CSR: Corporate Social Responsibility
Introduction
Can business do better than just business? That was a question I asked myself upon entering the 'Service Year' of my PhD. in Leadership at Cardinal Stritch University. I once heard a podcast by Harvard Business Review where two scholars were discussing the idea of how a corporation has an inherent social responsibility, to not only add value to the shareholders, but also to the stakeholders. In my investigation of this rather interesting topic, I stumbled upon the construct referred to today as Corporate Social Responsibility. I began to Google my way through the internet researching more and more about this idea that a corporation has the responsibility to do more than just business.
During my research phase of this interesting service journey, I was introduced to varying opinions and perceptions of the modern organization. On one hand I was met with perceptions of big business doing good. For example Samsung supplies impoverished tribes in Ethiopia with light sources to improve productivity as an aspect of business doing better than just business (see video below).
So given these two varying opinions of the function of the corporation, I was intrigued to investigate the following questions:
- Can business do better than business?
- What is the history of responsible organization theory?
- What really caused organization's to apply ideas such as shared value, responsibility, and social relativity to their corporate strategies?
- What are stories of socially responsible organizations?
- What is the future evolution of the social responsible organization?
This blog entry will discuss these wavering questions in with a general overview of Corporate Social Responsibility through covering: 1) background and definitions, 2) possible root causes, and 3) stories of CSR, While the purpose of this blog is to communicate a concise message of Corporate Social Responsibility, I will also sprinkle through this blog my ideas on the subject.
CSR Background and Definition
The idea of the corporation's role in society has long been up for debate. Bowen (1953) is regarded as one of the first modern scholars to address the purpose and responsibility of the corporation. Bowen (1953) suggested the amount of power and decision making processes of the corporation can have a dramatic effect on society. He inquired, "What responsibilities to society may businessmen reasonably be expected to assume?" (p. xi). This inquisition led to scholarly debate which expanded into the '60s to formalize and operationalize what we know today as corporate social responsibility. Davis (1960) was one of the first scholars to see that a socially responsible outlook can lead to long-term economic gains for an organization. The idea of adding economic value through social responsibility surely must have caught the attention of shareholders.
Davis (1960) proclaimed his "Iron Law of Responsibility" suggesting that lack of social responsibilities leads to "erosion of social power"(p. 73) which would inevitably lead to profit loss. Therefore, companies at this period of time were faced with a choice of what they wanted their imprint on the world to be recognized as.
The decision making philosophy and evolution of the corporation was affected by more than mere choice - with a little nudge by the judicial system. In an issue of the Harvard Business Review, Smith (1994) discussed some various other milestones in the CSR shift of the corporation. For example, during the 50s the Supreme Court lifted legal restrictions which had previously restricted corporate giving and contributions in social issues. Thus, companies began feeling the pressure to support social issues in the community at large by creating tactics and strategies.
Smith (1994) believes it wasn't until the 90s when companies began creating rich and detailed models as to the proper and ethical role of the corporation in today's society. Companies like AT&T provided groundbreaking models that demonstrated the shared value between corporate foundations and for-profit aspects of the organization. Kotler & Lee (2005) claim that this initiative helps foundations support business initiatives, while business initiative simultaneously support foundations. This sense of shared value adds value to the idea of chase-based foundations work together to maximize value to a corporation.
Thus, the development of corporate social responsibility has evolved into many definitions. For the purpose of this blog entry, a modern day definition of corporate social responsibility is the "commitment to improve community well-being through discretionary business practices and contributions of corporate resources" (Kotler & Lee, 2005, p. 3). This in turn is a "voluntary" (p. 3) commitment to doing good with the mission of the company for the community at large. Now that a little history and definition of Corporate Social Responsibility has been established, the next section will cover the root causes that create a need for more responsible companies.
Possible Root Causes That Create a Need For CSR
As I wrote in an earlier blog on my personal belief of CSR, Corporate Social Responsibility is truly the act of balancing ethics and profits. The need for social responsibility in today's companies stems from a history of unethical business practices that harm the well-being of society and the environment.
Recently in my ED 730 class on Service Philosophy at Cardinal Stritch University, I was tasked with studying classism in a group project. I was responsible for reporting to the class on the history of classism. What I uncovered was astonishing - Most of the causes that create a need for corporate social responsibility stems from our country's history of the value government places on big business.
According to scholars, during the Colonial Period wealthy caucasian (Europeans to be more precise) considered money an organizing principle - which had a compounding effect on how we arrived at the need for more socially responsible organizations. During this period if one had money, they had ownership of goods and property. Since these wealthy settlers had a surplus of ownership, goods, and property they had authority. Since these individuals had authority, they influenced the system of government to value the same organizing principles the settlers valued. This organizing principle of goods, property, and money within our government created class distinction, which therein of established a gap between the rich and the poor (Zinn, 2009).
