216 Chapters Coi-porate Social Responsibility Chapter Objectives After reading this chapter, you will be able to: 1. Define corporate social responsibility. 2. Describe and evaluate the economic model of corporate social responsibility. 3. Distinguish key components of the term responsibility. 4. Describe and evaluate the philanthropic model of corporate social responsibility. 5. Describe and evaluate the social web model of corporate social responsibility. 6. Describe and evaluate the integrative model of corporate social responsibility. 7. Explain the role of reputation management as motivation behind CSR. 8. Evaluate the claims that CSR is "good" for business. Introduction OB)ECTIVE OBIECTIVE This chapter addresses the nature of corporate social responsibility (CSR) and how firms opt to meet and demonstrate their fialfiilment of this perceived respon- sibility. In one sense, no one denies that business has some social responsibilities. At a minimum, it is indisputable that business has a social responsibility to obey the law. Economists might also say that business has a social responsibility to produce the goods and services that society demands. If a firm fails to meet soci- ety's interests and demands, it will simply fail and go out of business. But, beyond these legal and economic responsibilities, controversies abound. In general terms, we can say that the primary question of CSR is the extent to which business has social responsibilities that go beyond producing needed goods and services within the law. There are a range of answers to this question and it will be helpful to dis- tinguish some prominent alternatives along this continuum. Most involved in business would accept the general definition of the tenn corporate social responsibility as referring to the responsibilities that a busi- ness has to the society in which it operates. From an economic perspective, a business is an institution that exists to produce goods and services demanded by society and, by engaging in this activity, the business creates jobs and wealth that benefit society fiirther. The law has created a form of business called corporations, which limits the liability of individuals for the risks involved in these activities. Legislatures thought that businesses could be more efScient in raising the capital necessary for producing goods, services. Jobs, and wealth if individuals were pro- tected, and people would therefore be encouraged to engage in these activities. This narrow view of CSR, what we shall refer to as the economic model of CSR, holds that business' sole duty is to fulfill the economic fiinctions busi- nesses were designed to serve. On this narrow view, the social responsibility of business managers is simply to pursue profit within the law. Because profit is an indication that business is eflficiently and successfully producing the goods and services that society demands, profit is a direct measure of h.

1. 216 Chapters Coi-porate Social Responsibility
Chapter Objectives
After reading this chapter, you will be able to:
1. Define corporate social responsibility.
2. Describe and evaluate the economic model of corporate social
responsibility.
3. Distinguish key components of the term responsibility.
4. Describe and evaluate the philanthropic model of corporate
social
responsibility.
5. Describe and evaluate the social web model of corporate
social responsibility.
6. Describe and evaluate the integrative model of corporate
social responsibility.
7. Explain the role of reputation management as motivation
behind CSR.
8. Evaluate the claims that CSR is "good" for business.
Introduction
OB)ECTIVE
OBIECTIVE
This chapter addresses the nature of corporate social
responsibility (CSR) and
how firms opt to meet and demonstrate their fialfiilment of this
perceived respon-
sibility. In one sense, no one denies that business has some
social responsibilities.

2. At a minimum, it is indisputable that business has a social
responsibility to obey
the law. Economists might also say that business has a social
responsibility to
produce the goods and services that society demands. If a firm
fails to meet soci-
ety's interests and demands, it will simply fail and go out of
business. But, beyond
these legal and economic responsibilities, controversies abound.
In general terms,
we can say that the primary question of CSR is the extent to
which business has
social responsibilities that go beyond producing needed goods
and services within
the law. There are a range of answers to this question and it will
be helpful to dis-
tinguish some prominent alternatives along this continuum.
Most involved in business would accept the general definition
of the tenn
corporate social responsibility as referring to the
responsibilities that a busi-
ness has to the society in which it operates. From an economic
perspective, a
business is an institution that exists to produce goods and
services demanded by
society and, by engaging in this activity, the business creates
jobs and wealth that
benefit society fiirther. The law has created a form of business
called corporations,
which limits the liability of individuals for the risks involved in
these activities.
Legislatures thought that businesses could be more efScient in
raising the capital
necessary for producing goods, services. Jobs, and wealth if
individuals were pro-

