2. 2
Executive Summary
Corporate social responsibility (CSR) is becoming an increasingly important topic both in
business and in academia. Consumers are increasingly concerned with issues such as human rights
and environmental standards when they make purchasing decisions, and as a result of this
corporations are taking a more proactive approach to CSR. At the same time public skepticism around
CSR is on the rise as more consumers see CSR as nothing more than a self-serving attempt by
companies to whitewash their reputation while doing little of real benefit for society. Part of the
reason for this skepticism is that firms, in their eagerness to obtain the status of “socially responsible
company,” tend to focus on easy CSR issues for which they may also gain some benefit, while
ignoring more difficult ones—ones that are difficult to justify due to the lack of incentives. Many
observers ask whether these “easy” CSR activities which also profit firms should be called socially
responsible at all. There is a need to distinguish between firms who do this and firms who address
more difficult and pressing issues.
This distinction between “easy” CSR and “difficult” CSR—or what this paper metaphorically
refers to low- and high-hanging fruits—is still quite ambiguous. While various authors have used the
language of low- and high-hanging fruit in passing, nothing has been written to really solidify the idea
and ground it in theory. In order to answer the question of why companies are eager to engage in
certain CSR activities and not in others, this work aims to create a new theoretical framework which
will allow us to characterize CSR issues according to their relative difficulty. The framework
examines how the potential for profit, the influence of powerful stakeholders and the presence of
institutional pressures act as factors which incentivize companies to engage in CSR. The degree to
which a CSR activity can be said to be “easy” or “difficult” is then determined by the number of
factors present, and the intensity to which they affect the issue.
While the potential for profit is the most obvious incentivizing factor in determining whether
a given issue is a low- or high-hanging fruit, it is far from the whole picture. Many socially beneficial
activities that companies engage in are not necessarily profitable in the short term, but may still be
necessary for firm survival. By incorporating stakeholder theory we see that when CSR issues
represent the interests of powerful stakeholders, firms are incentivized to address these issues in order
to placate stakeholders regardless of the immediate profitability involved. Institutional theory further
informs the framework by showing us that the degree to which a particular CSR issue has been
institutionalized by society will govern the extent that firms are incentivized to address them in order
to maintain legitimacy. The resulting model allows us to look beyond only profitability and determine
what other benefits a firm derives from its CSR undertakings. Making the distinction between low-
and high hanging fruits more concrete will have implications as to how we assess a company’s true
level of social responsibility.
4. 4
Introduction
Today, one would be hard-pressed to find a company headquartered in the Global North that
does not have a substantive corporate social responsibility (CSR) policy statement prominently
displayed on their website. For large multinational companies, especially those who have endured
criticism in the past such as Nike or Shell, an argument could be made that being seen as socially
responsible has become a crucial and central element in managing their brand images owing to the
fact that CSR accounts for a large part of how consumers form opinions about companies (Parguel et
al., 2011; Dawkins & Lewis, 2003). Such large firms often devote an entire section of their website to
CSR and produce extensive reports on the topic. But even small and medium sized businesses are
jumping on the bandwagon realizing that CSR initiatives can be a source of competitive advantage
and that consumer demands for ethical products and services is only expected to grow (Princic, 2003).
While CSR is a growing trend both in academic work and in the public sphere, the idea that
business entities have certain obligations related to the welfare of the communities in which they
operate is not at all new (Dawkins & Lewis, 2003; Carroll, 1999). The prevalence of many high-
profile corporate scandals, the media attention that they have received and growing consumer
awareness of issues related to human rights and the environment have been major factors in causing
the concept to be widely popularized in the last couple decades (Wagner et al., 2009). Simply
perusing through business related magazines, blogs or Twitter feeds reveals the immense attention the
topic is currently receiving. The very names of popular and relatively recent academic journals such
as Corporate Social Responsibility and Environmental Management and the Journal of Management
and Sustainability reveals the same trend in the world of academia. No attentive person can avoid
noticing the many “trending” terms in today’s printed or online media; terms such as sustainability,
fair trade, carbon footprints, carbon neutral, ethical sourcing, green, renewable resources and equal
pay—to name a few.
At the same time, much public skepticism has arisen about this trend (Wagner et al., 2009;
Skarmeas & Leonidou, 2013). Alleged practices of “greenwashing,” or promoting the perception that
their policies are more eco-friendly than they actually are, has become problematic as companies
strive to meet the demands of increasingly environmentally-conscious consumers (Parguel et al.,
2011). “Bluewashing” is another term used to criticize companies who flout their supposed
commitment to socially responsible or humanitarian practices but who do so for public relations and
economic gains, often not meeting these commitments in practice, or doing so only superficially
(Runhaar & Lafferty, 2009; Berliner & Prakash, 2015). To further fuel the skepticism, despite the
apparent increase in responsible business practices it seems that the rate of corporate scandals and
revelations of human rights abuses is only increasing in frequency (Wagner et al., 2009; Skarmeas &
Leonidou, 2013). Thus we are confronted with what appears to be a paradox: companies are
increasingly acknowledging and addressing their social responsibilities by adopting CSR practices,
5. 5
but despite this the global situation does not seem to be improving—or at least there are competing
narratives as to whether or not certain situations are improving. The most recent annual review of the
United Nations Global Compact shows that while membership has been growing steadily, many
issues—such as the disclosure of sustainability information and lobbying activities, attention to
human rights and the development and evaluation of sustainability goals at management level—
remain at depressingly low levels (UNGC, 2012).
Looking more specifically at the actual activities companies engage in helps to explain the
discrepancy between the apparent positive trend in CSR and the seemingly unimproved global
situation; and it also helps to illuminate the reason for much of the skepticism. In their eagerness to
obtain the status of “socially responsible company,” firms tend to focus on easy CSR issues for which
they may gain some benefit, while ignoring difficult ones (hence the accusations of blue and
greenwashing) (Berliner & Prakash, 2015). “Easy” CSR issues are typically understood to involve
activities for which a business case can be made; they directly or indirectly improve financial
performance and thus incentivize firms to take action (Carroll & Shabana, 2010). “Difficult” CSR
issues, on the other hand, do not present companies with sufficient incentives for action and are
therefore largely left unaddressed. It is important to note that when speaking of “difficult” we are not
referring here to activities that are operationally difficult, such as going to the moon or other activities
that are hard to implement because the company lacks the necessary means. Rather, we are referring
to activities which are plausible, but which the company has a difficult time justifying due to a lack of
incentives. These issues are difficult to address because they typically require some amount of
sacrifice and their potential for improving the firm’s bottom line is doubtful.
Some writers have described this situation using the metaphor of low- and high-hanging fruit
(Kourula et al., 2015); companies always tend to go after the low-hanging fruits because it presents
them with the biggest reward for the least amount of effort. An example of such a low-hanging CSR
issue might be a coffee vendor switching to recycled paper cups. Doing so would be beneficial for
society because of its positive impact on the environment, but it would also be beneficial for the
vendor in that it may attract more environmentally-conscious customers. In contrast, a high-hanging
fruit might be responding to the possible use of forced labor on the farms from which the vendor buys
its coffee. Addressing such a situation would be costly, complicated and yield uncertain results. The
low-hanging fruits of CSR issues have typically already been widely addressed by companies and are
often acted on through similar activities. The high-hanging fruits are issues that few companies have
addressed and are issues for which innovative solutions are still required.
