THREE TYPES OF CORPORATE SOCAIL RESPONSIBILITY
ENGAGEMENT; SELF INTEREST & ALTRURISM ON
L. Chamila Roshani Perera
Graduate School of Business Administration, Kobe University, Japan
Chandana Rathnasiri Hewege
Department of Management, Caulfield Campus, Monash University, Australia
Milton Friedman emphasised on firm‟s self-interest (profit maximisation) as the
main direction for CSR. Some of the Post-Friedman literature on CSR calls for firm‟s
selfless commitment (altruistic) to the betterment of the society beyond profit motive.
The two opposites, firm‟s self interest and the firm‟s selfless (altruistic) commitment
for CSR, have been analysed with a view to developing a synthesis that can ensure
sustainability of CSR practices. It is believed that these two opposites are not
mutually exclusive and that it is not necessary to attempt a trade off between the two.
Maximisation of both ends can be achieved by strategically linking CSR into
business. This paper theoretically argues that sustainability of CSR can be ensured by
incorporating it as an important element of firm‟s business strategy. A typology of
CSR engagement of firms is developed to categorise different CSR initiatives of
Keywords: CSR, sustainability of CSR, firm‟s self-interest and altruism.
Since the pioneering work of Bowen (1953), social responsibility of businessman, the
concept of corporate social responsibility (CSR) has been receiving unprecedented
attention from researchers and practitioners (Andrews, 1972; Carroll, 1979; Freeman
1984; Wartick and Cochran, 1985; Utting, 2005; Luo. X. & Bhattacharya C.B, 2006).
However it was Milton Friedman (1970) who boldly expounded the inevitability and
primacy of firm‟s self-interest in engaging in CSR by business firms. He claimed;
There is one and only one social responsibility of business-to use its resources
and engage in activities designed to increase its profits as long as it stays
within the rules of the game…
Friedman‟s emphasis on profit motive was, perhaps, to eliminate the dilemma that
could arise when profit oriented private firms engage in non-profit actions. In a
capitalist economy where market forces operate and where firms engage in
competition to maximize market share with a craze for cost cutting operations, it is
not viable to commit resources for public welfare unless there is a direct benefit
toward profit motive. However some post–Friedman CSR literature (Carroll, 1979;
Waddock, 2004; Matten and Crane, 2005), being critical of Friedman, demands
selfless (altruistic) corporate commitment to society beyond profit motive. Many
firms have provided examples of CSR actions, yet there are questions relating to
ulterior motive and the scope of CSR activities these companies engaged in. Close
scrutiny of these CSR actions and the related propaganda by the firms provide
evidence for self-interest (firms trying to use CSR as a strategic tool for long term
business growth) in CSR actions. However, in order to refute Milton Friedman‟s
(1970) argument for primacy of profit over social welfare, one has to prove that firms
engage in CSR with a selfless, genuine commitment to society devoid of profit
motive. Most of the post-Friedman CSR studies seem to have emphasised less on the
importance of firms‟ profitability and growth for the sustainability of CSR
Ideally, private firms should conduct business operations in a manner that preserves
and enhances social well-being. Being social entities and corporate citizens, private
firms are said to have a responsibility to be discharged in lieu of the exploitation of
community resources and the detrimental actions against community as a result of
profit oriented business operations. Due to escalation of corporate failures in this
regard, CSR has become an issue of grave concern. Although the necessity of CSR is
undisputedly accepted by all, there are unresolved issues regarding conceptualisation
and operationalization of CSR actions in corporate practices. On one hand, as
Friedman expressed, it is unrealistic to expect that private firms willingly and
altruistically engage in CSR at the expense of profit maximization. On the other hand,
it is the duty of academics, practitioners, law making bodies and all sorts of „watch
dogs‟ of just and fair society to make sure private firms behave in a socially
responsible manner. For this to happen, it is important to look at the motive for doing
CSR actions by private firms. Generally, private firms are not willing to tolerate
„pain‟ if there is no „gain‟! Self-interest of firms is an important factor for firms to
engage in CSR practices.
Due to variety of pressures from stakeholders, private firms are increasingly engaged
in CSR activities and are aggressively disseminating CSR related propaganda through
media. In the context of growing corporate power and curtailment of social welfare
actions by the governments, private corporations are expected to act, firstly, for the
improvement of social welfare of citizens and secondly, in a socially responsible
(ethical) manner in business dealings. Majority of CSR themes fall outside of core
business operation of firms and some of the themes are in the domain of duties and
responsibilities of a responsible government. It is widely accepted that corporations
should be engaged in socially responsible actions for the purpose of enhancing social
well-being. However, from a utilitarian perspective, it is unrealistic to assume that in
the absence of material gain in return (or strategic advantage), profit oriented private
firms lavishly commit resources for social well being. In fact, there is a problem in
expecting profit oriented, competitive firms to spend on social welfare like
governments do. So, it can be questioned whether there can be a genuine commitment
(without expecting a material gain in return) for CSR by private firms.
In the main stream CSR literature, there is an inclination toward philanthropic nature
of CSR. Firms are likely to engage in occasional corporate donations or corporate
philanthropy as an expression of CSR consciousness (Maignan and Ferrell, 2001).
