What moral values mean for corporate social responsibility

More and more companies are taking on social responsibility. The role of moral values in this is the subject of a study written by David Risi of BFH Wirtschaft together with Laurence Vigneau (Newcastle University), Stephan Bohn (Freie Universität Berlin) and Christopher Wickert (Vrije Universiteit Amsterdam). The authors elaborate on the two key functions that values can have for corporate social responsibility (CSR).

Corporate Social Responsibility (CSR) is a relevant management concept for companies that want to contribute to sustainable development. CSR focuses on the interactions between business and society and, in particular, how these interactions can be managed (Risi, 2022). CSR is about integrating social, environmental and ethical aspects into a company’s entire value chain, i.e. into internal areas such as logistics and production as well as into external business processes and practices in the areas of logistics, marketing, sales and service (Wickert & Risi, 2019). Accordingly, CSR is widely regarded as the management concept through which companies can contribute to sustainable development (e.g. European Union 2011; Matten and Moon, 2020; State Secretariat for Economic Affairs of Switzerland, 2020; Voegtlin et al., 2022).

Values are often underestimated

Aspects relevant to CSR, such as fair treatment of employees or protection of the natural environment, are characterised by moral values and give these aspects normative weight in business and society. Moral values have a normative weight and are experienced by people as moral imperatives and used by them to judge the world, each other and themselves (see Kraatz et al., 2020, p. 477). Such values are important but often underestimated components of CSR, as they influence the actions of companies beyond economic and legal aspects and are central to CSR thematic areas such as fair working conditions, equality and environmental protection. Although CSR is often understood as a phenomenon that focuses centrally on moral values, as it is based on “the morally right thing to do” (Bansal and Song, 2017; Wickert and Risi, 2019) and reflects the values of societal stakeholders (Bansal and Roth, 2000; Risi, 2022), the role of values has not yet been systematically captured. Based on their systematic analysis of the role of moral values for CSR, the team of authors identified two central functions of values:

The bridging function

Values are shown to have a “bridging function”. By illustrating the bridging function of values in relation to corporate responsibility towards society, they succeed in introducing a key factor that influences the reciprocal relationship between CSR structures and actions (Walker et al., 2019). This is crucial as CSR research has argued differently why companies engage in CSR (Walker et al., 2019). On the one hand, structure-based explanations suggest that companies reflect the institutional structures of their environment by mirroring the CSR prescriptions established by government, the market and civil society. On the other hand, action-based explanations assume that companies engage in CSR to replace the limited activities of government and other institutions in providing structures to promote CSR. While this debate is still ongoing, it is not very helpful for understanding CSR due to the interplay of both factors, i.e. structures and action. The bridging function incorporates action and structures to discuss corporate commitment to CSR and thus offers a sound approach to bring together structure- and action-based explanations of CSR.

The reference function

It is shown that values have a “reference function”. Elaborating on the reference function of values provides a more systematic approach to addressing the normative foundations of CSR and the underlying idea of responsible management of company-stakeholder interactions. Values are at the heart of CSR as they suggest to entrepreneurs and managers ‘the right thing to do’ (Bansal and Song, 2017; Wickert and Risi, 2019; Wicks, 1996) and thus perform a referential function in the interactions between companies and society. Values are central to whether and to what extent companies take responsibility for the social and environmental impacts of their operations. Stakeholders also set moral imperatives for companies and judge their activities according to the extent to which they are in line with these imperatives. The systematic focus on the reference function of values thus captures the fact that CSR-relevant aspects such as fair treatment of employees or nature conservation have a normative weight for a company and its stakeholders, and values are accordingly perceived as consequential by both business and society. This work lays the foundation for moral values to be more explicitly included in the understanding of CSR. The study of values provides new insights into how CSR is mutually influenced by structures and actions. Probably more importantly, mobilising values contributes to a better understanding of the normative core of CSR and can thus help to conduct impactful research aimed at solving society’s most pressing challenges.


The study “Institutional theory-based research on corporate social responsibility: Bringing values back in” is published in the International Journal of Management Reviews.


References

  1. Bansal, P., and Roth, K. (2000). Why companies go green: A model of ecological responsiveness. Academy of Management Journal, 43, pp. 717-736.
  2. Bansal, P., and Song, H. C. (2017). Similar but not the same: Differentiating corporate sustainability from corporate responsibility. Academy of Management Annals, 11, pp. 105-149.
  3. European Union (2011). A renewed EU strategy 2011-14 for corporate social responsibility. Available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0681:FIN:EN:PDF
  4. Kraatz, M. S., Flores, R., and Chandler, D. (2020). The value of values for institutional analysis. Academy of Management Annals, 14, pp. 474-512.
  5. Matten, D., and Moon, J. (2020). Reflections on the 2018 decade award: The meaning and dynamics of corporate social responsibility. Academy of Management Review, 45, pp. 7-28.
  6. Risi, D. (2022). Institutional research on business and society: Integrating normative and descriptive research on values. Business & Society, 61, pp. 305-339.
  7. State Secretariat for Economic Affairs of Switzerland (2020). Corporate social responsibility (CSR). Available at: https://www.seco.admin.ch/seco/en/home/Aussenwirtschaftspolitik_Wirtschaftliche_Zusammenarbeit/Wirtschaftsbeziehungen/Gesellschaftliche_Verantwortung_der_Unternehmen.html
  8. Voegtlin, C., Scherer, A., Stahl, G., & Hawn, O. (2022). Grand Societal Challenges and Responsible Innovation, Journal of Management Studies, 59(1), 1-28.
  9. Walker, K., Ni, N., and Zhang, Z. (2019). The mirror effect: corporate social responsibility, corporate social irresponsibility and firm performance in coordinated market economies and liberal market economies. British Journal of Management, 30, pp. 151-168.
  10. Wickert, C., and Risi, D. (2019). Corporate social responsibility. Cambridge: Cambridge University Press.
  11. Wicks, A. C. (1996). Overcoming the separation thesis: The need for a reconsideration of business and society research. Business & Society, 35, pp. 89-118.
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AUTHOR: David Risi

David Risi is a Research Professor of Responsible Management at the Business School of the Bern University of Applied Sciences. and an affiliated senior research fellow at the University of St. Gallen. He combines empirical and conceptual methods in his work, which focuses on business ethics and management theory.

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