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A Multidimensional & Practical Approach to Corporate Social

Responsibility: A Conceptual Framework

Sunil K. Dixit

Adjunct Professor, Mount Saint Mary’s University, Los Angeles, California

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AbstractResearch Question/Issue: This paper seeks to evaluate and explore different dimensions of

corporate social responsibility, with the objective of laying the groundwork for the development

of a conceptual framework.

Research Findings/Insights: A multiperspective review of literature reveals that the demands

and expectations of corporate social responsibility are influenced by financial, legal, cultural and

moral factors. In addition, corporate social responsibility is viewed differently in the developed

and developing nations.

Theoretical/Academic Implications: Having a multidimensional corporate social responsibility

framework paves the way for future research to embed corporate social responsibility into

corporate governance and business strategies.

Practitioner/Policy Implications: Management practitioners can use a multidimensional

corporate social responsibility framework to meet the expectations of society, customers and the

government, while improving the organizational performance.

Keywords: Corporate social responsibility, corporate social responsibility framework.

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BackgroundA special interest society is comprised of a variety of groups with different objectives. As

a result of globalization, we are seeing significant improvements in the standard of living in many

countries. Education levels have also been improving. Today’s world is interconnected and

interdependent. In most cases, information flows over the Internet in real-time, overcoming the

limitations of national boundaries. People do not have to go and look for information because it

comes to their mobile phones and tablets. The digital age has created a knowledge-based society

in which information can be checked and cross-checked instantly. Furthermore, we live in a

pluralistic society in which power is distributed or dispersed among a diverse group of people and

entities. Diversity and the decentralization of power have created complex relationships between

corporations and people, thus, complex relationships have given rise to a special interest society

(Carroll & Buchholtz 2012).

With the fast-paced socioeconomic progress, people’s expectations rise as they demand

businesses to perform better, in the context of society’s interests. However, business enterprises’

actual social performance may not match the rising expectations of the special interest society.

The rising expectations create a perceived entitlement mentality, and society demands that

businesses meet those expectations. Employees believe that they are entitled to health care

coverage and fair wages. Patients believe that they are entitled to a certain quality of health care

services. An affluent, well-informed society lobbies to make the perceived entitlement a legal

right. Although different groups battle to promote their agenda, it is not always possible for each

group to win, thus, dissatisfied groups feel victimized.

It took the United States about two decades to pass the healthcare reform law. Before the

passing of the law, a huge segment of society felt victimized. Interestingly, businesses felt

victimized after the passage of the law. Businesses too are a part of the special interest society;

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they promote and safeguard their interests. At the macro level, businesses can dominate the

market. At the intermediate level, businesses can pool their interests to further their agendas. At

the micro level, individual firms can exert power. At the individual level, leaders of a corporation

may exert power. When businesses abuse their power, governments step in and enact new laws to

keep the balance between companies’ powers and responsibilities. Many groups in the special

interest society feel dissatisfied when they see businesses flex their muscles and win. As

dissatisfaction spreads, businesses come under tighter scrutiny and criticism.

Companies cannot survive without customers, because unprofitable business models

cannot be sustained. Society is a stakeholder in business enterprises because businesses need

customers, suppliers and employees. Both sides ought to make a sincere effort to understand each

other’s positions and objectives, especially in the social, ethical and environmental contexts. A

‘power-responsibility equation’ has to be created to address the growing criticism of business.

Thus, the relationship between business and society can be defined as a social contract. A “social

contract” is a legal framework within which businesses operate, and it is used to learn each

other’s expectations (Carroll & Buchholtz 2012, p. 20).

This review has been organized as follows: First, historical developments in the domain of

corporate social responsibility have been analyzed. Second, the financial and legal considerations

of corporate social responsibility have been discussed. Third, corporate social responsibility’s

environment in developed and developing countries is summarized. Fourth, the natural cultural

implications of corporate social responsibility are briefly discussed. Fifth, a synopsis of the moral

implications of companies’ economic activities is given. At the end, along with a proposed

corporate social responsibility framework, the potential implications for further research have

been recommended.

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Historical DevelopmentsThe concept of Corporate Social Responsibility (CSR) has evolved since the 1950s.