This „philanthropic–only‟ nature of CSR does not amount to be complete CSR
practice (Carroll, 1996). CSR can be viewed from four facets of philanthropic, ethical,
legal and economic responsibilities of firms (Carroll, 1996). Accordingly, firms
should go beyond charitable activities and frequent donations. More importantly,
firms should engage in CSR in a manner that it encompasses the overall business.
Sustainability of CSR cannot be maintained unless private firms have some benefits
from CSR activities. Once CSR actions are linked with company business strategy
and are incorporated in to day-to-day operations of the business, some firms have
shown positive results and also the sustainability of CSR (Key and Popkin, 1998).
Most of the well known CSR practices of firms (Benetton, Body Shop and Ben &
Jerry), indicate as to how these firms have used CSR for corporate image building
(that generate higher customer loyalty with repeated purchases).
Sizable amount of post-Friedman CSR studies appear to have neglected the
importance of firm‟s self-interest in CSR for CSR sustainability. Also, these studies
have demanded selfless company engagement in a wide spectrum of social welfare
actions outside core business activities. This may result in a situation where the firm
deviates from its direct responsibility to customers and other stakeholders. Further,
though it seems attractive, redirecting the companies toward socially responsible
engagements beyond the core business may yield in unintended and unfavourable
performance. Embedding selfless social commitments in to business will deviate the
business from its core mission (Badger.T.A, 2004). Moreover, philanthropy without
active engagement has been criticized as „narrow‟, „self serving‟ and „often motivated
just to improve the corporation‟s reputation‟ (Husted.B, 2003).Thus the main
argument of this paper is that sustainability of CSR can be ensured by incorporating it
as an important element of core business strategy that enables firms to receive a
benefit in return for CSR commitment. The paper introduces three types of CSR
engagement to enable categorization of CSR initiatives in terms of sustainability.
The rest of the paper is organized in five sections. Firstly, a review of changing
business context and emergence of CSR is presented followed by a theoretical review
self interest & altruism of CSR in the second section. Thirdly, the relationship
between CSR and business gain is discussed. Fourthly, how to ensure sustainability of
CSR is explained. Finally, in the fifth section, discussion and conclusion is presented.
Change in Business Context and the Emergence of CSR concept
CSR has been receiving increasing attention of practitioners and academics due to
changes in business context, especially over the past half century. According to neo-
classical view of firm, the only social responsibility of a firm is to provide
employment and pay taxes (Moir, 2001). Such views are in harmony with profit-only
idea of Friedman. However complying with tax obligations is not apparently
sufficient to convey the level of corporate social responsibilities of firms (Bowie,
1995). Moreover, as a result of significant reductions in government spending on
social welfare, public policy makers expect greater social involvement from
corporations. (Maigan, et al., 2001).
Change of regulatory systems and increasing influence of society over businesses
paved the way for CSR. For example, according to Gallin (2000), the two reasons for
CSR to emerge are; (1) the rise of welfare legislation in post-war Europe ,occurred
in a context where the labour movement and other ideological and political forces
associated with social democracy were relatively strong (2) big businesses had been
weakened through decades of depression and war. Businesses have been influenced
by civil society engagement in CSR since 1980s. Many issues such as child labour,
sweatshops, fair trade, the rights of indigenous people, toxic chemicals, oil pollution,
tropical deforestation, and other forms of environmental degradation have been
highlighted in actions of numerous NGOs, consumer groups and trade unions (Utting,
2005). Similarly, there has been increased pressure on organizations to acknowledge
responsibility to society and to act in a way that benefits the society overall (Lambin,
1997). Further globalization and economic liberalization tend to alter the balance of
right and obligations which inturn change the behaviour of organizations (Change
2001). Due to these new circumstances, not only firms are expected to be virtuous,
but also they are supposed to practice social responsibility (Carroll, 2000). In line
with this trend, increasing number of firms has been adopting a variety of voluntary
initiatives aimed at improving CSR records (Utting, 2005).
The change in the business context also influences the way in which businesses are
evaluated. Thus, business performance is measured not only as a function of
economic and moral accomplishments but also its social contributions. In 1969,
Henry Ford II commented;
“The terms of the contract between Industry and society are changing…. Now
we are being asked to serve a wider range of human values and to accept an
obligation to members of the public with whom we have no commercial
transactions” ( Chewing et al.,1990,p.207 cited in Lantos 2001)
In addition, because of size and special legal status, the modern firms may be
perceived as public institutions rather than private organizations in many aspects. A
private firm, to a certain extent, is expected to perform a public role. Some argue that
private firms must be held responsible to discharge higher standards of social
responsibility than that of individuals (Miller and Ahrens, 1993).
Changing social context imposes pressure of change on it social constituents. Firms,
being social entities, have to adapt to these changes for survival. Now, firms are
evaluated based on the gap between newly defined social expectations and the actual
social performance. CSR has thus become inevitable, given the present social context.
In a way, corporate social responsibility is a tool, which guides organizations to
comply with these changing social expectations and thereby to ensure continuity of
the organization. Sustainability of corporate social responsibility is dependent on the
sustainability of business organizations and vice versa. Therefore, there should be a
link between CSR and business performance. By incorporating social performance of
a business in to its core business operations, this link can well be established.
