3 mo hinh.pdf

Business and Society Review

113:1

1–41

© 2008 Center for Business Ethics at Bentley College. Published by Blackwell Publishing, 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

Blackwell Publishing IncMalden, USABASRBusiness and Society Review0045-3609© 2008 Center for Business Ethics at Bentley CollegeXXX Original ArticlesBUSINESS AND SOCIETY REVIEWAVIVA GEVA

Three Models of Corporate Social Responsibility:

Interrelationships between Theory, Research, and

Practice

AVIVA GEVA

D

ecades of debate on corporate social responsibility (CSR)have resulted in a substantial body of literature offeringa number of philosophies that despite real and relevant

differences among their theoretical assumptions express consensusabout the fundamental idea that business corporations have anobligation to work for social betterment. All accounts of CSR recognizethat business firms have many different kinds of responsibility, andseek to define both the scope of corporate responsibility in societyand the criteria for measuring business performance in the socialarena.

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Waddock

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used the metaphor of a branching tree to describehow the field has evolved into its current understanding of CSR, anunderstanding that attempts to link the relatively parallel universesof theory and practice, and to illustrate how various conceptualbranches are related to each other. Fruitful as the development of acomprehensive organizing framework for the field has been, we arestill left with the same quagmire of definitional problems thatbeclouded the old debate about the exact nature of CSR. The oldclaim that CSR “means something, but not always the same thingto everybody”

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is no less true today. This article seeks to add clarity

Aviva Geva is with the Open University of Israel, Department of Management and Economics,Israel.

2 BUSINESS AND SOCIETY REVIEW

to CSR theory and research by focusing on the core responsibilitiesthat form the trunk of the branching CSR tree. A comparativeanalysis of three recognized CSR models—represented graphicallyas a pyramid,

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intersecting circles,

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and concentric circles

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—mighthelp locate and clarify ambiguities through revealing systematicdifferences in their underlying assumptions, conceptual structure,methodological tools, and managerial implications.

In the following section I briefly review the evolution of the CSRconcept and its extensions. I next present the three CSR modelsbeginning with a critical analysis of Carroll’s CSR pyramid, a dominantmodel that has enjoyed wide popularity among business and societyscholars; I will then examine the intersecting circles (IC) model, aCSR configuration representing overlapping responsibility areas; Iwill conclude with the concentric circle (CON) model, originallydeveloped by the Committee for Economic Development (CED),and reformulated here so as to adjust to recent developments in CSRthought. In each section of the comparative analysis, I will first portraythe general idea of the model, and then discuss its theoreticalassumptions and its implications for research and practice. Thelast section discusses some of the implications of this analysis forfuture CSR research and teaching.

FROM CSR BRANCHES TO CSR TRUNK

Early definitions of CSR, or CSR

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in Frederick’s

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well-acceptedclassification, carried heavy philosophic overtones. The abstractand often highly elusive principles governing CSR

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yielded, towardthe late 1970s, to the action-oriented managerial concept of corporatesocial responsiveness (CSR

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) and corporate social performance(CSP). The new theoretical approaches to CSR went beyond theprevious somewhat narrower focus and, instead, aimed to developmore comprehensive frameworks that incorporate operational andbehavioral aspects of corporate endeavor, relate the corporation toits external environment, and ground CSR/CSP theory in one ormore social sciences–humanities disciplines.

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Carroll’s foundational article on social performance

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provided athree-dimensional model defined by categories of CSR (economic,legal, ethical, and discretionary) on the first dimension, managerialphilosophies or modes of social responsiveness (reaction, defense,

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accommodation, and proaction) on the second dimension, and therange of social issues that business must address (e.g., consumerism,environment, product safety) on the third dimension. Wartickand Cochran presented their evolution of the CSP model, whichextended Carroll’s model recasting his three dimensions of respon-sibility, responsiveness, and social issues into a framework ofprinciples (using Carroll’s four-part definition of CSR), processes(social responsiveness—the general means to the ends of satisfyingcorporate social obligations), and policies (social issues manage-ment).

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They emphasized that CSP can integrate the three dominantorientations in the field of business and society: the philosophicalorientation (relates primarily to the principles of social responsibility),the institutional orientation (relates primarily to the process ofsocial responsiveness), and the organizational orientation (relatesprimarily to the policies of social issues management).

In what became an important framework that continues to shapethe conceptualization of the field, Wood, building on Wartick andCochran’s CSP model, integrated much of the previous theoreticaldevelopments in an acknowledged definition of CSP as the “con-figuration of the principles of social responsibility, processes of socialresponsiveness, and policies, programs, and observable outcomesas they relate to the firm’s societal relationships.”

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This definitionpermits CSP to be seen as an assessment tool, a guiding frameworkthat provides an outline of what needs to be considered (policies,programs, processes, and social outcomes) in evaluating CSR. It,however, does not clarify whether or to what extent processes ofresponsiveness and observable social outcomes are linked toprinciples of responsibility. In other words, the CSP model escapesthe central issue of defining the boundaries of CSR. Indeed, as Woodnoted, one of the major attractions of the CSP model has been itsability to sever the implicit identity of responsibility, responsiveness,and social outcomes and to indicate, for example, that a firm havingsocial programs and policies can be seen as responsive to socialexpectations, but not necessarily therefore as socially responsible.

In an effort to integrate normative and descriptive approaches toCSP, Swanson reoriented Wood’s framework through shifting thefocus of attention from the CSP branches—processes of corporatesocial responsiveness, programs, policies, and social impacts ofcorporate behavior—to the CSP trunk: the core responsibilities thatcannot be escaped because they are integral to action.

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Using


Frederick’s nature-based approach to foundational corporate values,

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it seems that Swanson was looking for a more process-oriented,dynamic model of CSP that could accommodate mutual influencesand combined effects of different clusters of values.

Consistent with Swanson’s reorientation of the CSP model, therehas been recently renewed interest in the core values or principlesthat provide the behavioral and philosophical rationale for sociallyresponsible corporate practices. For example, Waddock suggests“generally agreed principles of corporate citizenship,”

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Clarksonlists seven principles for stakeholders management,

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Hemphillproposes sets of principles of excellence for managing corporaterelationships with primary stakeholders,

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Logsdon and Woodprovide a “relatively small set of basic universal principles”

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thatgovern the company’s conduct, and Goodpaster presents the CauxRound Table Principles of global business as “one of the best knownsets of transcultural principles available today.”

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Observing changesin social expectations from the business community, scholars mayrevise and adapt existing formulations of CSR, but, as Carroll noted,

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it seems unlikely that new concepts could develop apart and distinctfrom the groundwork that has been established to date.

Rather than articulating a set of principles that purports to offernecessary and sufficient conditions for CSR, this article focuses onthe conceptual structure of CSR and the relations between itselements as depicted in three different schematic descriptions(Figure 1): pyramid, intersecting circles, and concentric circles.

As Bacharach pointed out, “A theory is a statement of relationsamong concepts within a set of boundary assumptions and con-straints.”

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A comparative analysis of the three conceptual modelswill show that the same terminology represents different meaningsand different approaches to CSR. More specifically, the comparativeanalysis will demonstrate that the nature of CSR, its underlyingboundary assumptions, the methodological tools, and the perfor-mance assessments are both the cause and the consequence ofhow the relationship between its elements is understood. Analysisof the differences in the conceptual structure across the threemodels (see Table 1) may assist in clarifying ambiguity in CSRtheory and research through explicating the implicit assumptionsby which each is bounded, unraveling inconsistent findings on thesocial impacts of corporate behavior, and removing impurities inmanagerial decision making.

AVIVA GEVA 5

THE PYRAMID OF CSR

General Description

A leading model of CSR is Carroll’s four-part pyramid.

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The CSRpyramid was framed to embrace the entire spectrum of society’s

FIGURE 1 Three Basic Models of CSR: Relationships between Domains of Responsibility.

iFor the sake of comparison, Figure 1b includes all four domains of responsibility. This prototype model represents the general idea of intersecting circles, rather than trying to depict every one of the resultant categories.

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TABLE 1

Comparison of Three CSR Models

CSR Pyramid Intersecting Circles Concentric Circles

General Description

Hierarchy of separate responsibilities

Nonhierarchical set of intersecting responsibilities

Integration of responsibilities; all sharing a central core

Theoretical Assumptions

Nature of CSR

Normative restraints of responsiveness

Classification framework; no normative guidance

Incurred obligation to work for social betterment

Scope of Responsibilities

Narrow split Wide

Total CSR

Conjunction Disjunction Integration

Order of importance

Hierarchy; Economic responsibility first

No prima facie order Inclusion system; economic circle at the core

Role of Philanthropy

“Icing on the cake” Subsumed under economic/ethical responsibilities

Integral part of CSR

Research Implications

Operationalization

Constant-sum method CSR portraits Representative range of measures

CSR–CFP relationship

Positive Positive, Negative, or Neutral Nonlinear

Managerial Implications

Justification for CSR

Ethics pays Strategic considerations Normative obligation

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expectations of business responsibilities and define them in termsof categories. According to the model (Figure 1a), four kinds ofsocial responsibilities constitute total CSR: economic (“makeprofit”), legal (“obey the law”), ethical (“be ethical”), and philan-thropic (“be a good corporate citizen”). According to Carroll, the useof a pyramid to depict the conceptual model of CSR is intended“to portray that the total CSR of business comprises distinctcomponents that, taken together, constitute the whole.”

