The concept of corporate social responsibility (CSR) — the idea that companies directly contribute to the common good — is gaining adherents throughout the business world.  However, what constitutes responsible corporate behavior is open to interpretation by the firms themselves and the larger cultures in which they operate.

A 2011 paper from INSEAD Business School published in the Socio-Economic Review, “The Spirits of Corporate Social Responsibility: Senior Executive Perceptions of the Role of the Firm in Society in Germany, Hong Kong, Japan, South Korea and the USA,” surveyed 73 senior executives of large corporations and asked them to articulate their thoughts relating to corporate responsibility. The researchers focused on distinguishing between two types of corporate charity: implicit (“Our goods benefit society”) and explicit (“We contribute to charitable causes”).

Key study findings include:

• The senior executives of Germany, Japan, South Korea and the United States espoused an implicit philosophy of charity: “A large majority of executives in each economy agreed on the importance of taking society into account in the running of the firm.” However, there was “no sense that responsibilities towards society represented voluntary corporate action. This suggests that executives in these four societies tended to view their relationships with society as ‘implicit.’ ”
• Hong Kong executives adhered to explicit standards of corporate responsibility, with 60% mentioning “charity” as an obligation of successful corporations. Charitable contributions were seen as supporting Hong Kong’s economic well-being and elevating the status of the contributors; however, charity still remained subordinate to a company’s ability to generate wealth for its stakeholders and create jobs.
• U.S. executives were “unusually clear in assessing societal concerns as secondary, with primacy accorded to shareholder interests,” and society was positioned as a “constraint” to be overcome. Corporate responsibility was seen primarily in relation to job creation and innovation; only 14% of U.S. executives mentioned charity directly. Overall, there was a “strong emphasis on the provision of employment as a contribution to society, a claim that may ring hollow in the aftermath of the U.S. financial crisis but was credible for most of the [2000s].”
• Only 40% of financial sector executives in the U.S. alluded to the importance of society or community: “At the root of the financial crisis may not only have been insufficient regulatory oversight, but also a proliferation of financial executives with possibly deviant value systems.”
• “Germany emerged as a unique case. While the other three societies with implicit CSR tended to focus on one type of stakeholder — the state and society as a whole in Korea, employees in Japan and shareholders in the USA — German executives chose to emphasize the societal value of production in itself. This is consistent with the high rate of engineering doctorates among German executives outside the financial sector, which is likely to condition executives’ views to focus on the productive function of the firm.”

The authors worried that corporate behaviors may be divorced from broader societal benefits; they call for additional research to refine the evolution of executive values and the link between cultural context and corporate behavior.

Tags: ethics, Asia, Europe, financial crisis