Firm’s self interest and altruism
Over the past few decades, as evident from literature, the notion of CSR has been
taking its form as a concrete concept (Browen 1953; Heald, 1957, cited in Ulmann,
1985; Fiedman, 1962; Mguire 1985; Wartick and Cochran, 1985; Klein et al, 2004).
However, still it is apparent that the notion of CSR is scattered widely in many
dimensions. The broad nature of the concept and the lack of precise definition indicate
that CSR is still taking its shape as a business philosophy and a practice (Frankental,
2001). Initially, corporate donations and other philanthropic actions were identified as
CSR and these were considered „out side‟ of core business function. Organizations
embraced CSR by engaging in social activities and making charitable contributions
(Fry, Keim and Meners, 1982). Some of the previous studies implied that CSR is yet
to reach perfection as far as conceptual clarity is concerned (Berner 2005, Smith
2003). Subsequently, scope of CSR began to expand to cover a wider spectrum of
areas and more importantly several attempts have been made to incorporate CSR as
an important business function.
The notion of CSR can be grasped in a continuum; „normative case (altruism)‟, and
„self interest‟ (Holliday et al.2002; Porter and Van Der Linde 1995; Smith, 2003).
Firstly, the normative case (altruism) of CSR accepts the fact that firms need to
commit their resources for societal benefits. This commitment of a firm is not only for
business stakeholders but also for those groups who do not have direct business
relationship. Theoretically, the normative theory developed by Donaldson, T., and
Preston, I. (1995) also rationalizes as to why firms should give consideration to their
stakeholders. This perspective is also supported by some of the Post Friedman studies
(Carroll, 1979, Waddock, 2004; Matten and Crane, 2005) where as Friedman‟s
(1970) argument of CSR was rejected in normative terms. The definition developed
by Commission of the European communities (2001) emphasises on the voluntary
nature of CSR. According to this definition CSR is “a concept whereby companies
integrate social and environmental concerns into the business operations and their
interactions with their stakeholders on a voluntary basis”. Similarly CSR is defined as
a commitment for sustainable economic development ensuring quality of life of
employees, development of local communities and society at large (Business and
Sustainable Development ,2001; The World Bank 2004). Some of the definitions
moved in different aspects within the normative case of CSR by defining CSR as
forming relationships with artistic, educational, and cultural institutions, whereby
firms integrate themselves into their social communities and shape favourable
attitudes to their activities (Useem, 1988). Moreover, there are instances where CSR
is related to business ethics (Kilcullen, 1999). For example, Andrews (1998)
described CSR as intelligent and objective concern for the welfare of society that
restrains individual and corporate behaviour from ultimately destructive activities,
even though those activities ensure immediate profits (cited in Hartman, 1998).
It is evident, that the other end of the CSR continuum, „self interest‟, has been gaining
prominence in recent CSR research literature. With Bowen‟s (1953) seminal work,
Social Responsibilities of the Businessman, researchers began to investigate the social
responsibility aspects in businesses. However, it was after Friedman‟s (1970) writing,
the real debate started. Friedman boldly claimed that the sole social responsibility of a
business is to be profitable, operating within the stipulated legal framework. Friedman
was criticized based on the argument that a private firm should not be allowed to
exploit the environment and society that support its very existence. However, it
should be noticed that many of the critics have not been able to totally reject
Friedman‟s view. Modern day businesses are showing a transition from this
„volunteerism‟ perspective to „self interest‟ perspective in CSR, as they believe CSR
contributes to the development of the business (CCPA, 2000). Further, it is noted that
90% of the fortune 500 companies have explicit CSR initiatives (Kotler and Lee
2004; Lichtenstein Drumwright, and Bridgette 2004) and many large-scale firms tend
to create specific senior management positions to take the responsibility of CSR
activities (Pearce 11.J.A, and Doh.J .P, 2005). The firms ensure to treat stakeholders
in an ethical and responsible manner aiming at creating higher standards of living
while preserving the firms‟ profitability (Snider, et. al., 2003).
As a whole, although there is a CSR continuum laying between „normative case
(altruism)‟ and an „self interest‟ (the business case), executives and companies
engaging in CSR are likely to reflect a mixture of these extremes (Smith, 2003).When
analysing the „mixture‟, the scope of CSR can be viewed from a framework that
consists of two dimensions; 1) narrow to wider perspective, 2) cost to benefit driven
perspective. The narrow to wider perspective of CSR covers a range of issues stating
from simple corporate philanthropy and extending to more complex issues such as
plant closures, employee relations, human rights, corporate ethics, community
relations and environment. It is noted that the key CSR issues are often clustered
under four headings: Marketplace, Workplace, Environment and Community
(Whooley, 2004). Overall, Cost -benefit driven perspective is more or less related to
the profitability argument of Friedman.
In recognizing the business aspects of CSR, Carroll (1979) developed a conceptual
model including three dimensions; discretionary, ethical and economic responsibility.
