long, dominated human thinking (Maccoby in Kodish 2006). Sendjaya and Sarros (2002) recognized the tendency among leadership scholars to present leaders as larger-than-life and Herculean. But corporations governed by the framework of the White Man’s Burden will not be able to sustain the real burdens that come with positioning oneself as “heroic” and “benevolent.” This is where one might consider the simple yet novel insight provided by the dictum of “doing ordinary things, extraordinarily well.” Greenleaf (1977), the founder of the concept of servant leadership “constructed the notion of servant leadership not by studying some top-notch corporate leaders or other high profile individuals, but through his reading of Herman Hesse’s story about a pilgrimage, Journey to the East” (Sendjaya and Sarros 2002, p. 58), where the character of servant, was essential to all other characters, needing his guidance and leadership throughout. Aristotle himself believed virtue and integrity are not “the special province of saints” (Solomon 2004, p. 1025); and just as virtues are not the special province of saints, altruism “isn’t self-sacrifice; it’s just a more reasonable conception of self, as tied up intimately with community” (Solomon 2004, p. 1025). But similar to the notion of sustainability, when referring to corporate activities pertaining to the environment, so too should there be a notion of sustainability when referring to CSR. Going beyond everyday business activities without a good dream, sound reflection, a flexible moral code, and virtue within the context of a complex business enterprise is doomed to fail. The framework proposed here guards against the narcissistic and Messianic tendencies of the White Man’s Burden (as well as the tendency to utilize it as a front for wrongdoing) and the propensity for immoderation by the Merchant Trade (as well as its tendency to also use it as a front for making more money). At the same time, it is important to heed Aristotle who believed pusillanimity to be worse than vanity (Brague 2006). The vain pretends to accomplish great things beyond his ken. But the pusillanimous is also flawed as he does not stake sufficient claim to honor he truly deserves. Thus, “many truly capable people end up causing their respective communities to forgo the full benefits of their skills and talents, instead leaving the field open to the confidently less able” (p. 348). Bragues explained, “magnanimity is a mean between pusillanimity and vanity” (p. 348). CSR should minimize the potential for its activities to be viewed as attempts at ingratiation. Corporations should remember that at the heart of cSR is caring and responsibility; but not just to others as popular CSR often frames in the spirit of “benevolence.” cSR’s caring and responsibility will help enable people in business itself (particularly, the shareholders) to “resist the flow of success,” as Badaracco (2006) put it because it is a framework that recognizes “favors” as obligations not just to others but oneself. It is the recognition of the need and obligation for true human flourishing in the Aristotelian sense. It could be the best way to counter the White Man’s Burden as it recognizes others as crucial in ones own development and progress.
In his effort to utilize literature to explain the problem with the illusion created by the flow of success, one of Badaracco’s (2006) choices is I Come as a Thief by Louis Auchincloss. It is a story about a man named Tony Lowder, a highly successful lawyer with a promising political career. He commits an undetectable crime, confesses, but destroys his professional life and plunges his family into embarrassment and chaos. Why? Badaracco explained, because “Tony has become a virtuoso performer in a role created by the people and society around him” (p. 126) and despite all his “success,” Tony felt dead inside. But after confessing his crime, he has a more modest and achievable goal—to live on his terms, honestly, and to make a genuine difference in the small sphere of life around him. CSR through the Merchant Trade and the White Man’s Burden is just like Tony. Like a virtuoso performer, the Merchant Trade engages in CSR simply for strategic reasons. Like a virtuoso performer, the White Man’s Burden is manipulative CSR in the guise of heroism; but, nonetheless, comes off as self-righteous as it soon usurps the role and functions of others—but still a virtuoso performer as it feeds off the false heroic delusions of others. Like Tony, in the end, CSR should live on its own terms—guided by the essence of social responsibility, the corporation as a community of persons, and the corporation as an instrument for economic efficiency for a community of persons wanting to engage in a trade.
This article addressed the root problems of CSR. In doing so, the authors discussed the essence of social responsibility based on the provision of having “limited liability,” a corporation as a community of persons, and the efficiency rationale for a corporation’s creation. In order to further illustrate the failure of CSR and its roots with individualism, the authors presented two theories—the Merchant Trade and the White Man’s Burden. The former may have taken advantage of the spirit of charity and selfless giving as an opportunity to generate publicity and cover-up wrongdoing. The latter may have forwarded a kind of false benevolence, which may have usurped functions of other institutions (i.e., government) and given rise to even more conflicts between business and society. Finally, the authors presented a model to address the failure of the more individualistic frameworks based on the essence of social responsibility. By zooming in on the fundamental crises in CSR thought, a more realistic, truthful, and useful model may be utilized to develop even more specific and detailed CSR theories. But more research needs to be done, particularly in identifying key business points and areas where profit efficiency can be best employed in tandem with relational capability. Moreover, some empirical studies may be conducted that might show inefficiency in the profit maximization scheme. Such data may enable the adoption of profit efficiency more salient.