The debate on corporate social responsibility (CSR) is one that has dug its roots deep in the society for a long time now, with individuals differing in terms of their views on whether the organizations embrace corporate responsibility for the good of the society or for their own good. As a result, various individuals developed different approaches towards this issue, leading to the development of the instrumental, political, integrative, and ethical theories. Organizations give CRS reports after specified periods, in the quest of developing their relationships with the society in which they operate. However, some individuals believe that such reports are meant to benefit the stakeholders and to offer an account of how the organization is developing its relationship with the society, while others believe that such a report is aimed at hiding the true picture of the organization benefits at the expense of the society.
These theories define CSR as a strategic tool necessary in achieving the economic objectives of the organizations and thus, creating wealth for the organization. These theories have been well embraced by most organizations, with most managers conceiving responsibility as progressive wealth creation. In these theories, it is argued that the concern for profits should include taking into account all the stakeholders of a given organization. Most managers believe that when the interests of stakeholders are satisfied with certain conditions, then the value of the shareholder is due to be maximized(Prašnikar, 2006, p. 14). For the sake of achieving maximum profits, some managers believe that an adequate amount of investment in social activities and philanthropy is acceptable. The instrumental theories are divided into three groups, with respect to the economic objective stated.
The first group of theories involves the objective of maximizing the shareholder value(Garriga & Mele, 2004, p. 53). In this case, any investment in the societal social demands that prove to be of benefit in terms of increasing the value of the shareholder should be embraced without any form of fraud or deception. On the other hand, those social demands that only cost the company with no benefit are rejected. In such a case, the organizations view it as a long-term benefit to investing in society in terms of improving their government or providing them with various amenities. As a result, that makes it easier for the same organization to attract the quality employees and in turn, reduce the wage bill, or reduce the losses incurred through sabotage and pilferage, or benefit in another way. Another group of instrumental theories involves the objective of establishing strategies for achieving competitive advantages. In this case, the focus is directed towards the natural resources of a firm and its capabilities, competition-oriented social investments, and establishing strategies for attaining the economic pyramid’s bottom. The last group of instrumental theories involves the objective of attaining cause-related marketing (Garriga & Mele, 2004, p. 54). In this case, a company aims at building its relationship with the customers or enhancing its sales and revenues by building its brand via social responsibility engagement.
Political theories form a group of theories in the Corporate Social Responsibility, which focus on the business’s interaction with the society, and the position and power of the business and the responsibilities that come with them. These theories revolve around political analysis and political considerations in CSR. Under this group of theories, there are two major theories that explore the political framework of CSR, which include corporate citizenship and corporate constitutionalism.
In this context, it is argued that businesses as social institutions have power, of which they are expected to use responsibly. Such power is not only generated by the causes within a business, but also by external forces. As such, the locus of such causes constantly shifts from the social to the economic and later political forums, and back. Different organizations have different levels of social power in society. This theory maintains that the amount of the social power of an organization determines the social responsibility of the organization(Ransome & Sampford, 2010, p. 27). Each organization is expected to use its power adequately as if they do not apply it, they tend to lose it to other organizations that meet societal demands for social responsibility. Various constituent groups restrict the organizational power by defining the appropriate conditions in which it can be applied responsibly.
Under this theory, it is assumed that a social contract exists between the society and any given business, thus requiring the business to carry out certain indirect obligations towards society. This theory develops a process that upholds the legitimacy of contracts among departments, companies, and economic systems. In such a course, all the participants of the contract, including the society and the business, develop ground rules in the agreement, which are expected to guard the economic process for the benefit of all.
This theory defines a corporate organization as a citizen of the community in which it exists. In this case, a business is expected to experience a sense of belonging to society and thus carry out the responsibilities that come with such a sense of belonging. Corporate citizenship theorists maintain that business citizenship cannot be equated to individual citizenship, but instead takes a secondary position, whereby the rights, possible partnerships, and responsibilities of a given organization in the society are focused upon.
Under this group of theories, the business approach to social demands is focused upon, with greater consideration of the importance of the society in the continuity, existence, and growth of any business. In this case, social demands are viewed as a point of interaction between society and businesses. Such an interaction gives the businesses a certain prestige and legitimacy (Brennan & Merkl-Davies, 2013, p. 112). Corporate management is thus expected to take into account any social demands, and align the business operations with the social values of the society in which it exists.