The model was used by Wartick and Cochran (1985) and Wood (1991) to build a
complete model of corporate social performance. Incorporating CSR and corporate
social responsiveness, Wood (1991) emphasized the need of measuring corporate
social performance. Elaborating the discretionary dimension; managers‟ moral
responsibilities in selecting activities to achieve socially responsible outcomes,
Schwarz and Carroll (2003) improved the concept of CSR beyond philanthropic
framework. This new paradigm integrated CSR in to the main business functions
removing it outside „non-business‟ voluntary activity label. Further, 3C-SR model , a
refined version , (Meehan at al, 2006) guides managers in dealing with the growing
number of social conscious consumers and achieving economic and social objectives
simultaneously. Overall, it can be concluded that CSR is now almost universally
recognized as an integral component of an executive‟s role, either motivated by self
interest, altruism, strategic advantage or a political gain. (Smith, C.2001; Campbell,
L., et al.1999; Shaw, et al, 1993).
CSR AND BUSINESS GAIN
In Capitalist economies, market forces determine as to how resources are allocated for
the production of goods and services. Objective of a firm is to maximize profit. The
size of market share directly influences the quantum of profit. Competition among
firms to secure a bigger piece of market share is bound to push firms toward
continuous struggle for cost cutting operations. Downsizing, re-engineering,
restructuring, de-layering and retrenchment are some of the cost cutting projects of
modern day business strategy affecting CSR performance. Committing resources for
CSR with the sole intension of social welfare is an ideal and altruistic state and only a
small number of firms are capable of doing this. Most of the firms that engaged in
CSR acknowledge the fact that motivation for CSR came from increased revenue due
to higher level of customer loyalty caused by elevated corporate image (Business and
Sustainable Development, 2001). Firms that initially started CSR with the sole
intension of social welfare without expecting a direct benefit from CSR later realized
the difficulty in sustaining CSR actions. Some studies confirmed that firms practice
CSR with the motivation of maximizing self- interest. A study in Australia on
motivations of businesses for community involvement (CCPA, 2000) found that
Australian business is „experiencing a transition on expectations of its social role‟ but
part of the reason is that this social role „contributes to the continuing health and
growth‟ of business. This „social role‟ appears to aid sustainability of CSR practices
and thereby the sustainability of business. Lantos (2001) argued that though any
organization has an obligation for ethical CSR, altruistic CSR is not legitimate.
Therefore, companies should limit their philanthropy to strategic CSR (good works
that are also good for their business). Many studies confirmed the proposition that
good social and environmental performance is positively associated with
organizational profits (Porter and van der Linde 1995; Balabanis et al., 1998 Holliday
et al.2002).Interestingly; CSR has been a rewarding tool for many marketers. Large
number of studies revealed that CSR plays a role in consumers, brand and product
evaluation, and customer satisfaction (Asher,1991;Browen and
Dacin,1997;Handelman and Arnold,1999;Klein and Bronn and Vrioni ,2001;Dawar,
2004;Peterson and Hermans ,2004;Luo. X & Bhattacharya. C.B., 2006). Moreover,
the role of CSR in supporting marketing function is revealed by a study which claims
that when price and quality are perceived as equal many customers tend to favour
socially responsible companies and products(Bronn and Vrioni ;2001).
There is an argument that firms use CSR related programmes for public relations ends
and that raises moral problems over the real motivation of firms (L‟Etang 1994).
Bronn and Vrioni (2001) have explored as to how companies use CSR in their
marketing communication activities. They found that the changing attitudes of
customers support companies in making marketing increasingly relevant to the
society. Asher (1991) studied the effect of „green Marketing‟ on consumer behaviour
at ATM machines. This study examined advertising campaigns that are tied to
environmental friendly actions. It was found that ATM withdrawals went up by 56%
in 1988-1990.The large food retailers (UK) have been steadily increasing their market
share as a result of CSR being used as a marketing and communication tool (Jones.P,
et al; 2005). In this study, the major CSR themes used by UK‟s top ten food retailers
are organic and fair-trade products, healthy living ranges, local produce and
community issues and CSR information printed on product labels and packaging,
shelf edge marking, information leaflets, banners and posters.
Conversely, some other studies reported on adverse consequences of not being
socially responsible. The case study of the Exxon Valdez oil spill in Prince William
Sound in US coastal waters revealed that the company has ignored the fundamental
ethical aspects in strategic planing. (Bowen and Power, 1993; Wells and McCoy,
1989). In this case, a decision taken by considering only cost factors resulted in
utilising reduced amount of manpower in a certain operation. The outcome severely
affected business as it damaged the company‟s image especially among the citizens of
Alaska. The failure led to both poor financial and ethical outcome. In another case
(Angell, 1992), it was reported on the bankruptcy of US Company, Dow Corning,
which produces and markets silicone breast implant. The company was subjected to
severe court penalty due to the alleged hazard to consumers. It is reported that the
product is complied with all the existing US regulations and no conclusive evidence
has been offered to demonstrate that this product is unsafe. However, finally Dow
Corning was forced to remove the product from the market. Though this product
represent less than 1% of Dow Corning‟s profits, it forced the company to a
bankruptcy. It is noted that in 1964, when Dow brought its first silicon breast implants
to US market there were no regulations on any implants of human body and the
company took advantage of this „opportunity‟ by taking its products to market with
little testing. If the company had been conscious about moral and social duties and
obligations to its customers as a part of its product strategy, extensive product testing
and the keeping records of customers would have been included in the product
strategy. From this case, it is evident that CSR need to be embedded in the business
process itself not as an alien activity (Key, S and Popkin, S.J, 1998). CSR directly
influence marketing and marketing can use CSR for great results. CSR has a direct
impact on businesses through marketing function. On one hand, CSR commitment is
certain to influence the customer perception of the company and as a result company
sales increase. On the other hand, failure in CSR actions of companies is bound to
erode the net worth of firms. CSR has become a product as well as company attribute
that plays a significant role in the total product offer of a firm.
