Keywords

3.1 Introduction

Corporate social responsibility (CSR) has become one of the most prominent topics in the field of business ethics (Aßländer and Curbach 2014). Several political initiatives, like the UN Global Compact (UNGC 2020), the OECD Guidelines for Multinational Enterprises (OECD 2011) or the Green-Book of the European Commission (European Commission 2001, 2011) have highlighted the social responsibilities of corporations. Currently, various new legal regulations, like the EU directive for disclosure of nonfinancial and diversity information (EU 2014) or the new French regulations concerning due diligence on human right abuses in the supply chain (ECCJ 2017) underpin the importance of CSR in the political context. Over the last decades, theoretical contributions have focused on various aspects of CSR including its normative foundation (e.g., Scherer and Palazzo 2007), as well as its historical (e.g. Husted 2015), political (e.g. Ungericht and Hirt 2010; Whelan 2012) or societal dimension (e.g. Djelic and Etchanchu 2017). Currently, the focus has shifted to the discussion of the practical implications of CSR in specific business sectors, like the banking sector (Scholtens 2009; Sigurthorsson 2012), the extractive industry and the mining sector (Berkowitz et al. 2017; Dashwood 2007) or the jewellery industry (Carrigan et al. 2017; Claasen and Roloff 2012).

In management theory and business practice, various instruments have been developed to safeguard responsible behaviour in and of corporations. Stakeholder-dialogues, whistle-blower hotlines, codes of conduct, CSR reporting and other instruments have become a fixed component in the organisational structures of nearly all large companies. Initiatives like the Global Reporting Initiative (GRI) or the International Standard Organisation (ISO) have set the benchmark for ethical conduct and transparency in the business world by defining widely accepted standards for reporting (GRI 2020) and appropriate business behaviour (ISO 2010). Thus, it seems that ethics has arrived in business practice and determines corporate decision-making.

However, corporate scandals, like the bribery scandal of Siemens, the emission fraud scandal at Volkswagen or the account fraud scandal at Wells Fargo, to name but a few, cast some doubts on the validity of such assessment. Most of the companies involved in the recent business scandals had implemented CSR programs and—at least formally—complied with elaborated codes of conduct concerning relevant ethical questions, like fight against corruption, conduct toward customers or honesty and transparency of managerial decisions. These cases only represent three examples of corporate misbehaviour. Yet, the list of corporations’ wrongdoing could be extended unlimitedly despite of all commitments to ethical standards and good business practices as well as the actual implementation of CSR instruments. Most corporations seem to be either unwilling or unable to apply such standards in their day-to-day business. It seems that the formal adoption of ‘ethical standards’ by far does not make an ethical company. So ‘What Went Wrong with CSR?’

To answer this question, the paper is structured as follows. First, we will briefly outline the discussion of CSR as it was initiated in the USA in the 1950s and summarise the most important issues and the original ethical intentions of this early CSR discussion. In a next step, we will analyse three recent developments in CSR practice, which, in our opinion, deserve critical attention and may help us to understand why corporations would not or could not ‘walk their talk’. It is (1) a strict orientation towards predefined moral standards, (2) following a pure governance logic when implementing CSR and (3) using CSR as a means for the symbolic adoption of responsibility (Aßländer 2015; Aßländer and Kast 2015). As we will show in the following discussion section, we believe that these developments deprived the CSR discussion of its essence by not substantially reflecting companies’ role and responsibilities in and for society, anymore. We will thus conclude with a plea for seriously reconsidering the meaning of ‘responsibility’ in ‘corporate social responsibility’ or abandoning the field of CSR in the social responsibility discussion while simultaneously reviving the discipline of business ethics.

3.2 The Early CSR Debate in the United States

With the beginning of the twentieth century, the role of modern corporations in societal life increasingly became an issue of political discussion. The question was whether such incorporated companies, primarily seeking to maximise profits on behalf of their shareholders, should be seen as ‘essentially a private association, subject to the law of the state but with no greater obligation than making money, or a public one which is supposed to act in the public interest?’ (Micklethwait and Wooldridge 2005: p. 54).

As early as in 1916, John Maurice Clark doubts whether modern capitalism and this new type of corporations serve the interests of the community. In an article in the Journal of Political Economy , he writes: ‘We have inherited an economics of irresponsibility. (…) We need an economics of responsibility, developed and embodied in our working business ethics’ (Clark 1916: 210). And he concludes: ‘The world is familiar enough with the conception of social responsibilities (…) But the fact that a large part of them are business responsibilities has not yet penetrated…’ (Clark 1916: 229).

However, for various reasons this early critique received little attention. It was only after WWII, at the beginning of the 1950s, that economists, theologians and philosophers re-started the theoretical discussion about the role of business in society, which became later known as the early CSR discussion (Carroll 2009). This series of critical publications started in 1953 with Howard Bowen’s seminal book Responsibilities of the Businessman . Therein, Bowen asks whether corporations bear social responsibilities beyond compliance with the law and making profit on behalf of their shareholders. In his book, he assigns a social responsibility to the businessman, which is defined as an obligation ‘to pursue those policies, to make those decisions, or to follow those lines of action that are desirable in terms of the objectives and values of our society’ (Bowen 2013, p. 6). While economic success remains the primary task of the businessman, he is also seen as a partner of governments who ‘is expected to cooperate with government in the formulation and execution of public policy’ (Bowen 2013: 28). For Bowen, the businessman functions as a trustee ‘not alone for stockholders or owners, but also for workers, suppliers, consumers, the immediate community, and the general public’ and should therefore ‘serve as a mediator, equitably balancing the legitimate interests of the several principal beneficiaries of corporate activity’ (Bowen 2013: 48–49). With this idea of balancing economic and social interests against each other, Bowen laid the foundation for our contemporary understanding of CSR as a responsibility towards a company’s stakeholders.

