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    11.vol. 0002www.iiste.org call for paper no. 2_j claydon_pp260-265 11.vol. 0002www.iiste.org call for paper no. 2_j claydon_pp260-265 Document Transcript

    • Issues in Social and Environmental AccountingVol. 2, No. 2 Dec 2008/Jan 2009Pp. 260-265 Two Models of CSR and Sustainability A comparison between the ‘Pyramid of Corporate Social Responsibility’ and the ‘Model of Sustainable Development’A review of The Durable Corporation: Strategies for Sustainable Development: Güler Aras & David Crowther; Gower; 2009 Jane Claydon University of Sussex, UKAlthough many different theories exist corporation. This was a necessary reori-of the notion of Corporate Social Re- entation as it emphasised the importancesponsibility (CSR) and the terms associ- of corporate action and implantation of aated with it (sustainability, Corporate social role, however the question stillGovernance, sustainable development), remained of how to reconcile the eco-very few have managed to develop a nomic orientation with such social role.comprehensive model of CSR or sus- From this, a four part comprehensivetainability but instead concentrate on definition of CSR was proposed, whicheither one or a few stakeholders within emphasised the importance of businessesspecific contexts or examples. Aras and responding to all aspects of the socialCrowther (2009) present an interesting world: economic, legal, ethical and phil-new ‘Model of Sustainable Develop- anthropic and it is from this that Carrollment’ that can be usefully contrasted constructed the four tiered pyramidwith Carroll’s (1991) Pyramid of Corpo- (Carroll 1991).rate Social Responsibility’, now almosttwenty years old. According to Carroll (1991) all business responsibilities are predicated upon theWith the creation of many government economic responsibility, the raisonbodies in the 1970s, such as the Environ- d’etre of the firm, which is to createmental Protection Agency and the Con- profit for its shareholders from supplysumer Product Safety Commission to and demand of society (Friedman 1970).protect the environment, employees and This feature of the pyramid is positionedconsumers, it became apparent at the at the bottom as the foundation of thetime that the business world was under pyramid. All other responsibilities mustcriticism for not being accountable occur after this fundamental principleenough to their stakeholders and society has been satisfied . At the second tier liein general (Carroll 1991). The percep- the legal responsibilities, whereby thetion of social responsibility shifted to corporation must adhere to the law andsocial responsiveness by some writers all rules and regulations that it is gov-who argued that the former was not con- erned by to ensure it maintains responsi-centrating enough on the actions of the ble business practices. The third tier is
    • J. Claydon / Issues in Social and Environmental Accounting 2 (2008/2009) 260-265 261 Figure 1. The Pyramid of Corporate Social Responsibility (Carroll 1991, p42)the ethical layer, where corporations are nomic goal of maximising profit. Thisobliged to do what is right, just and fair suggests that all actions that derive outfor their stakeholders and avoid doing of CSR will inevitably be for economicthem any harm. The last tier, the philan- purposes, which have always been andthropic level, ensures that the corpora- always will be the raison d’etre of thetion is a good citizen to the community, firm.contributing resources where needed.The last two tiers of the pyramid have This model is one of the earliest exam-also been highlighted within the social ples of how the structure of responsibili-contract theory of CSR, whereby the ties should sit within a corporation, andcorporation is regarded as a citizen is still widely used. However, it has alsowithin the community, who should, faced much criticism. For example, thetherefore, contribute to society like any mere fact that the root imperative of aother individual (Dahl 1972). This corporation is to maximise profit and‘Pyramid of CSR’, then, rests on the no- act on behalf of the interests of its share-tion that the raison d’etre of the firm is holders may prevent corporations fromeconomically defined, by the foundation acting socially responsibly. Campbellof the pyramid. All other responsibilities (2007) argues that companies who are(legal, ethical and philanthropic) come economically weak are less likely to en-after or from this, suggesting that the gage in acts of CSR as they have fewercompany will only ever be socially re- resources to invest time, effort andsponsible if this fits in with its eco- money into it (‘slack resource theory’),