Given the understanding that companies will generally go after easy CSR issues—ones from
which they might derive some benefit—while ignoring more difficult ones, leads us to some
important philosophical questions. For example, should a firm’s pursuit of “easy” CSR activities in
order to realize gains actually be called socially responsible? Does our concept of CSR and the
language we use to describe it need to be refined in order to differentiate between firms who do this
6. 6
and firms who address more difficult and pressing CSR problems? How should this distinction affect
the way we evaluate the social performance of a firm? Rather than attempting to definitively answer
these philosophical questions here, the aim of this paper is to help carry this discussion forward by
making the distinction between “easy CSR” and “difficult CSR” less ambiguous and more measurable
through the application of theory. Thus, the objective of this work is to examine what it is exactly that
makes certain CSR issues more difficult than others, and then to develop a model for classifying these
issues according to their difficulty. More specifically, we will explore how the potential for profit, the
influence of powerful stakeholders and the presence of institutional pressures each act as incentives or
deterrents for companies in deciding which CSR issues to address and which not to. Based on these
factors, a framework will be proposed that will help us to characterize and differentiate between the
low- and high-hanging fruit of CSR, thus making the difference between “easy” and “difficult” less
ambiguous. This framework will be helpful for managers in assessing the costs and benefits of
different CSR activities. But it will also be helpful for researchers to better understand what benefits
must be attached to an issue to sufficiently incentivize companies to address it. And finally, by
making the distinction between easy and hard CSR more concrete, it will also serve the public as a
way for the social performance of companies to be better evaluated.
In the following section we will look at how corporate social responsibility has been defined
by others, and based on this, present a working definition that will serve as a guide for the rest of the
paper in determining which socially beneficial activities can be considered CSR and which cannot.
Then, there will be a brief review of the literature on CSR including frameworks which others have
proposed while also attempting to classify CSR issues. This review will serve to contextualize the
current discussion into the larger academic discourse, and it will also reveal the gap in the literature to
which this paper seeks to contribute.
7. 7
Defining CSR
There is nothing new about the basic idea that business in its pursuit of profit also carries a
responsibility towards the community in which it operates. Some claim this idea has existed for
centuries (Carroll, 1999). However, corporate social responsibility—the current term that
encompasses this idea—first appeared in academic literature in the 1950s (Rahman, 2011). While the
definition has evolved over the decades and a complete consensus has never been reached, the basic
understanding is more or less summed up by Jones when he refers to “the notion that corporations
have an obligation to the constituent groups in society other than stockholders and beyond that
prescribed by law or union contract…” (Jones, 1980). In other words, companies and businesses have
a responsibility for the welfare of society at large that extends beyond the mere generation of profit or
adherence to the rule of law. Business leaders most often articulate this as extending a company’s
responsibility beyond only its shareholders to its various stakeholder groups (Dawkins & Lewis,
2003).
To build upon Jones’ definition, for the purpose of this paper corporate social responsibility
will specifically refer to programs or activities that a company engages in (or refrains from) that go
beyond mere economic requirements (e.g. producing profit, proper management), beyond mere legal
requirements, and that by doing so produce some intentional social benefit. Note that this definition
does not exclude activities that are both profitable and socially beneficial, but it does exclude
activities that companies are obligated to perform—in other words, this definition requires that they
be of a voluntary nature.
Literary Context
A great deal of academic literature has been written on the topic of corporate social
responsibility. To begin with, there has been debate over whether or not CSR is even a legitimate and
worthwhile practice or if it is (and should remain) capitalism itself that is the driving force behind
social prosperity. Friedman (1962) famously wrote, “There is one and only one social responsibility
of business–to use its resources and engage in activities designed to increase its profits so long as it
stays within the rules of the game, which is to say, engages in open and free competition without
deception or fraud.” Other more recent authors have echoed this sentiment, e.g. Henderson in his book
Misguided Virtue: False notions of corporate social responsibility. Despite this debate, there is a
wider acknowledgment of the reality that CSR is of growing importance to firms and is therefore the
subject of continuing research. Much of this research has focused on testing and explaining the
relationship between a company’s CSR profile and their corporate financial performance (CFP).
McWilliams & Siegel (2000) found there to be a neutral relationship between corporate social
8. 8
performance (CSP)—a proxy for measuring CSR effectiveness—and firm profitability. They also
theorized that CSR could be reduced to a supply and demand function and that managers could use
cost-benefit analyses to determine optimal levels of CSR activities (McWilliams & Siegel, 2001).
This, according to them, is what accounts for the long-standing disagreement in literature about the
CSR-profitability link. Other researchers, however, have found evidence supporting a positive
relationship between CSR activities and a firm’s future profitability (Waddock & Graves, 1997;
Orlitzky et al., 2003; Godfrey, 2005). Mackey and Barney (2005) used a similar supply and demand
model for CSR, but this time gave evidence that investing in socially responsible activities could
maximize the market value of a firm (if not necessarily increase the present value of cash flows).
Other research has focused on the reasons why companies engage in socially responsible
activities. Aguilera, Rupp, Williams & Ganapathi (2007) argued that the debate over the CSR-CFP
link was now “settled” and that it was time to turn attention towards what “catalyzes” organizations to
pursue CRS activities. They developed a model of CSR antecedents in which they described three
types of motives that lead actors at different levels to pressure companies into engaging in CSR:
instrumental (driven by self-interest), relational (concerned with relationships between actors or group
members) and moral (concerned with ethical standards and moral principles). Additionally, literature
has focused on how consumers perceive companies who engage in CSR and what effect
communication about CSR activities has on company reputations (e.g. Wagner et al., 2009).
Regarding the characterization and categorization of CSR related issues—which is the aim of
this paper—the literature is less informative. Researchers have tried to create broad categories to
better understand the differences between CSR activities. An example of this would be Carroll’s CSR
pyramid (1991) in which a firm’s responsibilities are represented on a tier basis. At the bottom of the
pyramid are economic requirements placed upon the firm such as “being profitable,” further up are
legal requirements, above that are ethical “expectations,” and finally at the top of the pyramid are
philanthropic “desired” activities. One of the problems with this model is that it does not capture the
interrelatedness of these (often conflicting) responsibilities. Also, by placing philanthropy as a
separate component on the top of the pyramid it fails to integrate the concern for human welfare as a
fundamental principle in CSR—rather it depicts it as merely an add-on activity that corporations may
engage in if they happen to have the resources. Schwartz & Carroll (2003) introduce another model in
which CSR elements are represented in a Venn diagram depicting three domains: ethical, economic
and legal. This model is an improvement because it helps to explain the interrelatedness of issues by
the overlapping of different domains, and it also enables us to account for socially irresponsible
actions (activities that fall only in the economic domain). It does not, however, help in categorizing
CSR issues according to their difficultly. Another more recent model developed by Karpoff (in
Jackson, 2015), takes a simpler approach by producing a two-by-two matrix with 4 quadrants that
represent types of activities a firm can engage in. On the horizontal axis activities are divided into
profitable and not-profitable, and on the vertical axis activities are divided into socially beneficial and
9. 9
not socially beneficial. Karpoff relates activities that are both profitable and socially beneficial to
Adam Smith’s concept of the invisible hand, and activities that are neither profitable nor socially
beneficial as examples of bad management. The other two quadrants represent what he calls “grey
areas:” activities that are socially beneficial but not profitable and activities that are profitable but
socially detrimental. This model is helpful but incomplete because it looks at profitability only in a
very broad sense and at social benefit as a one-dimensional construct.
None of these previous models creates a sufficient framework allowing us to characterize and
differentiate between low- and high-hanging fruits or to identify and thoroughly explain the reasons
why various issues fall into different categories. Therefore, using Karpoff as a starting point, this
paper will attempt to address this deficiency in the literature and expand upon his model. Stakeholder
theory and institutional theory will be drawn upon to complement the matrix by shedding further light
on what particular CSR issues are difficult, why they are difficult and why companies often ignore
them. This will allow us to begin to classify CSR issues and examine the factors that characterize low-
and high-hanging fruit; and consequently help us begin to discuss the philosophical questions above
in a more meaningful way.
In the following section we will further discuss what we already know regarding which types
of CSR activities are commonly practiced by firms, which ones are avoided, and what we know about
some of the obvious reasons for this. Then, Karpoff’s matrix will be introduced and explained more
fully, pointing out its merits, but also explaining why it is insufficient for fully understanding the
conceptual problem. Afterwards, stakeholder theory and institutional theory will be introduced into
the discussion and we will see how they can help to explain why companies engage in some CSR
activities while ignoring others. Finally, the main contribution of this paper will be to suggest a new
model in which the various theories discussed are brought together to serve as a framework for
categorizing CSR issues. The paper will end with a discussion of some of the implications and also
suggestions for further research.