Although Marquis W. Childs and Douglas Cater in their book Ethics in a Business Society cast some doubts on the assumption that businessmen will balance various interests in society, stating that such Greek idea of ‘equilibrium’ is alien to the US business world (Childs and Cater 1954: 83), they, nevertheless, admit that American business has become more concerned vis-à-vis the social dimension of their business activities (Childs and Cater 1954: 98–99). However, they remain sceptical because they fear ‘that the doctrine of social responsibility espoused by businessmen is merely a propaganda device by which they hope to maintain power’ (Childs and Cater 1954: 99)—a concern that never lost its topicality and which is still present in the contemporary debate about CSR.

Only few years later, in 1957, Morrell Heald expresses his beliefs that the US business world has changed during the 1950s and writes: ‘A prominent aspect of the new capitalism (…) is the emergence of a ‘corporate conscience’, a recognition on the part of management of an obligation to the society it serves’ (Heald 1957: 375). In his book The Social Responsibilities of Business , first published in 1970, Heald upholds the above-mentioned ‘equilibrium idea’ of the establishment of a balance between the interests of business and society by business’ management as a sign for the new type of capitalism of the 1950s. And he adds—based on the statements of leading managers of the US-industry—that managers’ original role of trusteeship is now supplemented by new ideas like ‘team-leadership’ or ‘stewardship’ (Heald 2005: 274–275). However, he sees some clouds appearing at the horizon. If business increasingly assumes additional social responsibilities and engages for communities, then the lines between corporate obligations and governmental responsibilities concerning the provision of public goods are blurring (Heald 2005: 279–280). In want of a political theory assigning corporate and governmental duties in society, it becomes increasingly unclear who bears which responsibilities in society.

In the 1960s and 1970s, the discussion about CSR shifted from the question of the responsibilities of the businessman to a broader discussion about the interrelation between business and society. Thus, for example, Joseph McGuire (1963) in his book Business and Society asks the question about the role of the business firm in contemporary society and of its influence upon American culture. Interestingly, he thereby adds a new question to the discussion: If those who direct the fortunes of the giant corporations exercise power not only over the economic but also over the political and social destiny of the whole nation, ‘where do they obtain the authority to wield this power, and to whom are they responsible?’ (McGuire 1963: 138). The main assumption of early economic theories that private property legitimises the use of economic power no longer held as managers of large corporations did not own them anymore. Although McGuire does not outline this concept further, he nevertheless prepares the ground for the idea of a ‘license to operate’ as rationale for business operations in stating that to obtain public approval business has to behave ‘in accordance with the laws and ethical percepts of society’ (McGuire 1963: 276).

In his book Corporate Social Responsibilities , also Clarence Walton rejects the idea that corporations should only follow their economic interests. Probably too optimistically he states: ‘Growing evidence indicates that the modern corporation is consciously placing public interest on a level with self-interest and possibly above it’ (Walton 1967, vii). In this new understanding of corporations as socially responsible ‘citizens’, managers have to keep in mind the interrelationship between economy and society and should contribute to the community beyond delivering useful products and services, paying salaries to their employees or generate dividend for their shareholders. ‘There is no denying the fact that citizenship entails additional burdens, but the evidence appears strong that corporate executives are willing to shoulder these responsibilities as part of their professional obligations’ (Walton 1967: 110).

By and large, this early debate on CSR is concerned with the role of business in and for society. Criticising the common understanding that making business is a private concern and separated from other spheres of society, the proponents of the concept of corporate social responsibility believe that business is a part of society and should be embedded in a set of commonly shared values. Business, therefore, should be conducted in a way that is supportive for the execution of public policy (Bowen 2013: 28) and which is in line with the objectives and ethical values of a society (Bowen 2013: 6). In general, the business-world should be aware of its different social responsibilities vis-à-vis various groups in society.

This general idea is reflected in at least three specific issues. A first point concerns the excessive profit orientation of modern companies. The respective authors criticise the liberal doctrine of making profit as the best way to serve public wealth. Although they see the pursuit of economic success as legitimate target in business, they doubt that monetary interests should always range before the interests of the community and that company earnings should go at the expense of the majority of the society (Bowen 2013: 48–49).

A second point is related to the issue of responsible management and the professional role of managers. Managers are entrusted with power and, therefore, should act responsibly. As stewards of corporate assets entrusted to them by the community they have to use these assets not only in the interest of the company’s shareholders, but also in the interest of the society as a whole (Heald 2005: 274–275). Hence, responsibilities vis-à-vis the society have to be seen as part of the personal professional obligations of managers (Walton 1967: 110).