Typology of CSR engagement: Ensuring sustainability of CSR
Sustainability connotes durability or longer existence. The sustainability of CSR is
dependent on sustainability of firms. The firms‟ financial stability is a fundamental
determinant of its survival and growth. The research literature on financial impact of
CSR concluded with inconsistent findings (Pearce 11.J.A and Doh.J.P, 2005).In some
studies, CSR relates with positive financial performance (Waddock and Graves (1997;
Pava and Krausz, 1996; Key, S and Popkin, 1998), while for others it‟s a negative
relation (Piacentini M., et al., 2000).And some other studies revealed no relationship
between CSR and financial performance Goldreyer and Diltz (1999). We believe that
such inconsistent findings are partly due to the vagueness of the CSR concept and the
defects in definition, theory and methodology used to study the phenomenon.
However, since mid-1990s, improvement in theory, research design and data analysis
have produced empirical researches with more consistent results (Griffin.J.J and
Mahon.J.F 1997; Roman.R.M et el,1999;Ruf.B.M et el ,2001;Margolis.J.D. et
al,2003). A recent meta –analysis of more than 10 studies confirmed a positive
relationship between financial performance and CSR. However, it should be noted
that the primary vehicle for achieving superior financial performance for social
responsibility is via reputation effects (corporate image) (Orlitzky.M et al, 2003).
Reputation or corporate image is influenced by CSR actions of firms.
It can be argued that when an organization uses CSR for marketing alone with other
marketing strategies, firms can sustain CSR as they can derive a benefit in return.
Companies can maximize the benefits of CSR actions when they treat CSR at
strategic level and develop products and services that are based on CSR principles.
This phenomenon was referred to at the recent World Economic Forum gathering,
“ We see corporate social responsibility as part and parcel of doing business,
part of our core skills,” ( Antony Burgmans,Chairman of consumer products
,Uniliver NV cited at Lazarus S.et al 2005).
The CSR initiatives of firms such as Ben & Jerry‟s Home made Holdings Inc. showed
that both CSR and profit goals can be achieved simultaneously and a trade off
between the two is not necessary. These firms hold the view that „doing good led to
making good money too’ (Pearce 11.J.A, and Doh.J .P, 2005). Similarly IBM, as part
of its “Reinventing Education Initiative”, commits financial resources, facilitates
research, provides educational consultants and technology at each site seeking new
ways to spur and support fundamental school restructuring with a view to enhancing
student achievements. In effect, IBM improves its technological and systems expertise
in providing systems solutions to educational clients as well as puts strong
foundations for potential markets (http://www.ibm.com).
IBM believes that a strong community is a key to a company’s success…..To
this end, a key focus of our work has been on raising the quality of public
education and bridging the digital divide. (Stanley Litow, Vice President of
corporate community relations at IBM).
Procter and Gamble‟s (P&G) believes that CSR should take the advantage of a
company‟s core competencies and benefit to the company in turn. The company
identifies projects that will have long lasting benefits for all of the stakeholders
(Trevino A, 2003).
People begin to accept that CSR is a two way relationship in which there are
benefits to the community and benefits to the companies involved”(Trica
Dodds, community relations manager ).
Taking totality of preceding analysis, it is now possible to develop a typology that can
explain the main argument of this paper (see figure 1). Self-interest of a firm is
denoted by the benefits that a firm gains through CSR. These benefits can be direct or
indirect. Direct benefit means profit that arises from CSR actions of a firm. Indirect
benefit is the enhancement of corporate image through CSR actions. Sustainability or
the firm‟s ability to prolong CSR actions is taken as high or low. Inability of a firm to
sustain CSR actions for a long period of time is termed as „low sustainability‟.
According to this typology, there are three categories of CSR engagement.
Type 1: Firms engaging in CSR as a voluntary activity not as an essential component
of business strategy resulting in low level of sustainability
Type II: Firms engaging in specific promotional activities associating products and
brands with social welfare activities
Type III: Firms engaging in CSR treating it as a necessary and indispensable
component of marketing strategy
Table 1 outlines type of benefits and sustainability level associated with each type.
Type III CSR style can offer firms a win-win situation
Table 1: Benefits and Sustainability Gird
Category Description Level of Benefits
Type 1 Firms engaging in CSR as a Low Indirect
voluntary activity not as an
essential component of
business strategy resulting in
low level of sustainability
Type 2 Firms engaging in specific Low Direct
associating products and
brands with social welfare
Type 3 Firms engaging in CSR treating High High
it as a necessary and
indispensable component of
Figure 1: Typology of CSR Sustainability
High Level of
Sustainability of CSR
from Type 2 from
CSR Type 1 CSR
(Corporate Promotional (Profits)
Image) activities with
Volunteerism CSR extension
Low Level of
Sustainability of CSR
Discussion and Concluding comments
This paper investigated the two opposing tenets of CSR, Friedman and some of the
post – Friedman, with a view to attempting a synthesis of the views. This synthesis is
essential for the sustainability of CSR actions of the firms. It is believed that firms are
not likely to practice CSR as an ongoing activity unless there is a return from CSR.
