Magazine Summer 2015

Why Corporate Social Responsibility Isn’t a Piece of Cake

Although corporations can play important roles in addressing some of society’s problems, it’s naïve to think that corporate social responsibility can turn the corporate landscape into a win-win wonderland.

José Carlos Marques and Henry Mintzberg Reading Time: 11 min 

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Mondragon

Mondragon Corporation, a federation of worker cooperatives with headquarters in Spain’s Basque region, is highly regarded for creating both economic and social value.

Image courtesy of Flickr user Fagor Automation

Corporate Social Responsibility (CSR) isn’t a piece of cake. It is fraught with contradictions, subject to political challenges and demands deep commitment. So let’s stop sugarcoating it. Relying on the familiar clichés — “doing well by doing good,” finding “win-win solutions” and being a “good corporate citizen” — accomplishes little in the bigger scheme of things. In fact, these platitudes sometimes encourage corporate social irresponsibility.

In nutrition, eating cake can leave you unsatisfied after the sugar hit has worn off. Although we don’t want readers to finish this article feeling unsatisfied, we also don’t want people to think there’s a simple recipe for responsible corporate behavior. We begin by critiquing four common recipes for CSR. We call them “let them eat cake,” “icing on the cake,” “everyone gets a slice of the cake,” and “having your cake and eating it too.” We find none of them adequate, however, and believe managers should instead focus their attention on the bread and butter of responsible corporate behavior.

1. Let Them Eat Cake

University of Chicago economist Milton Friedman famously denounced CSR as a “fundamentally subversive doctrine,” arguing more than 40 years ago that “there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.” Friedman’s argument was elegant, influential — and flawed, predicated on a black-and-white world that is artificially compartmentalized: Social consequences are conveniently excluded from economic decisions, so long as markets are competitive and rules are clear.

Sadly, too many companies cause significant harm while playing by the rules of the game. We all know about the criminal cases of corruption in the marketplace, exemplified by convicted swindler Bernard Madoff. Far more damaging may well be the legal corruption embodied in practices that benefit a few corporations but harm the wider society. One blatant instance came to light during the subprime mortgage crisis and its aftermath, but such market manipulation is hardly isolated.

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About the Authors

José Carlos Marques is a doctoral candidate in strategy and organization at McGill University’s Desautels Faculty of Management, in Montreal. Henry Mintzberg is the Cleghorn Professor of Management Studies at McGill. His most recent book is Rebalancing Society: Radical Renewal Beyond Left, Right, and Center (Berrett-Koehler Publishers, 2015).

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Comments (3)
Diniwe Siwa
i have applied for a post  recently advertised and requires a person with Project Management Certificate and HIV/AIDS Management who will be working in a Correctional Service Department. after reading your socia responsibility articles, i feel ready for the interviews
Jan Komorowski
A very good article in the context of criticism of the contemporary economics. Peace of conscience due to the fulfillment of CSR is delusional. The conclusions of the so-called behavioral anomalies have the same meaning. All this boils down to a conflict of attitudes of social orientation of selfish as a conscious or unconscious choices and points to the importance of the advisability of intentions, actions, that is, values a man directs. You can not have longer all explained by the theory of monetarism, in isolation from the dimension of the real economy, culture and sociology. Finally, ideological character of paradigms and conventional way of thinking are confirmed. CSR and dilemmas of Behaviorism show conflict between the simplified thinking based on the economic theories and real economy culture referred to a social values-based rationality.
Sean Fitzgerald
"Friedman’s argument was elegant, influential — and flawed, predicated on a black-and-white world that is artificially compartmentalized: Social consequences are conveniently excluded from economic decisions, so long as markets are competitive and rules are clear."

Very well put. I couldn't agree more. His argument made the assumption that business and government etc. were all in their own little 'vacuums'—somehow unaffected by one another. We know that's not the case in the real world. There is an interdependency that must be recognized before any real progress is to be made.