Third, the early proponents of the idea of CSR argue that in modern capitalism a corporation’s license to operate can no longer be based on the idea of arbitrary use of private property. With the separation of ownership from management and since business affects the social life in many ways, corporations should prove that their policies do not follow pure economic interests but are in line with ethical norms and societal expectations of society to be granted with a socially legitimised license to operate (McGuire 1963, p. 276).

Admittedly, this early discussion mirrors a widely accepted but rather unspecific unease about developments in modern capitalism that were considered to be harmful for society. The discussion was far away from delivering a new management conception, which would allow for integrating the idea of corporate social responsibility into management doctrine or practice. However, a new idea has rooted in the academic world, and it took only a few years until a first management-oriented conception of CSR was offered by Archie Carroll’s (1979) Three-Dimensional Conceptual Model of Corporate Social Performance . In his contribution, Carroll defines four types of corporate responsibilities (Carroll 1979, 1991; Pinkston and Carroll 1996): (1) Corporations bear an economic responsibility and should run their business in a profitable manner; (2) they bear a legal responsibility and should obey the law; (3) they bear an ethical responsibility and should respect the demands of their stakeholders; and (4) additionally, they bear philanthropic responsibilities and should contribute to the common wealth by philanthropic engagement as good corporate citizens. This widely regarded new approach to CSR allowed it to integrate specific aspects of corporate responsibility into management practice by defining clear requirements for managerial behaviour and decision-making. With this model, the discussion about corporate social responsibility not only shifted away from until then vague ideas about what social responsibilities corporations should bear but also became a conception for practical use.

However, this operationalisation of CSR for management practice departed from the original, broader CSR discussion about redefining the role of business in society. The focus of the CSR debate was narrowed down to the practicability of different CSR strategies and the ways of how they should be implemented into day-to-day business operations. From this managerial perspective, the question was no longer, what responsibilities corporations reasonably should bear, but how such predefined types of responsibilities could be implemented, and which instruments can be used to make a corporation a ‘socially responsible’ one.

3.3 CSR—Losing Its Ethical Roots

With the adoption of the CSR conception in management theory, CSR has lost its ethical roots. While the original CSR discussion mainly concerned the question which responsibilities corporations bear towards society, in the managerial discussion the question how to implement responsibility in the business practice prevails. In our view, at least three developments in this managerial discussion seem to be problematic, since they prevent or at least strictly limit any serious discussion about the social responsibilities of corporations (Aßländer 2015; Aßländer and Kast 2015). It is: (1) a strict orientation towards predefined moral standards, (2) following a pure governance logic when implementing CSR and (3) using CSR primarily as a means for the symbolic adoption of responsibility. We will explain our concerns, step by step, in the following paragraphs.

3.3.1 CSR—Processing Responsibility by Standardised Checklists

In business practice, ethical considerations about responsibility take the backseat. A corporation’s ‘social responsibility’ is predefined by various standards like the Global Compact, the ISO 26000 Guideline or the OECD Convention for Multinational Enterprises, to mention just a few. Main topics, reiterated in nearly all documents, are labour rights, human rights, consumer rights, prevention of corruption and environmental protection (e.g. ISO 2010: 23–60; OECD 2011: 31–54). Additionally, various industry-specific guidelines, like the Forest Stewardship Council (FSC 2020) or the Responsible Care program of the chemical industry (Responsible Care 2020), regulate special requirements of responsible behaviour, which are typical for the respective industries, like the protection of the rights of indigenous peoples or the handling and disposal of hazardous materials. Nearly, all of these documents refer to the respective publications of the United Nations or the International Labour Organisation concerning labour rights, human rights or prevention of corruption (an overview provides Roloff 2011: 254). Referring to such ‘sacrosanct’ documents like the Universal Declaration of Human Rights , which claims to reflect the firmly beliefs of the whole community of nations, relieves firms’ management from the obligation to analyse corporations’ business responsibilities themselves. But, even more importantly, using such internationally accepted standards as a predefined list of responsibilities allows for replacing serious reflection about the range of responsibilities of the single corporation by a nearly identical list of unchallenged ‘responsibilities’ for all corporations.

In the 1970s and 1980s, there was, for instance, a serious political and academic discussion about employee codetermination, meaningful work, just treatment of labourers or fair payment (cf. Strauss and Hammer 1987; Benelli et al. 1987), which was followed, among others, by corporations’ realisation of employee stock option plans and other forms of worker participation. Over the decades, the theoretical CSR debate about employee relations progressed and concepts of work–life balance, gender aspects or diversity have also affected corporate policy, especially in western countries. However, the list of work-related topics, which has entered the CSR standards, remains exclusive. Topics like the destruction of domestic workplaces due to the business practice of outsourcing production to low-cost countries or hiring low-paid temporary workforce to replace permanent workforce are not challenged by CSR’s proponents. Yet, such CSR understanding as compliance with an exclusive list of CSR standards, as it has become usual in industry, does not foster any serious individual reflection of what corporations ought or can do and what their respective responsibilities vis-à-vis their employees should be.