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The modelcategorizes the different responsibilities hierarchically in orderof decreasing importance. The most fundamental is economicresponsibility, “all other business responsibilities are predicatedupon the economic responsibility of the firm, because without itthe others become moot considerations.”

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Businesses are expectedto operate within the framework of law, thus legal responsibility isdepicted as the next layer of the pyramid. Following is ethicalresponsibility defined in terms of “those activities or practices thatare expected or prohibited by society members even though theyare not codified into law.”

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Last in importance, at the top of thepyramid, is philanthropic responsibility, which is discretionary innature. In the main, the pyramid purports to describe a necessaryand sufficient set of obligations that socially responsible businessesshould simultaneously fulfill, taking into consideration theirdecreasing importance.


The central assumptions underlying the CSR pyramid are presentedbelow, followed by a discussion of their theoretical implications (seesummary in Table 1).

Nature of CSR

Taking a managerial approach, the four-partpyramid defines CSR in terms of social expectations that responsiblecorporations should strive to meet. Prevailing social norms andexpectations provide external criteria against which corporate per-formance can be measured; thus, the notion of responsibility in thepyramid model is reduced to normative restraints of responsive-ness.

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In other words, CSR in the pyramid formulation is basicallyaccommodative. Suggesting that businesses should treat CSR notas a goal to be maximized but as a constraint, the pyramid does ineffect promote satisficing behavior rather than striving for excellence.


Scope of responsibilities

Understanding CSR as an array ofseparate domains naturally leads to narrow definitions of thedifferent responsibilities. Thus, the economic role of the corporationis reduced in the pyramid model to the narrow emphasis on profitmaking of neoclassical economics.

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Likewise, legal responsibilityis restricted to the “letter” of the law, while the “spirit” of law isreserved for the ethical domain.

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The ethical domain is furtherseparated from the legal domain using a negative definition: ethicalresponsibility relates to those social expectations and norms not yetcodified into law. In the same vein, philanthropic responsibilitydesignates those areas of voluntary social involvement not specificallyprohibited or demanded of companies because of their economic,legal, and ethical responsibilities.

Total CSR

The pyramid is a conjunction of separate domains ofresponsibility. In contrast to the ordinary view, the so-called separa-tion thesis,

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that businesses can focus either on profits or socialconcerns but not on both, the CSR pyramid “sought to argue thatbusinesses can not only be profitable and ethical, but they shouldfulfill these obligations simultaneously.”

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However, the clear-cutseparation of the domains raises the problem of integration. Atmost, the pyramid model can postulate that while separate, thebundle of responsibilities—formulated as a simple arithmetic sum

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—must apply simultaneously; it says nothing about how theseresponsibilities are interwoven.

Order of importance

If the four responsibilities taken togetherconstitute a whole, what is the meaning of the decreasing order ofimportance? A number of explanations have been offered to answerthis question: (1) the pyramid suggests a ranking of CSR prioritiesbased on the level of essentiality—the most fundamental is economicresponsibility, of smallest importance is the philanthropic category,which is a sort of “icing on the cake”;

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(2) the pyramid characterizesthe social pressures imposed on the business sector in decreasingorder of their strength—whereas economic and legal responsibilitiesare required of business and ethical practices are expected,philanthropic contributions, albeit desired, are voluntary; (3) thehierarchy of importance “simply suggest[s] the relative magnitude ofeach responsibility”;

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and lastly, (4) the four categories “are ordered inthe figure only to suggest what might be termed their fundamental

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role in the evolution of importance. . . . [T]he history of businesssuggests an early emphasis on the economic and then legal aspectsand a later concern for the ethical and discretionary aspects.”

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As it stands, the combination of simultaneity and hierarchy mayexplain the wide popularity of the pyramid model among ethicistsand management theorists alike. Simultaneity reconciles the firm’sprofit-making concern with social concerns; the hierarchy ofpriorities provides the flexibility necessary to management decisionmaking. In the ideal case, a responsible firm will simultaneouslyfulfill all component parts of the CSR pyramid. But this “win-win”outcome is not always possible. In daily life, where different corporateresponsibilities often come into conflict, the good corporate citizen,though striving to fulfill all its responsibilities, will actually applythe proposed order of priorities to resolve the conflict.

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The role of philanthropy

The role of philanthropy has been dis-cussed in the context of the CSR pyramid from two perspectives:inwards—as compared to other components of CSR, and outwards—as compared to other notions of CSR. Inwards, the question ariseswhether the philanthropic category can be correctly considered aresponsibility in itself. To the extent that responsibility is conceivedas a normative restraint or an obligation it clearly contradicts thediscretionary nature of philanthropy. In an attempt to reconcile thisdifficulty, Carroll has argued that in fact, “philanthropy is highlydesired and prized but actually less important than the other threecategories of social responsibility.”

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Looking outwards, philanthropy is often regarded as the definingcomponent of CSR. Milton Friedman’s statement that managementis to make as much money as possible within the limits of thelaw and ethical custom embraces three components of the CSRpyramid—economic, legal, and ethical.

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A central tenet of present-day thinking on CSR is that businesses have a responsibility thatgoes beyond the demands of law and common morality. Philan-thropy, which is usually understood as exceeding this minimum,appears to serve as the distinguishing point between the neo-classical economic position and the new widely accepted notion ofcorporate citizenship, which highlights the importance of corporategiving.

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However, given the discretionary nature of philanthropy,its role as the distinguishing component of CSR creates a boundaryproblem that, as shown below, will lead to two different resolutions.



The pyramid model of CSR has served as a platform for some of themajor research developments in the field. As Clarkson claimed, “thestrength of its influence can best be judged by its longevity and thatof its progeny.”

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A considerable number of empirical studiespublished in recent years have focused first on operationalizing theframework, and then on developing and testing a set of hypothesesregarding the determinants and consequences of CSR.

Operationalization There has been extensive research on theissue of CSR in general and in reference to the pyramid modelin particular.39 Here, I shall focus on the operationalization ofthe pyramid model. As Aupperle, Carroll and Hatfield claimed, theattractive feature of the CSR pyramid was its definition of CSR throughfour components.40 They viewed this comprehensive quality asparticularly conducive to the construction of a research instrument,which could allow assessment of orientations toward social respon-sibility of corporate executives as well as inquiry into whether ornot four separate components of CSR exist, and, if they do, whetherthey exist in the weighted proportions implied by the pyramid.

The most widely used research tool in CSR pyramid studies is theconstant-sum instrument deployed by Aupperle.41 This sort of com-parative rating scale involves relative judgments of the importanceof each component with direct reference to the other componentsbeing evaluated. Raters are instructed to allocate a given sum (e.g.,10 or 100 points) among statements in each of several sets of fourstatements. Each statement in a set corresponds to one of the fourcomponents of the CSR pyramid. The results of content validitystudies appear to support model and instrument as regardsreliability, the number of CSR components, their content, internalconsistency, and relative weightings.42 Note, however, that the morereliable the measure, the higher the similarity between the differentattempts to measure the same construct, and, accordingly, thenarrower the scope of this construct.

The partitioning of CSR in connection with the constant-summethod introduces, perhaps as an unintended artifact, a trade-offassumption. Adopting this method means assuming that societalconcerns and concern for economic performance are mutuallysubversive rather than mutually supportive. This assumption has

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attracted widespread criticism in business and society literature,43

and certainly cannot be justified in the framework of the pyramidthat requires simultaneous fulfillment of all four responsibilities. Itis worth noting here that trade-offs among responsibilities mustnot be confused with trade-offs among outcomes. To be sure, manymanagerial decisions involve trade-offs among outcomes, not respon-sibilities. One may assume full responsibility and still make difficultdecisions demanding high economic or social price.

While the constant-sum method does allow more insight into therelative ranking of CSR components, it does not readily lend itself toassessing total CSR. A different approach to evaluating total CSR isbased on measuring CSP, the pyramid providing the frameworkfor data gathering on each of its four components. Commonly, themeasure of economic responsibility is profitability as presented inannual reports; legal responsibility is assessed by the absence oflitigation and allegations of illegal corporate behavior or environ-mental or safety problems; ethical responsibility is evaluated by theexistence of corporate code of ethics and other ethical programsand initiatives; and discretionary responsibility is defined in termsof the extent of the corporation’s philanthropic activities.44 Thefundamental problem with this method, besides problems ofaccessibility to corporate data, is one of validity; namely, ofdetermining the types of behavior that can serve as valid indicatorsof, or surrogates for the corresponding responsibilities. For example,is the absence of allegations a valid indicator of legal responsibility?Is the existence of a corporate code of ethics a valid surrogate forethical responsibility?

Several researchers have used Aupperle’s constant-sum instru-ment to examine the impact of different factors, especially demo-graphics and social context, on people’s orientation toward CSR45

and to investigate whether and how society’s changing expectationsaffect priority in CSR orientations across cultures and over time.46

Given the globalization of business activities, more and moreorganizations need to gain insight into the nature of CSR orientationsin different countries and as public expectations put increasingdemands on the business community. Research in this importantdirection is still in its infancy.

