Keywords

In the time of ancient Rome, the laws originally revealed social responsibility and corporate behavior for example hospitals and homes for the poor, old, and orphans (Chaffee, 2017). During the Middle Ages, this notion of responsibility and behavior was continued with the English Law. Later in the following centuries, this concept was focused on social problems such as poverty, working class, and child labor which led to the creation of social welfare programs to improve the quality of employees’ lives both in Europe and the United States of America (Carroll, 2008; Harrison, 1966). After World War II, it was a time of changing attitudes toward corporate social responsibility (CSR). Bowen (1953) proposed a new approach that related social responsibility to the business. His definition aimed at improving the business response to its social impact which made him the Father of Corporate Social Responsibility (Carroll, 1999). This approach led to concern about corporate behavior and its response to the social context of the time such as environment, culture, human values, and economy (Agudelo et al., 2019).

Though some scholars introduced a wider scope of CSR, others still hesitated with the concept. Friedman (1970) argued CSR is activities that misuse companies’ resources by spending money for the general social interest. His perspective on CSR was to make as much money for stockholders as possible (Cadbury, 2006). Preston and Post (1975) identified a clear boundary for the company's responsibility, indicating that the company has no obligation for involving and improving social issues. On the other hand, the overall social context drove robust pressure on businesses to provide corporate behavior according to the social expectation. The business was asked to provide broader responsibilities to society, especially on human values (Agudelo et al., 2019). This discussion on the different concepts of CSR presented the increasing interest among scholars and society. The absolute meaning of CSR is still unclear, so it depends on which concept scholars believe (Sethi, 1975; Votaw, 1973).

Jones (1980) provided a new idea on CSR by focusing on operationalization rather than concept. This idea created the frameworks, methods, and models to evaluate CSR from an operational perspective. In the 1990s, the concept of CSR influenced organizations internationally toward social responsibility and sustainable development regarding global concerns (Carroll, 2015). As CSR contributes to improving the quality of life of society in terms of responsibility, CSR can be used as a strategy in supporting business activities to improve the company's effectiveness and achieve its goals (Burke & Logsdon, 1996). Therefore, strategic CSR obligates organizations to bridge business and society's needs by minimizing the negative influences and maximizing the positive influences of its actions on society in the long run (Lantos, 2001).

Friedman and Miles (2002) proposed stakeholder theory which provided a new aspect of strategic CSR by offering a broader perspective of the stakeholder. This theory believes that business has a responsibility toward suppliers, consumers, employees, stockholders, and the local community. Strategic CSR is pointed out as a key dimension in creating the company's value by focusing on the relationship between corporations and their stakeholders (Burke & Logsdon, 1996). Therefore, contributing to strategic CSR by demonstrating the new roles and responsibilities concerning social issues creates a brand image and generates the shared value of the company (Trapp, 2012). By looking at CSR from a holistic perspective, this concept helps businesses to balance the challenges and opportunities of the time in their society.

Based on the different concepts of CSR, it depends on which concepts the companies agree with and prefer to implement to create the value of their organization. The different perspectives reflect how companies engage in CSR and reveal different actions and results. As there are two sides to the same coin, CSR obtains both good and bad aspects depending on what concepts are being implemented, whose interests are being examined, how much knowledge in social responsibility exists, and what activities are being done.

The majority of research proves the importance of CSR on businesses’ performance (Virakul et al., 2009). Strandberg’s (2009) research noticed that CSR helps companies to motivate, attract, and retain human resource talents. According to the study of Asogwa et al. (2020), 56 listed firms on Nigerian Stock Exchange (NSE) were selected on the data availability between 2009 and 2019. This study examined the effect of CSR on firms’ value. The finding showed that CSR intensity activities significantly positively affected the firms’ value and firm performance. The qualitative research of Jenkins (2004) also determined the benefits of CSR activities on the selected SME companies: for instance, improving employee motivation, improving image and reputation, increasing market position, and increasing attractiveness to potential recruits.