10. 10
What We Already Know
Before introducing the various theories into this discussion, we will look at what is already
known about why businesses engage in some socially beneficial behavior and not in others. This will
include a brief examination of how business in general has played a beneficial role in society through
the generation of wealth. This is essential to understand because many of the reasons why companies
engage in (or refrain from) socially beneficial activities requires no further explanation than to
demonstrate that they are byproducts of regular business activities (e.g. Conerly, 2015). This leads us
to first address the obvious cases of low- and high-hanging fruits—CSR issues for which
categorization poses no problem.
As the 18th
century economist Adam Smith noted in his classic The Wealth of Nations,
business has been benefiting society long before the idea of corporate social responsibility was
mentioned in literature. This fact is obvious when considering that if we, as consumers, did not benefit
from the products or services that a business generated, we would not patronize them and they would
go out of business. A restaurant where nobody enjoys eating (where nobody derives a benefit) will not
stay in business long. Given this understanding, many of the activities which firms of all sizes engage
in today might be called “socially beneficial” whether or not they were intentionally undertaken to
create some kind of social benefit; and virtually all businesses can be said to be socially beneficial in
one way or another.
But the social gains created by business go even further than benefiting only the consumer.
Business also produces social benefit in less direct ways. As firms conduct business, wealth is also
created—and not only for the owners of the business, but for many parties involved. This is what
Smith spoke of when he described the concept of the Invisible Hand: much of what companies do in
order to gain profits through trade and manufacturing also unintentionally benefits society at large
(Smith, [1776] 1963). Take, for example, a consumer buying a new car. Those directly involved in the
transaction—the consumer and the car manufacturer—are not the only parties who derive some sort
of benefit. Many other actors benefit indirectly as well, including (to name only a few) the employees
of the car manufacturer whose salaries depend on the sale of the car; the salesmen at the dealership
who earns a commission; the companies that mine the ore and other raw materials which go into the
making of the car; even those who make the roads which are necessary as a result of the demand for
cars. All of these parties benefit from the demand the consumer brings, and the firm’s business of
meeting that demand. In short, business is good not only for its owners, but for society in general as it
creates wealth, jobs and even innovations which will benefit others in the future.
Socially beneficial activities firms engage in that are simply the result of doing business as
usual are the no-brainers of CSR. These are activities which companies will pursue because they are
profitable—the fact that they also benefit society is merely the mechanism of the market. In fact, it is
only because of the recent popularization of CSR as a concept that companies have begun to highlight
11. 11
the fact that many of their regular business operations happen to create social benefits (Grafström &
Windell, 2011).
On the other hand, there are many problems in the world today that have emerged as a result
of companies pursuing regular profit-seeking activities. The widespread public health problems
caused by smoking are an example of this; tobacco companies, in their pursuit of economic gain, are
(to a large degree) responsible for this socially undesirable reality. Additionally, companies are often
in a position to help to alleviate various societal problems, but for obvious reasons do not. It would
clearly be detrimental for a pesticide manufacturing company, as an example, to voluntarily launch
campaign encouraging people to buy only organically grown food. While such a move would
probably be socially beneficial (for the environment and, arguably, for public health), it would also be
in direct conflict with the company’s obligation to make a profit. Many such examples exist and
illustrate why some socially beneficial activities companies have no interest in engaging in.
Considering all of this, many of the reasons why companies engage in certain socially
beneficial activities and not in others are obvious—they are simply the result of business as usual and
the pursuit of profit. Applying this understanding to the issue at hand—characterizing CSR issues—
we arrive at the first factor that will help us differentiate between low- and high-hanging fruit:
potential profitability. On one hand we have easy CSR issues: these involve profitable business-as-
usual activities which companies would engage in regardless of whether any public scrutiny existed
and benefit society by way of Smith’s Invisible Hand. And on the other hand, we have difficult CSR
issues: these involve activities which a firm would not voluntarily engage in because it runs contrary
to their main objective—making profit.
It should also be noted that socially beneficial activities which are also profitable can be
broken down into two categories: 1) activities in which a company is already engaged as part of its
primary economic obligation to be profitable, and are now being advertised as socially responsible as
an opportunistic marketing-driven response to growing consumer awareness about CSR issues. And
2) new activities in which a company voluntarily engages in response to opportunities that have
emerged because of the popularization of CSR—activities that might not have been profitable a
couple decades ago but now are. According to the definition of CSR at the outset of this paper, only
the latter activity here can be considered a CSR activity because it involves a voluntary undertaking.
Thus, it is important to note that not all socially beneficial activities a firm engages in can be
classified as socially responsible. Table 1 below summarizes the difference between low- and high-
hanging fruits based on the factor of potential profitability.
12. 12
Table 1: Socially Beneficial Activities & Profitability
Factor High‐hanging fruits Low‐hanging fruits Not CSR
Potential
Profitability
Activities which a firm would not
voluntarily engage in because it runs
contrary to their main objective—
making profit.
Profitable new business activities
undertaken in response to
opportunities created by the
popularization of CSR.
Profitable business-as-usual activities
which companies would engage in
regardless of whether any public
scrutiny existed, and then are dressed
up as CSR.
Besides these obvious situations where business activities benefit society through the overall
generation of wealth and innovation, or where societal problems are not addressed by companies who
consider the problems either contrary to their objective or outside of their domain, there is a whole
myriad of other situations and activities that are not so easily explained. Other factors come into play
besides general profitability, some of which we will address in later sections. In the next section we
will examine Karpoff’s matrix in more detail as he uses the concept of profitability and the Invisible
Hand to create his categories of firm activities. We will see that this model is useful, but that it is still
inadequate in that it fails to incorporate stakeholder issues and institutional theory, and it does not
investigate enough factors to allow us to categorize CSR issues according to their difficulty.
13. 13
Karpoff’s Matrix
Karpoff begins by asserting that the concept of the Invisible Hand works well for many types
of firm activities but not for all. The way he puts it is that “profitability and social desirability are not
perfectly correlated” (Karpoff [in Jackson], 2015). His reason for why there are areas in which the
Invisible Hand does not work well is that there are many socially beneficial activities which are not
profitable—and therefore firms do not engage in them; and there are many profitable activities that
firms engage in which are not socially beneficial—or may be downright detrimental to society. By
placing social desirability and profitability on two axis, he creates a matrix with four quadrants onto
which all firm activities can be mapped.
Source: Jackson, G., Brammer, S., Karpoff, J., Lange, D., Zavyalova, A., Harrington, B., Partnoy, F., King, B., Deephouse,
D. (2014). Grey areas: irresponsible corporations and reputational dynamics. Socio-Economic Review, 12, 153-
218
Activities that fall into quadrant I of his matrix are the types of business activities that we
defined in the previous section as low-hanging fruit. They are activities firms engage in because they
are profitable, and the fact that they produce social benefit is a bonus. Again, a distinction should be
made (and Karpoff fails to do this) between the two types of profitable, socially-beneficial activities
that can exist. Many of these activities are merely firms continuing to do what they have always done,
expressing their economic obligation to be profitable, and then perhaps dressing them up as CSR
Figure 1: Karpoff’s Matrix
14. 14
activities; whereas other activities are actually voluntary (chosen from among alternatives) and
produce profit only because there is a growing market for socially responsible products and services.
According to our definition, only the latter can really be considered CSR, and thus not all activities
which fall into quadrant I are really examples of corporate social responsibility.
Quadrant III activities, according to Karpoff, are also related to the correlation between
profitability and social benefit which we discussed in the previous section—only this represents the
opposite situation. These are activities which neither produce profit nor benefit society at large. These
types of activities could be summarized as bad business practices. We can refer back to the example
of the restaurant where no one wants to eat (presumably because of poor products or services). In its
failure to provide social benefits the restaurant will not generate profits and eventually go out of
business. Again, we see the Invisible Hand at work in that what is profitable is often also socially
beneficial, but here we see the negative side—what produces no social benefit also produces no profit.