Treating CSR as a totally altruistic activity for the betterment of the society is certain
to affect the continuity of CSR actions of the firms. Therefore, it is essential to ensure
maximisation of firm‟s self-interest and social well-being through CSR. With a view
to explaining this phenomenon, a typology of CSR engagement of firms is created.
Three types of CSR engagements have been identified by using two dimensions,
sustainability and benefits. Type III, embedding CSR in to marketing strategy, is
suggested as the most viable approach that can ensure the sustainability firm‟s CSR
Friedman‟s profit motive in CSR is in the self-interest extreme whereas most of the
post-Friedman CSR conceptions are in the extreme of selfless (altruistic)
commitment. Undoubtedly, either extreme taken alone is not feasible for the
sustainability of CSR in businesses. In the context of stiff corporate competition,
securing a higher market share for firm‟s products and services are of utmost
importance to all firms. If CSR actions aid market share growth, short term or long
term, firms will surely be willing to embrace CSR. More importantly, firms will be
self-motivated to act for CSR resulting in sustainability of CSR. Most of the thinkers
appear to be mistaken when they comprehend these two opposites as mutually
exclusive. It is not true to think that there is always a trade off between the two
opposites. A higher level of managerial craftsmanship is required to design and
configure a strategic map that enables optimisation of opposites, self interest
(profitability) and selfless (altruistic) commitment to social well being. What seems
ideal is a combination of the two polar opposites of self-interest and selfless
genuineness via marketing strategies. Marketing strategies are the mirrors that a
company can use to express their intensions in business. The marketing strategies and
tactics convey lot about the principles, philosophy and practices of a business. So, the
link between CSR and marketing is obvious.
CSR actions of firms are essential for the wellbeing of the society and therefore, it is
important to ensure firms‟ continuous engagement in CSR. Self-motivation or internal
motivation of firms to engage in CSR is much more superior to external coercive
persuasion by means of legal and other pressures. From rational view point, firm‟s
motivation is dependant on the quantum of benefits that are to be derived from the
CSR engagements. If a clear relationship between CSR and profitability is
established, it is likely that firms are certain to incorporate CSR in to the main
business strategy. Evidence from business cases corroborates this assertion.
However, it is not within the scope of this paper to assert that there is a direct and
definite impact of CSR on business performance. Firms are not equally competent in
executing, supporting, and exploiting CSR initiatives in the market place (Brown
T.J.and Dacin, P.A. (1997; Sen et al; 2001). On the other hand, different markets
response differently for the CSR initiatives of organizations. For e.g. positioning an
organization as a socially responsible company for example, Benetton, Body Shop,
raises customer expectations and opens the organization to a wide range of potential
criticisms that ultimately may not be manageable (Piacentini M., et al.,
2000).However we argue that by incorporating CSR into core business function
specially into the marketing function of a business, sustainability of CSR can easily be
If CSR is expected from private firms as a voluntary altruistic commitment, it is both
unrealistic and against the principles of free market mechanism. Thus, the
implementation and Operationalization of CSR tend to pose serious problems. To
overcome these difficulties, firms are expected to devise their corporate strategies in
such a manner that CSR action will derive benefits for both the firm and the society.
This is a „win-win‟ situation. Friedman‟s notion of self-interest of firm is „win-loose‟
and the altruistic CSR is „loose-win‟ situation.
The firms, consumers, shareholders, and all the other community members belong to
one social system. All of them share limited resources. To enhance the sustainable use
of the limited resources, all members need to agree to a social contract which is just
and fair for all. CSR is an essential condition for such social contract. What is good
for business should be good for society and what is good for society should be good
for business. Therefore, the conceptual correction that maximisation of self-interest
and social well-being are not mutually exclusive concepts is needed. So, the notion of
„doing well by doing well‟ is reaffirmed.
Andrews, K.R.1972.Public Responsibility in the Private Corporation. The Journal of
Industrial Economics, 20 (2), 135-145.
Angell, M.1992.Breast implants-protection or paternalism. New England Journal of
Medicine, 18(June), 1690-1701.
Asher.1991.When a good cause is also good business. Bank marketing, 23(6), 30-32.
Balabanis, G., Philips, H.C. and Lyall, J.1998.Corporate social responsibility and
economic performance in the top British companies: are they linked?. European
Business Review, 98(1), 25-44.
Badger, T.A.2004.Levis Strauss Closes Its Last U.S. Sewing Plants. Associated Press.
Berner, R.2005.Smarter Corporate Giving. Business Week, November (28), 68-76.
Bloom, P.N.and Gundlach, G.T.2001.Handbook of Marketing and Society, Sage
Publications, Thousand Oaks, CA.
Bowen, H.R.1953. Social Responsibilities of the businessman, New Yourk: Harper &
Bowen, M.and Poer, F.1993.The moral manager: communicative ethics and Exxon
Valdez disaster. Business Ethics Quarterly, 3(2), 97-115.
Bowie, N.1995. New Directions in corporate social responsibility, in Hoffman,
W.M.and Frederick, R.E. (Eds), Business Ethics: Readings and Cases in
Corporate Morality, 3rd ed., McGraw-Hill, New York, NY.