3. tected, and people would therefore be encouraged to engage in
these activities.
This narrow view of CSR, what we shall refer to as the
economic model
of CSR, holds that business' sole duty is to fulfill the economic
fiinctions busi-
nesses were designed to serve. On this narrow view, the social
responsibility of
business managers is simply to pursue profit within the law.
Because profit is an
indication that business is eflficiently and successfully
producing the goods and
services that society demands, profit is a direct measure of how
well a business
Chapter 5 Corporate Social Responsibility 217
firm is meeting society's expectations. Because corporations are
created by soci-
ety and require a stable political and economic infrastructure in
which to conduct
business, like all other social institutions, they are expected to
obey the legal
mandates established by the society. This economic model of
CSR denies that
business has any social responsibilities beyond the economic
and legal ends for
which it was created.
Milton Friedman's classic 1970 New York Times article, "The
Social Respon-
sibility of Business Is to Increase Its Profits," is perhaps best
known as an argu-

4. ment for this economic model of the social responsibility of
business. Contrary to
popular belief, Friedman does not ignore ethical responsibility
in his analysis; he
merely suggests that decision makers are fulfilling their
responsibility if they fol-
low their firm's self-interest in pursuing profit. Friedman
explains that a corporate
executive has a
responsibility to conduct business in accordance with [his or her
employer's]
desires, which generally will be to make as much money as
possible while
confonning to the basic rules of society, both those embodied in
law and those
embodied in ethical custom (emphasis added).
This common view of corporate social responsibility has its
roots in the util-
itarian tradition and in neoclassical economics (as discussed in
the section on
utilitarianism in chapter 3). As agents of business owners, the
contention is that
managers do have social responsibilities—their primary
responsibility is to pur-
sue maximum profits for shareholders. By pursuing profits, a
business manager
will allocate resources to their most efficient uses. Consumers
who most value a
resource will be willing to pay the most for it; so profit is the
measure of optimal
allocation of resources. Over time, the pursuit of profit will
continuously work
toward the optimal satisfaction of consumer demand which, in
one interpretation

5. of utilitarianism, is equivalent to maximizing the overall good.
Debates concerning CSR start with alternatives to the narrow
view expressed
by Friedman and others. In what follows, we will categorize
these alternatives into
three general models. As alternatives to the economic model, we
will describe the
philanthropic model, the social web model, and the integrative
model of CSR.
Recognize that these three models are intended to be general
categories into
which various specific versions of CSR can be fit; others may
describe them dif-
ferently and, certainly, there will be individual businesses that
overlap these cat-
egories. Nevertheless, these models provide a helpful way to
understand debates
surrounding corporate social responsibility.
Ethics and Social ResponsibiHty
To help us sort through these alternative models of CSR and to
better understand
_ the extent of business' social responsibility, let us begin with
a general discussion
OBJECTIVE of tfie potential responsibilities of a business and
how they can be understood
from an ethical perspective.
218 Chapters Corporate Social Responsibility
The words responsible and responsibility are used in several

6. diiFerent ways.
When we say that a business is responsible, we might mean that
it is reliable
or trustworthy. For example, you might recommend a car
dealership to a friend
by describing them as a responsible, trustworthy business. A
second meaning of
responsible involves attributing something as a cause for an
event or action. For
example, poor lending practices were responsible (i.e., the
cause) for the collapse
of many banks during the 2008 economic crisis; and the location
of the gas tank
was responsible for fires in the Ford Pinto. A third sense
involves attributing lia-
bility or accountability for some event or action, creating an
obligation to make
things right again. To say, for example, that a business is
responsible for a polluted
river is not only to say that the business caused the pollution,
but also that the
business is at fault for it and should be held accountable. An
unavoidable accident
would be a case in which someone was responsible in terms of
causing the acci-
dent, but did not bear responsibility in terms of being liable or
at fault.
Laws regarding product safety and liability involve many of
these meanings
of being responsible. When a consumer is injured, for example,
a first question to
ask is whether the product was responsible for the injury, in the
sense of having
caused the injury. For example, several years ago a controversy
developed over

7. the drug Vioxx, produced by Merck. Some evidence suggested
that Vioxx was
responsible for causing heart attacks in some users. In the
debates that followed,
two questions required answers. Was Vioxx the cause of the
heart attacks, and was
Merck at fault, i.e., should it be held legally liable, for the heart
attacks? Once
the causal question is settled, we might then go on to ask if the
manufacturer
is responsible in the sense of being at fault and therefore being
liable for pay-
ing for the damages caused by the product. Both ethics and tort
law involve the
question of liability or fault for causing harm. (See Figure 5.1,
"Responsible and
Responsibility.")
It is this last sense of responsibility as accountability that is at
the heart of
CSR. Corporate social responsibility refers to those actions for
which a busi-
ness can be held accountable. We can think of responsibilities
as those things
that we ought, or should, do, even if wc would rather not.
Responsibilities bind,
FIGURE 5.1
Responsible and
Responsibility
Responsible
Responsibility
Did Vioxx cause the heart attacks?