In opposition, there is some support for the debate that CSR redirects resources away from stockholders. According to the concept of stakeholder theory, CSR is an approach to protecting stakeholders’ benefits and reputation. It is the duty of companies to make profits for their stockholders so spending money on CSR activities takes away the profits from stockholders (Kaewchird, 2016). Any mismanagement of CSR investment may also lead to destroying the company image or endangering the existence of the company and then removing benefits and reputation from stockholders. Some research studies presented bad aspects and company misconduct in CSR; for example, Nike spent $10 million to $12 million a year, just for the CSR staff to go to these sustainability meetings all over the world (Kanji & Chopra, 2010). This is also a good example of the misguided virtue of CSR. Another mismanagement of CSR is that global corporations such as British American Tobacco undertakes CSR activities to distract the public from ethical questions raised by their core business operations regarding the health effects of tobacco (McKibben, 2006). Some companies lack knowledge of social responsibility which leads to destroying society rather than value adding. These strategies drive the criticisms of CSR.

Therefore, the critique that CSR redirects resources away from stockholders may not be fully true, as CSR could provide the stakeholders’ benefits in other ways besides money such as trust and understanding, motivation, and image. Understanding the original purpose of CSR can lead to an increase in the benefits for stakeholders and society. However, implementing CSR for a company's advertising without a real understanding of social responsibility leads to the criticism that CSR removes resources from stockholders (Kaewchird, 2016). In conclusion, using the different concepts of CSR depends on how a company views CSR, which reveals how the company engages in CSR and its results on stakeholders and society.

Ethics and CSR in Business

After the introduction of CSR and the CSR debate clarified in the first section, this section will consider that the job of each business is to figure out what they should do about CSR and what factors they need to think about while setting CSR policy. In this section, four elements regarding ethics and CSR in businesses are introduced and  the conceptual framework is provided to business as a guideline to set CSR policy.

Two Groups of Forces for Business to do CSR

Roughly, two groups of forces including external forces and internal forces need to be considered by business at the beginning of setting CSR policy (Panayiotou et al., 2009; Šontaitė-Petkevičienė, 2015). External forces refer to the forces located in the macro-environment of business, which are related to its value chain and business model (Panayiotou et al., 2009) and have an impact on aspects of business such as market share and share price (Lamberti & Lettieri, 2009). Internal forces are the micro-forces which exist outside and inside of a business and have a direct impact on the operation of the business such as financial performance and reputation in the local community (Cho et al., 2019). PESTLE framework and stakeholder theory (Panayiotou et al., 2009) are briefly detailed to analyze those forces to answer what forces a business confronts.

According to PESTLE, six environmental factors should be analyzed by business, namely political, economic, social, cultural, technological, legal, and environmental factors (Perera, 2017). Analyzing these factors will help businesses generate rich information in terms of the political and economic laws and policies, social contract and cultural norms, the level of technology, and environmental issues (Panayiotou et al., 2009). Then, the data gathered can be used as the guidelines to businesses to set each responsibility of CSR.

After analyzing the macro-environment, stakeholder theory offers a framework for businesses to analyze those micro-factors, namely customer, supplier, employee, investor, the local community, and others who have a stake in the business (Freeman & Phillips, 2002). Early studies have provided sufficient data to argue that customers tend to purchase products from those businesses who conduct CSR activities and take a stand on some social issues such as corruption and air pollution (Šontaitė-Petkevičienė, 2015). In addition, present studies suggest that taking a clear stand in CSR has an impact on the work attitude of employees, in particular the younger generation (Šontaitė-Petkevičienė, 2015). Therefore, it is vital for businesses to scan and analyze those forces above before setting the CSR policy.

Three Ethical Theories for CSR

Three main ethical theories including utilitarianism, ethics of rights, and contractarianism are briefly described, as well as the connections between those theories and CSR in business (Frederiksen & Nielsen, 2013). Utilitarianism focuses on the consequences, meaning that it argues that moral agents should maximize the greater well-being of the greater number (Shafer-Landau, 2012). In this regard, utilitarianism suggests that a business as a moral agent should consider maximizing the total sum of well-being of its stakeholders while setting CSR policy and conducting CSR practice (Frederiksen & Nielsen, 2013). However, utilitarianism still leaves a problem to business which is the difference between harmful actions and harmful omissions (Frederiksen & Nielsen, 2013).