CSR–CFP relationship The question of CSR contributions can beapproached from a normative as well as from an instrumental point


of view. The former holds that no matter what the consequences ofCSR, it must be adopted because it is the morally right thing todo; the latter emphasizes the connection between CSR principlesand outcomes: CSR should be adopted because it may pay.Although corporate financial performance (CFP) is only one, andnot necessarily the primary, expected consequence of adopting aCSR approach, the great bulk of empirical research on CSR con-tributions has focused on the relationship between the social andthe financial performance of business corporations. After all, if itcould be demonstrated that socially responsible firms were alsoprofitable, this would be an added argument in support of the CSRmovement. In spite of a long record of studies and continuousimprovements in currently available databases and measurementmethods, the connection, if any, between corporate social andfinancial performance is still far from clear—studies have reporteda positive, negative, and neutral impact of CSP on CFP.47 One crucialreason for the inconsistent findings stems from conceptual andmethodological differences in the operationalization of key terms.As Wood and Jones claimed, “the theory and the methods havebeen incongruent.”48 To make sense of this body of research, corre-lation studies must be integrated with a CSR model whose system-atic power would provide the conceptual and methodological toolsneeded for formulating hypotheses and improving their testability.As my comparative analysis will show, different models tend to begetdifferent research instruments and generate different hypotheseson the CSR-CFP link (see summary in Table 1).

A critical implication of the pyramid model is the positive relation-ship between CSR and CFP. There are numerous grounds forthis claim. First, the four-part definition of CSR emphasizes theimportance of the economic component as the foundation uponwhich all others rest. In other words, a company is defined associally responsible primarily if it is profitable. Because of the inter-relationship between profitability and being defined as sociallyresponsible, it can be expected that companies having a favorable(unfavorable) reputation for CSR have favorable (unfavorable)financial results. Indeed, as reputation researchers have shown,CSR can have a positive impact on CFP through its impact onreputation. And conversely, the absence of CSR can damage CFPdue to negative reputational effects.49 Second, the CSR pyramid ispresented as an expectations-based model. There is a CSR premium

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that can be earned by meeting the expectations of various stake-holders. According to the good management theory, well-matchedattention to CSR domains can increase the efficiency of the com-pany’s adaptation to internal and external demands.50 Resultingbenefits such as employees’ productivity, reputation for productquality, and consumer satisfaction lead to better financial perfor-mance. Finally, the pyramidal structure suggests that companieshigh in CSR ranking are high on financial performance becauseonly well-to-do companies can afford the luxury of above-averagesocial performance.

Unfortunately, the measures used to assess the relationshipbetween CSR and CFP in empirical studies to date are somewhatillusory. The wide range of existing methods—including reputa-tional surveys, content analysis of disclosure documents, examina-tion of implementation arrangements, accounting-like auditingprocedures, and even Aupperle’s constant-sum measure of thefour-part CSR construct—are all based on a presumed dichotomybetween corporate economic and social performance.51 In defianceof the four-part definition, Aupperle, Carroll and Hatfield claim that“[t]he social orientation of an organization can be appropriatelyassessed through the importance it places on the three non-economic components compared to the economic.”52 Devoid of itscore component, it is doubtful whether this reduced yardstick canbe considered a valid measure of CSR. Studies using Aupperle’sconstant-sum instrument did not find any relationship betweensocial responsibility and profitability.53 An ironical complementaryresult of these studies is the finding, which though not reportedcan be logically inferred, that neither was there any relationshipbetween economic responsibility and profitability.54

The partitioning method deviates from the basic tenets of thepyramid model: it excludes the core component from the measure oftotal CSR, it mandates trade-off between social and economicresponsibilities, it assumes a positive correlation between socialconcern and total CSR and it ignores the hierarchical order of priority.A more consistent measure of total CSR would embrace all itscomponents while allowing for more complex relationships amongthem and between them and the total CSR. For example, a CSRfunction could be developed that, for each possible bundle of thefour responsibilities, would yield a number representing the level ofCSR provided by that bundle. The assumption is, of course, that the


raters are always able to rank each possible bundle in order of pref-erence. Their rankings could then be used to assess the correlationbetween CSR and profitability.


In recent years, the friendship model of the relationship betweenfinancial and social interests has gained growing acceptance pre-mised on management’s belief that “ethics pays.” The CSR pyramiddovetails well with this current trend among corporate managements.While attempting to extend the neoclassical economic paradigmto accommodate societal expectations and the effects of businessoperations, the pyramid does emphasize that the fundamentalresponsibility of business is economic. It suggests that it is in thefinancial interest of businesses to comply with the law, to engage inethical behavior, and to exercise philanthropy. Stated differently,social responsibilities are accepted to the extent that they can servea part of the firm’s competitive strategy. The underlying assumptionof an expectations-based model such as the CSR pyramid is thatcompanies do not pursue their humane policies for altruistic rea-sons alone. They do so because the nature of society is such thatthey could not behave any other way and expect to survive as viableentities. The main problem with such a responsive strategy is, ofcourse, that it is highly contingent and thus may lead to dualstandards in the global market when dealing with stakeholdersoperating in different sociopolitical contexts.55

A basic question regarding the provision of CSR is: precisely howmuch should a firm spend on social responsibilities? Should itstrive to maximize profits? Given that philanthropy is a positiveduty, should it assume a more-is-better attitude toward this activity?The pyramid advances a proportionate allocation of resourcesamong the different kinds of responsibility. It implies that thefirm must achieve a critical level of profit; thereafter, priority isgiven to the fulfillment of other social obligations in decreasingproportions: profit making gets the largest portion, philanthropythe smallest. In practice, however, the pyramidal lexicographic viewof CSR can mean that “legal, ethical, and discretionary (charitable)responsibilities might be ‘put on hold’ if business is bad or times aretough.”56 Considering the lower weights given to the upper levelsof the pyramid, these responsibilities could be subject to a LIFO

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method of placement on a firm’s action inventory, that is, “last in,first out.”57

In sum, the pyramid framework is consistent with the widelyaccepted general view that CSR is an extensive and inclusiveconcept, encompassing a range of responsibilities that must besimultaneously fulfilled. Within the broad consensus on CSR as acompound concept, there are diverse views on the intricate relation-ships among the different domains of responsibility. The pyramidmodel suggests hierarchical relationships between separate domainsof CSR; the intersecting circles model below attempts to accountfor overlapping nonhierarchical relationships among the differentresponsibilities.

THE INTERSECTING CIRCLES MODEL OF CSR

The intersecting circles (IC) model of CSR (Figure 1b) contrastswith the pyramid model in two main aspects: (1) it recognizes thepossibility of interrelationships among CSR domains; and (2)rejects the hierarchical order of importance. The distinctive featuresand implications of the IC model, as contrasted with the pyramidmodel, are summarized in Table 1 and will become apparent as myanalysis proceeds.

General Description

A pyramid framework cannot fully capture the interpenetratingnature of the CSR domains, nor does it denote all possible tensionpoints among them. Such mutuality has been recognized as anintegral characteristic of CSR58 and of such fundamental importancethat Schwartz and Carroll saw it necessary to propose an alter-native approach to CSR, one that includes the major domains ofresponsibility and clearly depicts their interrelationships.59 The ICmodel refutes the notion that CSR is nothing but a collection ofcontingent, externally related topics; it holds rather that the differentresponsibilities are in dynamic interplay with each other, and it isthe overall corporate responsibility to advance harmony and resolveconflicts between them.

As Schwartz and Carroll claim, the primary idea behind the ICmodel is that none of the CSR domains is prima facie more important


or significant relative to the others.60 In particular, the economicresponsibility is not necessarily the most fundamental. Accordingto Davis’s Iron Law of Responsibility,61 it is true that corporationsare designed for business, but before anything else they are socialcreations whose very existence depends on the willingness of societyto endure and support them. In this view, the social responsibilitiesof the firm are not necessarily less important than its economicundertakings.


The following discussion focuses on Schwartz and Carroll’s three-domain model (Figure 2) as a recent example of the IC approach toCSR that stands in sharp contrast to the pyramid insofar as itsconceptual structure is concerned.62 Schwartz and Carroll’s newmodel of CSR (and see the comparison with Jones’s model below) isan attempt to develop the CSR domains “more completely both interms of what each means or implies and in terms of the over-lapping categories that are identified when the three domains aredepicted in a Venn diagram format.”63 Unfortunately, their use of athree-circle Venn diagram to amend the difficulties inherent in thepyramid model introduced new difficulties that undermine its abilityto provide a proper conceptualization of CSR. Guided by Table 1, letme highlight a few points that may help clarify controversial issuesin CSR theory.

Nature of CSR The IC model seems to be primarily intended as adescriptive model of CSR, not a normative model. A major feature ofSchwartz and Carroll’s version of the model is the depiction of themain domains of responsibility in a Venn diagram, which highlightsthe overlapping nature of the domains and the resultant creation ofa set of CSR categories in which corporations and their activitiesmay be described, classified, and analyzed. As a descriptive model,it permits CSR to be seen not as something that is implicitly good initself, but as a construct that must be used in conjunction withexplicit values about appropriate business–society relationship.64

Put differently, the categories of CSR should not be thought of asnormative standards, but as analytical forms to be filled with thecontent of explicit values preferences that exist within a given culturaland organizational context.

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Scope of responsibilities The depiction of a three-domain CSR ina Venn diagram creates eight sections: seven inner and one outer.Let us label the three different responsibilities, economic, legal, andethical (moral), “E,” “L,” and “M,” respectively, and the correspondingcomplements, “´“ (no E), “Ò” (no L), and “Â” (no M), in that order;the eight categories are: EÒÂ , EÒM, ELÂ , ´LÂ , ´LM, 1M, ELM,and 1Â .