8. Was Vioxx responsible for the heart attacks?
Was Merck at fault, i.e., should it be held legally
liable, for the heart attacks?
Should Merck bear responsibility for the heart
attacks?
Chapters Corpowle Social Responsibility 219
srent ways.
is reliable
to a friend
neaning of
action. For
be collapse
le gas tank
buting lia-
)n to make
a polluted
30 that the
le accident
g the acci-
meanings
[uestion to
of having
oped over
/ioxx was
followed,

9. s, and was
iks? Once
inufacturer
le for pay-
nvolve the
insible and
le heart of
zh a busi-
Qse things
ities bind.
or compel, or consti-ain, or require us to act in certain ways.
We can be expected
to act in order to fulfill our responsibilities; and we will be held
accountable if we
do not. Thus, to talk about corporate social responsibility is to
be concerned with
society's interests that should restrict or bind business'
behavior. Social responsi-
bility is what a business should or ought to do for the sake of
society, even if this
comes with an economic cost.
Philosophers often distinguish between three different levels of
responsibili-
ties in this sense, on a scale from more to less demanding or
binding. First, the
most demanding responsibility, often called duty or obligation
in order to indi-
cate that they oblige us in the strictest sense, is the
responsibility not to cause
harm to others. Thus, a business ought not to sell a product that
causes harm to
consumers, even if there would be a profit in doing so. A
second, less binding,

10. responsibility is to prevent harm even in those cases where one
is not the cause.
These so-called good Samaritan cases are examples of people
acting to prevent
harm, even though they have no strict duty or obligation to do
so. Finally, there
might be responsibilities to do good. Volunteering and
charitable work are typical
examples of responsibilities in this sense. To call an act
volunteer work is pre-
cisely to suggest that it is optional; one does not have a duty to
do it, but it is still
a good thing to do.
Is there a duty not to cause harm? Let us consider how each of
these three
types of responsibilities might be seen in business. The
strongest sense of respon-
sibility is the duty not to cause harm. Even when not explicitly
prohibited by law,
ethics would demand that we not cause avoidable harm. If a
business causes harm
to someone and, if that harm could have been avoided by
exercising due care or
proper planning, then both the law and ethics would say that
business should be
held liable for violating its responsibilities.
In practice, this ethical requirement is the type of responsibility
established by
the precedents of tort law. When it is discovered that a product
causes hann, then
business can appropriately be prevented from marketing that
product and can be
held liable for harms caused by it. So, in a classic case such as
asbestos, busi-

11. nesses are restricted in marketing products that have been
proven to cause cancer
and other serious medical harms.
Is there a responsibility to prevent harm? But there are also
cases in which
business is not causing harm, but could easily prevent harm
from occurring. A
more inclusive understanding of corporate social responsibility
would hold that
business has a responsibility to prevent harm. Consider, as an
example, the actions
taken by the pharmaceutical firm Merck with its drug Mectizan,
Mectizan is a
Merck drug that prevents river blindness, a disease prevalent in
tropical nations.
River blindness infects between 40 and 100 million people
amiuaily, causing
severe rashes, itching, and loss of sight. A single tablet of
Mectizan administered
once a year can relieve the symptoms and prevent the disease
from progressing—
quite an easy and effective means to prevent a horrendous
consequence.
On the surface, Mectizan would not be a very profitable drug to
bring to mar-
ket. The once-a-year dosage limits the demand for the di'ug
among those people
who require it. Further, the individuals most at risk for this
disease are among
220 Chapters Corpomte Social Responsibility