Quadrant II includes activities that would represent a social benefit, but firms do not engage
in them because they are unprofitable. We already mentioned this scenario in the previous section
with the example of the pesticide company. It would make no economic sense for a business to
engage in socially beneficial activities if they produced no profit, or worse, actually hurt their bottom
line. Engaging in such activities would go contrary to a firm’s economic obligations, and thus far
(with profitability still being our only factor) we sweepingly identified such activities as high-hanging
fruits.
Quadrant IV introduces us to something we have not yet discussed: situations in which firms
are able to generate a profit by doing something that is socially undesirable. The examples Karpoff
gives of such activities include fraud, bribery and pollution. By rephrasing the activities in quadrant
IV, we can add them to Table 1 as another example of high-hanging fruits—we need only refer to
them as profitable activities which a firm must stop engaging in in order to make them socially
beneficial. Thus, we have a second type of activity for which profitability is the main factor in making
it a difficult issue. By placing Karpoff’s activities into Table 1, we obtain the following:
Both quadrants II and IV run contrary to the general link between profitability and social
benefit that we established in the previous section. In both of these cases certain socially beneficial
activities are left unaddressed—either because they are unprofitable to engage in or because they
would be unprofitable to cease—and thus Karpoff’s model goes further in its ability to explain high-
Table 2: Karpoff’s Activities as Low or High‐Hanging Fruit
Factor High‐hanging fruits Low‐hanging fruits Not CSR
Potential
Profitability
Quadrant II
Quadrant IV
Quadrant I Quadrant III
15. 15
hanging fruit than only Smith’s Invisible Hand could. However, there is also much that this model
does not help to explain. As mentioned before, the potential for profit is not the only factor that comes
into play in determining which CSR issues firms address. If quadrant IV activities such as fraud or
bribery are profitable, then why do firms not always engage in these activities? If quadrant III
activities (which might include charitable donations) are not profitable, then why is corporate
philanthropy on the rise (Kozlov, 2014)? In addition, potential profitability is not such a simple thing
to evaluate. While some socially beneficial activities may not directly produce profits, they may still
contribute towards a company’s competitive advantage and indirectly increase profitability in the long
run—particularly for companies pursuing a differentiation strategy (Jones, 1999)—and this is
something that is difficult to account for using the matrix. Also, as mentioned before, this matrix
looks at social benefit as only a one-dimensional construct. But what about activities that are
beneficial to certain members of society but detrimental to others? How do firms manage competing
and conflicting interests from society, and how can this be accounted for in a framework?
Clearly, there are other important factors besides potential profitability worth exploring in our
attempt to understand why certain CSR activities are more difficult than others. Karpoff lists some of
the determining factors apart from profitability himself, namely laws and regulations, management
morality and firm reputation. Some of these factors can be incorporated and accounted for by
introducing stakeholder theory and institutional theory into our discussion, and this will be the
objective of the following sections.
16. 16
Stakeholder Theory
Stakeholder theory has become an important way of viewing corporations and has found an
important place in management literature ever since the book by Freeman, Strategic Management: A
Stakeholder Approach (1984) was published. The idea is that it is important for firms to give
consideration to the many other constituent groups that influence, or are influenced by a corporation
other than only its shareholders. Freeman defines stakeholders with a wide definition, “any group or
individual who can affect or is affected by the achievement of the organization's objectives”
(1984:46). And also with a more narrow definition, “those groups who are vital to the survival and
success of the firm” (in Bowie, 2013:98). Some of the most common stakeholders mentioned in
literature include customers, suppliers, investors, employees, governments, associations, interest
groups and communities (e.g. Roberts, 1992). This is different than the “conventional” view of the
firm which concerned itself only with inputs and outputs, and the generation of profit for a firm’s
shareholders. Whereas in the conventional view, suppliers, investors and employees contribute inputs
into the firm, and customers realize the majority benefits of the firm’s activities in transforming inputs
to outputs; stakeholder theory introduces many more actors into the equation and demonstrates that
the relationships they have with a firm are not necessarily one-way because all constituents
participating in the firm’s activities are also benefactors (Donaldson & Preston, 1995).
Stakeholder management involves the investment of time and resources into the management
of stakeholder interests, a departure from the more traditional view of management which formerly
concerned itself only with shareholder value maximization in its decision making (Freeman & Reed,
1983). In the stakeholder view, the corporation should be managed for the benefit of its stakeholders,
and the rights of groups who have interests or “stakes” in a company should be ensured (Evan &
Freeman, 1988). Consequently, with the increased acceptance by business leaders that firms have
responsibilities to groups other than its shareholders, additional management complications have
emerged. In making decisions, managers must now take into account the huge variety of differing
(and often competing) interests of its stakeholders and learn how to balance them. Given Freeman’s
original definition of “any group that can affect or is affected by,” stakeholders can be just about
anybody in society, making managing their interests a complex task. Thus the primary challenge for
management related to stakeholder theory is being able to identify, prioritize and balance stakeholder
claims (Mitchell et al., 1997; O’Riordan & Fairbrass, 2014).
Stakeholder theory is closely related to corporate social responsibility. Both of these ideas
present the firm as having responsibilities that extend beyond the economic obligation to make profit
and increase shareholder wealth. In fact, it could be said that the operationalization of CSR is the
responsible or ethical management of stakeholders because every CSR issue (whether environmental,
ethical, legal or related to human rights) is represented by the interests of some stakeholder group.
This interrelatedness can also be seen in various CSR definitions such as that by the United Nations
17. 17
Industrial Development Organization (UNIDO): “Corporate Social Responsibility is a management
concept whereby companies integrate social and environmental concerns in their business operations
and interactions with their stakeholders.” While CSR inevitably involves stakeholder management, it
is not always true that stakeholder management activities necessarily result in CSR—in other words,
the terms are not synonymous. For example, many of the activities in which firms engage to appease
stakeholder interest groups are necessitated by laws and regulations (e.g. the reporting of annual
financial statements are often required by law). Given the definition of CSR as requiring voluntary
action that goes beyond legal requirements, these types of activities could not be called CSR.
However, it is possible for a firm to go above and beyond legal requirements by, for example,
providing more detailed financial reports than are legally required with the aim of placating certain
stakeholders (in this case its shareholders and perhaps other interest groups with whom it considers its
corporate reputation important). In this case, such activities would fall into the domains of both
stakeholder management and CSR.
This interrelatedness makes the inclusion of stakeholder theory essential as an element in any
model that seeks to better understand and categorize CSR issues. Understanding the needs,
expectations and pressures that stakeholder groups place upon organizations can help us to understand
why firms find it easy (or difficult) to engage in certain CSR activities and not in others. For example,
Ullmann (1985) predicted that stakeholder power (the degree to which certain stakeholders control
key resources) is significantly related to a firm’s corporate social performance, especially in regards to
financial disclosure—and Roberts (1992) later verified this through empirical research.
Other stakeholder attributes besides power have been identified and used to classify
stakeholders by their influence on organizations. Mitchel et al. (1997) created a framework that
attempted to classify stakeholders according to three dimensions (power, legitimacy and urgency) in
an attempt to aid management in answering the question of “Who or What Really Counts.” We will
draw on his framework to help us understand how stakeholder issues affect firms’ decisions about
whether or not to engage in CSR activities and to help us further in developing a model for the
categorization of CSR issues.