As the compliance idea dominates the CSR understanding in business practice, guiding principles, like SA 8000 or ISO 26000, have become ‘de facto law’, and serve as ‘checklists’ for responsible behaviour. From perspective of corporations, the question of a substantive justification of the responsibilities they should assume is thus reduced to the question of how to operationalise and implement the provisions of the respective international standards in their business practices. In most cases, this operationalisation follows the managerial logic of command and control, expressed by the processing of standardised CSR checklists: External demands from international standards are ‘translated’ into elaborate corporate codes of conduct and detailed regulations for nearly every critical business operation, like receiving gifts or dealing with insider information. Sophisticated monitoring and control systems, like anonymous whistle-blower hotlines or electronic monitoring systems to control the account activities of managers, are implemented to control employees’ compliance with these codes and to detect and report misbehaviour. Ethics officers are hired to offer ethics training for employees, and ombudsmen serve as contact persons in case of problems with code compliance. Corporations elaborate detailed audit-schemes and hire professional auditors to formally control labour conditions and adherence to environmental standards along their supply chains. In sum, ‘responsibility’ becomes a strategic target among others and is operationalised by breaking down responsibility to a list of predefined ‘CSR requirements’.

Although such practices are worthwhile in general, the standardisation of the CSR debate has the unintended consequence to limit the discussion of corporations’ responsibilities to the minimal requirements as defined by the above-mentioned documents. Issues, which are not defined in such standards, like equitable management remunerations, old-age poverty due to low salaries or undue influence on political decision-making in favour of companies’ interests, are not discussed in the context of corporate social responsibilities (Aßländer and Löhr 2010: 22). All in all, this practical CSR debate has become a discussion about a narrow set of corporate responsibilities and focusses rather on an externally and politically defined set of goals than on the comprehensive and specific responsibilities of individual corporations. Most part of this discussion concerns pure technical aspects of the implementation of predefined standards and does not foster any substantive discussion of responsibility within corporations and their sphere of influence.

3.3.2 CSR—The Logic of Governance

Since responsibility in the contemporary CSR discussion has become a management tool prone to standardisation, its implementation is primarily seen as a question of corporate governance. This has opened the pathway for a new consultancy industry enticing companies with supposed advantages of CSR. Thus, for instance, CSR efforts should increase sales figures, strengthen brand loyalty of customers, motivate workforce or attract investors (Kotler and Lee 2005: 10–11). To succeed in business, corporations should have a customised CSR strategy (Urip 2010), develop a business plan for their CSR activities (Werther and Chandler 2006: 69) and should have a high CSR performance to survive in competition (Vitt et al. 2011: 150–151). ‘Oceans of ink have flowed to support the claim that corporate virtue delivers financial rewards’ (Vogel 2006: 11).

In this view, it is not the aim of CSR to increase managerial awareness for responsible business practices or corporate social obligations vis-à-vis the community anymore. Quite the opposite: CSR should help to stabilise the corporate environment to avoid state regulation of critical issues (Haufler 2001: 42), to lower the pressure of critical non-governmental organisations (NGOs) (Fombrun et al. 2000) and to increase the non-monetary capital-base (human capital, social capital etc.) of the corporation (Leisinger 2007). Especially, business consultants emphasise a kind of ‘strategic CSR’, which is not contradictory but geared to the business interests of the corporation. In this sense, investments in an educated and well-informed workforce create motivated employees and pay off due to an increased productivity. Similarly, investments in social and economic conditions in low developed countries increase wealth and thus create new markets (Porter and Kramer 2002, 2006). From such point of view, CSR has to be considered economically advantageous because it focuses on future business opportunities. And even if it is difficult to show a direct monetary success of such efforts, it is argued that CSR activities at least are rewarded by an increase of corporate reputation (Gardberg and Fombrun 2006). CSR, thus, becomes an investment in an ‘intangible asset’, which helps to increase profits and must be used in the most efficient manner.

In such ethics business, ‘CSR has long departed from the discursive plane of business ethics and has become (…) commercialised’ (Shamir 2005: 230). This has little to do with the original ethical discussion about the responsibilities of the businessman or the role of business in society and leads to an adverse logic that sees responsibility as a kind of strategic tool. However, acting morally to receive economic rewards leads to a logical contradiction since such behaviour is not moral in an ethical sense. The conclusion that responsible business practices lead to an increased reputation and that an increased reputation helps to make profits is misleading. Responsible business practices lead to reputation since this shows that in the mindset of the management social responsibility ranks before pure profit-making (self)interests. If striving for reputation is used just as a means for profit making, reputation is lost eventually (Aßländer 2013). It is a well-observed paradox that honesty and integrity lead to reputation and thus may entail economic advantages, but that this presupposes that striving for honesty and integrity is a value for its own sake and not misused as a means for economic success (Bowie 2017: 139).

With turning business ethics into an ethics business, the CSR debate has visibly shifted away from its original question of responsible managerial practice and the intention to define requirements for regulating a managerial ethos. While within other professions, as lawyers, engineers, or medical professionals, standards of individual ethical behaviour are discussed by professional associations, in the field of management such association which would define an ethos for managerial behaviour is still not existent. Early attempts to establish a charter of ethical standards for managers, like the Davos Manifesto of 1973 (Lozano 2001), have failed and the Davos Manifesto, by and large, remained meaningless. Also later attempts to define standards for responsible managerial behaviour, as outlined for example in the principles of the Caux Round Table for Moral Capitalism, stem from voluntary initiatives of some business leaders and serve only as ‘a statement of aspirations’ (Caux Round Table 2020), but did not reach the status of binding professional rules for managers.