FIGURE 2 The Seven Category IC Model of CSR (dashed area).


The creation of pure and mixed classes of responsibilities in theframework of the intersecting circles raises concerns about thedefinition of the boundaries of CSR. CSR scholars gave differentanswers to this question. According to Schwartz and Carroll, CSR iscomposed of all seven inner sections, suggesting that each one ofthem represents instances of CSR. However, considering that Venndiagrams chart a logical space of mutually exclusive classes in auniverse of all instances, it is difficult to make much sense of whatparticulars would fall into each of these classes. For example, theso-called purely economic (EÒÂ ) category, that part of the economicresponsibility domain (E), which is, by definition, empty of social(legal and ethical) concerns, is nevertheless included in the universeof CSR as one of its classes. Schwartz and Carroll describe thisclass as follows: “[A]ctivities which are purely economic in naturemust have a direct or indirect economic benefit, be illegal (crimi-nally or civilly), or passively comply with the law, and be consideredamoral or unethical.”65 This description of the purely economicdomain of CSR represents a radical notion of economic responsibilitythat even well-known critics of most social responsibilities forcorporations such as Milton Friedman would not accept. Taking thepurely ethical (1M) category as another example, we learn thatthis domain of CSR is defined by a loss-making practice that caresabout ethics but disregards the law. Obviously, the new categoriescreated by the partition of the three main domains of CSR aredifficult to justify in terms of social responsibility.

The nature of the Venn categories as closed areas requires adichotomous definition of what is in and what is out. The difficultyto define responsibility in a dichotomous framework is perhaps thereason why what was meant to be a categorization of the three coredomains of corporate responsibility glossed almost unnoticeablyinto a classification of corporate activities: responsible activitiesare in, irresponsible activities are out. Thus, for example, accordingto Schwartz and Carroll, a corporation’s actions would fall outsideof the economic domain if “they are engaged in without any realconsideration of the possible economic consequences to the firm.”66

If irresponsible practices fall outside of the relevant domain ofresponsibility, in what terms of accountability are they to betreated? Paradoxically, the very distinction between responsible andirresponsible activities excludes from the domain of responsibility(whether economic, legal or ethical) the most important matter of

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liability, i.e., reckless behavior. As Wood has noted, every firm isresponsible for its social performance, and a firm’s social performancecan be negatively or positively evaluated; however,

The entire CSP concept has taken on subtle “good” and binaryconnotations, as though corporate social performance issomething that responsible companies do, but irresponsiblecompanies do not do. Even though such connotations arecommon in the literature, they are misrepresentations ofCSP.67

Total CSR If each of the seven categories is problematic as a classof CSR, what can we say about the total CSR? In contrast to thepyramid framework which depicts the total CSR as an "and" orien-tation, namely a conjunction of the different responsibilities; theVenn model implies an "or" orientation, which is a disjunction of thedifferent categories. The pyramidal notion that a CSR firm shouldstrive to make a profit, obey the law, and be ethical is easy to follow,but what is the meaning of CSR that incorporates EÒÂ , ́ LÂ , 1M,EÒM, ELÂ , ´LM, and ELM in the same framework? While themain responsibilities as defined in the pyramid framework arecomplementary components of the total CSR, their parts asdefined in Schwartz and Carroll contradict each other and thereforecannot add up to a coherent global concept of CSR. Thus, the pro-posed application of the Venn model to CSR undermines its all-encompassing orientation.

Jones’s social control of business model, in contrast, used theVenn diagram for general integration purposes.68 As a generalframework for business and society, the model was intended todescribe the interrelationships of the various subjects in the fieldand show how the parts fit together. Since the field is concernedwith the tensions that arise from the interaction of business andsociety, only those segments representing the interplay of the eco-nomic system with the political (law) and cultural (ethics) systemsare considered relevant.69 In reference to CSR, the relevant area isconfined to those domains where corporate economic concernsmeet with social concerns, namely, EÒM, ELÂ , and ELM. Pureeconomic responsibilities (which are empty of social concerns) aswell as pure ethical and legal responsibilities (which are empty ofeconomic concerns) do not count among the components of CSR,and thus fall outside its boundaries. Jones’s institutional definition


of CSR gains concrete meaning in the reality of cross-sector part-nerships that have become a widely adopted vehicle for business,government, and communities to work together to address socialissues.70 However, the issue of cross-sector partnerships extendsthe discussion of CSR to the field of public policy.

Order of importance Being committed to multiple objectives at oneand the same time, how are the different corporate responsibilitiesto be reconciled in cases of conflict? The CSR pyramid resolves thisfundamental difficulty by specifying the order of priority among thevarious responsibilities; the concentric-circle model (see below)offers a normative core of integration as another solution. The ICmodel, in contrast, fails to provide any clear normative guidance formanagerial decision making. It leaves managers faced with com-peting responsibilities with no way to make principled or purposefuldecisions. As Jensen has pointed out, “multiple objectives is noobjective.”71

The role of philanthropy In general, the domain categories in thethree-circle Venn diagram are defined in a manner consistent withCarroll’s four-part model, with one exception: the philanthropiccategory is subsumed under the ethical and/or economic domains.Many would argue that to subsume the philanthropic categoryunder economic responsibility is to convert what is seen as a virtueinto self-interest.72 Eventually, however, the choice to considerthe philanthropic category separately or subsume it under otherdomains of responsibility largely depends on the costs and benefitsof the particular framework of the problem at hand.


Operationalization Under the assumption that none of the threeCSR domains is prima facie more important relative to the others,the immediate research question concerns the assessment of therelative mix of economic, legal, and ethical forces and orientationsthat pervade the business community. As Schwartz and Carrollsuggest, the model could be especially useful for the establishmentof “CSR portraits” for different entities (e.g., individuals, corporations,stakeholders, industries, nations). Thus, for example, CSR portraitscould be established for stakeholder groups based on the domains

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they believe the corporation is currently emphasizing or would preferthe corporation to operate within. As yet, however, the IC model is inan early stage of development, still waiting for the operationalizationof the variables under consideration and the creation of a valid andreliable data-gathering instrument. The most basic issue of CSRresearch is: How do we measure better versus worse? Or, in termsof the IC model, which portrait is better and which is worse: purelyeconomic (EÒÂ ) or purely ethical (1M), legal and economic (ELÂ )or ethical and economic (EÒM)? The IC framework, as a descriptivemodel of possible partnership between corporate responsibilities,fails to provide a range of levels for evaluating CSR portraits.

CSR–CFP relationship Are CSR portraits associated with CFP?Considering the variety of CSR portraits, all kinds of relationshipscan be hypothesized—positive (e.g., for “purely economic” and CFP),negative (e.g., for “purely ethical” and CFP) or neutral.


The IC model draws managers’ attention to the overlapping natureof the CSR domains and sets the running of the interrelationshipsamong them as the central issue of the CSR management agenda.As Schwartz and Carroll suggest, the model could be useful inidentifying and analyzing existing as well as anticipated points oftension among the different domains. Considering that the differentresponsibilities are in dynamic interplay with each other, the role ofthe manager is not only to resolve existing conflicts or, better, toprevent them before they develop, but to advance harmony andcreate opportunities for beneficial partnerships.

From a managerial point of view, the most important advantageof the IC model is its flexibility. Allowing for all sorts of interrelation-ship among the different domains of responsibilities with no primafacie order of priority, the model is open to a wide range of inter-pretations. In fact, its managerial prescriptions and implicationsare nearly limitless. With such a breadth of interpretation, it seemsclear that this model can be attractive to all kinds of managers anddirectors, socially responsible and opportunistic alike. Directingmanagers to promote multiple responsibilities, while leaving themwith no principled criterion for decision making, plays into theirhands by allowing them to exercise their own preferences in


spending the corporation’s resources.73 One could make a case thatthe nonhierarchical nature of the IC model provides unscrupulousmanagers with a ready excuse to act in their own self-interest. Byappealing to whichever responsibilities they like, opportunisticmanagers are able to justify all but the most egregious self-servingbehavior. Without specifying what better is, the IC model effectivelyleaves managers unaccountable for the effects of their decisionson the firm and on society at large.

THE CONCENTRIC-CIRCLE MODEL OF CSR

The concentric-circle (CON) model (Figure 1c) is similar to thepyramid in that it views the economic role of business as its coresocial responsibility, and similar to the IC model in that it em-phasizes the interrelationships among the different corporate socialresponsibilities. But underlying these similarities are essentialdifferences in the very definitions of the corporate responsibilities.Thus, the pyramid defines the corporate economic role in terms ofnarrow self-interest (“be profitable”), whereas the CON modeldefines this same role in terms of CSR, namely, enhancing the goodof society (“be constructively profitable”). In contrast to the pyramid,which scales down the importance of the noneconomic socialresponsibilities (i.e., legal, ethical and philanthropic), and in contrastto the IC model which, along with interrelationships, also allowsfor no relations among the different domains of responsibility,the CON model outlines the noneconomic social responsibilities asembracing and permeating the core economic responsibilities.