The ethics of rights, in this case including theories labeled as deontology, focuses on talking about rights and duties. The ethics of rights suggests that businesses should pay attention to negative rights and positive rights. CSR policies should contribute to the rights and moral dignity of all stakeholders of businesses (Frederiksen & Nielsen, 2013). Regarding the harmful actions and harmful omissions, supporters of this theory argue that harmful omissions are morally better than harmful actions as they believe that not helping a person is better than actively harming her/him (Frederiksen & Nielsen, 2013).

Finally, contractarianism also known as social contract theory focuses on the mutual benefit of all contractors, meaning that this theory will not agree with the proposition of utilitarians who would sacrifice the welfare of a few to fulfill the welfare of the great number (Shafer-Landau, 2012). Contractarianism has played a significant role in CSR as it can connect business and society smoothly. Businesses can take CSR actions by drawing on the social contract established with the society (Sacconi, 2006). Ethical theories reviewed in this section are provided to help businesses answer what theories can be employed and which one would be appropriate for them.

Three Approaches for CSR in Business

Three approaches for CSR in business are briefly described to help businesses set their purpose while setting CSR policy after reviewing ethical theories related to CSR in business. First, the instrumental approach. This approach focuses on the consequences as in utilitarianism. Adopting this approach in business aims to achieve good results in the business case by treating CSR as an instrument (Garriga & Melé, 2004). More specifically speaking, the business that holds this perspective will take the CSR actions solely because those actions can make it look good in stakeholders’ eyes (Frederiksen & Nielsen, 2013).

Second, it is the ethical approach. This approach cares less about the possibility of profits resulting from CSR. Instead, it focuses more on the ethical aspects of CSR practice (Deigh, 2010). In accordance with the perspective of this approach, businesses do the right things as is morally right to do. Moreover, businesses can accept the loss of profit (potential and eventual) due to moral aspects (Frederiksen & Nielsen, 2013).

Last, the third approach is called the hybrid approach which means businesses can combine the first two approaches to do CSR practically (Frederiksen & Nielsen, 2013). This approach suggests that the interests of business and society can match together well and produce a win–win situation. However, the discussion regarding this approach still needs to be considered, as it is not easy for a business to make a balance or even a win–win consequence between maximizing the profit and taking moral actions (Fisher et al., 2009). The description of the three approaches will make businesses think about what purpose to do CSR.

Two Key Issues for Business in CSR

Two key issues come up after determining the purpose of doing CSR. These issues consist of Do and Don’t, and the scope in CSR (Frederiksen & Nielsen, 2013). The Do and Don’t issue normally refers to the level of CSR, including doing the right things or rejecting to do the immoral things, or even both (Fisher et al., 2009; Lantos, 2002). In a business, the job is to determine what should be done and what should not be done, meaning that the business should ask itself two questions: (a) do we focus on avoiding harmful actions solely as a means to respect human rights such as freedom to speech and life, or (b) do we focus on doing good, meaning to respect positive human rights such as education and health (Frederiksen & Nielsen, 2013). In this regard, it raises a concern about the discussion between negative rights and positive rights in business while doing CSR (Lantos, 2002). However, selecting which level of CSR practice depends on the choice of business.

After determining the level of doing CSR, another issue emerges for business if the business chooses to avoid harmful actions and do the good things. This is particularly problematic as a business cannot achieve the interests of the whole world, especially while fulfilling its positive duties (Garriga & Melé, 2004). A scope is obviously needed for businessin CSR (Frederiksen & Nielsen, 2013). Therefore, the last step is to answer the question, which agents should be taken into account as morally relevant?

A Four-Step Conceptual Framework

Based on the discussion above, we propose a conceptual framework appearing in Fig. 1 as a guideline to help businesses do the CSR, including CSR strategy, policy, and action. Four steps have been involved in this framework. First, it is necessary for businesses to search and analyze macro-environmental and micro-environmental forces before doing CSR. Second, businesses need to determine which ethical perspectives to hold to do CSR by analyzing three main ethical theories including utilitarianism, ethics of rights, and contractarianism. Third, after determining the ethical theory, businesses should make their purpose clear while setting CSR strategy and policy by analyzing three approaches, namely the instrumental approach, the ethical approach, and the hybrid approach. Furthermore, two issues need to be considered by businesses while doing CSR. The first issue is whether businesses should promote the good or solely prevent the bad. Another issue is which groups’ interests businesses should uphold.