Fast forward to today - 2013. A time when our government still operates and functions for the interests of those who have wealth, property, and ownership. However, those wealthy white settlers from the Colonial Period are today referred to as Congressmen, CEOs, government officials, and Wall Street bankers. This class of elite individuals today are protected by our system of government because of wealth.
This idea of perpetuating class distinction stemmed from what some economists call the idea of Reaganomics. This idea was founded upon the works of economist Milton Freidman, a Nobel laureate, celebrated for his belief that the economy should be restructured around the interests of big business (Miller, 2006). The debate is still on the table whether or not the preservation of big business adds value to society. For example, the documentary below, One Percent, shares a message of a young man determined to prove that there is an increasing gap between the rich and the poor. His general argument is that rich, and those in big business are responsible for much of the inequality and inequity experienced here in the United States. He claims, "When you look around, the disparity is hard to miss" (Miller, 2006). Thus, he engages in an exploratory journey interviewing people from the 1% who are considered the elite.
It is this history of the United States government's love affair for big business that has created the need for corporate social responsibility. Big business has developed a bad name for itself because they were considered untouchable. Thus, companies have wanted to change this image through being more socially responsible to win back the support of the people. These companies are yearning to change the image of the modern day corporation to show the world that they can do better than mere business. The need for corporate social responsibility comes in many forms: 1) strengthened brand positioning, 2) improved image, and 3) meaningful work environment (Kotler & Lee, 2005).
Strengthened Brand Postitioning
According to Kolter and Lee (2005) companies who have a positive reputation with corporate social responsibility have a longer brand lifetime. Pringle and Thompson (2001) believe that by linking a brand to a cause the company positions that brand with a more spiritual quality. Sinek (2011) refers to this spiritual brand repositioning as starting with your 'why' or the purpose behind what your brand stands for to do more than mere business and sales. Sinek (2011) believe that to position a brand towards 'why,' companies need to follow the golden circle. This circle below depicts that most brands focus on 'what' their product is, and 'how' it fills a need in the market. However, Sinek (2011) argues that a strengthened brand positioning details and dissects their existential why first.
This why that Sinek (2011) stresses is what scholars refer to as 'social content' or the idea of a brand communicating "tangible improvements to social welfare" (Kotler & Lee, 2005, p. 14). For example, TOMS shoes company has impacted the world with tremendous social content tied to it's brand organization in a 'one for one program.' This program is designed to communicate: For every shoe bought, the company will send a pair to someone in need. The tangibility in this message has positioned this particular brand for increased success because consumers understand the company's why.
Improved Image
To combat some of the negative undertones of big business, many companies are applying CSR to improve their image. An improved brand image not only can help sales,having a strong brand image can be an asset during times of crisis (Kotler & Lee, 2005). For example, during the 1992 South Central Los Angeles riots, those participating vandalized much of the areas sparing 60 McDonalds franchises. Why? The company developed such a beneficial image with the community through its Ronald McDonald Houses that those participating in the riot had a sense of high respect for the company (Hess, Rogovsky & Dunfee, 2002). Therefore, investing in the community improves the image of the brand to preserve and protect the company's success.
Meaningful Work Environment
For companies to do more than just business they have applied CSR initiatives as strategies to attract and motivate employees. Today's employees are yearning to work in more meaningful environments. According to Goffee & Jones (2013) "People want to be a part of something bigger than themselves, something they can believe in" (p. 104). A study by Net Impact found more than half of 2,100 MBA students surveyed claimed they would accept a position with a lower salary if the company demonstrated socially responsible values (Kotler & Lee, 2005). There is a sense of "forging and maintaining powerful connections between personal and organizational values" (Goffe & Jones, 2013, p. 104) that today's employees are seeking in their career path. The next section will discuss a personal account of an individual at Google who shares stories of working in a CSR-mindful and meaningful work environment.
Stories of CSR: Evolving the Need for Service & Shared Value
This section will cover the Corporate Social Responsibiliy philosophy of Google, the technology giant. The purpose of this section is to describe the current evolution of service Google is providing with their CSR initiatives. Additionally, this section will cover the highlights of an interview I conducted with a Google employee discussing various CSR initiatives currently underway. Lastly, this section will highlight how these Google CSR initiatives would serve recipients.