General Description

The CON model is adapted from a notable statement issued in 1971by the Committee for Economic Development (CED), an Americanassociation of influential business leaders. In this statement, CEDadvocated the notion that social contracts for business firms arenot only feasible but morally necessary, and urged business toadopt a broader and more humane view of its function in society.The original CED model consists of three concentric circles. Theinner circle represents the core responsibility of business in termsof CSR. It includes the basic responsibilities for the efficient

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execution of the economic function—products, jobs, and economicgrowth. The intermediate circle, which can be viewed as the ethicalcircle, encompasses responsibility to exercise the economic functionwith a sensitive awareness of basic ethical norms as well as changingsocial values and priorities. The outer circle, equivalent to thephilanthropic circle, outlines newly emerging and still amorphousresponsibilities that business should assume in order to becomemore broadly involved in actively improving the social environment.Legal responsibilities are not explicitly presented in the originalCED framework, but rather subsumed under other corporateresponsibilities. Thus, for example, the economic function of busi-ness includes “cooperating with the government in developing moreeffective measures to control inflation and achieve high levels ofemployment” or “supporting fiscal and monetary policies for steadyeconomic growth.”74 The CON version presented here differs fromthe original model in that, for clarity and to create a common basisfor comparison between the three CSR models, it places the corporatelegal responsibilities in a particular circle, between the economicand the ethical.

For the sake of clarification, it should be noted that the structureof concentric circles, as opposed to concentric rings, represents asystem of inclusion relations rather than a scheme of mutuallyexclusive domains. In a system of concentric circles, every memberof the inner circle is also a member of the wider, more inclusiveouter circle, but not vice versa. Thus, from a CSR perspective asexpressed in the CON model, all economic responsibilities also havelegal and ethical aspects.


Nature of CSR The CON model represents a normative approachto CSR. Compatible with recent developments in CSR thinking, thefundamental idea embedded in the CON model is that business cor-porations have an incurred obligation to work for social betterment,and this obligation acts as a constant function throughout allphases—mainstream and peripheral—of the company’s operations.Applying Logsdon and Wood’s line of reasoning, “Above all, CSR is aconcept supporting social control of business that resides andoperates inside business itself, with the aim of protecting andenhancing the public welfare as well as private interests.”75 While


the pyramid and the IC models focus on the tension between busi-ness and society, the CON model highlights their interdependence.Advancing this notion of CSR, the CON model presents the relation-ships between business and society from two perspectives: outside-in and inside-out. The move from the outer circle inward reflects thelong-standing concept of social control that refers to society’s needto impose some standards of behavior on business activity in order topreserve the core function of business as an important instrumentfor social progress.76 The move from the inner circle toward theoutside represents the internalization of social norms that resideand operate within business itself as affirmative or positive duties.77

In the framework of the CON model, the inside-out and the outside-in dimensions work in tandem. Translating the same approach toCSR into practice, Porter and Kramer have recently argued thata CSR company must integrate a social perspective into the coreframeworks it already uses to guide its business strategy.78

Scope of responsibilities Understanding CSR as a framework ofintegrated responsibilities with a common core requires that each ofthe different responsibilities be defined in reference to this unifyingmeaning or purpose. The narrow definitions that characterizedthe separation of the CSR domains in the pyramid frameworkand in the seven-category IC model are replaced here with broaddefinitions that account for their common essence. A brief examina-tion of these broad definitions may be useful in clarifying the criticaldifferences between the contrasting CSR models.

The economic circle As we have seen, both the CSR pyramid andthe seven-category IC model adopt a narrow definition of economicresponsibility that focuses on the fundamental call on businessto be a profit-making enterprise. In the CON framework the scopeof economic responsibility is much broader and directly orientedtoward the good of society. According to the CED statement, theprincipal economic responsibility of the corporation in CSR terms is“to serve constructively the needs of society—to the satisfaction ofsociety.”79 Economic responsibility, in this view, is not simply aboutwealth creation; it is about generating wealth that improves thenation’s standard of living, supplying the needs and wants of peoplefor goods and services, and selling them at fair prices, providing jobsand decent wages to the work force, expanding career opportunities

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in all parts of society, and eliminating poverty.80 Under this widedefinition, profitability is not the critical test for economic responsi-bility. Contrary to the narrow focus on profit making, which repre-sents the neoclassical economics “IF” doctrine (if certain conditionsare met, then if a firm concentrates on profit making, it contributesto the common good), the CON model holds that the CSR firmhas direct responsibility to promote the quality of life, even at theexpense of profitability.81

The legal circle Christopher Stone distinguishes between twosenses of legal responsibility: responsibility 1, which emphasizesfollowing the law, and responsibility 2, which emphasizes delibera-tion with preparedness to give good reasons for one’s actions interms that admit for generalization.82 In more common parlance wewould say that responsibility 1 refers to the letter of law—i.e.,observing the law per se, and responsibility 2 refers to the spirit oflaw—i.e., approaching law through socially appropriate consider-ations. The first type demands obedience; the second, in a wayalmost diametrically opposed to the first, puts a premium on auton-omous choice. This distinction between the two senses of legalresponsibility has direct relevance to a comparative analysis of thethree CSR models. The pyramid and the seven-category IC modelsboth limit the legal responsibility to responsibility 1: obey thelaw. The narrow focus on obedience reflects an external view of law-abiding behavior, and so breeds a cost–benefit approach to the law.The legal system, in this view, is a burden that should be avoidedor, as there is no alternative, borne; the rationale for obediencebeing to seek pleasurable consequences and avoid negative con-sequences. Under the title of CSR, this kind of legal responsibilityincludes such varieties as restrictive compliance, opportunisticcompliance, avoidance of civil litigation and anticipation of changesin legislation;83 all of which are characterized by what Stone hascalled “morality of duty,” namely the specification of minimumstandards of conduct (“I won’t do anything more than I am absolutelyrequired to do”), rather than “morality of aspiration” and exhorta-tions to realize one’s fullest potential.84

The CON model, in contrast, incorporates into the legal circleboth notions of responsibility: obedience (responsibility 1) andconsidered autonomy (responsibility 2). When rules of corporatebehavior are relatively unambiguous and well established, legal


responsibility demands nothing but observing the law; however,when legal control over corporations is ineffective, and perhapseven counterproductive, the responsibility that is needed is of theperceptive sort, emphasizing considerations of the general good.Defined in terms of commitment to the common good, legal respon-sibility represents an internal view of the company’s behavior. TheCSR company seeks to comply with legal obligations not because ofthe threat of litigation, but rather because these obligations havebeen internalized as guiding standards of behavior.85 Rather thanseeking to “outsmart the law by the law,”86 a CSR firm is required tohelp to define the point at which regulation is not only necessarybut desirable. This idea is directly expressed in Thomas McCabe’smemorandum cited in the CED document:

Indeed, if corporations cannot deal individually with majorsocial responsibilities such as pollution because of competitivecost disadvantages, and if they are unable to cooperate inresolving such difficulties, then they logically and ethicallyshould propose and support rational governmental regulationwhich will remove the short-run impediments from actionsthat are wise in the long run.87

The ethical circle The ethical domain in both the CSR pyramidand the IC model refers to those standards and norms of businessbehavior that are expected by stakeholders and society at large eventhough they are not codified into law. As argued above, this negativedefinition creates an artificial separation between intimately relateddomains of responsibility, and identifies ethical responsibility withresponsiveness to external expectations and social conventions,regardless of the motivation for responding. In contrast, the CONmodel maintains that ethical issues are an integral part of everybusiness activity. Ethical responsibility cannot be performed in adetached way that conforms to external constraints without value-judgments. In line with Wood’s argument, socially responsible firmsare guided by their inner sense of commitment, and thus “need notchoose between the demands of economics and the demands ofethics; nor is ethics something that is tacked onto economics, as inthe phrase ‘economics and ethics.’ Economics is ethics, though ethicsis more than economics.”88

Rather than expedient conformity, the CON model defines ethicalresponsibility in terms of self-governance based on internal

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commitment to the good of society. While responsiveness-based morality may prompt companies to “act smart,” it does notnecessarily induce them to act ethically; a company may takeadvantage of ill-defined local norms and still be consideredsocially responsible. In keeping with recent developments in CSRthought, the CON model would judge the ethical corporation bythe extent to which it upholds its duty to seize the opportunityto be an active participant in contributing to greater stability, pro-sperity, and sustainability, and by the extent to which it does notexploit its power against those stakeholders who are not protectedby well-established ethical norms and customs.89 The CON model’semphasis on the active aspect of corporate ethical responsibilityis largely connected with the process of globalization. In the wordsof Sethi:

The large corporation, and especially the multinationalcorporation, must become an active agent for social change. . . .As a dominant institution in society, the corporation mustassume its rightful place and contribute to shaping the publicagenda instead of simply reacting to policy choices advocatedby others.90

Total CSR The CON model regards CSR as a global conceptwhose parts are bound together by means of a shared intrinsiccontent, which can be defined as a commitment to operate in a waythat promotes the good of society.91 One can argue that the notionof the “good of society” is too abstract to serve as a benchmark forassessing CSR. However, despite, and perhaps owing to, the manymeanings of this notion, nearly all today’s large corporations havetheir mission codes stated in terms of commitment to the good ofsociety, and in most cases this general commitment is furthertranslated into a list of more practical goals.