Bowen & Johnson (1953) saw CSR as business owners’ obligation to align their business

practices with the objectives and values of society. Davis (1960) justified socially responsible

decisions as long as there was a long-term gain. Frederick (1960) depicted businesses as

contributors to society’s economic and human resources. Johnson (1971) asserted that responsible

businesses should follow the stakeholder approach. Carroll (1979) defined CSR as a three-

dimensional (corporate responsibilities, social issues and business actions) concept. Wartick &

Cochran (1985) introduced a three-dimensional (principles, policies and processes) conceptual

framework of CSR. Wood (1991) presented an institutional framework. Schwartz & Carroll

(2003) stated that CSR has three types of corporate responsibilities (economic, legal and ethical).

The Caux Round Table (2009) released the Principles for Responsible Business, underlining the

importance of stakeholders’ engagement, environmental sustainability and responsible

globalization. The European Commission (2011) expanded the concept of CSR to include human

rights, climate change, education and public procurement.

Financial and Legal ConsiderationsCSR is an investment, and companies should try to find a balance between profit

maximization and meeting the expectations of the special interest society (Pavel, Christopher,

David & John 2004; McWilliams & Seigel 2001). Businesses engage in activities to generate

profits, by producing good quality products at a fair price, so that wealth is created for their

owners or shareholders (Carroll 2000). If businesses do not produce goods that meet the

expectations of their customers, their sales will plummet. Therefore, businesses should try to

build an understanding of their customers’ expectations. Improvements in companies’ CSR can

be financially beneficial for companies with low or moderate CSR scores (Cajias, Fuerst &

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2014). A well-informed society expects businesses to adopt ethical practices. A loss of reputation

may cause a loss of revenue and profitability. Firms can use CSR as reputation insurance (Minor

& Morgan 2011). Businesses strive to create value for their customers. Value creation can be

used to create a competitive advantage by incorporating corporate social value (Shahin & Zairi

2007). So far, research findings have produced conflicting results regarding CSR’s effect on

profitability (McWilliams & Siegel 2000). This may be due to the fact that it is not easy to define

and measure corporate social responsibility.

CSR savvy companies go beyond what the law requires, or meet the CSR expectations,

even if there is a legal vacuum (Pohl & Tolhurst 2010). In many cases, companies are sued for

not meeting the expectations of society. Lengthy tobacco litigation in the US is one such

example. A widow was awarded $23.6 billion in damages (Sifferlin 2014). CSR reporting is

mandated by law in many jurisdictions. The annual reports of companies in the EU contain a CSR

segment (Delbard 2008). The Australian Securities Exchange (ASX) rules require continuous

disclosure (Chew & Scott 2013). In April 2014, India became the first country to enact a CSR law

requiring companies to give 2% of their net income to social causes (Prasad 2014). CSR issues

are no longer confined to the activism domain.

Developed and Non-Developed NationsCSR is seen differently by the US and the European Union (EU). People in the US depend

less on the government, while the EU is a regulation and compliance focused society (Albareda,

Lozano & Ysa 2007; Tschopp 2005). Companies in the US do more for the communities they

operate in. The special interest society in the US fights intense battles to guard and promote its

interests. Over the years, the US Supreme Court has recognized corporations as people (Park

2014). When the power balance is tilted in favor of corporations, new laws are made. With

globalization, however, companies in the US are beginning to recognize the value of corporate

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responsibility reporting. In the Americas, 76% of companies have adopted corporate

responsibility (CR) reporting, while 73% of the EU companies have done the same. CR reporting

includes climate change, material resource scarcity, energy and fuel, water scarcity and

ecosystem decline (KPMG 2013).

Governments in developing countries use two approaches to deal with CSR: defensive

and proactive. The defensive approach streamlines CSR to meet the country’s economic and

social interests. The proactive approach uses CSR to boost the social, economic and

environmental benefits. Governments can link investment opportunities to responsible business

practices (Ward, Fox & Zarsky 2008). Companies with a sound CSR strategy can benefit from

the governments’ policies in the developing countries. On one hand, CSR can be used to leverage

national policy goals. On the other hand, companies can use CSR to expand and diversify their

business interests (United Nations 2007). Companies ought to tailor their CSR strategies to meet

the needs of the host nation, because western style systems may not work well in the developing

countries (Peters, Miller & Kusyk 2011).