I recently had the opportunity to interview a Retail Industry Director at Google. Krueger focuses on the retail end of the Google company. Through a fascinating conversation, she touched on the role of Google's role to add value to society through social responsibility. Krueger (2013) began the conversation by describing the importance and prevalence of Google's mission statement: to organize the world's information and make it universally accessible and useful (Google, 2013). The mission rings true the tenets of corporate social responsibility by communicating the company's existence, their why (Sinek, 2011) to be that of adding informative value to the global community. In essence, the company saw shared value in connecting information with people. Krueger (2013) posited that many of the projects Google is currently working may seem off mission but if you trace the projects back to the mission they begin to make sense. Part of the motivation, as Krueger (2013) states is to provide tools that organize information in a way that people can use it to benefit their community.
Our conversation focused on a new impending CSR project at Google called Project Loon. This exciting and innovative project lives out the mission of Google by working towards utilizing balloons in the atmosphere to provide wireless internet to third-world countries.
Beyond Project Loon, Krueger (2013) shared a story of a friend of hers who had a severe medial issue and utilized the power of Google to find a specialist doctor. The brilliance of the value that Google adds was communicated by Krueger in that, "Before the internet, and before the discoverability of information, this woman would have never found this guy [specialist doctor] and would have just gone to her pediatrician and hoped that pediatrician might have known some body who would maybe have an idea of what to do" (Krueger, personal communication, 2013). In other words, if it weren't for Google this lady's finding would probably never have happened.
Here's Another Example of CSR...watch the video below
Kruger (2013) also shared another CSR initiative with the new Driverless Car Project at Google. This idea was sparked by the founders twofold: 1) the founders wanted to make driving more efficient by eliminating traffic, and 2) eliminate fatalities by making computers replace impaired decision making.
I personally enjoyed hearing about these two CSR initiatives at Google. Krueger fluidly tied each initiative back to the mission of Google which demonstrated a keen sense of overall vision the company must emphasize with their employees. The Driverless Car initiative, however, inspired me in a touching way. I thought of those I know who either are too old to drive, not very skilled at driving, physically cannot drive, or those we always encounter on the road that are reckless drivers. In thinking of these people, I was inspired to interview a vision impaired classmate of mine, Dan, to ask him how a driverless car would change his life. The next section will cover Dan's interesting perspective on the driverless car initiative: Is it really of service to the world?
Receiving a CSR Service
I asked a visually impaired friend of mine, Dan, to tell me his thoughts on the Google Driverless car initiative. I believe interviewing him would shed light on how wonderful of an initiative the driverless car is for those who are vision impaired. Instead, he basically has changed his outlook on life to become more of a minimalist since he lost his sight. Dan said,
The consistent theme in these changes [in my life] is a focus on how I can be truer to myself and how I can lead a simpler life. With regard to transportation I have found myself moving away from an interest in automobiles as a means of transport and found myself far more interested in the simple act of moving from one place to another.I highly doubt that most visually impaired people would deny the value of the driverless car. One significant reason for Dan's disinterest for the driverless car is due to the award winning public transportation system in Milwaukee, Wisconsin, where he lives. Dan said, "I find my interests in greater access to going to the places I want to go at the times I want to go are focused more towards walkable communities and public transit infrastructure than in automobile ownership." This disinterest could likely vary if Dan were in a town with poor public transportation.
What I found interesting in the interview was how selfless and service oriented Dan was in his response. Ultimately the driverless car would benefit Dan, but it is his values for environmental and financial well-being that drive his lack of enthusiasm in the driverless car.
The major issue I have with automobile ownership is the fact that automobiles are a financial and environmental burden 24/7 while transportation needs occur sporadically for short periods of time. This is a belief I hold regardless of my own ability to direct the automobile in question.In this response Dan demonstrated what I believe is the future of CSR evolution: minimalizing burden on areas such as financials and environment. I am sure Google is working to make affordable driverless cars with green car models. In the video I posted on this initiative it looks as though Google is using Prius, which is a step in the right direction. If that is Googles baseline, an affordable and green car, I think their vision is being mindful of people, planet, and profits.
This interview opened my mind to my own personal bias: I tend to generalize that a service initiative satisfies all recipients. In this case I assumed that the VI man in the video was enthused with the driverless car, therefore Dan will be too. This is a sticky trap to fall into as a leader. While we can't please everyone, we still need to keep in mind that multiple perspectives of a given service is needed before we generalize the benefits of that service. This was very eye opening!
In Conclusion
Can business do more than just business? That was the question that drove my initial interest in the topic of corporate social responsibility. Along my research journey I learned that companies can do much more than just make their shareholders happy, they can add tremendous value to the world by aligning their why (Sinek, 2011) with everything they do. Wild ideas, like driverless cars, or balloons with internet, are the ideas that test the boundaries of the next-generation of a purpose driven company. The companies that are applying a socially responsible model with flourish in the future and lay an amazing foundation for the world to flourish.
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