Rather than a mere aggregation, CSR is conceived as an entity orsystem made up of interrelated responsibilities, with mutual andreciprocal influence on each other. In other words, the value of thewhole is greater than the sum of its parts. Fulfillment of one respon-sibility will always affect the fulfillment of the others. For example,fulfilling (avoiding) the economic responsibility to provide jobs andgood wages to the work force while earning a profit, directly affectsthe fulfillment (avoidance) of the legal responsibility to pay for labor,the ethical responsibility to enhance justice, and the philanthropic


responsibility to help the workforce. The CON model rejects thepyramidal trade-off assumption, and holds that the interactionamong the different CSR responsibilities creates an enhancedcombined effect.

Order of importance A basic feature of the concentric circles isthe existence of a common core. In terms of CSR this means that alldifferent corporate social responsibilities share a common essence.The CON model recognizes that the vital function of business iseconomic; even so, business decisions consist of continuous, inter-related economic and moral components. Indeed, the inclusionstructure of the responsibility circles might blur the distinctionbetween the different responsibilities. However, this structure helpsthe manager to see that the different types of obligations are inconstant and dynamic interrelationships. At the same time, it doesnot prevent the manager from considering each responsibility initself in the process of decision making.

The notion of shared intrinsic content stands in sharp contrastto the notion of a range of separate responsibilities that must besimultaneously fulfilled. There is no linearity and no hierarchyin the CON model. Rather than inter-responsibilities, as in thepyramid, the order of essentiality in the CON model is intra-responsibilities, with the more intense, straightforward, well-established, and universally advantageous requirements in thecenter, and the more amorphous, newly emerging, contestable, andindeterminate obligations along the periphery.92 Thus, for example,in the CSR pyramid, ethical considerations are by definition lessimportant than economic considerations, whereas in the CONmodel, ethical considerations can be less important, more important,or equivalent to economic considerations. A CSR firm can indeedfocus on one kind of responsibility and then on another; but alwaysthrough the lens of the general purpose, namely promoting the goodof society.

Role of philanthropy Corporate philanthropy commonly refers tothe contributions of business firms to humanitarian and socialcauses, which are usually considered outside the firms’ natural lineof business. Indeed, as we have seen, Carroll’s pyramid treatsphilanthropic giving, or for that matter, good corporate citizenship,as a discretionary responsibility, separated from daily business

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operations and secondary to the more basic economic, legal, andethical responsibilities; and the IC model treats corporate philan-thropy as either “strategic philanthropy,” subsumed under economicresponsibility, or “charity expected by society,” subsumed underethical responsibility. The CON model holds a broader view ofcorporate philanthropy that draws on the general purpose of CSR,namely the obligation of the corporation to help in achieving thegood of the larger society. In contrast to the pyramid, where theactions of a company in society are divorced from its operating pra-ctices, the CON model presents an all-encompassing view thatintegrates citizenship both locally and globally with day-to-daybusiness functions. Good citizenship is no longer a sort of “icing onthe cake” but, to use Porter and Kramer’s terms, “a sine qua non ofCSR,”93 and CSR companies need to integrate social considerationsinto core business operations and strategy.

In the broad sense of the CON model, corporate philanthropy isnot simply corporate contributions to other entities to further aparticular cause, but the use of the corporate special competenciesand advantages to solve major social problems. Implicit in thisbroad definition is the view, once expressed in the CED documentand currently becoming increasingly commonplace, that becauselarge corporations possess considerable resources and skills thatcould make a critical difference in solving social problems, they“must take up the slack resulting from inadequate performance ofother institutions, notably government.”94 A wider spectrum ofcorporate philanthropic responsibility is all the more significant in theglobal arena where serious market imperfections, absence of strongbackground institutions, inadequate regulation, and ineffectiveenforcement place multinational corporations in a unique positionto help alleviate harsh living conditions, especially in developingcountries.95


As we have seen, the CSR pyramid generated a proliferation ofempirical research attempting to establish its validity and study itsnature in different contexts. Unfortunately, this is not the case withthe CON model. Taking a comparative approach, two questions areon target: the validation of the CON model and the hypothesizedrelationship between CSR and profitability.


Operationalization With regard to the question of validation,Guttman’s definition of a theory, which establishes a partnershipbetween concepts and observations, seems most useful:

A theory is an hypothesis of a correspondence between adefinitional system for a universe of observations and an aspectof the empirical structure of those observations, together witha rationale for such hypothesis.96

The universe of observations that corresponds to the CON model isclearly different from that corresponding to the pyramid (or the ICmodel). In the former case, the definitional system refers to thecommon core of all corporate social responsibilities, while the latterlacks a common core. Thus, research tools that have been developedto test the validity of the pyramid are inadequate in testing the CONmodel. Let us take Aupperle’s aforementioned constant-suminstrument as an example. Corresponding to the idea of interre-sponsibilities difference in importance, respondents were instructedto distribute up to ten points to four statements reflecting thepyramid’s four domains; and, corresponding to the view of separatedomains, the allocation of points among them had to be “based ontheir relative importance and application to your firm.”97 Note thatreference is made to the multifunctional target, “your firm,” and notto the more articulated target, “your firm’s social responsibility.”A hypothesis on the correspondence between this definitionalsystem and the pyramidal structure of the resulting observationsis straightforward.

The CON model requires a different research tool. Since it main-tains that all corporate social responsibilities share a common core,a measurement method ignoring this feature is irrelevant; andsince it stands for intra-rather than interresponsibilities order ofimportance, a measurement method based on distribution of pointsamong different domains of responsibility makes no sense. One wayto approach the research on the relationships between conceptualdefinitions and empirical observations draws on facet analysis,which, with the companion of multidimensional scaling (MDS)procedures, provides a powerful set of tools for studying the contentof and order relations between and within facets (subsystems orcomponents) of the construct of interest.98 In the course of gatheringdata for assessing the geometry of the CON model, respondentscould be instructed to evaluate a range of items—wide enough to

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represent thickly populated responsibility circles—based on theirrelative importance in fulfilling the corporate commitment toenhance the good of society. To the extent that the set of items isrepresentative, we might find essential as well as peripheral respon-sibilities in each of the circles, whether economic, legal, ethical, orphilanthropic. For example, the duty of the firm to ensure that itsoperations do not put people’s life in danger can be thought of asan item representing essential ethical responsibility; and therequirement that managers take advantage of opportunities to avoidpaying taxes to increase profits—an item representing peripherallegal responsibility, or, for that matter, perhaps economic responsi-bility (a clear-cut distinction is not very important from a CONperspective). Using the proposed methodology, we would expectthat the interrelationships among the resulting observations bestructured in concentric circles in the same order as that depictedin the CON model.

CSR-CFP relationship As previously mentioned, relationshipsbetween CSR and profitability (or CFP) have been generallyassumed to be linear. Under the CON theoretical assumption thatthere is more to CSR than responsiveness to social expectations,the prevailing hypothesis of positive correlation between CSR (that is,responsiveness) and profitability (that is, reward for responsiveness)requires modification. As Sethi noted, under conditions of imperfectcompetition, as in most modern economies, social expectationsplay a rather small role in inspiring good corporate conduct.99

Instead, it is the values and the traditions of the corporations,and their perceived risks in exploiting market opportunities, thatinfluence the extent of a corporation’s socially responsible conduct.Rather than a simple linear CSR-CFP link (as reflected in thecommon use of correlations and regression analysis for the detectionof positive or negative association between social and economicperformance),100 a hypothesis of an inverted U-shaped relationshipbetween these two variables is called for. To wit, a positive relation-ship between CSR and CFP can be expected for the range of under-normal and normal profits (here profit levels are acceptable, i.e.,higher profits mean higher reward for responsiveness), and aninverse CSR–CFP relationship for the range of above-normal profits(here corporate power is used to deprive ineffectual stakeholdersof their market-based gains, i.e., higher profits mean less social


responsibility). According to the CON model, a socially responsiblefirm is expected to refrain from chasing unfairly high profits and tofollow its inner commitment to contribute to achieving socialprogress, even at the expense of profitability.

A curvilinear hypothesis calls into question the adequacy of theconventional methods used to substantiate the CSR–CFP link.First, there is a problem of measurement. To capture the form of therelationship in its entirety, the entire span of the variables must becovered. It is doubtful whether, assuming linearity, all the diverseCSR–CFP studies to date actually covered, or attempted to cover,the entire span. One may interpret the inconsistent results of thesestudies as representing different segments of the plot, thus indicat-ing, in fact, a curvilinear relationship between variables. Second,data analysis must be appropriate to the problem as specified.While the conventional linear hypothesis-testing techniques may beconvenient, they are useless for confirming a nonlinear relationship.


Both the pyramid and the IC models direct socially responsiblemanagers to serve “many masters” simultaneously (i.e., makeprofits, obey the law, and so forth), with or without a fixed order ofpriorities. As Porter and Kramer claim:

The result is oftentimes a hodge-podge uncoordinated CSRand philanthropic activities disconnected from the company’sstrategy that neither make any meaningful social impact norstrengthen the firm’s long-term competitiveness. Internally,CSR practices and initiatives are often isolated from operatingunits—and even separated from corporate philanthropy.Externally, the company’s social impact becomes diffusedamong numerous unrelated efforts, each responding to adifferent stakeholder group or corporate pressure point.101

In the same vein, Jensen has argued that without the clarity ofmission provided by a single criterion, corporate executives facingmultiple objectives will experience managerial confusion, conflict,and inefficiency.102 The CON model solves the problems that arisefrom the multiple objectives that accompany the other two models bygiving managers wishing to be socially responsible a single criterionby which to choose among alternative courses of action: the

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improvement of social welfare. This criterion, which resides incon-testably as the implicit raison d’être of the economic institution, ismade explicit in the CON model. Rather than assuming that profitmaximization leads to the maximization of social welfare, managersare guided to directly consider the social value of alternative policyoptions before making their decisions. In more general terms,rather than pursuing each of the diverse corporate responsibilitiesper se hoping that this, in turn, will enhance the good of society,the CON model guides managers to consider each responsibility indirect relation to the overall objective of social welfare.