National Cultural ImplicationsCulture influences human behavior and decision-making. A person living in the US is

likely to be focused on buying a car that gives better mileage or uses hybrid technology. At the

same time, a person living in India may not be so worried about the environmental effects of

automobiles, even though both India and China face high levels of pollution and water shortages

(Dutta 2014). Thus, culture is one of the driving forces of CSR. Companies can use this

opportunity to promote sustainability in the countries where the national culture is passive about

environmental issues. Matten & Moon (2008) presented a conceptual framework for

understanding CSR. They stated that there are two types of CSR: explicit and implicit. Implicit

CSR is asking businesses to do something which essentially should be done by the government.

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Explicit CSR is open, direct and strategic, as it aims at reaping benefits in the short-term.

Globalization is changing business practices as well as CSR’s orientation (Tukrina 2013). The

findings of a cross-country study suggest that individualism and uncertainty avoidance have a

positive impact on firms’ CSR, while power, distance and masculinity have a negative impact

(Peng, Dashdeleg & Chih 2012).

Philosophical Corporate Approach vs. De facto Marketing Approaches

There are moral implications to the economic activities of companies. CSR serves as a

mechanism to tell the world capitalism works well for the people (Semeniuk 2012). CSR

performs a balancing act between the interests of businesses and society (Garriga & Melé 2004).

The current body of knowledge suggests that CSR underlines the activities that are generally

considered to be in the domain of public governance (Semeniuk 2012). CSR extends beyond the

profit-making interests of shareholders. The inclusion of human rights, public procurement, the

environment, workers’ welfare and benefits to the ordinary citizens implies that businesses should

do more than manage their economic activities (Steurer 2010). The difficulty arises as soon as the

concept of CSR attempts to be used as corporate policy or strategy. Different groups of the

special interest society expect different outcomes from companies’ CSR policies (Lebano 2010).

These philosophical differences will not disappear, despite the fact that CSR is gaining global

acceptance.

There are four philosophies that have conflicting expectations from companies.

Utilitarianism expects companies to focus on the happiness of their stakeholders. Libertarianism

focuses on free competition. New liberalism is about equality. Communitarianism aims at finding

a balance between autonomy and order. Socially responsible companies should know these

demands (Taka 2011), because companies have a business case motivation in promoting

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sustainability. A fishing company should incorporate clean water policies in its CSR (marketing)

strategy. Companies see opportunities to boost their reputations by showcasing their CSR

activities to the public (Semeniuk 2012). Environmentally friendly initiatives may increase the

cost of production. In that case, a company would have to build a close connection with its

customers so that they see the good in the company’s CSR practices. The communication of CSR

policies cannot be avoided because the business strategy should be obvious (McElhaney 2009). In

addition, companies build partnerships with non-governmental organizations (NGOs) and

contribute to social causes. These partnerships can be used to build both equity and the brand.

Companies can use green marketing to promote their commitment to CSR as well (Paetzold

2010). Consumers are keenly interested in environmental issues. Reputable companies believe in

innovation and show their sincere commitment to CSR. The ‘millennial generation’ is serious

about CSR and is taking its agenda further (McElhaney 2009). In addition, companies use social

media (e.g. Facebook and Twitter) to disseminate CSR messages to consumers, in return,

consumers provide feedback; the use of social media by companies is expected to increase (Yiğit

& Kirezli 2019).

Discussion & Direction for Future ResearchThis review article provides a few insights into the factors that influence corporate social

responsibility. It appears that corporate social responsibility is shaped by socioeconomic progress,

financial incentives, legal requirements, national cultural considerations, human rights, the

environment and social welfare. After dissecting different facets of corporate social

responsibility, it has become clear that corporate social responsibility should be an integral part of

corporate governance and strategy. A corporate social responsibility framework has been

presented in Figure 1.

Financial Considerations

(Profit & Performance)

Stakeholder Expectations

Socioeconomic Factors

(Based on Location)

Law & Regulations

Corporate Social Responsibility(Governance &

Strategy)Cultural Behavior(Based on Location)

CSR Approach(Marketing)

CSR Approach(Philosophical or

Moral)

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Figure 1: A Multidimensional Corporate Social Responsibility Framework

Scientific management and its dehumanizing tendencies have had an impact on CSR and

management research, hence, humanity ought to become an integral part of management theory

research (Hill & Van Buren III, 2018). There is a need to construct a new narrative in which

humanity, dignity and the well-being of humans and non-humans are an integral part of an

economy (Waddock 2018). Thus, on the basis of the ideas encapsulated in this paper, the

following issues may potentially be addressed in the future:

(a) A multiperspective and multitheoretical approach to CSR.

(b) The integration of CSR into multitheoretical organizational design.

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