4 Carroll’s Pyramid of CSR
Corporate social responsibility (CSR) in its modern formulation has been an important and progressing topic since the 1950s. To be sure, evidences of businesses seeking to improve society, the community, or particular stakeholder groups may be traced back hundreds of years (Carroll et al. 2012 ). In this discussion, however, the emphasis will be placed on concepts and practices that have characterized the post-World War II era. Much of the literature addressing CSR and what it means began in the United States; however, evidences of its applications, often under different names, traditions, and rationales, has been appearing around the world. Today, Europe, Asia, Australia, Africa, South America, and many developing countries are increasingly embracing the idea in one form or another. Clearly, CSR is a concept that has endured and continues to grow in importance and impact.
To be fair, it must be acknowledged that some writers early on have been critical of the CSR concept. In an important Harvard Business Review article in 1958, for example, Theodore Levitt spoke of “The Dangers of Social Responsibility.” His position was best summarized when he stated that business has only two responsibilities – (1) to engage in face-to-face civility such as honesty and good faith and (2) to seek material gain. Levitt argued that long-run profit maximization is the one dominant objective of business, in practice as well as theory (Levitt 1958 , p. 49). The most well-known adversary of social responsibility, however, is economist Milton Friedman who argued that social issues are not the concern of business people and that these problems should be resolved by the unfettered workings of the free market system (Friedman 1962 ).
Introduction
The modern era of CSR, or social responsibility as it was often called, is most appropriately marked by the publication by Howard R. Bowen of his landmark book Social Responsibilities of the Businessman in 1953. Bowen’s work proceeded from the belief that the several hundred largest businesses in the United States were vital centers of power and decision making and that the actions of these firms touched the lives of citizens in many ways. The key question that Bowen asked that continues to be asked today was “what responsibilities to society may businessmen reasonably be expected to assume?” (Bowen 1953 , p. xi) As the title of Bowen’s book suggests, this was a period during which business women did not exist, or were minimal in number, and thus they were not acknowledged in formal writings. Things have changed significantly since then. Today there are countless business women and many of them are actively involved in CSR.
Much of the early emphasis on developing the CSR concept began in scholarly or academic circles. From a scholarly perspective, most of the early definitions of CSR and initial conceptual work about what it means in theory and in practice was begun in the 1960s by such writers as Keith Davis, Joseph McGuire, Adolph Berle, William Frederick, and Clarence Walton (Carroll 1999 ). Its’ evolving refinements and applications came later, especially after the important social movements of the 1960s, particularly the civil rights movement, consumer movement, environmental movement and women’s movements.
Dozens of definitions of corporate social responsibility have arisen since then. In one study published in 2006, Dahlsrud identified and analyzed 37 different definitions of CSR and his study did not capture all of them (Dahlsrud 2006 ).
In this article, however, the goal is to revisit one of the more popular constructs of CSR that has been used in the literature and practice for several decades. Based on his four-part framework or definition of corporate social responsibility, Carroll created a graphic depiction of CSR in the form of a pyramid. CSR expert Dr. Wayne Visser has said that “Carroll’s CSR Pyramid is probably the most well-known model of CSR…” (Visser 2006 ). If one goes online to Google Images and searches for “Carroll’s Pyramid of CSR,” well over 100 variations and reproductions of the pyramidal model are presented there ( Google Images ) and over 5200 citations of the original article are indicated there ( Google Scholar ).
The purpose of the current commentary is to summarize the Pyramid of CSR, elaborate on it, and to discuss some aspects of the model that were not clarified when it was initially published in 1991. Twenty five years have passed since the initial publication of the CSR pyramid, but in early 2016 it still ranks as one of the most frequently downloaded articles during the previous 90 days in the journal in which it was published – ( Elsevier Journals ), Business Horizons (Friedman 1962 ) – sponsored by the Kelley School of Business at Indiana University. Carroll’s four categories or domains of CSR, upon which the pyramid was established, have been utilized by a number of different theorists (Swanson 1995 ; Wartick and Cochran 1985 ; Wood 1991 , and others) and empirical researchers (Aupperle 1984 ; Aupperle et al. 1985 ; Burton and Hegarty 1999 ; Clarkson 1995 ; Smith et al. 2001 , and many others). According to Wood and Jones, Carroll’s four domains have “enjoyed wide popularity among SIM (Social Issues in Management) scholars (Wood and Jones 1996 ). Lee has said that the article in which the four part model of CSR was published has become “one of the most widely cited articles in the field of business and society” (Lee 2008 ). Thus, it is easy to see why a re-visitation of the pyramid based on the four category definition might make some sense and be useful.
Many of the early definitions of CSR were rather general. For example, in the 1960s it was defined as “seriously considering the impact of the company’s actions on society.” Another early definition of CSR read as follows: “Social responsibility is the obligation of decision makers to take actions which protect and improve the welfare of society along with their own interests” (Davis 1975 ). In general, CSR has typically been understood as policies and practices that business people employ to be sure that society, or stakeholders, other than business owners, are considered and protected in their strategies and operations. Some definitions of CSR have argued that an action must be purely voluntary to be considered socially responsible; others have argued that it embraces legal compliance as well; still others have argued that ethics is a part of CSR; virtually all definitions incorporate business giving or corporate philanthropy as a part of CSR and many observers equate CSR with philanthropy only and do not factor in these other categories of responsibility.
The ensuing discussion explains briefly each of the four categories that comprise Carroll’s four-part definitional framework upon which the pyramidal model is constructed.