The CON model prescribes a CSR strategy that could, perhaps,be best described in terms of Paine’s notion of “integrity strategy,”which is characterized by “a conception of ethics as a driving forceof an enterprise. Ethical values shape the search for opportunities,the design of organizational systems, and the decision-making pro-cess used by individuals and groups.”103 Managers who regard CSRas nothing more than conformity to externally imposed standardsnecessarily endorse a code of moral mediocrity for their companies.In contrast, managers who adopt the commitment strategy nolonger view CSR as a burdensome constraint within which theyhave to operate, but as the governing purpose of the firm, a purposethat incorporates all corporate social responsibilities, unites membersof different divisions and inspires corporate excellence.

CONCLUSION

This paper has sought to add clarity to CSR theory and research bycomparing and contrasting the underlying assumptions, the con-ceptual structures, the methodological tools, and the managerialimplications of three basic CSR models—the pyramid, the inter-secting circles, and the concentric circles. The four-part CSR pyramiddovetails well with the current trend among corporate manage-ments towards growing acceptance of a friendship model of therelationship between the basic economic role of the firm and itsextended social obligations. The pyramid’s unique combination ofsimultaneity and hierarchy of importance attempts to reconcile thechanging social expectations of businesses with the traditionalemphasis on profit making, the ideal CSR behavior with the pragmaticconsiderations of CSR management. Unfortunately, the supposed


alliance between social concerns and profit making depends to alarge extent on the surrounding cultural and institutional context.Where external stakeholders fail at holding corporations to accountfor the social consequences of their activities, the necessary con-dition that glues the economic and social responsibilities togetherin a coherent framework is lost, and the ability of the pyramid toguide companies to take actions that would support both theircommunities and their business goals is undermined. The IC modelcontrasts with the pyramid in two main aspects: it refutes thenotion that CSR is a range of externally related domains of respon-sibility, and it rejects the hierarchical order. The radical idea behindthe IC model is that the different domains of CSR are interrelatedand none of them is prima facie more important relative to theothers. This advantage is also the main difficulty of the IC model.Failing to provide any clear normative guide, it leaves managers toface competing responsibilities with no way to make principleddecisions. The CON model combines considerations of externalconstraints on corporate behavior with a self-binding commitmentto the common good. Like the pyramid, it views the economic role ofbusiness as its core responsibility, but this core is embedded in,rather than separated from, the broader responsibility to the goodof society. The pyramidal view of CSR as a range of separate respon-sibilities that must be simultaneously fulfilled is replaced in theCON model with a framework of integrated responsibilities, allsharing a common essence—the responsibility to promote the qualityof life. According to the CON model, every corporate decision mustbe considered through the lens of social betterment. The main con-clusion of the comparative analysis is that unless we are willingto acknowledge that all corporate social responsibilities share acommon normative essence, there is little prospect of finding a wayout of the difficulties inherent in disintegrated frameworks suchas the CSR pyramid and the IC model.

The development of the CON model may open new directions forCSR research investigating intra as well as interresponsibilitiesorder of importance, and studying more complex relationshipsbetween CSR and profitability than the regular linear hypothesis.However, the CON model needs further development of research toolsin the general directions outlined above. This is a task for futureresearch. Once the research tools are developed, a central objectivewould be to establish a valid and reliable scale for total CSR.

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At this stage, the immediate lesson from the comparative analysisfor both CSR research and teaching is that the same concept ofresponsibility may carry different meanings, depending on theparent model. Unfortunately, when alternative models of the sameconcept are held by different people in different contexts, discussionfrequently seems to represent mutual understanding and agree-ment, while in fact there are no common points of reference, andproblems of ambiguity arise. To ensure that CSR theory and conceptscan be established and provide a source of managerial guidance,attention should be given to the explication of the underlyingassumptions which bound the theory, to the distinction betweendifferent definitions of its constructs and variables, and to theimplications of the assumed interrelationships among them.Focusing on the boundaries of CSR, the comparative analysis mightalso be used to help interpret and discuss growing trends in thebusiness and society field such as stakeholder management, corpo-rate citizenship, triple bottom-line accounting, and sustainability.Each of these theoretical trends involves, to some extent, aspects ofthe core responsibilities that form the trunk of CSR, so that thecomparative analysis might provide an initial framework to betterunderstand the branches of CSR thinking.

NOTES

1. For instance, A. B. Carroll, “A three-dimensional conceptual modelof corporate performance,” Academy of Management Review 4, 4(1979):497–505; M. B. E. Clarkson, “A stakeholder framework for analyzing andevaluating corporate social performance,” Academy of Management Review

20, 1(1995): 92–117; W. C. Frederick, Corporation, Be Good! (Indianapolis, IN:Dog Ear Publishing, 2006); S. P. Sethi, “Dimensions of corporate socialresponsibility: an analytical framework,” California Management Review

17, 3(1975): 58–64; D. L. Swanson, “Addressing a theoretical problem byreorienting the social performance model,” Academy of Management Review

20, 1(1995): 43–64; S. A. Waddock, “Creating corporate accountability:foundational principles to make corporate citizenship real.” Journal of Busi-

ness Ethics 50, 4(2004): 313–327; D. J. Wood, “Corporate social performancerevisited,” Academy of Management Review 16, 4 (1991): 691–718.

2. S. A. Waddock, “Parallel universes: companies, academics, and theprogress of corporate citizenship,” Business and Society Review 109,1(2004): 5–42.


3. D. Votaw, “Genius becomes rare: a comment on the doctrine ofsocial responsibility Part. I.” California Management Review 15, 2(1972):25–31.

4. For instance, Carroll, “A three-dimensional conceptual model ofcorporate performance.”

5. For instance, T. M. Jones, “An integrating framework for research inbusiness and society: a step toward the elusive paradigm?” Academy of

Management Review 8, 4(1983): 559–564; M. S. Schwartz and A. B. Carroll,“Corporate social responsibility: a three-domain approach.” Business Ethics

Quarterly 13, 4 (2003): 503–530.6. Adapted here from the Committee for Economic Development

(CED), Social Responsibilities of Business Corporations, (New York: Author,1971).

7. W. C. Frederick, “Theories of corporate social performance,” inBusiness and Society: Dimensions of Conflict and Cooperation, eds. S. P. Sethiand C. Falbe (New York: Lexington Books, 1987): 142–161.

8. For a detailed review, see for example, A. B. Carroll, “Corporatesocial responsibility: evolution of a definitional construct.” Business and

Society 38, 3(1999): 268–295; Frederick, Corporation, Be Good!; Waddock,“Parallel Universes.”

9. Carroll, “Three-Dimensional.”10. S. L. Wartick and P. L. Cochran, “The evolution of the corporate

social performance model,” Academy of Management Review 10, 4(1985):758–769.

11. Wood, “Corporate social performance revisited,” 693.12. Swanson, “Addressing theoretical problem”; cf., D. L. Swanson,

“Toward an integrative theory of business and society: a research strategyfor corporate social performance,” Academy of Management Review 24,4(1999): 506–521.

13. W. C. Frederick, Values, Nature, and Culture in the American Corpo-

ration (New York: Oxford University Press, 1995).14. Waddock, “Creating corporate accountability,” 313.15. M. B. E. Clarkson, Principles of Stakeholder Management (Toronto:

The Clarkson Centre for Business Ethics, 1999).16. T. A. Hemphill, “Corporate citizenship: the case for a new corporate

governance model,” Business and Society Review 109, 3(2004): 339–361.17. J. M. Logsdon, and D. J. Wood, “Business citizenship: from domestic

to global level of analysis,” Business Ethics Quarterly 12, 2(2002), 177.18. K. E. Goodpaster, “Some challenges of social screening,” Journal of

Business Ethics 43, 3(2003), 239.

AVIVA GEVA 37

19. Carroll, “Corporate social responsibility.”20. S. B. Bacharach, “Organizational theories: some criteria for evalua-

tion.” Academy of Management Review 14, 4(1989), 496.21. Carroll, “Three-dimensional”; see also, A. B. Carroll, “The pyramid

of corporate social responsibility: toward the moral management of organi-zational stakeholders,” Business Horizons 34(July–August, 1991): 39–48.

22. Ibid., 42.23. Ibid., 41.24. Ibid., 41.25. Swanson, “Toward integrative theory.”26. For instance, A. B. Carroll, “Social responsibility,” in The Blackwell

Encyclopedic Dictionary of Business Ethics, eds. P. H. Werhane and R. E.Freeman (Oxford, UK: Blackwell Publishers Ltd. 1997): 593–595.

27. Ibid., 593–595.28. R. E. Freeman, “The politics of stakeholder theory: some future

directions,” Business Ethics Quarterly 4, 4(1994): 409–421.29. A. B. Carroll, “Ethical challenges for business in the new millennium:

corporate social responsibility and models of management morality,”Business Ethics Quarterly 10, 1(2000), 35.