CSR requirements by and large are not addressed to individual managers—like the professional requirements for individual lawyers, engineers, or medical professionals—but focus on a corporation’s business organisation. Thus, the focus of CSR has shifted towards aspects of corporate governance, which has opened a new market for business consultants offering a wide range of seemingly profitable CSR strategies and instruments to corporations while neglecting responsible managerial behaviour as such. However, the purchase of such products and services is not suitable for advancing a corporations’ comprehensive responsible business practices and may not even increase corporate reputation in the long run—the promise of which is a major selling proposition offered by CSR consultants.

3.3.3 CSR—The Symbolic Adoption of Responsibility

At least in its practical application, CSR has departed from its original meaning as a critical evaluation of corporate roles in society as it has been the starting point of the CSR discussion in the 1950s and 1960s. CSR is now defined by a mixture of CSR standards, best-practice examples, and social as well as political demands. It is additionally framed by a whole, unregulated industry offering potentially profitable CSR strategies and ‘ethical’ instruments. This makes it difficult to understand what CSR really is. As Benedict Sheehy (2014: 4) notes, the ‘focus on specific behaviours and their classification fails to advance an understanding of the phenomenon of CSR’, and adds: ‘The better approach, therefore, is to ask and examine what type of institution CSR may be…’ He believes that CSR has reached the status of an institution, like ‘free enterprise’ or ‘private property’, which is defined primarily by societal norms and legal regulation. From this point of view, CSR is constituted by CSR-defining norms, like ISO 26000 or the various UN-Guidelines and the concomitant ‘social practices’ in corporations, like stakeholder dialogues or social reporting.

This might explain why for most companies CSR seems to be less a question of ethical behaviour but simply a question of how to strategically implement and communicate CSR-relevant activities—which then might symbolise the taking on of social responsibility. From this perspective, CSR activities serve as an act of symbolic adoption of responsibility (Bromley and Powell 2012) and are seen as helpful tools and the cheapest way to settle critique from outside the company (Behnam and MacLean 2011). Instead of examining the ethicality of corporate activities, CSR activities are used to internally and externally create the image of a responsible company and thus might help to establish a ‘good corporate conscience’. This view seems to have gained widespread attention. Thus, for instance, Klaus Leisinger (2007: 326) believes ‘that a record of responsible behaviour plus corporate philanthropy can (…) help to mitigate public criticism of corporate behaviour’.

For most corporations, CSR remains a demand from outside the corporation and is decoupled from their core business practices (Meyer and Rowan 1977: 356). It helps the company to prove that they are doing something good but distracts from the critical discussion of other corporate activities. Thus, CSR in practice leads not to a reconsideration of corporate policy but is used to cover unaltered, superordinate financial interests by symbolically complying with external social and political demands. In this vein, as Bromley and Powell (2012: 404–405) note, various ‘[s]tudies of corporate philanthropy and environmentalism and CSR have analysed these practices as symbolic actions tied to managing external pressures, largely disconnected from an organisation’s core work’. Interestingly, Bromley and Powell analyse two different types of decoupling CSR from daily business practices: Policy-practice decoupling and means-ends decoupling. ‘Whereas policy-practice decoupling can be thought of as symbolic adoption, means-ends decoupling is better characterised as symbolic implementation. Means-ends decoupling helps to explain why organisations implement a range of practices (…) that have an opaque relationship to outcomes’ (Bromley and Powell 2012: 497).

In business practice, the symbolic adoption of CSR can manifest itself, for example, in the formal proclamation of CSR strategies which are not lived up to, or the formal commitment to CSR standards, like the UN Global Compact, which are not implemented in any actual business practice. The symbolic implementation is often found in form of a set of CSR instruments, like codes of conduct or whistle-blower hotlines, or the provision of large budgets for philanthropic engagement that represent symbolic acts which allow companies to formally comply with legal regulations and the demands of the broader public, but are intended to shield the true business interests from public criticism. Both types create what Behnam and MacLean (2011: 47) have labelled a ‘credibility cover’, which helps the corporation to get legitimacy and to uphold its license to operate while doing business as usual. For corporations, such pure formal compliance instead of substantive changes of corporate policy and practice seems to be the cheapest way ‘to protect internal activities from external monitoring’ (Bromley and Powell 2012: 484).

The conclusion that the practice of decoupling is more than a vague suspicion is supported by Aldag’s (2013) observation that many of those companies used in literature as ‘best-practice-examples’ for having financially successful CSR activities also faced numerous corporate scandals during the last years. The exemplified cases of Siemens, Volkswagen or Wells Fargo support this thesis. Thus, the critical question should be allowed whether positive financial results follow from CSR activities—as proponents of CSR’s win-win scenario would likely do proclaim—or rather from extensive corporate malpractices, while the isolated CSR engagement was intended to shield those unethical, but financially rewarded practices from detection.