    • 262 J. Claydon / Issues in Social and Environmental Accounting 2 (2008/2009) 260-265thus these corporations are unlikely to as important variables, which ignoresmeet the threshold for socially responsi- external factors outside the corporationble behaviour. He further states that itself. Yet this is typical of much litera-companies are less likely to act in so- ture surrounding CSR. Aras and Crow-cially responsible ways if it appears that ther, then, aim to provide a comprehen-it will be difficult for a firm to turn a sive model which looks at all four as-profit in the short term. Therefore, the pects of CSR (environment, society, fi-traditional ‘Pyramid of CSR’ model is nancial performance and organisationalnot sufficient as a comprehensive under- culture) in the short term as well as thestanding of the ways in which CSR and long term context, to provide a moresustainability should be achieved. complex model than any others that ex- ist.The durability of a corporation is largelydependant on its understanding and In ‘The Durable Corporation’, they pro-demonstration of CSR (Aras and Crow- vide a comprehensive explanation andther, 2009). Within the broad concept of description of the term sustainability,CSR are three issues on which corpora- referring to the traditional concepts oftions focus most heavily: sustainability, what the terms has meant in the past andcorporate governance and the harmoni- providing a framework for understand-zation of accounting standards. Aras and ing what the term should mean in theCrowther focus on the first of these, as- present and in the future. They outlineserting that most analyses of sustainabil- the limitations of such existing asser-ity concentrates solely on the environ- tions of the term sustainability, specifi-mental and the social, which is inade- cally in relation to corporate behaviour,quate as financial performance is im- and provide a new, more complexperative to the success of sustainability model of CSR and sustainability. Thealso. It is likely that such analyses do so term ‘sustainability’ traditionally assertsbecause many authors see a conflict be- that society must not use resources moretween financial performance of a corpo- quickly than it produces them, a defini-ration and its social/environmental per- tion which was first publicly debated asformance. As such, most work on corpo- part of the Brundtland Report. Althoughrate sustainability does not recognise the we must start with this when attemptingneed for understanding the importance to define sustainability, mainly becauseof financial performance as an essential it is the first public definition of sustain-part of sustainability, which again inhib- ability, it is still a controversial topic asits a comprehensive debate. Margolis it can mean different things to differentand Walsh (2003) have reviewed thirty people in various contexts and so confu-years of CSR literature and found the sion around the term is still prevalentmajority of it has ignored factors other (Aras and Crowther 2009). Further,than financial performance which may there is a tendency for analysis of sus-affect CSR. Further, although Waddock tainability to consider only two aspects:and Graves (1997) found a positive cor- the environmental and the societal.relation between financial performance However, Aras and Crowther assert thisand CSR, their research only focused on analysis is deficient and propose fourcorporate financial performance, firm aspects, within a two dimensional aspectsize, risk tolerance and type of industry of short term versus long term that leads
    • J. Claydon / Issues in Social and Environmental Accounting 2 (2008/2009) 260-265 263 Figure 2 The Model of Sustainable Development, Aras and Crowther, 2009, page 41to a more complete definition of sustain- aging the interest of the stakeholdersability: societal influence, environmental versus the shareholder, which is theimpact, organisational culture and fi- most common assertion in organisationnance. theory. Further, all stakeholder values must be recognised and accommodatedFurthermore, to achieve sustainable de- within a body of trust, for if trust doesvelopment it is necessary to achieve sus- not exist between the organisation andtainability and this can be achieved by the stakeholder than these transactionsfour actions: maintaining economic ac- of value sharing cannot take place (Arastivity as this is the raison d’etre of the and Crowther 2009).company (Friedman 1970); conservingthe environment as this is essential for Aras and Crowther’s view of corporatethe maintenance of future generations; performance is that is should be one ofensuring social justice which includes stewardship - of the resources of the so-elimination of poverty and the ensuring ciety and of the environment withinof human rights; and developing spiri- which the corporation operates – whichtual and cultural values, where the cor- leads to sustainability (Aras and Crow-porate and societal values align in the ther 2009). Sustainability focuses onindividual (Aras and Crowther 2009). ensuring that the resource utilisation ofThus, sustainability and sustainable de- the present does not affect the future.velopment is about more than just man- This creates concepts with which the
