CSR Stuck in Logical Trap

by Aneel Karnani



Corporate social responsibility (CSR) discussions often fall prey to a logical trap. If some socially desirable activity is profitable, then it is best described as "intelligent operation of the business" and thus CSR is irrelevant. If the socially desirable activity is not profitable, then companies will not voluntarily undertake it unless required to do so by law or regulation, and thus CSR will be ineffective. The concept of CSR is "intensely confused" because in both the above cases it is not a useful construct. Rivoli and Waddock propose to get out of this logical trap by analyzing CSR "in a more dynamic, time- and context-dependent manner." Unfortunately, the presumed escape route turns out to be a dead end. CSR is best defined as: a company has a corporate social responsibility to voluntarily undertake socially desirable behavior that decreases the firm’s profits. Laws and regulation are much more effective than CSR at inducing firms to implement socially desirable behavior that reduces firm profits.

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