Brown, T.J, and Dacin, P.A.1997.The Company and the product: corporate
associations and consumer product responses. Journal of Marketing, 61(Jan), 68-
Bronn, P.S. and Vrioni, A.B. 2001.Corporate social responsibility and cause –related
marketing: An overview. International Journal of Advertising, 20,207-222.
Business and Sustainable Development.2001.Coporate Social Responsibility Monitor.
Available at: www.bsdglobal.com/issue/sr_csrm.asp
Carroll, A.B.1979.A three –dimensional conceptual model of corporate performance.
Academy of Management Review, 4,497-505.
Carroll, A.B.1996.Ethics and Stakeholder Management, 3rd ed., South-Western
College Publishing, Cincinnati, OH.
Carroll,A.B. 2000.The four faces of corporate citizenship” ,in Richardson,
J.E.(Ed.),Business Ethics 00/01,Dushkin/McGraw-Hill,Guilford,CT,187-91.
Campbell, L., Gulas, C.S, and Gruca.T.S.1999.Corporate Giving Behaviour and
Decision –Maker Social Consciousness. Journal of Business Ethics, 19 (4), 375-
Change,H.J. 2001. Breaking the Mould: An Institutionalist Political Economy
Alternative to Neo liberal Theory of the Market and the State. Programme Paper
(SPD) No.6, Geneva:UNRISD
CCPA.2000.Corporate Community Involvement: Establishing a Business Case,
Centre for Corporate Public Affaires, Melbourne.
Commission of the European Communities.2001.Promoting a European Framework
for Corporate Social Responsibility. Available at; http://europa.eu.int/eur-
Dawar,N, and Maignan,J.2004.Coprporate social responsibility and consumers‟
attributers and brand evaluations in product –harm crisis. International Journal of
Research in Marketing,21,203-217.
Donaldson, T, and Preston, L.1995.The stakeholder theory of the corporation:
Concepts, evidence, and implications. Academy of Management Review, 20, 65-91
Friedman, M.1962.Capitalism and Freedom, University of Chicago, Chicago, IL.
Friedman, M.1970. The Social Responsibility of Business is to Increase its Profits.
The New York Times Magazine, Sep.13, New York Times Company.
Freeman, R.E.1984.Strategic Management: A Stakeholder Approach, Pitman, Boston, MA.
Frankental, P.2001.Corporate social responsibility – a PR invention? Corporate
Communication. An International Journal, 6(1), 1-6, 18-23.
Fry, L.W., Keim, G.D, and Meiners, R.E.1982.Corporate contribution in corporate
philanthropy. Administrative Science Quarterly, 36(1):88-105.
Gallin, D.2000.Trade Unions and NGOs: A necessary Partnership for Social
Development. Programme Paper (CSSM), Geneva: UNRISD.
Goldreyer, E.F. and Diltz, J.D.1999.The performance of socially responsible mutual
funds: incorporating socio-political information in portfolio selection. Managerial
Finance, 25(1), 23-36.
Griffin.J.J ND Mahon.J.F.1997.The Corporate Social Performance and Corporate
Financial Performance Debate: Twenty –Five Years of Incomparable Research.
Business and Society ,36:5-31
Hartman, L.M.1998.Perspectives in Business Ethics, Irwin/McGraw-Hill, Boston,
Handelman, J.M, and Arnorld, S.A.1999.The role of marketing actions with a social
dimensions: appeals to the institutional environment. Journal of Marketing, 63,
Holliday, C., S.Schmidheniny, and P.Watts.2002.Walking the Talk: The Business
Case for Sustainable Development.Sheffield: Greenleaf Publishing.
Husted.B.2003.Governance Choices for Corporate Social Responsibility: To
Contribute Collaborative or Internalize?. Long Range Planining, 36(5):481-498.
Jones, P., Comfort .D., Hillier. D.2005.Corporate social responsibility and the UK‟s
top ten retailers. International Journal of Retail & Distribution Management, 33
Key.S, and Popkin.S.J.1998.Integrating ethics in to the strategic management process:
doing well by doing good. Management Decsion,36(5),331-338.
Kilcullen , M.and Kooistra J. O.1999.At least do no harm: Sources on the changing
role of business ethics and corporate social responsibility. Reference Services
Klein,J.and Dawar,N.2004.Corporate social responsibility and consumers‟ attributions
and brand evaluations and in a product harm crisis. International Journal of
Research in Marketing, 21,203-217.
Kotler, Philip and Nancy Lee.2004. Corporate Social Responsibility: Doing the Most
Good for your Company and Your Cause. New York: John Wiley & Sons
Lambin, J.J.1997.Strategic Marketing Management, McGraw-Hill, Maidenhead
Lantos, G. P.2001.The boundaries of strategic corporate social responsibility. Journal
of Consumer Marketing, 18 (7), 595-630.
Lazarus, S., Quelch, J.A., Roberts, N., Burgmans, A and Smith, O.2005.How
Responsible Is Responsible Enough?” .Panel discussion at World Economic
Forum annul meeting.
Lichtenstein, Donald R., Minette, E., Drumwright, and Bridgettee M.Braig .2004.The
effect of Corporate Social Responsibility on Customer Donations to Corporate-
Supported Nonprofits. Journal of Marketing, 68 (October), 16-32.