    • 264 J. Claydon / Issues in Social and Environmental Accounting 2 (2008/2009) 260-265corporation must engage to become sus- to do business with a company if theytainable such as renewable energy re- are conducting their business practicessources, minimising pollution and using in an eco-friendly way. This assertionnew techniques of manufacture and dis- corroborates the principles of thetribution and accepts the costs that may ‘Pyramid of CSR’ which also stressesbe involved in the present for ensuring the importance of the bottom line of fi-such possibilities for sustainability in the nancial performance as a pre-requisitefuture. This is beneficial not only to the for ethical behaviour thereafter. How-environment, but also to the organisa- ever, although the ‘Pyramid of CSR’tion, for it cannot operate tomorrow includes the financial aspect which iswithout the resources it has today. The integral to a concrete model of CSR andsame applies within the financial per- sustainability, it does not provide an ex-formance of the corporation and there is planation of how financial performanceno dichotomy between the environ- can actually lead to the corporation’smental and financial performance of the sustainability in terms of ensuring thatcompany as the environmental perform- money is invested in socially responsibleance of the company in the present day behaviour and sustainable behaviour, i.e.ensures the financial performance of the by investing in renewable energy re-company tomorrow, and vice versa sources and other socially responsible(Aras and Crowther 2009). activities as outlined by Aras and Crow- ther. Instead, the ‘Pyramid’ merely as-There are internal drivers for an organi- serts that the business must stay profit-sation setting agendas to improve envi- able only because it is the raison d’etreronmental performance because of the of the corporation to do so and not be-perceived benefits for such an action, yet cause it actually has a direct impact onthere have been many critics of these r ensuring sustainability. Further, the(Aras and Crowther 2009). Two such ‘Pyramid’ asserts that the corporationcriticisms assert that either companies can always achieve profitability, despiteare often driven by the need to comply the other factors of CSR as seen in thewith regulation and legislation concern- other tiers, as the financial layer is theing the government, rather than having a foundation of the pyramid. However,real concern for the environment or that Aras and Crowther’s model asserts thatthe environmental practice of a company profitability is predicated upon the otheris a mere Public Relations stunt for ad- factors of CSR and so the financial suc-vertising purposes. However, Aras and cess of the company and its actions ofCrowther state that it is inevitable that CSR exist in a continuum.the business will concentrate on the bot-tom line of the performance in order to Therefore, the ‘Model of Sustainableensure the raison d’etre of the firm and, Development’ offers a more comprehen-thus, environmental performance is sive insight into CSR and sustainability.achieved in relation to the bottom line It is a more practical tool for businessfor the above reasons: to make sure that managers to use as a guide for achievingthe company is not prohibited by large socially responsible corporate behaviourmonetary fines from government bodies than has ever been seen before andfor not complying with regulation; or shows how each of the responsibilitiesbecause consumers will be more likely associated with CSR are to be achieved
    • J. Claydon / Issues in Social and Environmental Accounting 2 (2008/2009) 260-265 265for each stakeholder group, whether at a Aras, G. & Crowther, D. (2009) “Thelocal, national or global level, and ex- Durable Corporation: Strategiesplains whether these are short term or for Sustainable Develop-long term aspirations. Although Car- ment” (Gower Publishing Ltd)roll’s ‘Pyramid’ demonstrates many of Campbell, J.L. (2007) “Why would cor-the important aspects of CSR (economic porations behave in socially re-responsibility, legal responsibility, ethi- sponsible ways?” Academy ofcal responsibility and philanthropic re- Management Review, Vol. 32, No.sponsibility) it does not show how these 3responsibilities are to be sustained Carrol, D. (1991) “The Pyramid of Cor-across time and for different stake- porate Social Responsibility: To-holders, as Aras and Crowther’s model ward the Moral Management ofsuccessfully does, ; nor does it assert Organisational Stakeholders”,strongly enough the link between finan- Business Horizons, Vol. 34, No. 4cial performance and socially responsi- Dahl, R. (1972) “A Prelude to Corporateble corporate behaviour. Reform”, Business and Society Review, No. 1I assert that ‘The Durable Corporation’ Friedman, M. ‘The social responsibilityis a comprehensive and exciting take on of business is to increase its prof-CSR and sustainability. I would recom- its’ The New York Times, 1970, 13mend it to anyone who is interested in SeptemberCSR and sustainability, particularly Margolis, J. D., & Walsh, J. P. ‘Miserybusiness leaders and academics and for loves companies: Rethinking so-people with varying understanding and cial initiatives by business’ Ad-experience of CSR. It provides an in- ministrative Science Quarterly,depth introduction to CSR but has 2003, Vol. 48unique content with the introduction of Robinson, J. (2004) “Squaring the cir-the ‘Model of Sustainable Development’ cle? Some thoughts on the idea ofand so is useful for novices who are sustainable development”, Eco-learning about CSR and experts in the logical Economics, Vol. 48field who can compare this model to Sneddon, C., Howarth, R.B., & Nor-other models of CSR and sustainability. gaard, R.B. (2006) “Sustainable Development in a post-Brundtland world”, Ecological Economics,References Vol. 57 Waddock, S. A., & Graves, S. B. (1997)Internet Sources “The corporate social perform-www.davideacrowther.com ance–financial performance link”,www.thedurabilityinstitute.org Strategic Management Journal,www.terry.uga.edu Vol. 18
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