Applying Stakeholder Theory to CSR
According to the stakeholder typology developed by Mitchell et al. (1997), three overlapping
dimensions can be used to classify stakeholder groups and determine their salience, which they define
as “the degree to which managers give priority to competing stakeholder claims.” A stakeholder with
a high degree of salience is more likely to receive managerial attention and there will often be some
type of formal mechanisms—such as corporate policies, practices and guidelines—in place for
managing their interests (Mitchel et al., 1997). Stakeholders with a lower degree of salience are less
likely to be given priority in the case of competing claims. The three dimensions included in the
18. 18
typology are 1) power, which they define by stating, “a party to a relationship has power, to the extent
it has or can gain access to coercive, utilitarian, or normative means, to impose its will in the
relationship” (Mitchel et al., 1997); 2) legitimacy, which they define using Suchman’s definition: “a
generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate
within some socially constructed system of norms, values, beliefs, and definitions” (1995: 574); and
3) urgency, which they define as “the degree to which stakeholder claims call for immediate
attention” (Mitchel, et al., 1997). They depict these dimensions using a Venn diagram upon which
stakeholders can be mapped into 7 categories and their salience can be determined (see figure 2
below). Stakeholder groups in which only one of the three attributes are present have low salience,
whereas groups with 2 and 3 attributes have higher salience, respectively. With the understanding that
managers and the corporations that they represent have limited time, energy and resources available to
attend to stakeholder claims, this typology helps us to predict which stakeholder groups—and thus,
which related CSR issues—are more likely to be addressed than others.
Stakeholder groups where only one dimension of salience is perceived to be present by
managers are less likely to receive attention than are stakeholders where two or three dimensions are
perceived to be present (Mitchell et al., 1997). Therefore, logically speaking, wherever claims or
Figure 2: Mitchell’s Stakeholder Typology
Source: Mitchell, R., Agle, B., Wood, D. (1997). Toward a Theory of Stakeholder Identification and Salience: Defining the
Principle of Who and What Really Counts. The Academy of Management Review, 22(4), 853-886
19. 19
interests by these low-salience stakeholders represent CSR issues, these too will receive less attention
than CSR issues represented by high-salience stakeholders. Among stakeholders with only one
attribute of salience, those with only power or only urgency are not relevant in this discussion because
in order for a stakeholder’s interests to represent a CSR issue those interests must be legitimate, as
according to Suchman’s definition above. Discretionary stakeholders (ones that possess only the
attribute of legitimacy), however, are of particular interest regarding CSR in that they possess
legitimate claims upon firms, but because they lack both power and urgency there is no pressure upon
firms to address them. Stated another way, where power and urgency are absent there exist insufficient
incentives for a firm to act in regards to a stakeholder’s interests. It therefore follows that when a
claim by a discretionary stakeholder represents a CSR issue, it should be classified as a high-hanging
fruit. This is because—as stakeholder theory shows—such stakeholders are unlikely to receive
priority amidst competing claims and thus the CSR issues which they represent will remain
unaddressed.
An example of a CSR issue related to discretionary stakeholders whose interests are often not
addressed—one that is particularly relevant in our increasingly globalized economy—are laborers in a
company’s supply chain who are victims of exploitation. While such groups certainly have a
legitimate claim upon the firm, they often receive scant attention from management because their
salience is low; they lack the power to exercise their will in the relationship. Only in cases where the
public is made aware of such situations do these stakeholder groups become salient, in that they
inherit the additional attribute of power (when an advocacy or legal group becomes involved), and
then firms are inclined to act in order to avoid consequences by more salient stakeholders (see for
example DeTienne & Lewis’ [2005] paper on the Nike case).
We have established that stakeholder claims in which legitimacy is the only salient attribute,
and where those claims represent CSR issues, should be classified as high-hanging fruit because firms
have little incentive to address them. Stakeholders whose claims are legitimate and also urgent,
however, are not necessarily in a better position. Mitchel et al. (1997) define these stakeholder groups
as “dependent stakeholders” because they rely on other, more powerful stakeholders such as advocacy
groups or governments for the power necessary to enforce their will. Returning to the case of
exploited workers making shoes for Nike, for many of them their claims were urgent—in some cases
workers did not have access to clean water—but it was not until their plight was described by a New
York Times journalist on a front-page story that Nike took action (DeTienne & Lewis, 2005). In this
case, the media, and afterwards advocacy groups adopted the urgent claims of the exploited workers
and moved them into a position of salience.
Dominant stakeholders (those with both legitimacy and power) and definitive stakeholders
(those with all three attributes), on the other hand, are very likely to have their claims addressed by
management (Mitchell et al., 1997). Probably the most obvious example of such stakeholders are
governments or other regulatory bodies. In the previous section, we posed the question that if fraud
20. 20
and bribery are profitable, why do companies not always engage in such activities? Stakeholder
theory gives us one clear answer: regulatory bodies such as governments have both the legitimacy and
the power to exert their will on a company (they have high salience), and therefore firms are very
responsive to their claims by acting in a responsible, law abiding way. Just as we see that CSR issues
which are represented by low-salience stakeholder claims receive little attention, here we see that
CSR issues represented by high-salience stakeholder claims are high on management’s list of
priorities.
An example of a CSR issue represented by another high-salience stakeholder group is
financial creditors who are concerned about social responsibility. Because creditors have control over
financial resources that are necessary for a company’s continued operation (they have power),
companies have a strong incentive to go above and beyond what is merely required by law in order to
satisfy their interests. Both Ullmann (1985) and Roberts (1992) postulated that the greater degree to
which a company relies on debt financing, the more they respond to creditor expectations to disclose
social responsibility information. Therefore, we see that where power and legitimacy exist together,
there are sufficient incentives for a firm to act in regards to a stakeholder’s interests; and if those
interests represent a CSR issue, then these should be classified as low-hanging fruit.
In this section we have established that salience—and more specifically, the presence of
power—will govern the priority given to a stakeholder’s legitimate claims. In other words, power acts
as a deciding factor as to whether certain stakeholder issues will be addressed. Therefore, the question
of whether a particular CSR issue is a low- or a high-hanging fruit is determined, in part, by whether
the connected stakeholder possesses power over the firm—whether it be economic power (as in
creditors), legal power (as in governments) or even the power to affect a firm’s reputation (as in the
media).
Table 3: CSR Issues Reflecting Stakeholder Interests
Factor High‐hanging fruits Low‐hanging fruits Not CSR
Stakeholder
power
CSR issues that affect stakeholders
whose claims are legitimate (and
possibly urgent) but are lacking in the
attribute of power.
CSR issues that affect stakeholders
whose claims are legitimate (and
possibly urgent) and who also possess
the attribute of power.
Stakeholder interests where the
attribute of power and/or urgency is
present, but whose claims are not
legitimate.
21. 21
Institutional Theory
The Oxford English Dictionary (2015) defines an institution as “an established law, custom,
usage, practice, organization, or other element in the political or social life of a people; a regulative
principle or convention subservient to the needs of an organized community or the general ends of
civilization.” Business literature adds to this in describing it as a rule or expectation that is either
taken for granted, or enforced through public opinion or law (Commons, 1950; Starbuck 1976).
According to Meyer & Rowen (1977), these societal rules have power to influence the structure and
practices of an organization. Their institutional perspective of the firm describes all organizations as
existing within an institutional environment, and postulates that this reality must be taken into account
in order for organizations to maintain legitimacy and ensure long-term survival. Furthermore, they
argue that many of the practices and structural elements that organizations adopt do not necessarily
exist to improve organizational performance, but are “rationalized myths” inherited from the
institutional context. They write, “organizations are driven to incorporate the practices and procedures
defined by prevailing rationalized concepts of organizational work and institutionalized in society.
Organizations that do so increase their legitimacy and their survival prospects, independent of the
immediate efficacy of the acquired practices and procedures” (Meyer & Rowan, 1977). In other
words, it makes sense for a firm to align itself to the institutionalized norms of the society in which it
is embedded and to adopt the prevailing practices which are important to the social environment in
which it operates—even if these do not directly contribute towards the economic goals of the firm—
for by doing so the firm can maximize its societal legitimacy, strengthen its support by acting in what
is considered a socially acceptable manner and help to secure its survival by protecting it from public
scrutiny.