Social responsiveness among organizations to issues in the society is an issue of great concern, with the focus being directed to the gap between the organization's actual performance, and the society’s expectations in terms of its operations(Low, Idowu, & Ang, 2013, p. 177). It is upon organizations to perceive the gap as received from the various signals in its environment and consider proper responsive measures that would ensure that the gap is properly closed.
This approach goes beyond the responsiveness approach, arguing that such an approach is inadequate as it focuses on the personal-morals of small groups in society. Instead, it broadens its scope, in a way that they incorporate legitimate managerial behavior in the relevant public policy framework. In this case, the public policy includes emerging issues, public opinion, enforcement, legal requirements, and implementation requirements, besides the literal texts of regulations and law.
This approach is directed towards the stakeholders of the business. The goal of this approach is to ensure that there is a maximum corporation between all the stakeholder groups, and the corporate objectives. In order to achieve such management, the development strategies should involve efforts that are directed towards dealing with the various issues that affect multiple stakeholders. The entire stakeholder groups should be involved in the corporate decision-making process.
This approach considers three elements, one of which includes an appropriate definition of social responsibility, in which case the definition must incorporate legal, discretionary, ethical and economic business performance categories. The second element involves identifying and listing all the issues that are associated with social responsibility. Thirdly, the focus is directed towards the specific philosophical provisions, on which a response to social issues is based.
This group of theories focuses on the ethical issues that define the relationship between society and a given business. The principles under which these theories have developed a focus on the correct thing to do, in the view of achieving an all-round better society.
This theory describes the need for the business to maintain a good relationship with the stakeholders. As such, the value of the stakeholders is based on their legitimate interests in the important aspects of the organization and the organizational procedures (Ahmad & Crowther, 2013, p. 142). It is also held that the interests of all the stakeholder groups are of intrinsic value to the organization. As such, it is upon any firm that is socially responsible to offer address simultaneously, all stakeholders’ interests, rather than directing their focus only to the interest of the stockholders.
This approach upholds human rights in corporate social responsibility, whereby organizations are expected to approach aspects of labor and environmental management in a way that would ensure that human rights have been maintained. In this context, it is important for organizations to adopt economic, social, and political justice even as they interact with the society in which they exist.
In this approach, it is upon the organizations, within their CSR, to ensure that the current societal social demands are achieved without affecting the sustainability of the society to meet their future needs (as seen in this Umicore report). This approach calls for economic, social, and environmental considerations by the businesses in making long-term judgments in society.
This group of approaches upholds the good of society as the defining point for CSR. As such, businesses are considered as part of the society, and thus, like any other individual or social group in society, they are expected to contribute to the good of society. It is maintained that a business should not be parasitic on, or harmful to the society in any way, but instead should have a positive contribution towards the development of the society geared towards a common good for every member (Mullerat & Brennan, 2011, p 102).
It is evident that the CSR theories are focused on meeting the organizational objectives and goals, responsible application of business power, integrating the demands of the society in business operations, and contributing to the welfare of the society through conducting activities that are ethically right. As such, these theories define the relationship of organizations with the society, and thus the development of both the businesses and the societies. It is therefore important to note that businesses have a responsibility in maintaining the society that they exist, in order to facilitate their development.
Ahmad, J., & Crowther, D. (2013). Education and Corporate Social Responsibility: International Perspectives. Bengley: Emerald Group Publishing Limited.
Brennan, N. M., & Merkl-Davies, D. M. (2013). Accounting Narratives and Impression management. In L. Jackson, J. Davison, & R. Craig (Eds.), Routledge Companion to Communication in Accounting (pp. 109-132). Routledge.
Garriga, E., & Mele, D. (2004). Corporate Social Responsibility Theories: Mapping the Territory. Journal of Business Ethics, 53, 51–71.
Low, K. C., Idowu, S. O., & Ang, S. L. (2013). Corporate Social Responsibility in Asia. New York: Springer.
Mullerat, R., & Brennan, D. (2011). Corporate Social Responsibility: The Corporate Governance of the 21st Century. Alphen aan den Rijn: Kluwer Law International.
Prašnikar, J. (2006). Competitiveness, Social Responsibility, and Economic Growth. New York: Nova Science Publishers, Inc.
Ransome, W., & Sampford, C. (2010). Ethics and Socially Responsible Investment: A Philosophical Approach. Burlington: Ashgate Publishing Company.