12. the poorest people living in the poorest regions of Afriea, Asia,
Central America,
and South America. However, in 1987, Merck began a program
that provides
Mectizan free of charge to people at risk for river blindness and
pledged to "give
it away free, forever." Cooperating with the World Health
Organization, UNICEF,
and the World Bank, Merck's program has donated more than
1.8 billion doses of
Mectizan (by 2007), which have been distributed to 40 million
people each year
since 1987. The program has also resulted in the development of
a health care
system, necessary to support and administer the program, in
some of the poorest
regions of the worid. By all accounts, Merck's Mectizan
Donation Program has
significantly improved the lives of hundreds of millions of the
most vulnerable
people on earth. Merck's actions were explained by reference to
part of its cor-
porate identity statement: "We are in the business of preserving
and improving
human life."'
Clearly Merck was not at all responsible for causing river
blindness and,
therefore, according to the standard of CSR discussed earlier,
Merck had no
social responsibility in this case. But, Merck itself saw the issue
differently.
Given the company's core business purpose and values, its
managers concluded
that they did have a social responsibility to prevent a disease
easily controlled

13. by their patented drug. Moreover, as we will discuss later,
Merck recognized
that it was the right thing to do for its business. George Merck,
grandson of
Merck's founder, explains, "We try never to forget that
medicine is for the peo-
ple. It is not for the profits. The profits follow and, if we have
remembered that,
they have never failed to appear. The better we have
remembered it, the larger
they have been."
Is there a responsibility to do good? The third, and perhaps the
most wide-
ranging, standard of CSR would hold that business has a social
responsibility
to do good things and to make society a better place. Corporate
philanthropy
would be the most obvious case in which business takes on a
responsibility
to do good. Corporate giving programs to support community
projects in the
arts, education, and culture are clear examples. Some
corporations have a chari-
table foundation or office that deals with such philanthropic
programs. (See the
Reality Check, "Corporate Philanthropy: How Much Do
Corporations Give?")
Small business owners in every town across America can tell
stories of how
often they are approached to give donations to support local
charitable and cul-
tural activities.
Many of the debates surrounding corporate social responsibility
involve the

14. question of whether business really has a responsibility to
support these valuable
causes. Some people argue that, like all cases of charity, this is
something that
deserves praise and admirafion; but it is not something that
every business ought
to do. Philosophers sometimes distinguish between
obligations/dufies and respon-
sibilities precisely in order to make this point. A responsible
person is charitable;
but donating to charity is neither an obligation nor a duty.
Others argue that busi-
ness does have an obligation to support good causes and to
"give back" to the
community. This sense of responsibility is more akin to a debt
of gratitude and
In 2011, tc
w a s es t im
contributic
Corporate
of the tota
t h e p a s t 4C
FIGURE ;
Models of (
Econom
ofC:
Philanll
CS
Social V
"Citizer

15. Models (
Integra
Strategic
ofCi
ntral America,
that provides
;dged to "give
ion, UNICEF,
ilHon doses of
iple each year
a health care
of the poorest
Program has
ist vulnerable
art of its cor-
id improving
indness and,
erck had no
3 differently,
rs concluded
y controlled
; recognized
grandson of
for the peo-
nbered that,
t, the larger

16. most wide-
sponsibility
hiJanthropy
sponsibility
jects in the
ive a chari-
is, (See the
ns Give?")
ies of how
le and cul-
nvolve the
se valuable
5thing that
ness ought
nd respon-
:han table;
that busi-
ck" to the
titude and
Chapters Corponile Social Responsibility 221
Rsality Check corporate Philanthropy: How Much Do
Corporations Give?
In 2011, total chaiitalDle giving in the United Sta tes
w a s es t ima ted to b e almost $300 billion. Individual
contr ibut ions totalled billion more than $200 billion.
Corporate giving totalled $14.5 billion, or 5% pe rcen t
of t h e total, giving rate tha t h a s remained flat over
t he pas t 40 years.
Source: 2012 Giving USA: The Annual Report on
Philanthropy (oi the Year 201'1/Executive Summary,"

17. June 18, 2012, http://www.givingusaieports.org/.
thankfulness—something less binding than a legal or
contrachaal obligation per-
haps, but more than a simple act of charity. Perhaps a clear way
to understand the
distinction is to compare it to your obligation to write a thank-
you note to your
grandmother for the extraordinary knit sweater that she sent you
for your birthday
gift. You might not have a legal requirement to send the note,
but nevertheless you
feel a strong duty to do so. This discussion can help us gain a
fuller understand-
ing of the models of CSR described later and in Figure 5.2,
"Models of Corporate
Social Responsibility."
FIGURE 5.2
Models of Corporate Social Responsibility
Economic View
of CSR
Primary Responsibility:
Produce goods and
services (seek profit),
within the law
Philanthropic
CSR
Economic
View of

