Lesson 1: What is CSR? Two Opposing Views

This lesson defines CSR and provides a broad understanding of the context from which it emerged. In discussing this historical development, four different arguments for CSR are presented (ethical, moral, rational, and economic). It will draw on two perspectives (economic and social) to provide a comprehensive overview of CSR, as well as illustrating the practical challenges faced by decision makers who grapple with this complex topic. The lesson finishes with a case study that looks at how broad societal issues, such as LGBT rights, are increasingly influencing the relationships between stakeholders and corporations. 

Organizations are the collective structures used by people to pursue common goals. In general, these organizations come in three broad forms: businesses, governments, and nonprofits (or non-governmental organizations, NGOs). Businesses exist to pursue profit with the intention of making their owners wealthy; governments (at least in democratic societies) respond to the will of their citizens; and, nonprofits or NGOs meet the needs of people in society when the profit motive of business or the political will of government is lacking.

Though organizations are not legally compelled to be “socially responsible”—even if society could agree on a universal definition—societal expectations become embodied in tradition, laws, agency interpretations, and court rulings that form a set of expectations. Thus, we arrive at two central questions of concern to CSR:

  1. What is the relationship between a business and the societies within which it operates?
  2. What responsibilities do businesses owe society to self-regulate their actions in pursuit of profit?

These questions grow in importance as businesses grow in importance to society. Ultimately, it is business organizations that provide the most basic necessities of societal survival, including much of the wealth that funds government and nonprofit activities. Because of this broad reaching impact of business corporations, CSR has emerged as a study to better understand the answers to the above questions.

Next Page: Definition of CSR