Coupled with this idea is that of isomorphism, or the tendency of organizations in an
institutional environment towards homogenization (DiMaggio & Powell, 1983). Because society
places pressures and expectations upon organizations that govern their structures and practices, it
follows logically that as a field becomes more established, organizations within that field will begin to
resemble one another. Paraphrasing Schelling (1978), one could describe the process as organizations
responding to other organizations within an institutional context who are themselves responding to an
environment of organizational responses. DiMaggio & Powell (1983) write, “Organizations compete
not just for resources and customers, but for political power and social legitimacy, for social as well as
economic fitness.”
This continual competition by firms to act on collectively held values and be seen by society
as legitimate is helpful in explaining why firms often engage in some similar activities and not in
others. Two particular forms of isomorphism described by DiMaggio & Powell (1983) that are of
particular interest to the current discussion are 1) coercive isomorphism, which results from external
pressures and influences placed upon firms through either formal (e.g. governments or regulatory
22. 22
bodies making laws) or informal (e.g. specific cultural expectations) means; and 2) mimetic
isomorphism, which describes the process of firms imitating the practices of other firms whom they
perceive as being successful in a given area.
Applying Institutional Theory to CSR
Jones (1999) connects the ideas of corporate social responsibility and institutional theory by
arguing that the degree to which social responsibility and stakeholder management takes place is
contingent on the extent to which the discourse of social responsibility exists in the sociocultural and
national contexts (among others) in which a firm operates. According to this argument, a society’s
dominant conceptualization of capitalism, for example, as either a system that is inherently
individualistic and should aim for owner profit maximization (the typical Friedman view), or a system
in which business and society are interrelated and corporations ought to minimize negative
externalities for their stakeholders (the typical Freeman view), will determine the incidence of
corporate social responsibility.
As this paper has argued at the outset, social responsibility is increasingly being perceived by
the public as an important factor for corporations to take into account in their business dealings (e.g.
Dawkins & Lewis, 2003). Stated in terms of institutional theory, it can be said that CSR is becoming
increasingly taken for granted by the public—that it is becoming an institutionalized norm within
Western society (see Bondy et al., 2012). To the extent that this is true, it can be expected that the
mechanism of coercive isomorphism will create increasingly more pressure upon corporations to
adopt CSR practices, and that the direction of a firm’s CSR activities will be governed by
institutionalized norms. And this can indeed be seen in simple fact that as consumer awareness about
CSR issues has increased, so have corporate efforts to give the impression of engaging in such issues,
either through meaningful action or at least by devoting large sections of their websites to CSR. Given
this understanding (the idea of CSR becoming an institutionalized norm and therefore creating more
pressure for corporations to adopt CSR practices in general), the relevant question then involves
determining which types of CSR activities are most encouraged by the effects of isomorphism, and
which types of CSR activities resist this effect.
Many socially beneficial activities firms engage in are never considered CSR because the
norms they reflect are taken for granted (they are “rationalized myths” which have taken their place in
the corporate structure). The number of hours employees are expected to work in a single day is an
example of such an issue where coercive isomorphism has quietly pressured firms to adopt certain
socially responsible behaviors. Campbell (2007) uses this example in his explanation of how the idea
of socially responsible behavior has changed throughout history. While it may have been normal
during the time of the Industrial Revolution for companies to expect their employees to work 10-14
hours per day, today this would typically be seen as inappropriate (and perhaps exploitative) firm
23. 23
behavior. As institutional theory dictates, the fact that most members of today’s Western societies
consider it normal for employees to be required to work no more than 8 hours in a single day places
the expectation upon firms not to exceed this norm. In other words, the 8-hour working day has
become institutionalized, and through the mechanism of isomorphism most firms accept this norm as
a socially responsible practice to uphold, even though it may not necessarily be optimal for
organizational performance. If a firm were to deviate from this institutionalized norm by increasing
obligatory daily working hours for the sake of increased performance, it would risk losing its
legitimacy in society.
This brings us to our first criteria for a low-hanging fruit from an institutional perspective:
any CSR issue that reflects an institutionalized norm which places a clear expectation on the firm by
society, and whereby departing from the norm would cause the firm to risk losing legitimacy, should
be considered a low-hanging fruit. The risk of losing legitimacy, in other words, provides sufficient
incentives for companies to voluntarily engage in socially beneficial behavior. Karpoff et al. (2007)
highlights the high costs incurred by firms when their corporate reputations (a proxy for legitimacy)1
are damaged because of deviating from social norms. Of course, this incentive is contingent on the
degree to which a company can expect to be caught and apprehended.
It should also be noted here that in most countries there are laws which govern the number of
hours employees are allowed to work and the additional compensation they should receive in the case
of overtime (and indeed, many of the issues that represent institutionalized norms are governed by
laws). When corporate policy merely extends far enough to comply with these laws, it can still be
attributed to coercive isomorphism (laws are institutions which place pressure upon the firm), but it
can no longer be considered CSR according to our definition because it does not involve voluntary
action. To the extent which socially beneficial corporate policy goes beyond requirements set by law
in order to satisfy societal expectations, it can be considered CSR. Examples of this also include
adhering to industry self-regulation and non-government organizations that establish “soft-law”
reflecting public discourse. Adhering to such non-obligatory but expected standards should be
considered socially responsible and the result of institutional isomorphism.
There are also CSR issues for which the effects of isomorphism do not prove sufficient in
prompting corporations to take enough action for the issue to be adequately addressed. Modern day
slavery is an example of an issue that, despite being universally condemned, manages to persist as a
1
Legitimacy can be closely related to reputation, and firm activities aimed at maintaining and increasing its
legitimacy are closely related to its activities aimed at improving its reputation. King and Whetton (2008)
connect the two concepts when they write, “Legitimacy and reputation are both perceptions of approval of an
organization's actions. Legitimacy is a perception that organizations conform with taken-for-granted standards.
Reputation is a perception that organizations are positively distinctive within their peer group.” Thus, losses to
legitimacy would be assumed to be as severe or more than losses to reputation.
24. 24
global problem—and in many cases is fueled by corporate rent-seeking activities (Crane, 2013).
According to the United Nations, there are currently an estimated 21 million victims of forced labor
worldwide (United Nations, 2014). Many of these cases of forced labor have been linked to the
supply chains of companies headquartered in Europe and the United States (e.g. Roberts, 2003).
Institutional theory would suggest that as the practice of slavery has come to be seen as an illegitimate
business practice by virtually all members of society, it should disappear. Given that this is not the
case, there must be some counter-effect that works against the principle of isomorphism and allows
organizations that profit by violating institutionalized norms to survive.
Crane (2013), gives us an answer in what he calls “institutional deflection,” a mechanism that
protects firms from isomorphic pressures in certain situations. He presents a complex model that
describes and explains many factors that contribute to the persistence of modern day slavery and its
resistance to the effects of isomorphism, including socioeconomic factors such as unemployment and
poverty, geographical factors such as distance and political isolation, regulatory factors such as the
strength of local governments and their susceptibility to corruption, and also local cultural factors
such as traditions and religious beliefs, all of which work against the established institutionalized
norms and enable slavery. He convincingly demonstrates that the issue is enormously complex and
that there are many more forces at work than merely isomorphism. He writes, “One implication of this
analysis is that pressures to conform to market or institutional pressures are not absolute and that
resistance to isomorphism, even in the face of quite overwhelming legitimacy challenges, is possible
given certain external and internal contingencies. Contrary to the predictions of institutional theory,
illegitimate practices can persist over time in the interstices of prevailing regulative, normative, and
cultural-cognitive systems” (Crane, 2013).
Another factor that can contribute to institutional deflection in complex CSR issues is that it is
often difficult for society to establish exactly who is to blame. Jackson (2015) highlights the problem
of what he calls “corporate culpability,” in which companies are often able to distance themselves
from issues by offering competing narratives and explanations. Additionally, he notes that companies
who are violating institutionalized norms in one area are often also pursuing other activities aimed at
producing social benefit, and thus the public is faced with a “conflicting bundle of good and bad
contributions” by which they have difficulty evaluating a firm’s legitimacy (Jackson et al, 2015).