Fig. 1
A cycle diagram of a 4-step C S R framework. It starts with scanning and analyzing forces, followed by reviewing ethical theories, evaluating and determining approaches, discussing and setting the level and scope, and scanning and analyzing forces again. 2 or 3 points are listed for each step.

A conceptual framework for CSR in business

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This framework can be both linear and nonlinear which means businesses can go through each step from scanning and analyzing forces to determining the level and scope of CSR. Or they can also employ each step flexibly according to their way of thinking. For example, the business may go back to check or rethink the last step if some unusual things happen.

Human Resource and Employees in Relation to CSR

According to Farooq et al. (2017) and Deng et al. (2020), CSR can be divided into two domains: external and internal. External CSR refers to corporate philanthropy and volunteerism related to external stakeholders such as customers, business partners, and local communities, whereas internal CSR focuses on policies and practices of an organization related to the well-being of employees and their productivities (Farooq et al., 2017). Internal CSR can be represented by HR for organizational actions to satisfy employees’ expectations and improve employees’ productivity (Crane et al., 2019; Greenwood, 2002). In this regard, Bang et al. (2022) revealed that internal CSR is highly related to HR practices which lead to higher employee work outcomes and can be matched with external CSR activities. Based on the social exchange theory, HR practices and internal CSR have a mutual role in leading organizations to support employee well-being and sustainability. Further, extant literature indicated that employees reciprocate the organization by providing more productivity and enhancing engagement and trust (Luo & Zheng, 2013). On the other hand, when organizations lack internal CSR meaning HR practices are inefficient, employees may create negative interactions at work which leads to employee cynicism that organizations focus on external CSR rather than internal (Low et al., 2017).   

As HR has a valuable role in protecting a negative impact on employees, enhancing employee engagement, supporting equality and diversity, and ensuring ethical people management practice, HR needs to develop organizational culture and values to contribute to internal CSR (Chartered Institute of Personnel and Development [CIPD], 2013). The linkage between HR and internal CSR also reveals how an organization is perceived externally. In other words, how organizations look after their employees is how seriously organizations take on external CSR. The internal fit approach from strategic human resource management (SHRM) well explained the interaction between HR practices and external CSR that employees respond differently to external CSR at different HR practices (Bang et al., 2022). Therefore, organizations must create efficient HR practices related to external CSR activities to maintain a fit or internal consistency between practices (Delery & Roumpi, 2017; Wright & Ulrich, 2017). Ultimately, to run the organization to be more successfully sustainable, internal and external CSR strategies must be embedded in organizational culture and the ethics in business activities.

Additionally, further discussing the impact of CSR on employees is worth mentioning. Based on the research in the HRD and HRM fields, the findings suggested that CSR positively resulted in conducive collaboration among employees and created mutual trust in the organization (Chaudhary, 2018). This echoes the ideas of Mael and Ashforth (1995), indicating that the increased level of strong organizational identification leads to extra efforts, and cooperation, and high performance of employees because of the sense of belongingness of employees toward the organization. Further, to focus on exploring the influence of corporate social responsibility (CSR) on employee engagement of staff members of two multinational companies, Tsourvakas and Yfantidou (2018) reported that employees had positive attitudes and were proud to identify themselves with companies that had a caring image. According to the previous literature, it should be mentioned that CSR is also positively linked to employee extra-role behaviors and engagement. A number of scholars asserted that employees’ perception of CSR can lead to positive outcomes at both employee and organizational levels such as organizational commitment and task performance (Edwards & Kudret, 2017), organizational citizenship behavior (He et al., 2019), and organizational identification (Farooq et al., 2017), to name a few. In line with Peterson’s (2004) findings, a positive correlation between employees’ perceptions of CSR and organizational commitment, mainly when organizational values and ethics are consistent with the employee’s personal values and norms. Thus, it can be highlighted that CSR activities can encourage employees’ commitment and overall productivity of the organizations. 