L‟Etang.1994.Public relations and corporate social responsibility. Journal of Business
Ethics, 13(13), 111-123.
Luo, X and Bhattacharya.C.B.2006.Corporate Social Responsibility, Customer
Satisfaction, and Market Value. Journal of Marketing, 70, 1-18.
Maignan, I., Ferrell, O.C.2001.Corporate Citizenship as a Marketing Instrument.
European Journal of Marketing, 35(3/4), 457-484.
Margolis,J.D, and Walsh,J.P.2003.Misey Loves Companies: Rethinking Social
Initiatives by Business. Administrative Science Quarterly, 48,268-305.
Matten,A.and Crane,D.2005.Corporate Citizenship: toward an extended theoretical
conceptualization.. Academy of Management review,30(1),166-79.
McGuire, W.J.1985.The Social responsibility of Corporations” in
White,T.I.(ed.),Business Ethics: A Philosophical Reader, Prentice-Hall, Upper
Meehan, J., Meehan, K, and Richards, A.2006.Corporate Social responsibility: the
3C-SR model. International Journal of Social Economics, 33 (5/6), 386-398.
Miller, F.D. and Ahrens, J.1993.The social responsibility of corporations” in
White,T.I.(ed.), Business Ethics: A Philosophical Reader , Prentice-Hall, Upper
Moir, L.2001.What do we mean by Corporate Social Responsibility?, Corporate
Governance 1,2, MCB University Press,16-22,
Orlitzky,M., Schmidt,F.L and Rynes,S.L.2003.Corporate Social and Financial
Performance: A Meta- Analysis. Organization Studies,24(3):403-441.
Pava, M.L.and Krausz.1996.The association between corporate social –responsibility and
financial performance: the paradox of social cost. Journal of Business Ethics, 15(3), 321-
Peterson, R.T., and Hermans, C.M.2004.The communication of social responsibility
by US banks. The International Journal of Bank Marketing, 22(3),199-211.
Pearce 11,J.A,and Doh,J.P.2005.The High Impact of Collaborative Social Initiatives. ,
MIT SLOAN MANAGEMENT REVIEW ( Spring);31-39.
Piacentini, M., MacFadyen, L., Eadie, D.,2000.Corporate social responsibility in food
Retailing. International Journal of Retail Distribution Management, 28(11),459-
Porter,M.and C.van der Linde.1995.Green and competitive : ending the stalemate.
Harvard Business Review (September-October),120-134.
Roman,R.M.,Hayibor,S and Agle,B.R.1999.The Relationship between Social and
Financial Performance: Repainting a Portrait. Business and Society,38:109-125.
Ruf,B.M ., Muralidhar,K .,Brown,R.M.,Janney.J.J and Paul.K.2001.An Empirical
Investigation of the relationship between Change in Corporate Social Performance
and Financial Performance: A Stakeholder Theory Perspective ,” Journal of
Business Ethics,32: 143-157
Sen,Sankar and Bhattacharya.2001.Does Doing Good always lead to Doing Better?
Consumer Reactions to Corporate Social Responsibility,” Journal of Marketing
Research, 38(May), 225-44
Schwarz,M.S. and Carroll,A.B.2003.Corporate Social Responsibility: a three –domain
approach. Business Ethics Quarterly,.13 (4),503-30.
Shaw.B and Post.F.R.1993.A Moral Basis for Corporate Philanthropy. Journal of
Business Ethics, 12(10),745-751.
Smith , N.C.2001.The role of Consumer boycotts and socially responsible
consumption in promoting corporate social responsibility. In Bloom, P.N. and
Gundlaxch,G.T.(Eds), Handbook of Marketing and Society, Sage Publications,
Thousands Oaks, CA,140-61.
Smith, C.2003.Corporate Social Responsibility: Whether or How?. California
Management Review, 45(4),52-76.
Snider,J.,Hill,R.P., and Martin,D.2003. Corporate Social Responsibility in the 21st
Century: A view from the World‟s Most Successful Firms. Journal of Business
The World Bank Group.2004.Corporate Social Responsibility. Available
Trevino, A.2003.Are Companies Embracing Corporate Responsibility Principles as a
New Strategy for Managing Reputation?. Corporate
Utting P.2005.Corporate Responsibility and the movement of Business, Development
in Practice, 15( 3& 4),pp.375-388.
Ullmann, A.A, 1985.Data in search of a theory: a critical examination of the
relationships among social performance, social disclosure, and economic
performance of US firms. Academy of Management Review, 10,540-57.
Useem, M.1988.Market and Institutional Factors in corporate contributions.
California Management Review, 30(2):77-88.
Waddok, S. and Graves, S.1997.The corporate social performance –financial
performance link. Journal Business Ethics, 12,197-206.
Waddock, S.2004.Parallel universes; companies‟ academics and the progress for
corporate citizenship. Business and Society Review, 109(1),5-42.
Wartick, S.L. and Cochran, P.L.1985.The evolution of the corporate social
performance model. Academy of Management Review,( October), 766.
Wells, K.and McCoy, C.1998.Out of Control: How unpreparedness turned Alaska
spill into ecological debacle. Wall Street Journal,3 ,A1
Wood, D. J.1991.Corporate social performance revisited. Academy of Management
Whooley, N.2004.Social Responsibility in Europe. available