Corporate Responsibility in a Changing Legal Environment

by Susan Foote



The goal of corporate social responsibility models is to understand, evaluate, and potentially improve corporate decision-making. Models must accurately describe the impact of legal institutions on corporations. The present models must be updated to reflect the changes in the legal environment of business. To do so, they must abandon the one-dimensional view of law, which has led to the four myths exposed herein. Instead, the models must reflect an understanding that law is more than rules; that law and choice are not always mutually exclusive; that law encompasses process as well as substance; and that law and business are not always engaged in a zero-sum game. To accomplish this goal, sociologists must discard the general notion that law always exerts a negative force on corporations. On the contrary, at least in an ideal form, legal institutions embody important shared social values and provide incentives for socially responsible corporate decisions. Law cannot, and should not, completely replace corporate discretion. Even in the face of law, corporations retain a range of choices, which must be responsibly exercised.

California Management Review

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