This example of modern day slavery offers us a strong criteria for identifying high-hanging
fruits from an institutional perspective: any CSR issue that is highly complex, involves many actors
and/or factors and for which culpability is difficult to establish, is often prone to intuitional deflection
(the resistance to isomorphism) and should therefore be classified as a high-hanging fruit. Such CSR
issues do not provide firms with sufficient incentives to take extensive action because they are
protected from the scrutiny that would arise if clear culpability could be established.
Finally, the mechanism of mimetic isomorphism should be considered as well. When firms
want to move forward in a certain area but face challenges for which solutions are ambiguous or
25. 25
unclear, it is often advantageous to simply observe and mimic what other firms are already
successfully doing (DiMaggio & Powell, 1983). This also holds true in the domain of CSR. If a firm
is faced with a variety of CSR alternatives from which it must choose and no other pressures play
upon the decision (i.e. they each have an equal potential for profitability and the powerful
stakeholders are indifferent to the decision), then it will generally be easier for a firm to imitate what
other companies are already successfully doing than to invent something new. Innovation entails
uncertainty. Thus, in the absence of other incentives firms will most likely choose what has already
been tried and proven. This tendency for companies to imitate others who have well-established
solutions helps to explain why some CSR issues are addressed in similar ways by many actors, and
other issues receive little attention—precisely because those CSR issues for which clear, effective and
imitable activities already exist are easier to adopt than are CSR issues for which there are none.
Therefore we can say, those CSR issues for which proven and imitable solutions already exist should
be considered low-hanging; and those that have no clear solution but still require certain innovations
should be considered high-hanging. Table 4 below summarizes the difference between low- and high-
hanging fruits based on the factor of isomorphic pressure.
In this section we have established that CSR is becoming increasingly institutionalized as a
societal norm and that the mechanism of isomorphism will pressure more firms to adopt more socially
responsible practices in general. The question of whether specific CSR issues are either low- or high-
hanging fruits is, in part, governed by the degree to which activities related to the issue are subject to
the effects of either (coercive or mimetic) isomorphism or institutional deflection. These effects will
act alongside potential profitability and stakeholder power as incentivizing factors in deciding
whether or not a firm will pursue specific CSR activities.
Table 4: CSR Issues Affected by Isomorphism
Factor High‐hanging fruits Low‐hanging fruits Not CSR
Isomorphic
pressure
CSR issues that are too complex for
isomorphism to govern and for which
culpability is difficult to establish;
CSR issues which are subject to
institutional deflection.
CSR issues that have no tried and
proven solution but require further
innovation.
CSR issues that reflect an
institutionalized norm which places a
clear expectation on the firm by
society, and whereby departing from
the norm would cause the firm to risk
losing legitimacy.
CSR issues for which clear, effective
and imitable solutions already exists.
Corporate activities that are governed
by coercive isomorphism but that do
not extend further than what the law
requires.
26. 26
A New Model
It has been demonstrated throughout this paper that the potential profitability of engaging in a
particular corporate social responsibility activity is an important factor, but that by itself is not
sufficient to categorize it as a low- or high-hanging fruit. Additional considerations come into play
when firms decide which CSR issues to address and which not to; namely, whether or not issues are
represented by stakeholders who have power over the firm and the degree to which institutional
pressures are present around the particular issue. The presence or absence of these factors in regards
to any given issue—their individual effects and also the interplay between them—incentivize firms in
various ways and serve as indicators as to the likelihood firms will address them. The more incentives
that an issue presents, the more likely a firm will act and the easier the issue can be said to be. Table 5
below compiles the information from the previous tables and summarizes the factors that we have so
far established as playing a role in determining the relative difficulty of a given CSR issue. Below the
table a new framework will be introduced which seeks to incorporate these different factors and
provide us with the ability to classify any CSR issue according to its difficulty.
Table 5: Classifying CSR Issues & Activities
Factor High‐hanging fruits Low‐hanging fruits Not CSR
Prospect of
profit
Stakeholder
power
Isomorphic
pressure
Activities which a firm would not
voluntarily engage in because it runs
contrary to their main objective—
making profit.
CSR issues that affect stakeholders
whose claims are legitimate (and
possibly urgent) but are lacking in
the attribute of power.
CSR issues that are too complex for
isomorphism to govern and for
which culpability is difficult to
establish; CSR issues which are
subject to institutional deflection.
CSR issues that have no tried and
proven solution but require further
innovation.
Profitable new business activities
undertaken in response to
opportunities created by the
popularization of CSR.
CSR issues that affect stakeholders
whose claims are legitimate (and
possibly urgent) and who also
possess the attribute of power.
CSR issues that reflect an
institutionalized norm which places a
clear expectation on the firm by
society, and whereby departing from
the norm would cause the firm to risk
losing legitimacy.
CSR issues for which clear, effective
and imitable solutions already exists.
Profitable business-as-usual activities
which companies would engage in
regardless of whether any public
scrutiny existed, and then are dressed
up as CSR.
Stakeholder interests where the
attribute of power and/or urgency is
present, but whose claims are not
legitimate.
Corporate activities that are governed
by coercive isomorphism but that do
not extend further than what the law
requires.
Any particular CSR issue or activity can be affected by any number of the factors that we
have discussed in this paper: potential profitability, stakeholder power and isomorphic pressure. In
other words, the factors are not mutually exclusive, but often exist simultaneously. A corporation
might decide to undertake a specific CSR activity both because it presents them with a good business
opportunity and because of isomorphic pressures from society; or it might decide to undertake an
activity both because of isomorphic pressures and because the issue is of concern to powerful
27. 27
stakeholders, and so on. The degree to which a CSR activity can be said to be “easy” or “difficult” is
then determined by the number of factors present, and the intensity to which they affect the issue.
Thus, rather than speaking of only two categories—low- and high-hanging fruits—we must speak of
these issues as existing along a continuum of low to high, or easy to difficult. The most difficult CSR
issues (or the highest hanging fruits) are ones where none of the factors discussed in this paper are
present at all; and the easiest issues (the lowest hanging fruits) are ones where all three of the factors
are intensely present. The best way to visually depict this is with a Venn diagram where CSR issues
that are closest to the center are easiest and issues furthest from the center are the most difficult. The
overlapping bold circles in the diagram below illustrate the possibility of multiple factors being
present at once, and the thin rings that resemble topography lines on a map are intended to depict the
distance from the center of the diagram and illustrates that these factors exist with differing levels of
intensity.
Figure 3: Model for Classifying CSR Issues
According to Their Difficulty
This two-dimensional visual model is, of course, not a perfect depiction of the real interplay
between these issues. For example, by looking at this model it would appear that if an issue is
extremely sensitive to isomorphism, it would move closer to the center of the diagram and thus
automatically inherit the attributes of profitability and stakeholder power as well. This, however,
would be an incorrect interpretation. Rather, the diagram should serve to illustrate that an issue which
is perfectly subject to isomorphism (i.e. the pressure from society to address an issue could not be
more strong) is still not as “easy” as an issue that is also affected by the other two factors. In other
28. 28
words, the combination of factors will always make an issue easier than a single factor on its own.
Similarly, an issue that presents an extremely profitable business opportunity (and thus would tend
towards the center of the diagram) does not automatically imply the presence of isomorphism or
stakeholder power. Instead, the diagram illustrates that an issue which is extremely profitable and is
affected by isomorphism and/or the interests of powerful stakeholders will always be a more “easy”
issue than one that was only extremely profitable. The more factors that are present, and the more
intensely present they are, the more they incentivize firms to act and thus the easier an issue can be
said to be.
Applying the Model
The issues in the very middle of the diagram are the lowest hanging fruits of CSR. They
involve activities for which a strong business case can be made, they are issues that represent the
interests of powerful stakeholders and they are issues for which there is strong institutional pressure
from society to address. Thus, a corporation has a plethora of incentives on multiple levels to take
action: it is incentivized by the potential for profit, the need or desire to placate important stakeholders
and the need to manage its perceived legitimacy. New and increased efforts by BP to ensure the safety
of drilling operations in the aftermath of the Deepwater Horizon accident is an example of socially
responsible behavior that falls in this category (see BP.com, n.d.). Such efforts strongly reflect the
expectations of an increasingly critical public and help BP maintain (and in this case recover)
legitimacy. They also take into account the interests and demands of powerful stakeholders such as
employees, regulators and environmental groups. And they also present a good business case in that
increased safety will help to prevent costs incurred by potential accidents in the future. These efforts
should therefore be considered an “easy” CSR activity because all three determining factors are
strongly present.
