Corporate social responsibility (CSR) can be defined as the "economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time" (Carroll and Buchholtz). The concept of corporate social responsibility means that organizations have moral, ethical, and philanthropic responsibilities in addition to theirresponsibilities to earn a fair return for investors and comply with the law. A traditional view of the corporation suggests that its primary, if not sole, responsibility is to its owners, or stockholders. However, CSR requires organizations to adopt a broader view of its responsibilities that includes not only stockholders, but many other constituencies as well, including employees, suppliers,customers, the local community, local, state, and federal governments, environmental groups, and other special interest groups.
Corporate social responsibility is related to, but not identical with, business ethics. While CSR englobes the economic, legal, ethical responsibilities of organizations, business ethics usually focuses on the moral judgments and behavior of individuals and groups withinorganizations.
Organizations are expected to be efficient, profitable, and to keep shareholder interests in mind. Organizations have thousands of legal responsibilities leading almost every aspect of their operations, including consumer and product laws, environmental laws, and employment laws. The ethical responsibilities concerns societal go beyond the law, such as the expectation that organizationswill conduct their affairs in a fair and just way. This means that organizations are expected to do more than just comply with the law, but also make proactive efforts to anticipate and meet the norms of society even if those norms are not formally enacted in law. This may involve such things as philanthropic support of programs benefiting a community or the nation. It may also involve donatingemployee expertise and time to worthy causes.
Corporate Social Responsibility History
The nature and scope of corporate social responsibility has changed over time. The concept of CSR is a relatively new one—the phrase has only been in wide use since the 1960s. But, while the economic, legal and ethical expectations placed on organizations may differ, it is probably accurate to say that allsocieties at all points in time have had some degree of expectation that organizations would act responsibly, by some definition.
In the eighteenth century the great economist and philosopher Adam Smith expressed the traditional or classical economic model of business. In essence, this model suggested that the needs and desires of society could best be met by the “unfettered interaction of individualsand organizations in the marketplace”. By acting in a self-interested manner, individuals would produce and deliver the goods and services that would earn them a profit, but also meet the needs of others. The viewpoint expressed by Adam Smith over 200 years ago still forms the basis for free-market economies in the twenty-first century. However, even Smith recognized that the free market did notalways perform perfectly and he stated that marketplace participants must act honestly and justly toward each other if the ideals of the free market are to be achieved.
In the century after Adam Smith, the Industrial Revolution contributed to radical change, especially in Europe and the United States. Millions of people obtained jobs that paid more than they had ever made before and the standardof living greatly improved. Large organizations developed and acquired great power, and their founders and owners became some of the richest and most powerful men in the world. In the late nineteenth century many of these individuals believed in and practiced a philosophy that came to be called "Social Darwinism," which, in simple form, is the idea that the principles of natural selection and...