30. A. B. Carroll and A. K. Buchholtz, Business and Society: Ethics and

Stakeholder Management, 6e. (Mason, OH: South-Western, Thomson,2006): 40.

31. Carroll, “Pyramid of CSR,” 42.32. Carroll, “Three-dimensional,” 499.33. Ibid., 499.34. W. Acar, K. E. Aupperle and R. M. Lowy, “An empirical exploration

of measures of social responsibility across the spectrum of organizationaltypes,” International Journal of Organizational Analysis 9, 1(2001): 26–57.

35. Carroll, “Pyramid of CSR,” 42.36. Ibid., 43.37. Carroll, “Corporate social responsibility”; Hemphill, “Corporate

citizenship.”38. Clarkson, “Stakeholder framework,” 94.39. For a general review of the empirical studies on CSR and the associated

measurement problems see, for example, Acar et al., “Empirical exploration”;S. A. Waddock and S. B. Graves, “The corporate social performance-financialperformance link,” Strategic Management Journal 18, 4(1997): 303–319.

40. K. E. Aupperle, A. B. Carroll and J. D. Hatfield, “An empiricalexamination of the relationship between corporate social responsibility andprofitability,” Academy of Management Journal 28, 2(1985): 446–463.


41. K. E. Aupperle, “An empirical measure of corporate orientation,”Research in Corporate Social Performance and Policy, 6(1984): 27–54.

42. For instance, Acar et al., “Empirical exploration”; Aupperle et al.,“Empirical examination.”

43. For instance, T. M. Jones and A. C. Wicks, “Convergent stakeholdertheory,” Academy of Management Review 24, 2(1999): 206–221.

44. Clarkson, “Stakeholder framework.”45. For instance, B. K. Burton and W. H. Hegarty, “Some determinants

of student corporate social responsibility orientation,” Business and Society

38, 2(1999): 188–205; V. C. Edmondson and A. B. Carroll, “Giving back: anexamination of the philanthropic motivations, orientations and activities oflarge black-owned businesses,” Journal of Business Ethics 19, 2(1999):171–179.

46. For instance, I. Maignan and O. C. Ferrell, “Measuring corporatecitizenship in two countries: the case of the United States and France,”Journal of Business Ethics 23, 3(2000): 283–297; T. S. Pinkston and A. B.Carroll, “A retrospective examination of csr orientations: have theychanged?” Journal of Business Ethics 15, 2(1996): 199–206.

47. For instance, J. J. Griffin and J. F. Mahon, “The corporate socialperformance and corporate social financial performance debate: twenty-fiveyears of incomparable research,” Business and Society 36, 1(1997): 5–31;L. E. Preston and D. P. O’Bannon, “The corporate social-financial perfor-mance relationship: a typology and analysis,” Business and Society, 36,4(1997): 419–430; D. Wood and R. Jones, “Stakeholder mismatching: atheoretical problem in empirical research on corporate social performance,”The International Journal of Organizational Analysis, 3, 3(1995): 229–267.

48. Wood and Jones, “Stakeholder mismatching,” 230.49. M. Orlitzky, F. L. Schmidt and S. Rynes, “Corporate social and

financial performance: a meta-analysis,” Organization Studies 24, 3(2003):403–441; C. K. Prahalad and G. Hamel, “The core competence of the corpo-ration,” Harvard Business Review, (May–June, 1990): 79–91; Waddock andGraves, “Social performance-financial performance.”

50. Waddock and Graves, “Social performance-financial performance.”51. Acar et al., “Empirical exploration.”52. Aupperle et al., “Empirical examination,” 458.53. Ibid.; H. M. O’Neill, C. B. Saunders and A. D. McCarthy, 1989.

“Board members, corporate social responsiveness and profitability: aretradeoffs necessary?” Journal of Business Ethics 8, 5(1989): 353–357.

54. The constant sum method places social responsibility (SR) andeconomic responsibility (E) as complementary variables (SR + E = constant);

AVIVA GEVA 39

i.e., SR is a linear transformation of E. Since the correlation coefficient isinvariant under a linear transformation of the variables, if the correlationbetween SR and profitability approaches zero, so does the correlationbetween E and profitability.

55. L. P. Hartman, B. Shaw and R. Stevenson, “Exploring the ethics andeconomics of global labor standards: a challenge to integrated socialcontract theory,” Business Ethics Quarterly 13, 2(2003): 193–220.

56. Wood and Jones, “Stakeholder mismatching,” 233.57. Wood, “Corporate social performance revisited,” 698.58. Jones, “Integrating framework”; Waddock, “Parallel universes.”59. Schwartz and Carroll, “Corporate social responsibility.”60. Ibid., 508.61. K. Davis, “The case for and against business assumption of social

responsibilities.” Academy of Management Journal, 16, 2(1973): 312–322.62. Schwartz and Carroll, “Corporate social responsibility.”63. Ibid., 508.64. Wood, “Corporate social performance revisited.”65. Schwartz and Carroll, “Corporate social responsibility,” 513.66. Ibid., 509.67. Wood, “Corporate social performance revisited,” 693.68. Jones, “Integrating framework.”69. See figure 1: Business and society graphic model in Jones,

“Integrating framework,” 560.70. B. K. Googins and S. A. Rochlin, “Creating the partnership society:

understanding the rhetoric and reality of cross-sectoral partnerships,”Business and Society Review, 105, 1(2000): 127–144.

71. M. Jensen, “Value maximization, stakeholder theory, and thecorporate objective function.” Business Ethics Quarterly 12, 2(2002),238.

72. P. F. Drucker, “The new meaning of corporate social responsibility.”California Management Review 16, 2(1984): 53–63.

73. Jensen, “Value maximization.”74. CED, Social Responsibilities, 37.75. Logsdon and Wood, “Business citizenship,” 158.76. Jones, “Integrating framework.”77. cf. Swanson, “Toward integrative theory.”78. M. E. Porter and M. R. Kramer, “Strategy and society: the link

between competitive advantage and corporate social responsibility,”Harvard Business Review, (December 2006): 78–92.

79. CED, Social Responsibilities, 11, italics added.


80. See for example, A. Sen, Development as Freedom. (New York:Anchor Books, 1999); J. E. Stiglitz, Making Globalization Work (New York:W. W. Norton, 2006).

81. CED, Social Responsibilities, 15.82. C. D. Stone, Where the Law Ends. (New York: Harper and Row, 1975).83. Schwartz and Carroll, “Corporate social responsibility.”84. Stone, Where the Law Ends, 101; cf. L. S. Paine, “Managing for

organizational integrity.” Harvard Business Review 72, 2(1994): 106–117.85. See one implementation of this idea in Caux Round Table, Princi-

ples for Business: Principle 3 – Going beyond the letter of law toward a spirit

of trust, Available from CRT network at: http://www.cauxroundtable.org/principles.html.

86. J. Aharony and A. Geva, “Moral implications of law in business: acase of tax loopholes,” Business Ethics: A European Review 12, 4(2003):378–393.

87. CED, Social Responsibilities, 46.88. D. Wood, “Toward improving corporate social performance,” Business

Horizons 34(July–August, 1991): 66, italics in the original; cf. A. Etzioni,The Moral Dimension: Toward a New Economics (New York: The Free Press,1988); P. H. Werhane and R. E. Freeman, “Business ethics: the state of theart,” International Journal of Management Reviews 1, 1(1999): 1–16.

89. Frederick, Corporation, Be Good!; Logsdon and Wood, “Businesscitizenship”; S. P. Sethi, “Globalization and the good corporation: a need forproactive co-existence.” Journal of Business Ethics 43, 1(2003): 21–31.

90. S. P. Sethi, Setting Global Standards: Guidelines for Creating Codes

of Conduct in Multinational Corporations (Hoboken, NJ: John Wiley & Sons2003), 288.

91. CED, Social Responsibilities; see also W. C. Frederick, “Moving toCSR4: what to pack for the trip.” Business and Society 37, 1(1998): 40–60;Goodpaster, “Some challenges.”

92. CED, Social Responsibilities.93. Porter and Kramer, “Strategy and society,” 85.94. CED, Social Responsibilities, 16; S. A. Waddock, “Building success-

ful social partnership,” Sloan Management Review 23, 4(1988): 17–23.95. T. Y. Dunfee and D. Hess, “The legitimacy of direct corporate

humanitarian investment.” Business Ethics Quarterly 10, 1(2000): 95–110;Sen, Development as Freedom.

96. L. Guttman, “What is not what in theory construction,” In eds.,R. M. Hauser, D. Mechanic and A. Hailer, Social Structure and Behavior

(New York: Academic Press, 1982), 338.

http://www.cauxroundtable.org/principles.html

http://www.cauxroundtable.org/principles.html

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97. Aupperle, “Empirical measure,” 30.98. S. Shye and D. Elizur, Introduction to Facet Theory: Content Design

and Intrinsic Data Analysis in Behavioral Research (Thousand Oaks, CA:Sage Publications, 1994).

99. Sethi, “Globalization.”100. For instance, O’Neill et al., “Board members”; Aupperle, Carroll

and Hatfield, “Empirical examination.”101. Porter and Kramer, “Strategy and society,” 83.102. Jensen, “Value maximization.”103. Paine, “Managing integrity,” 111.

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