The issues that are a bit further from the center, but that appear in the overlapping section of
two bold circles, represent CSR that are only slightly less “easy” than issues described in the previous
paragraph. Corporations still have strong incentives to address such issues stemming either from the
combination of profitability and isomorphism, profitability and powerful stakeholders, or
isomorphism and powerful stakeholders. Issues that fall in the latter category—ones that represent the
interests of powerful stakeholders and also represent institutionalized norms that put pressure on the
firm—call for activities that may not be profitable but still may be necessary for the firm to ensure its
survival. An example of such a CSR activity is the efforts by tobacco companies to combat youth
smoking (see for example, PMI.com, n.d.). Considering profit alone, there is nothing for a firm to gain
from discouraging such a large segment of the population from using its products. However, this
activity can be justified and explained by considering the pressures of isomorphism and powerful
stakeholders. Tobacco companies already have difficulty maintaining legitimacy in a society that is
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becoming increasingly aware of the health risks of smoking, and therefore any activity which may
help solidify their legitimacy and ensure their survival can be justified as a rational business move
(Apollonio & Malone, 2010). In addition, by voluntarily choosing to combat youth smoking, powerful
stakeholders such as governments might be placated and additional unwanted legislation might be
forestalled (Landman et al., 2002; Apollonio & Malone, 2010). Such activities should therefore be
considered moderately easy; while they may not directly produce profit, they help to ensure firm
survival.
Finally, issues that are closest to the edge of the diagram, and most specifically ones that do
not fall in any of the bold circles at all, are the highest-hanging fruits of CSR—they are not profitable,
the stakeholders whose interests they represent do not possess power over the firm and institutional
deflection protects the firm from external isomorphic pressures. In the absence of economic or
relational incentives, the reasons why any corporation would take action on such issues are limited to
the moral and ethical dispositions of managers (Aguilera et al., 2007). The presence of modern day
slavery in an industry’s supply chain is an example of such a CSR issue. As has been discussed above,
the mechanism of institutional deflection and the difficulty in establishing corporate culpability tends
to buffer individual firms from the institutional pressures of having to deal with this issue directly.
While it has become more common for firms to acquire fair trade labels, or other certifications which
are issued by third parties to verify that certain products are ethically produced, such efforts do more
to bolster the reputation of the individual firm than to actually end the practice of slavery in the larger
industry context (Crane, 2013). Additionally, without the intervention of advocates, victims of slavery
are in no position to exert their will upon corporations and therefore their legitimate claims are left
unaddressed. Financially, corporations have little incentive to help identify and eradicate slavery in
their industry, not only because such an undertaking would be costly, but also because they benefit
from the lower prices that forced labor provides.
Another example of a difficult CSR issue is in regards to whether a firm should stop doing
business in or with nations or regimes that are accused of human rights abuses or other infringements
of international law. While some may consider it socially responsible for a firm to end business
dealings in such a scenario, it is unlikely that this will produce sufficient incentives for a firm to do so.
Financially speaking, forcing an end to a contract with a counterparty is unlikely to be profitable
assuming that the contract was negotiated with maximum profitability in mind in the first place. There
will thus be little financial incentive to take action unless an equal or more profitable alternative is
readily available. Also, prematurely ending a contract may have reputational ramifications as other
salient stakeholders may be less inclined to trust that the firm will hold itself to future contracts.
Institutional pressure is also likely to be mixed. As is the case in all political situations, there will be
competing narratives and alternate perspectives; culpability will therefore be difficult to establish and
there is little chance that the firm will experience a loss in legitimacy unless the situation is
overwhelmingly clear in the eyes of the public. In both of these examples, none of the three
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determining factors are present and firms have little incentive to take action, therefore such CSR
issues should be classified as very difficult.
This new model goes a step further than Karpoff’s matrix in helping us to understand why
firms engage in some CSR activities and not in others. His matrix is useful in that it visually depicts
the link between social benefit and profitability, but it fails to account for other factors that also
incentivize firms to engage in (or refrain from) certain CSR activities. Because the correlation
between profitability and social benefit is not exactly linear, as Karpoff himself states, there exists two
“grey areas” in his model which contain firm activities that are more difficult to explain. For activities
that fall in these two areas, the potential for profit does not provide sufficient incentive for a firm to
engage in (or cease) the activity. Our new model helps to “clear up” these grey areas by including two
additional factors.
To illustrate the increased explanatory power of this model, consider a socially beneficial
activity that is not profitable but is subject to strong isomorphic pressure. An example of this could be
a pharmaceutical company making an urgently needed vaccine available during an epidemic at
discounted price. While, potentially, a strategic business case could be made for this, let us imagine
for the sake of illustration that this represents an undertaking for which no positive financial returns
are expected and is done only in response to societal pressure. If such an activity were mapped onto
the matrix it would fall into quadrant II and thus—considering profit alone—we would classify it as a
high-hanging fruit. With our new model, however, we can take isomorphic pressure into account as a
strong incentive to act even in the absence of potential profit and, consequently, we can see that such
an activity is not such a high-hanging fruit after all. In sum, this model allows us to take any CSR
issue or activity and assess its relative difficulty by determining the presence and intensity of the
determining factors we have established.
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Discussion & Further Research
This paper has helped to make the distinction between “easy CSR” and “difficult CSR” more
concrete by creating a framework with which we can analyze the number and intensity of factors
present that incentivize firms to address any given issue. Being able to distinguish between low- and
high-hanging fruits of CSR helps us to assess a company’s CSR profile and answer some of the
philosophical questions posed at the beginning of this paper. For example, we asked if companies that
pursue CSR activities in order to realize gains should really be considered socially responsible. The
findings of this paper appear to reveal that virtually every CSR activity that companies engage in is
done out of self-interest—whether economic self-interest or relational self-interest. In every example
we analyzed, at least one of the incentivizing factors was present; the prospect of economic gain,
external isomorphic pressure or the prospect of placating stakeholders. In other words, corporations
typically always go after low-hanging fruits. But does the fact that companies almost always benefit
from their CSR activities undermine their legitimacy? Should we stop calling them CSR? Dawkins
and Lewis (2003) found that most consumers really do not mind if companies also derive benefit from
their CSR undertakings. Therefore, it does not seem realistic to sweepingly revoke the CSR label from
all activities which benefit both society and the firm. Instead, given that almost all CSR activities can
be expected to benefit the firm, and given the fact that consumers don’t really mind, we should direct
our efforts towards measuring to what degree a company is pursuing either easy or difficult CSR
issues when we consider whether or not they are truly socially responsible.
It is impossible to establish a definitive threshold, but generally speaking, companies that
pursue only easy CSR issues from which they gain many benefits must be distinguished from
companies that also pursue more difficult CSR issues from which they gain fewer benefits. The
failure to establish this distinction in the past is possibly a major cause for CSR skepticism. A
company’s CSR profile should be judged based on the degree to which they engage in CSR activities
on the more difficult end of the spectrum. The model proposed in this paper serves as a tool with
which we can begin to make these judgements based on solid theoretical determinants.
Further research should be directed towards verifying the accuracy of this new theoretical
model and statistically determining whether potential profitability, powerful stakeholder interests and
isomorphic pressures do indeed serve as good indicators for predicting the likelihood that a
corporation will address a particular issue. Additional exploratory research could be done to further
refine these factors and/or discover other factors that may have a bearing on the relative difficulty of
CSR issues. And finally, further research should focus on what incentivizes firms to pursue high-
hanging fruits, and what can be done by governments, regulators and society in general to encourage
such behavior.
