Isn't good CSR above all about being a 'good neighbour'?

It has become customary to talk about CSR, or corporate social/societal responsibility, as self-evident. However, what exactly is meant by this - and what shape it should take - does not seem so clear on closer inspection. A CSR report of a large multinational can variously contain references to recycling policies, EDI targets, or details on philanthropic donations. As a June 2020 French Senate report wrote:

“The current situation leads to the production of very normative CSR reports, which are often abstruse, cluttered or indigestible.”

It is therefore sometimes difficult to understand the underlying logic at work, prompting criticism from researchers, practitioners, politicians or even consumers, who will only see in CSR a label that professes to 'do good' but without any (or few) real implications beyond that. The danger here is threefold: inconsistent and therefore illegible CSR policies, opportunistic executions in the shape of for instance greenwashing, and legitimising an already widespread cynicism about organisations making a positive contribution to society.

So, how can leaders, managers and employees give focused meaning and genuine impact to their CSR actions? We addressed this question in a research article recently published in the California Management Review.

An intellectual response to liberalism

For this, we started with the history of the subject: where does the idea of corporate social responsibility come from? A movement in this direction emerged at the end of the Second World War. American researchers and practitioners at that time often spoke of neighbourliness – good neighbourliness – to explain what CSR means.

For instance, in a foundational 1953 text titled Social Responsibilities of the Businessman, the American economist Howard Bowen (1908-1989) spoke of the company “as a citizen and as a neighbour of the local community”. In the 1970s, his work would, in particular, feed the theory of ‘ethical managerialism’. This sort of reflection pushed against the neoclassical vision of the entrepreneur whose objective cannot be other than to maximize his profit and whose social role is limited to paying taxes.

As explained by philosopher Grégoire Chamayou, professor at the École Normale Supérieure de Lyon, in his book La Société ingouvernable (The Ungovernable Society), Bowen formulated his intellectual critique in the context of strong labour protests. His reasoning started from a flaw in the dominant paradigm that two researchers – lawyer Adolf Bearle and economist Gardiner Means – had identified as early as 1932: that everything happens as if the owner of the company and the managers were one, which makes the system optimal. But, in fact, with the shareholder system, it is no longer only the owners but also the managers who impose the rules, and they have different interests.

It does not matter, Bowen wrote, that the manager does not manage the company for himself but that he is entitled to do so. Of course, he must be accountable to the company's shareholders, but he also has a broader social responsibility.

What does this mean in practice? Reflecting on this question in 1973 – twenty years after Bowen’s text – Henry Eilbirt and Robert Parket wrote in the journal, Business Horizons:

"Perhaps the best way to understand social responsibility is to think of it as being a 'good neighbour'."

Around the same time, General Electric, Ford and other large American companies used the same term to describe their local engagement policies. Ford, for example, established local relations committees in each of its 35 factories.

Anchored in the community

By centreing this idea of neighbourliness, we thus propose a slightly different definition of CSR:

"CSR refers to an open and collaborative way of engaging with economic, social and environmental issues that is rooted in the territory, driven by community, action-oriented and respectful of neighbours and local realities.”

This requires four main paradigm shifts when it comes to an organisation's CSR activities: moving from restricted responsibility for self-chosen issues to accepting the constraints of the territories in which the company is present; moving from a sense of distant detachment to a shared experience of local consequences; moving from global reports to reporting actions that make sense locally; and moving from a self-centred and selfish logic to sustainable partnerships between equals.

To partially illustrate these shifts, we build on concrete examples of companies committing to good neighbourliness: LVMH offering to modify its assembly lines to produce hydro-alcoholic gel during the pandemic; the Royal Bank of Scotland, which made its unused conference centre during lockdown available to charities; and also Liverpool Football Club’s Red Neighbours programme.

Highlighting such examples is not about handing out ‘brownie points’ or being naive about the reasons behind these community-friendly actions, but rather illustrating how this idea of good neighbourliness can give meaning to CSR strategies and policies on the basis of four simple operational questions:

• What does the neighbourhood need, here and now?
• What can we specifically offer?
• What are our institutional and local constraints?
• On what basis should we prioritise certain requests?

Crucially, the answers to these questions should come not only from the leaders and managers of the company, but also from constant exchange with the communities and territories in which the company is operates. It is likely to be more practically challenging, but it may also be far more meaningful. 

This article is republished from The Conversation. Read the original article.

Maja Korica is Reader in Management and Organisation at Warwick Business School, and specialises in corporate governance, accountability and responsibility, as well as executive management and leadership in practice. She teaches on the Executive MBA and Distance Learning MBA courses as well as the BSc Management and BSc International Management courses.

Yoann Bazin is Professor of Business Ethics, EM Normandie Business School.