18. CSR
Business may also CHOOSE to
contribute to social needs as
a matter ol philanthropy, but
not as a matter of duty or
social responsibility
For reputational and public
relations purposes
Because it is the rigtit thing
lodo
Social web or
"Citizenship"
f^odels ol CSR
Business is embedded within a web
of social relationships of mutual
rights and responsibilities (including
but not limited to the responsibility
to produce goods and services,
while obeying the law)
Integrative/
Strategic Models
ot CSR
Part, or all, of the mission of the

19. company is to serve some important
social goals (e.g., social enterprise,
other businesses with serious
commitment to sustainability)
224 Chapters Corporate Social Responsibility
Philosopher Norman Bowie has defended one version of CSR
that would fall
within this social web model. Bowie argues that, beyond the
economic view's duty
to obey the law, business has an equally important ethical duty
to respect human
rights. Respecting human rights is the "moral minimum" that we
expect of every
person, whether they are acting as individuals or within
corporate institutions. To
explain this notion of a "moral minimum," Bowie appeals to the
framework for
distinguishing responsibilities that was described earlier and
that is derived from
the principle-based traditional in ethics described in chapter 3.
Bowie identifies his approach as a "Kantian" theory of business
ethics. In sim-
ple terms, he begins with the distinction between the ethical
imperatives to cause
no harm, to prevent harm, and to do good. People have a strong
ethical duty to
cause no harm, and only a prima facie duty to prevent harm or
to do good. The
obligation to cause no harm, in Bowie's view, overrides other
ethical consider-

20. ations. The pursuit of profit legitimately can be constrained by
this ethical duty.
On the other hand, Bowie accepts the economic view that
managers are the agents
of stockholder-owners and thus they also have a duty (derived
from the contract
between them) to further the interests of stockholders. Thus,
while it is ethically
good for managers to prevent harm or to do good, their duty to
stockholders over-
rides these concerns. As long as managers comply with the
moral minimum and
cause no harm, they have a responsibility to maximize profits.
Thus, Bowie would argue that business has a social
responsibility to respect the
rights of its employees, even when not specified or required by
law. Such rights might
include the right to safe and healthy workplaces, right to
privacy, and right to due pro-
cess. Bowie would also argue that business has an ethical duty
to respect the rights
of consumers to such things as safe products and truthful
advertising, even when not
specified in law. But, the contracmal duty that managers have to
stockholder-owners
overrides the responsibility to prevent hann or to do
(philanthi'opic) good.
Example of a Social Web Model: Stakeholder Theory
Perhaps the most infiuential version of CSR that would fall
within the social
web model is stakeholder theory. Stakeholder theory begins
with the recog-
nition that every business decision affects a wide variety of
people, benefiting

21. some and imposing costs on others. Think of the cases we have
mentioned to
this point—Maiden Mills, Walmart, Enron, and Arthur
Andersen; AIDS drugs
in Africa; executive compensation; AIG—and recognize that
decisions made by
business managers produce far-ranging consequences to a wide
variety of people.
Remember, as well, the economic lesson about opportunity
costs. Every decision
involves the imposition of costs, in the sense that every
decision also involves
opportunities foregone, choices given up. Stakeholder theory
recognizes that
every business decision imposes costs on someone and mandates
that those costs
be acknowledged. In other words, any theory of corporate social
responsibility
must then explain and defend answers to the questions: for
whose benefit and at
whose costs should the business be managed?
Tlie economic model argues that the firm should be managed for
the sole benefit
of stockholders. This view isjustified by appeal to the rights of
owners, the fiduciary
Chapters Corporate Social Responsibility 225
4
duty of managers, and the social benefits that follow from this
arrangement. The
stakeholder theory argues, on factual, legal, economic, and