3.4 Discussion—What Went Wrong with CSR?

As we have outlined in the previous paragraphs, we believe that the desired ethical effects of the concept of CSR are jeopardised by several erroneous developments. We do not doubt that it is the intention of most of the practical efforts in the field of CSR to foster ethical behaviour in and of corporations. Nevertheless, the debates about which CSR instruments are suitable and of how CSR can be implemented in corporations shifted significantly away from the original CSR discussion. The key problem with this shift is that these recent debates ignore the indispensable fundament of CSR, that is, the serious considerations about the role of business in and for society.

  1. 1.

    Our first observation is that it has been the original concern of the early CSR debate to scrutinise the role of business in society by arguing that business affects society in many ways and, therefore, has different responsibilities vis-à-vis various groups in society, whereas in the recent CSR debate the responsibilities of corporations are reduced to predefined standards. Although such international standards, like ISO 26000 or the OECD-guidelines, provide detailed lists of social responsibilities, the listed responsibilities remain commonplaces. Thus, for instance, the ISO 26000 Guideline defines as its core principles that ‘an organisation should accept that respect for the rule of law is mandatory’, that ‘an organisation should respect international norms of behaviour’ and that ‘an organisation should respect human rights and recognise both their importance and their universality’ (ISO 2010: 12–13). However, ‘respecting the law’, ‘respecting international norms of behaviour’ or ‘respecting human rights’ are matters of course one would expect of every actor and which do not constitute specific corporate social responsibilities. Although ISO 26000 also lists ‘accountability’, ‘transparency’, ‘ethical behaviour’ and ‘respect of stakeholder interests’ as core-responsibilities of organisations, in business practice these demands have been translated into straightforward and readily available standard procedures like organising annual ‘stakeholder dialogues’, establishing ‘ethic-hotlines’ or reporting according to the standards of the Global Reporting Initiative. For dealing with these new requirements, new departments have been created, and public relations agencies have been appointed. But as our initial examples show, this standardisation of CSR has not substantially affected business practices in corporations or their awareness about their obligations towards society. This is due to standards’ often vague classification of CSR-relevant topics—either because no compromise about their contents would have been reached otherwise or in order to not refrain too many companies from joining the respective initiatives. Thus, such general standards obviously lack to give advice with respect to the specific situation of individual companies. Most of these international standards have neither implemented audit schemes to monitor corporate behaviour nor established procedures to penalise deviant behaviour. Since international standards are often the result of a long-winded and cumbersome political process, they only reflect the situation of the past and are too slow for adjusting norms of behaviour to newly emerging critical aspects of corporate behaviour. Important social topics, like workplace security, old-age poverty exacerbated by an increasing number of low-income jobs and temporary employment or social injustice caused by income disparities are not discussed in the context of corporations’ social responsibilities—although corporations are part of the problem. Additionally, these standards—if not decoupled from business practice anyway—are often implemented by classical management procedures of command and control, which do not foster a sense of responsibility but compliance with rules and external demands. Thus, standards like ISO 26000 have done a disservice to the initial debate of corporate responsibilities since they have terminated the broader discussion about how business can or should contribute to the well-being of a society and how each individual corporation might contribute to this end.

  2. 2.

    Our second point of concern is that in the early CSR debate it has been a hallmark to criticise the liberal doctrine that a companies’ pure profit-orientation would be the best way to generate common wealth. Besides the lack of proof for this assumption, seen from this perspective, the ‘morality pays’ argument easily results in the opposite belief: ‘morality has to pay’. Thus, questions about the legitimacy of corporations’ profit interests are no longer on the agenda of the recent CSR discussion. Asked why corporations should engage in CSR activities, business students from various business schools in the US referred to the ideas that CSR allows for increasing corporate reputation, betters work-force satisfaction, improves market-position, reduces capital costs etc. (Buchholtz and Carroll 2009: 53). Thus, the alleged economic success becomes the key-driver behind the CSR efforts of corporations. From such perspective, business is not ‘good business’ because it is ethical, but ethics is ‘good ethics’ because it is profitable. But such logic reverses ethics into a strategic tool, which effects will not last very long since it is not rested on integrity and moral convictions as the above-mentioned companies show. If ethical behaviour is legitimised by its profitability, it is abandoned when morality does not pay off. Who pays his children for telling the truth should not be surprised when they start lying if he quits payment. Or, as Jean-Jacques Rousseau has already observed two hundred years ago: ‘Who is doing good for monetary reason is just waiting for being better paid to do evil’ (Rousseau 1995: 233–234). Thus, for example, it should have been obvious for every manager at Volkswagen—to refer to one of our initial examples—that cheating with software manipulations is unethical, nonetheless, serious reflections about the ethicality of such behaviour have been overridden by a ‘win-at-any-costs’ mentality. Therefore, it is one of the fundamental errors of the recent CSR discussion to promote the ‘business case for CSR’ and to see CSR as a strategic tool for generating economic advantages. This development might be the result of the well-intentioned attempt to convince corporations to change their socially harmful behaviours by offering them arguments according to their own profit-oriented logic. However, permanent attempts from scientists and practitioners to substantiate and proof the link between profit and ethical behaviour resulted in an attitude where economic success is perceived as the prime legitimising factor for ‘responsible’ managerial behaviour. In practice, this leads to situations where ethical concerns are fade out in the process of corporate decision-making leaving its original logic of pure profit-maximisation untouched. But precisely such win-at-any-costs mentality of the early dog-eat-dog capitalism and the resulting socially harmful outcomes have been major points of critique of the early CSR debate. Its proponents advocated that a company’s pursuit of profit should be limited by legality and ethicality—a state that cannot be reached by twisting CSR according to the nowadays proclaimed ‘morality has to pay’ logic. Making compliance with moral standards dependent from profitability is, at least from the philosophical point of view, inacceptable. From a philosophical stance, ethical rules cannot be overridden by monetary interests.

