Arguments against corporate social responsibility - redoubled
It shouldn't be a great surprise that the financial crisis should prompt a bunch of the standard anti-CSR arguments to be rolled out with renewed vigour and determination. We are told that this will be the event that proves that CSR is 'just a fad'. But the arguments are flawed.
Then there are the arguments on the other side - David Vogel is the most intellectually robust and eloquent of these and was on the attack this week on Forbes.com. This view accepts that CSR has a business case, but redefines it at the other end as something that can only be measured as successful if it results in the superior performance of individual companies in comparison to their peers.
Vogel says that when analysed, you will see that adherence to CSR seems neither to improve or hold back financial performance. Therefore, he concludes, companies should only bother with CSR if it is essential to their business model - ie. you sell to an ethical market niche.
What Vogel is effectively arguing against are the simplistic cases made in favour of CSR that suggest that CSR is one thing, you only have to do it - skill in execution is irrelevant, and it always works to the benefit of competitive advantage. If that is the central tenet of the CSR movement (and you will always find someone has said it somewhere) then Vogel has the movement bang to rights. On the other hand, he may be doing just the same thing - redefining the movement to fit a stereotype he can then knock down.
In particular, his implication that CSR advocates would argue that good CSR will make for good performance, regardless of product quality, marketing skill, operational quality etc - this is something I don't think I've seen argued anywhere.
Corporate social responsibility is not one thing. It is about how the company decides to do the right thing by society, its customers and other direct stakeholders when faced with dilemmas and choices. I find it extraordinary that Vogel's conclusion when he suggests that CSR adherence makes no difference to the bottom line is that, therefore, you shouldn't do it unless you have to, rather than this means that you should do it, unless you're one of the few whose performance might be negatively impacted. His line is 'don't bother to do the right thing because there's no benefit to it' as opposed to 'do the right thing, because there is no disbenefit to your business in doing it'.
I'm sure people on both sides of the debate would love evidence to show that businesses that follow their favoured routes do better in the marketplace.
You can often test propositions by substituting other mainstream business concepts to see whether they sound ridiculous. Supposing Vogel was to say that there are plenty of examples of companies that use marketing who do badly, even though some who use marketing do well. Therefore, companies should consider that any company should avoid marketing, unless it is essential to the concept of their business model - ie. they sell to marketers. You would think somebody who wrote such a thing was an idiot.
Because everybody knows that in marketing, it is judgement and skill in execution that is key to success. Why would anyone imagine that it would be different in CSR? So you get companies committed to CSR that do badly. It would have to be magic stuff indeed to survive poor judgement or bad execution.
Corporate social responsibility has become an important aspect of managing a business in the 21st century. It is about effectively managing the relationships that can affect the business, and taking responsibility for the consequences that running the business has on society.
There are different business case arguments for different things that you might do under that broad umbrella. Any businesses will establish its priorities in the light of its own business model.
CSR will do best under good leadership and with a commitment to quality. Stated allegiance to it will not be enough to ensure the business survives poor leadership or a bad business model.
Not everyone committed to CSR uses the language of CSR. Not everyone that uses the language of CSR is committed to the principle of it.
There are areas where companies have to do the right thing. The business case for action on climate change is not that you will necessarily get competitive advantage for so doing (although you might if you are clever) but because your business model is fundamentally screwed if we don't have a planet, and every business, every law-maker and every individual citizen has a part to play in that.
CSR so understood does not lose its relevance in hard times. If anything, it becomes more important because the stakes in the eyes of the rest of society have become higher.
There is a real challenge here - to sharpen thinking and abolish floppy rhetoric. Let's see an end to case studies that celebrate the bare minimum action with questionable benefits, for sure. Let's be more critical about the tools, the indices, the frameworks, that may promise to identify good performance but are questionable in their success in doing so. Let's try to be more specific when we use labels such as CSR what aspects we're discussing and don't treat it as a single thing.
But nevertheless, the various people who will use the recession to argue for a selfish approach to business that is careless of the consequences are plain wrong.
From Business Respect