22. ethical grounds, that this
is an inadequate understanding of business. Let us examine who
are the stakehold-
ers, what reasons can be offered to justity the legitimacy of
their claims on manage-
ment, and what are the practical implications of this view for
business managers.
R. Edward Freeman has offered a defense of the stakeholder
model in his essay
"Managing for Stakeholders" that is reprinted at the end of
chapter 2. Freeman
describes both a narrow and a wider understanding of the
concept of a "stake-
holder." In a narrow sense, a stakeholder includes anyone who
is vital to the sur-
vival and success of the corporation. More widely, a stakeholder
could be "any
group or individual who can aifect or be affected by the
corporation."
Stakeholder theory argues that the narrow economic model fails
both as an
accurate descriptive and as a reasonable normative account of
business manage-
ment. As a descriptive account of business, the classical model
ignores over a
century of legal precedent arising from both case law and
legislative enactments.
While it might have been true over a century ago that
management had an over-
riding obligation to stockholders, the law now recognizes a
wide range of mana-
gerial obligations to such stakeholders as consumers,
employees, competitors, the
environment, and the disabled. Thus, as a matter of law, it is

23. simply false to claim
that management can ignore duties to everyone but
stockholders.
We also need to recognize that these legal precedents did not
simply fall from
the sky. It is the considered judgment of the most fundamental
instihitions of a
democratic society, the courts and legislatures, that corporate
management must
limit their fiduciary duty to stockJiolders in the name of the
rights and interests of
various constituencies affected by corporate decisions.
Factual, economic consideraUons also diminish the plausibility
of the economic
model. The wide variety of market failures recognized by
economists show that,
even when managers pursue profits, there are no guarantees that
they will serve
the interests of either stockholders or the public. When markets
fail to attain their
goals, society has no reason to sanction the primacy of the
fiduciary obligation to
stockholders.
But perhaps the most important argument in favor of the
stakeholder theory
rests in ethical considerations. The economic model appeals to
two ftindamental
ethical norms for its justification: utilitarian considerations of
social well-being
and individual rights. On each of these normative accounts,
however, due con-
sideration must be given to all affected parties. Essential to any
utilitarian theory

24. is the commitment to balance the interests of all concerned and
to give to each
(arguably, equal) consideration. The stakeholder theory simply
acknowledges this
fact by requiring management to balance the ethical interests of
all affected par-
ties. Sometimes, as the classical model would hold, balancing
will require man-
agement to maximize stockholder interests, but sometimes not,
UtiUtarianism
requires management to consider the consequences of its
decisions for the well-
being of all affected groups. Stakeholder theory requires the
same.
Likewise, any theory of moral rights is committed to equal
rights for all.
According to the rights-based ethical fl-amework, the
overriding moral imperafive
226 Chapter 5 Corpomte Social Responsibility
is to treat all people as ends and never as means only. Corporate
managers who
fail to give due consideration to the rights of employees and
other concerned
groups in the pursuit of profit are treating these groups as
means to the ends of
stockholders. This, in the rights-based ethical framework, is
unjiist. (Of course,
ignoring the interests of slockliolders is equally unjust.)
Thus, the stakeholder theory argues that on the very same
grounds that are used

25. to justify tlie classical model, a wider "stakeholder" theory of
corporate social
responsibility is proven ethically superior. Freeman argues that
"the stakeholder
theory does not give primacy to one stakeholder group over
another, though there
will be times when one group will benefit at the expense of
others. In general, how-
ever, management must keep the relationships among
stakeholders in balance.'"'
Films exist in a web of relationships with many stakeholders
and these rela-
tionships can create a variety of responsibilities. As we have
seen in many of the
cases and examples mentioned previously, it may not be
possible to satisfy the
needs of each and every stakeholder in a situation. But,
stakeholder theory also
recognizes that some stakeholders have different power and
impact on decisions
than others; that organizations have distinct missions, priorities
and values, affect-
ing the final decisions. Therefore, social responsibility would
require decisions to
prioritize competing and conflicting responsibilities.
Integrative Model of CSR
Most discussions about CSR are framed in tenns of a debate:
Should business be
expected to sacrifice profits for social ends? Much of the CSR
literature assumes a
OBJECTIVE tension between the pursuit of profit and social
responsibility. But. of course, there
have always been organizations that turn this tension around,