  3. 3.

    While it was a concern of the early CSR discussion to stress the personal responsibilities of managers and their role in considering the company’s obligations towards society, our third point of criticism is that in recent CSR discussion responsibility has become a matter of corporate governance and less a question of managerial integrity. Most CSR instruments implemented in business focus on legal compliance and aim at protecting the corporation against litigations. However, this perspective prevents managers from having a critical look on their personal business maxims and to examine critically how their decisions affect society.

From a managerial perspective, CSR is not a reference point for a critical discussion of the company’s specific business practices but has become a strategic investment and part of an ‘ethics business’. Yet, to limit ethical considerations to ‘profitable ethics’ absolves management from ethical reflection of their business decisions and its effects on society and intensifies the problems described above. Seeing ‘responsibility’ as a kind of ‘profit-centre’ and not as a requirement for integer managerial behaviour distracts from the original intention of CSR in stressing personal responsibilities of managers entrusted with corporate assets by the community and their role as stewards towards society.

It was one of the concerns of the early CSR debate to widen the scope of business responsibilities of managers in ‘contemporary capitalism’ by discussing potential contributions of business to society as fundament of the corporations’ license to operate. However, social responsibilities in the recent CSR discussion are rather discussed in the context of how to implement a set of commonly agreed upon international standards and how to develop profitable CSR strategies and instruments. Although we do not doubt that the standards define important matters of corporate responsible behaviour and are based on commonly shared values, and that in many cases the implementation of CSR strategies and instruments does create some positive outcomes, we nevertheless see the problem that such approach fosters the pure symbolic adoption and implementation of a special kind of ‘prefabricated’ responsibilities. From practitioners’ perspective, CSR has become an institution constituted by certain standards and practices. For acting in congruence with these requirements, it is, in many cases, sufficient if companies formally adopt or implement a set of approved CSR policies and practices and thus display their ‘good corporate conscience’. Indeed, there seems to be a wide consensus about this institutionalisation of CSR. It is interesting to note that neither in politics nor in the critical public, represented by various critical NGOs, the symbolic adoption or implementation of CSR is dismantled. Thus, for instance, there seems to be an agreement between NGOs and corporations that measures like audits in the supply chain or reporting in accordance with the guidelines of the Global Reporting Initiative are adequate instruments to comply with the rules of CSR. However, there is no discussion about the increasing production shift from industrial to low-cost countries, which triggers the problems of low income and weak social standards. And even from side of governments, CSR is rather seen as a welcomed means to release public funds (Albareda et al. 2008: 358f.) than as rationale to redefine corporations’ role in society. This is all the more astonishing when considering that governments had to bail out car manufacturers and investment banks during the economic crisis in 2008–2010 by various governmental programs in nearly all industrialised countries. But, except from some half-hearted reforms, after the crisis business went on as usual. As Ronan Shamir (2005, p. 232) notes strikingly: ‘Corporations, non-profit organisations, business-sponsored civic groups, commercial entrepreneurs, and business consultants, among others, participate in this constructivist theatre…’ Thus, corporations’ CSR policies and practices seem not only to be regularly decoupled from corporate core business activities but CSR also has long departed from its original intention to critically examine corporations’ contributions to society as fundament of their ‘license to operate’.

3.5 Conclusion—Replacing Responsibility by Strategy?

Since Maurice Clark’s early claim for an ‘economics of responsibility’ (Clark 1916: 210), the discussion about business responsibilities has never stopped. In this vein, the CSR debate has added much to answering the question of what corporations should bear responsibilities for. However, recent development of CSR practice shows a different picture. For most companies, CSR has become a means for gaining reputation, earning profits, and mitigating public criticism while behind the curtain doing business as usual. This is far from the initial intention of Maurice Clark and others when demanding corporations’ to take on their manifold corporate responsibilities in and for society and thus help to increase social welfare.

As we have outlined in the previous paragraphs, the contemporary practice of CSR has departed from the early idea of corporate responsibility. CSR has become an institution defined by political rules and different social practices. Especially in the ‘instrumental’ perspective (Garriga and Melé 2004) of consultants and business practitioners, CSR has become a managerial tool that promises to yield profits and helps to ‘manage’ the attribution of responsibilities from outside the company. In this instrumental understanding, CSR facilitates to comply with a set of predefined ‘responsibilities’ without endangering the profit strategies of the corporation, but has not yet contributed to initiate a fundamental change in the corporate understanding of ‘responsible business’ for the benefit of society. The pure symbolic adoption of responsibility might explain why CSR policies—as outlined in the various codes of conducts and mission statements of nearly all larger corporations—did not lead to responsible business behaviour but did remain ‘symbolical commitments’ (Lim and Tsutsui 2012: 89) and thus could not avoid rock-solid business scandals as outlined at the beginning of the chapter.

