Mukachevo State University
CORPORATE SOCIAL PERFORMANCE IS THE BASIS OF BUSINESS ETHICS
Studies on Corporate Social Performance use either of the following approaches:
(1) Process-focused approach: it tries to overcome the limitations of Corporate Social Responsiveness, here seen as an element in a wider Corporate Social Performance model including principles, processes and policies. This model is proposed by Carroll (1979, 1991), Wartick and Cochran (1985) and Wood (1991).
2) Social results’ measure approach: (Husted 2000) supports this view and prefers it to the former, as it inserts Corporate Social Performances literature in the broader category of the studies on business efficiency.
Moreover, Husted proposes a classification on the bases of performance measurement, as follows:
(a) Social audit studies: objective measure of the performance
(b) STK theory studies: subjective measure of the performance.
Wartick and Cochran (1985), reformulating Carrol’s model, affirm that the challenges in the Corporate Social Responsibility model have been overcome and included in Corporate Social Performance. These challenges are:
- ECONOMIC RESPONSIBILITY: it is supported by those who believe the onlyn firm’s responsibility to be making profit. On the contrary, these Authors consider economic responsibility as a part of a broader social responsibility.
- PUBLIC RESPONSIBILITY: some believe the “traditional” responsibility, i.e. economic responsibility, to be extendable to public responsibility, refusing the concept of social responsibility of the firm. In these Authors’ view, this concept is at least as vague as social responsibility’s and, in a broad sense, public responsibility can actually be a synonym of social responsibility.
- CORPORATE SOCIAL RESPONSIVENESS: according to the Corporate Social Performance model, Corporate Social Responsiveness and CSR are not antithetical, but coexisting at different levels, respectively at a “micro” and “macro” level.
Wartick and Cochran’s model has been modified by Wood. In this Author’s view, the previous model did not consider :
(a) action and result issues,
(b) the nature of Corporate Social Responsiveness as a net of interacting processes. Moreover, Wood did not agree with
(c) considering social politics a third domain, as a social performance can be carried out also in absence of social politics.
On this ground, Wood defines the Corporate Social Performance as: “a business organization’s configuration of principles of social responsibility, processes of social responsiveness, and policies, programs and observable outcomes as they relate to the firm’s societal relationships” (Wood 1991).
We are going to detail Wood’s classification of the Corporate Social Responsibility principles in the four following levels:
(1) institutional level: it deals with the society’s expectations of the firms as economic institutions, as outlined in Davis’s “Iron Law of Responsibility” (1973);
(2) business level: it deals with the society’s expectations of the companies more specifically regarding the results of their activities. This is the public responsibility described above;
(3) manager behavior: a certain degree of discretion is always present in the manager’s decision, as managerial action cannot be always prescribed by the company’s policies;
(4) performance in a strict definition: it does not consider only the mere social impact of the firm’s activity, but also takes account of the existence of programs and policies that the firm can implement to manage social issues and relationship with the stakeholders .This last issue of four is the only one that is considered observable and valuable.
Wood’s most interesting contribution is the integration of these four analysis levels which were previously seen as conflicting.
Lastly, Clarkson (1995) remarks that Wartick and Cochran’s model lacks of a clear distinction between the stakeholders issues and social issues; in Clarkson’s view, such a distinction is necessary, as both the manager and the firm, seen as a whole, relate to their the stakeholders and do not interact directly with the society, in a broad, general sense. Besides, this Author highlights how each analysis ought to be implemented at an appropriate level, proposing the following: institutional, organizational and individual level.
- Carroll A.B. (1991), The Pyramid of Corporate Social Responsibility, in Business Horizons, n. 34.
- Clarkson P.M., overell M.B., chapple L. (2011), “Environmental Reporting and its relation to Corporate Environmental Performance”, ABACUS-A Journal of Accounting, Finance and Business Studies, Vol. 47, Issue 1, p.27-60, 33p.
- Husted B.W. (2000), A Contingency Theory of Corporate Social Performance, Business Society, vol. 39 no. 1 24-48 p. 414).
- Davis K. (1973), The Case for and against Business Assumption of Social Responsibilities, in Academy of Management Journal, n. 16.
- Wartick S.L., cochran P.L. (1985), The Evolution of Corporate Social Performance Model, in Academy of Management Review, n. 10.
- Wood D.J. (1991), Corporate Social Performance Revisited, in Academy of Management Review, n. 16.
- Woods M. (2003), “The GRI’s Mission is to Promote International Harmonization in Reporting Relevant and Credible Corporate Economic, Environmental and Social Performance Information”, The CPA Journal, Vol.73, Issue 6, p.60-65, 6p.