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Three CSR Frameworks

9 January, 2015 - 16:59
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Shareholder View

From Milton Friedman, "The Social Responsibility of Business is to Increase Its Profits." "But the doctrine of "social responsibility" taken seriously would extend the scope of the political mechanism to every human activity. It does not differ in philosophy from the most explicitly collectivist doctrine. It differs only by professing to believe that collectivist ends can be attained without collectivist means. That is why, in my book Capitalism and Freedom, I have called it a "fundamentally subversive doctrine" in a free society, and have said that in such a society, "there is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." 1970 by New York Times Company

Stakeholder View

  • A stakeholder must be distinguished from a stockholder. The latter owns a share of the corporation. On the other hand, a stakeholder is any group or individual that has a vital interest in the doings of the corporation. Hence the stockholder is a stakeholder of the corporation whose vital interest at play is the share owned of the corporation and the money invested in this share.
  • There are several other stakeholders of the corporation. These include (1) employees, (2) customers, (3) suppliers, (4) local community, (4) surrounding governments, (5) the surrounding human and natural environment, and (6) the corporation's managers. (In some situations there are other stakeholders such as competitors.)
  • Stakeholder theory requires that the corporation recognize and respect the vital interests of each of its surrounding stakeholders. This frequently issues in proposing stakeholder rights and assigning to others correlative duties to recognize and respect these rights.
  • Stakeholder theory also requires that the corporation integrate interests where possible, mediate or broker conflicts between interests, and only trade of competing interests when absolutely necessary and when more conciliatory efforts have already been made and have failed.
  • See Evan and Freeman 1988

Werhane's Alliance Approach

  • Werhane's alliance approach is similar to the stakeholder approach in that it recognizes several groups that surround the corporation and have vital interests that depend on the doings of the corporation. These surrounding groups are more or less the same as those in the stakeholder approach: owners, managers, employees, customers, suppliers, local communities, governments, the environment, etc.
  • But Werhane makes two significant departures from the stakeholder approach. First, she uses moral imagination to distance the corporation from the problem solving process; the lens of problem solving refocuses on each of the other stakeholders. Whereas for stakeholder theory the corporation is the center of analysis and is visualized as surrounded by its stakeholders, the alliance approach decentralizes the corporation and alternatively visualizes each stakeholder as the center for the purpose of framing problems and generating solutions.
  • Second, the alliance approach sees the corporation as a part of a system of interrelated and interdependent parts. Hence, each problem situation presents a system formed of the corporation, owners, managers, employees, suppliers, customers, local communities, and governments. Problems emerge from value conflicts within and between the constituent parts of the system. They are solved through the cooperation of the different constituencies of the alliance.
  • While this approach does not lend itself to algorithms or rules, it does promise solutions by highlighting and facilitating moral imagination both in the framing of problems (problems are posed in terms of framings from multiple perspectives) and in terms of the generation of solutions (multiple problemframings help us to visualize new solution horizons).
  • See Werhane, 2007 and 2008.