During the last decades, the focus of the CSR discussion has moved away from matters of responsible corporate policy and practice to questions of ‘best-practice’ in the efficient implementation of profitable standards and instruments. While the initial debate focused on the ethical legitimation of corporate behaviour, it has now shifted to the financial legitimation of ethics. Such kind of CSR is not in conformity with an idea of ethics understood as critical reflection of morality and is far away from critically challenging the role of business in society.

If CSR is exercised mainly as a symbolic act for the assumption of responsibility, such CSR practice risks not only to lose its credibility but also to miss the point of conducting business with integrity. As Thomas Donaldson and James P. Walsh (2015: 198) note: ‘a firm is a moral entity that works in and for society. As such, a firm holds two interrelated purposes: first, a focal purpose that reflects its work in society and second, a contextual purpose, a purpose that reflects its work for society’.

With respect to the roots of the CSR discussion and in consideration of its recent undesirable developments, we suggest a quite more serious reflection of what corporate responsibility in and for society means and call for several respective adjustments of the CSR debate.

We strongly believe that the debate about corporate responsibilities must primarily focus on the ethical meaning of responsibility. We thus believe that the debate about corporate responsibilities should go beyond the business case for CSR. To believe that CSR instruments, originally intended to establish responsible behaviour, should pay off undermines the concept of responsibility as such. Thus, acceptance must be raised that fostering responsible business behaviour is an arduous task, which does not always yield profits. Additionally, it takes quite more than the adoption of some CSR standards or the isolated implementation of some CSR instruments to make a socially responsible company. To believe that the formulation of a code of conduct, the implementation of whistle-blower hotlines and other control mechanisms, or social reporting according to one of the readily available standards could create company-wide responsibility implies to make a means to an end. What we need, therefore, is a revived debate on the relation of business and society to achieve a new political and social understanding about the purpose of corporations.

Certainly, there are theoretical debates about the new political role of corporations in society (e.g. Scherer and Palazzo 2007; Matten and Crane 2005; Logsdon and Wood 2002). However, these debates obviously have not yet affected the self-understanding of corporate actors regarding their social and political co-responsibilities. As the above-mentioned developments show, from corporate view ‘responsibility’ does not result from a vivid discussion about what corporations may contribute to solve global problems in society but is seen as something, which can be ‘produced’ by implementing standardised governance instruments. Most international standards, however, can be seen as a minimum requirement at best. They reflect a political compromise, exclude important topics, which are not regulated by the core-documents of the international community, and reflect only a small part of corporate responsibilities. If it is one of the central elements of CSR that corporations should ‘cooperate with government in the formulation and execution of public policy’ (Bowen 2013: 28) and balance their interests with those of society at large, then the implementation of some standardised CSR tools is nowhere near enough. What is required is an active participation of corporations in political and social dialogues to find concrete ways to support the societies they live in, instead of lobbying for their business interests. From perspective of society, to accept business as partner in political affairs, clear rules, clarifying the form and scope of corporate political engagement have to be developed (Aßländer 2011). Only then fruitful results as, for example, with the 1970s debate about employee codetermination and fair payment can be achieved.

All the more important are attempts to foster the establishment of management professional ethics as binding rules for managers—one of its original roles the discipline of ‘business ethics’ should pursue more insistently than in recent years. In this context, the company-wide implementation of a consistent corporate culture which fosters the sense of personal responsibility among managers—which can definitely not be reached by monetary incentive schemes—can be seen as fundamental precondition for serious CSR where societal needs and business interests are regarded simultaneously in the managerial decision-making process. Without a sense of responsibility among managers with regard to the social responsibility of business, CSR remains a concept where ‘social responsibility’ is seen as a side constrain of strategic business considerations and the profit-maximisation for the benefit of some shareholders. What we need, therefore, is a reconsideration of the managers’ role as a steward of entrusted assets who has to act not only in the interest of the company’s shareholders, but also in the interest of the society as a whole. Although, there are academic discussions about replacing the idea of managers as agents of the company’s shareholders by a conception of managers as stewards (e.g. Ghoshal 2005; Donaldson 2002, 2008) this has not yet influenced corporations’ actual behaviour. This might be due to the fact that these insights have not yet changed managerial education at business schools. Therefore, especially in business schools the dominant paradigm of CSR as a strategic factor of economic success has to be replaced by a serious discussion about managerial responsibilities and a congruent managerial ethos to prepare an effective generation change in the business world.

In summary, our suggestions for reshaping the recent CSR debate call for stressing the role of ‘responsibility’ in ‘corporate social responsibility again. If, however, the instrumental perspective on CSR prevails in the future, the concept of CSR cannot substantially broach the issue of corporations’ role in and for society and thus cannot be called a discussion about corporate social responsibilities anymore. In this case, it would be best to disband the CSR debate as a practical and profit-oriented strategic concept—maybe even by visibly relabelling it as Corporate Social Strategy—and reviving the discipline of business ethics instead. Otherwise, the symbolic adoption and implementation of CSR is too easily conducted and thus the institution of CSR cannot be the one legitimising business’ ‘license to operate’.