26. organizations that
pursue social ends as the very core of their mission. Non-
profits, such as hospitals,
NGOs, foundations, professional organizations, schools,
colleges, and govern-
ment agencies, have social goals at the center of their
operations. The knowledge
and skills taught in business schools, from management and
marketing to human
resources and accounting, are just as relevant for non-profits as
they are in for-profit
organizations. For this reason alone, students in these various
sub-disciplines of a
business school ctu'riculum should be familiar with non-profit
business models.
But there is a growing recognition that some for-profit
organizations also have
social goals as a central part of the strategic mission of the
organization. In two
areas in particular, social entrepreneurship and sustainability,
we find for-
profit firms that do not assume a tension between profit and
social responsibility.
Firms that make environmental sustainability as central to their
mission, such as
Interface Corporation, are examples of the second area. (See the
Reality Check,
"Browsing for Social Good.")
Because these finns bring social goals into the core of their
business model,
and fully integrate economic and social goals, we refer to this
as the integrative
model of CSR. At first glance, firms that adopt the integrative
model raise no par-

27. ticular ethical issues. Even advocates of the narrow economic
model of CSR such
as Milton Friedman, would agree that owners of a firm are free
to make the pursuit
Chapter 5 Corporate Social Responsibility 227
managers who
:her concerned
to the ends of
St. (Of course,
Is that are used
rporate social
le stakeholder
; though there
general, how-
n balance.'"'
id these rela-
1 many of the
to satisfy the
r theory also
on decisions
alues, affect-
decisions to
Reality Check Browsing for Social Good
business be
e assumes a
ourse, there
nations that
s hospitals,

28. nd govern-
knowledge
; to human
fi for-profit
plines of a
models.
also have
m. In two
find for-
3nsibility.
1, such as
y Check,
is model,
jgrative
e no par-
:SR such
e pursuit
•
The popular w e b browser Firefox and e-mail pro-
gram Thundetb i rd are produc ts of Mozilla Corpora-
tion, a for-profit subsidiary of Mozilla Foundat ion, a
non-profit organization. Mozilia Corporation had rev-
e n u e s of more than more than $120 million, and more
than 400 million users of their Firefox browser in
2010. Mozilla is descril jed on i ts webs i t e as follows:
W h a t i s M o z i l l a ?
We're a global community of thousands who
sincerely believe in the power of technology to
enrich people's lives.
We're a pubUc benefit organization dedicated

29. not to making money but to improving the way
people everywhere experience the Internet.
And we're an open source software project
whose code has been used as a platform for
some of the Internet'.? most innovative projects.
Tlie common thread that runs throughout
MoziUa IS our belief that, as the most significant
social and technological development of our
time, the Internet is a public resource that must
remain open and accessible to aH. With this in
mind, our efforts are ultimately driven by our
mission of encouraging choice, innovation and
opportunity online.
To achieve these goals, we use a highly
transparent, extremely collaborative process
that brings together thousands of dedicated
volunteers around the world with our small staff
of employees to coordinate the creation of
products like the Firefox web browser This
process is supported by the Mozilla Coq^oration,
which is a wholly-owned subsidiary of the
non-profit Mozilla Foundation.
In the end, the Mozilla community, organization
and technology is all focused on a single goal:
m a k i n g the Internet bet ter for e v e r y o n e .
Source: Mozilla Foundation, The State of Mozilla: Annual
Report, (2010), http://www.mozilla.org/en-US/foundation/
annualreport/2010/fac[/ (accessed July 27, 2012).
of social goals a part of their business model. They would just
disagree that these
social goals should be part of ei-eiy business' mission. (For a
clear articulation of
the arguments surrounding each of the CSR models, see the

30. reading, "Rethinking
the Social Responsibility of Business" reprinted at the end of
this chapter.)
No one is claiming that every business should adopt the
principles of social
entrepreneurs and devote all their activities to service of social
goals. There are
clearly other needs that businesses are designed to address. At
best, social entre-
preneurs demonstrate that profit is not incompatible with doing
good, and there-
fore that one can do good profitably. (See the Reality Check:
"Fairness in a Cup
of Coffee: Example of the Integrative Model.") On the other
hand, there are some
who would argue that the ethical responsibilities associated
with sustainability are
relevant to every business concern. In some ways, sustainability
offers a model
of CSR that suggests that ethical goals should be at the heart of
every corporate
mission. There are reasons to think that sustainability promises
to be a concept of
growing importance in discussions of CSR.
The Implications of Sustainability in the
Integrative Model of CSR
Sustainability, and specifically its definition, will be discussed
in greater detail in
chapter 9; but as a topic within CSR, sustainability holds that a
firm's financial