Future Research on CSR

Having reviewed previous literature of research on CSR in recent years, it appears that CSR is now a key trend in the connection between sustainable development and care values for business operations, economics, society, and environment. As CSR can be conceptualized through various dimensions as earlier mentioned in the introduction part, it is appropriate to suggest further research that could advance the field. Therefore, this paper highlights some ideas for researchers based on more recent studies in order to provide up-to-date research trends and insightful recommendations to further conduct the CSR-related research.

First, researchers can use CSR as a moderating role/effect to study the relationship between green human resource management and organizations’ environmental performance. More specifically, this recommendation for future research was clearly indicated in the study of Masud et al. (2022), suggesting that although considerable research has been devoted to study CSR and its positive impact on environmental performance, less attention has been paid to its effect on the relationship between Green Human Resource Management (GHRM) and Green Human Resource Development (GHRD). As one of CSR dimensions highlights pollution reduction from business practice, it can be pointed out that various corporate functions such as manufacturing, supply chain and logistics, sales and marketing, human resource management, and human resource development strongly connect to the concept of green business practices (Ababneh, 2021; Rupa & Saif, 2022). In discussing the expectation of society toward corporate practice, GHRM and GHRD aligning environmental goals through HR activities (i.e., HR planning, training and development, performance evaluation, and incentive system) can play an important role in improving competitive advantage and increasing a firm’s reputation in the marketplace (Ansari et al., 2021). Further, investigating the relationships among CSR, GHRM, GHRD, and organizations’ environmental performance through a hybrid research approach (quantitative and qualitative) across countries would provide new insight into the existing body of literature under the topic of CSR.

Second, as CSR initiatives and practices play an important role in creating positive consequences of ethical behavior in business operations, there has been a growing body of literature surrounding the importance and implications of CSR adoptions in organizations and the marketing of such initiatives. This can be seen in another recent study by Kraus et al. (2022) which employed a systematic literature review (SLR) with the aim of reviewing a theoretical connection between CSR initiatives and positive consumer reaction. Some partial insight from Kraus et al.’s (2022) study sheds light on customer perception and intended buying behavior which is likely that CSR policies lead to increased consumer loyalty, satisfaction, and value. Specifically, CSR policies, activities, practices, and initiatives could help to sustain competitive advantage. This echoes a research study conducted by Jin et al. (2017), suggesting that CSR can be related to the emotional aspect of brand image and customer loyalty which appeared to be an important source of sustainable competitive advantages. Obviously, a study conducted by Jin et al. (2017) indicated that there was a significant difference in brand attitude and perception of credibility when companies did not engage in CSR activities.

However, Mohr et al. (2001) suggested that 44 research participants prioritized buying more ethical brands, but it seemed that both price and CSR attributes were equal weighting for decision making of product buying. Through the interdisciplinary nature of CSR-related studies, Kraus et al. (2022) suggested that there was some room for researchers to incorporate the concept of CSR, consumer buying behavior, and marketing role for further studies by deeply examining what kinds of relative factors emerging from price and marketing mechanism or CSR practices effectively come into play to consumers’ decision making to purchase products. Additionally, the socially responsible consumption (SRC) behaviors (d’Astous & Legendre, 2009) and the effects of CSR communication on consumer responses to brands (Dunn & Harness, 2018) appear in the sub-areas under the umbrella term of CSR which is worth further studies.

Lastly, Khuong et al. (2021) attempted to examine the relationship between stakeholder influence, CSR types, and corporate reputation. Within Khuong et al.’s (2021) research, it can be pointed out that corporations’ five fundamental responsibilities (i.e. economic, legal, ethical, philanthropic, and environmental) confirm the role of being good corporate citizens and these five dimensions were conceptualized as the CSR practices (meditating variables) to study the relationship between stakeholder influence and corporate reputation. The results of this study confirmed that stakeholder influence significantly affected the CSR types and had a positive effect on corporate reputation. Even though the findings of this study can be added to the body of existing literature in the related CSR concept; however, relying on managerial perceptions of 869 leaders and managers in 4,000 public, private, and foreign direct investment (FDI) sectors in Vietnam may result in criticism in terms of generalizability. It seems that this limitation opens the way for future research to include all stakeholders’ points of view as a research sample. Importantly, Khuong et al. (2021) clearly indicated that most previous studies paid attention to studying the business context in developed countries such as the USA and European countries. Hence, there is some room for future research to verify the same hypotheses testing in developing countries with different cultures, political principles, laws and regulations, and economic structures, especially in Southeast Asian countries.

