A second way to connect business in society that's emerged has been called,
corporate social responsibility or corporate social responsiveness or
sometimes just CSR. Well, there's some question about how far
back CSR goes. most people, who think about this, date
the origin to, in the US at least to Howard Bowen in 1953 in a book that he
wrote. And he says, you know, the business
person produces two categories of products.
The first consist of commercial goods and services.
The second is the conditions under which these goods and services are produced.
And Bowen saw these conditions as social products of a business.
And he's making the distinction between the economic products, the goods and
services, and the social products, the conditions under which this products are
made. And this gives really rise to the origins
of CSR in the American context. In the 1960s and 70s again in the US,
people began to take this idea very seriously.
large firms especially began to make what became known as the, the business case
for social responsibility. And the business case went something like
this, [INAUDIBLE] being a good citizen, paying attention to the social affects of
your business you can gain important support from customers and communities.
You can avoid regulation or, at least, hope to constrain the regulation.
And look, CSR's just good business. Now, this emerges in the US at a time
when you know, you're saying, well, there's the business part, there's the
ethics part. Business and ethics are separate.
In other societies around the world, this separation of business and ethics didn't
go as far. For instance, in the Scandinavian
countries and Denmark, Sweden, and Norway there was never the big separation
between business and the rest of society. And we'll talk about that later.
By focusing on the business case, however, business leaders could counter
Milton Friedman's argument that CSR was a waste of shareholder resources and a
usurping of shareholders' prerogative and government's prerogative.
Now, most of the work on CSR was done by issue or by social issue.
A company would take on an issue like racial discrimination or pollution or
consumerism. And try to do better with respect to its
products and services. Not just through its philanthropic
contribution, though that was sometimes added on.
Many companies have fought these ideas all the way, since they were committed to
the dominate story about, look, this is a waste of money, it's only about money and
[INAUDIBLE] profits. People began to talk about not just about
social responsibility, but corporate social performance and the connection
between social performance and financial performance.
For instance, is good social performance simply a matter of being financially well
off enough so that you can afford it? Or, does good social performance lead to
good financial performance? These questions have spawned hundreds of
research project and today, I think it's fair to say, that they remain open
questions. I'm going to argue a little bit later
there, open questions, because the way we ask the question.
But I'll save that for now. Many people have argued that CSR, if it's
to have an impact, has to be institutionalized through a set of
principles. This really came about in the 1960s with
something called the Sullivan [INAUDIBLE] Principles, articulated by Reverend Leon
Sullivan who was a board member of General Motors around the issue of should
companies do business in South Africa under apartheid.
Well this idea of articulating the set of principles has really grown over the
years. For instance, now there's a set of
principles called the UN Global Compact that the United Nations ask [INAUDIBLE]
companies to sign. And these are principles in four areas,
all of which make some sense. First of all in human rights, businesses
should figure out where they're not or at least they should make sure they're not
complicit in human rights violations, around labor.
Business's should work on the elimination of all forms of force labor or child
labor. Around the environment, business's should
promote greater environmental responsibility, and around
anti-corruption. Business should work against corruption,
extortion, and bribery. And these principals made sense.
Notice that they question, they question the idea in the old story that business
and, business and society are separate, business and ethics are [INAUDIBLE]
separate. And there are some great examples of CSR
[INAUDIBLE] programs. I'm going to give you a couple but there
are lots of others. And again, when I give you an example and
I use a company name, don't assume everything that company does is either
always right or always wrong. Oscar Wilde once said, the problem with
thinking about saints and sinners, is that every saint has a past and every
sinner has a future. and we shouldn't expect more of companies
than we expect of ourselves. I'll give you an example of a CSR
program. SAP, the [INAUDIBLE] the computer
company. In Latin America, SAP helps girls gain
the life skills they need to craft their own futures.
In Europe, they help young entrepreneurs build what's called social businesses
that we'll talk about later, in, in the course.
In Asia, it provides computer access to help people compete for jobs.
And in Africa, they focus on helping children attend school.
Or think about Procter and Gamble and their program they call live, or rather,
learn, live, and thrive, to improve the lives of over 400 million children.
They have a vaccination program associated with young babies and their
Pampers product. They have a partnership in China uh,with
PNG Hope schools in very rural, poverty-stricken areas.
And they've supported programs like Feeding America, oriented towards
children's basic needs. Contributing more than 3.2 million pounds
of, of, of products. This second new model, in addition to
philanthropy, is that businesses connected with society by its corporate
social responsibilities, activities. And maybe by it's corporate social
responsibility and it's philanthropic activities.
And that's a very different idea about business as connection with society than
the dominant story. What I'd like you to think about in the
discussion forum, talk about, is this question of does good social performance
lead to good financial performance? Or does good financial performance allow
companies to have good social performance?
What do you think about this?