Conclusion

Through a closer review of the CSR definition and its development, it should be pointed out that CSR was mainly conceptualized as the voluntary actions undertaken by organizations in an attempt to create values for business, society, and the environment (Agudelo et al., 2019; Carroll, 1999). However, due to the wider scope of CSR, the ambiguity of its meaning, and its role in today’s businesses, CSR practices gain some criticism for mainly focusing on increasing firms’ reputation and redirecting the resources for stakeholders. This paper provides some insight to create a better understanding of such an argument, indicating that CSR could be advantageous for stakeholders in terms of creating trust and mutual understanding, motivation, and brand image instead of redirecting resources away from them.

Further, this paper also highlights that the CSR policy of businesses was initiated by two groups of forces including external and internal forces, and the broad factors of political, economic, social, cultural, technological, legal, and environmental requirements (Perera, 2017). By analyzing CSR in business through the three ethical theories including utilitarianism, ethics of rights, and contractarianism, it can be clearly seen that business organizations can be viewed as moral agents which aim to maximize the well-being, contribute to the rights and moral dignity, and create mutual benefits for all stakeholders. In an attempt to incorporate three approaches (i.e. instrumental approach, ethical approach, and hybrid approach) for CSR practices in business operations, these three approaches highlight different perspectives for business organizations to be aware of the objectives of CSR initiatives and practices in particular organizations with a strong sense of social, legal, or moral requirements. As noted earlier, CSR has a multifaceted dimensional concept, and systemically initiating CSR practices for efficient business operations appears to be challenging for all types of businesses. This paper, therefore, proposes a conceptual framework of interrelated ideas of CSR strategy, policy, and action as a guideline to help business organizations to do effective and meaningful CSR practices.

In addition, a comprehensive review of previous literature on CSR indicates a strong link between CSR and the field of HRM and HRD. Through the notion of external and internal CSR practices and activities, organizations could achieve huge financial success and increase the reputation of organizations and other stakeholders because of the high productivity of their employees and their greater contribution to customers, community, and society at large. In this regard, HR practitioners as an agent concentrate on caring for the well-being and enhancing the sustainability of employees by operating CSR-related activities. Accordingly, employees, one of the internal stakeholders, tend to reciprocate with positive outcomes to organizations, including positive attitude, low cynicism, strong engagement, and ultimately high productivity based on the social exchange theory. The positive outcomes related to CSR that occur inside the organizations could have a positive impact on the external stakeholders, such as customers, community, or even the whole of society. For example, customers prefer consuming products of organizations adopting CSR rather than those organizations that do not address environmental and social issues. In this regard, the proposed conceptual framework could be a useful guideline for organizations to fulfill the interests of a comprehensive stakeholder group through the intersection of HR and CSR practices in order to create socially sustainable organizations and businesses.

As previously discussed, CSR can be viewed as multidisciplinary in its nature. To put theory into practice, it can be indicated that the influence of CSR on HRM and HRD practices can lead to a positive outcome in employee attitudes, perceptions, productivity of the businesses, and organizational performance as well as enhance the presence of product market competition and increase the reputation of a company in the long term. Further, this paper also provides insightful ideas for future research relating to the CSR concept such as green human resource management (GHRM), green human resource development (GHRD), consumer behaviors, and corporate reputation, to name a few.

Discussion Questions

1.What is your perspective on the CSR concept?

2.What are the main ethical theories which can be used to initiate CSR practices in businesses?

3.Select a CSR-related issue that you have confronted in the workplace. Adopt the conceptual framework presented in this chapter to analyze this issue.

4.How do CSR practices benefit both employee and organization levels?