The four-part definitional framework for CSR
Carroll’s four part definition of CSR was originally stated as follows: “Corporate social responsibility encompasses the economic, legal, ethical, and discretionary (philanthropic) expectations that society has of organizations at a given point in time” (Carroll 1979 , 1991 ). This set of four responsibilities creates a foundation or infrastructure that helps to delineate in some detail and to frame or characterize the nature of businesses’ responsibilities to the society of which it is a part. In the first research study using the four categories it was found that the construct’s content validity and the instrument assessing it were valid (Aupperle et al. 1985 ). The study found that experts were capable of distinguishing among the four components. Further, the factor analysis conducted concluded that there are four empirically interrelated, but conceptually independent components of corporate social responsibility. This study also found that the relative values or weights of each of the components as implicitly depicted by Carroll approximated the relative degree of importance the 241 executives surveyed placed on the four components—economic = 3.5; legal = 2.54; ethical = 2.22; and discretionary/philanthropic = 1.30. Later research supported that Aupperle’s instrument measuring CSR using Carroll’s four categories (Aupperle 1984 ) was valid and useful (Edmondson and Carroll 1999 ; Pinkston and Carroll 1996 and others). In short, the distinctiveness and usefulness in research of the four categories have been established through a number of empirical research projects. A brief review of each of the four categories of CSR follows.
Economic responsibilities
As a fundamental condition or requirement of existence, businesses have an economic responsibility to the society that permitted them to be created and sustained. At first, it may seem unusual to think about an economic expectation as a social responsibility, but this is what it is because society expects, indeed requires, business organizations to be able to sustain themselves and the only way this is possible is by being profitable and able to incentivize owners or shareholders to invest and have enough resources to continue in operation. In its origins, society views business organizations as institutions that will produce and sell the goods and services it needs and desires. As an inducement, society allows businesses to take profits. Businesses create profits when they add value, and in doing this they benefit all the stakeholders of the business.
Profits are necessary both to reward investor/owners and also for business growth when profits are reinvested back into the business. CEOs, managers, and entrepreneurs will attest to the vital foundational importance of profitability and return on investment as motivators for business success. Virtually all economic systems of the world recognize the vital importance to the societies of businesses making profits. While thinking about its’ economic responsibilities, businesses employ many business concepts that are directed towards financial effectiveness – attention to revenues, cost-effectiveness, investments, marketing, strategies, operations, and a host of professional concepts focused on augmenting the long-term financial success of the organization. In today’s hypercompetitive global business environment, economic performance and sustainability have become urgent topics. Those firms that are not successful in their economic or financial sphere go out of business and any other responsibilities that may be incumbent upon them become moot considerations. Therefore, the economic responsibility is a baseline requirement that must be met in a competitive business world.
Legal responsibilities
Society has not only sanctioned businesses as economic entities, but it has also established the minimal ground rules under which businesses are expected to operate and function. These ground rules include laws and regulations and in effect reflect society’s view of “codified ethics” in that they articulate fundamental notions of fair business practices as established by lawmakers at federal, state and local levels. Businesses are expected and required to comply with these laws and regulations as a condition of operating. It is not an accident that compliance officers now occupy an important and high level position in company organization charts. While meeting these legal responsibilities, important expectations of business include their
- Performing in a manner consistent with expectations of government and law
- Complying with various federal, state, and local regulations
- Conducting themselves as law-abiding corporate citizens
- Fulfilling all their legal obligations to societal stakeholders
- Providing goods and services that at least meet minimal legal requirements
Ethical responsibilities
The normative expectations of most societies hold that laws are essential but not sufficient. In addition to what is required by laws and regulations, society expects businesses to operate and conduct their affairs in an ethical fashion. Taking on ethical responsibilities implies that organizations will embrace those activities, norms, standards and practices that even though they are not codified into law, are expected nonetheless. Part of the ethical expectation is that businesses will be responsive to the “spirit” of the law, not just the letter of the law. Another aspect of the ethical expectation is that businesses will conduct their affairs in a fair and objective fashion even in those cases when laws do not provide guidance or dictate courses of action. Thus, ethical responsibilities embrace those activities, standards, policies, and practices that are expected or prohibited by society even though they are not codified into law. The goal of these expectations is that businesses will be responsible for and responsive to the full range of norms, standards, values, principles, and expectations that reflect and honor what consumers, employees, owners and the community regard as consistent with respect to the protection of stakeholders’ moral rights. The distinction between legal and ethical expectations can often be tricky. Legal expectations certainly are based on ethical premises. But, ethical expectations carry these further. In essence, then, both contain a strong ethical dimension or character and the difference hinges upon the mandate society has given business through legal codification.
While meeting these ethical responsibilities, important expectations of business include their
- Performing in a manner consistent with expectations of societal mores and ethical norms
- Recognizing and respecting new or evolving ethical/moral norms adopted by society
- Preventing ethical norms from being compromised in order to achieve business goals
- Being good corporate citizens by doing what is expected morally or ethically
- Recognizing that business integrity and ethical behavior go beyond mere compliance with laws and regulations (Carroll 1991 )
As an overlay to all that has been said about ethical responsibilities, it also should be clearly stated that in addition to society’s expectations regarding ethical performance, there are also the great, universal principles of moral philosophy such as rights, justice, and utilitarianism that also should inform and guide company decisions and practices.
Philanthropic responsibilities
Corporate philanthropy includes all forms of business giving. Corporate philanthropy embraces business’s voluntary or discretionary activities. Philanthropy or business giving may not be a responsibility in a literal sense, but it is normally expected by businesses today and is a part of the everyday expectations of the public. Certainly, the quantity and nature of these activities are voluntary or discretionary. They are guided by business’s desire to participate in social activities that are not mandated, not required by law, and not generally expected of business in an ethical sense. Having said that, some businesses do give partially out of an ethical motivation. That is, they want to do what is right for society. The public does have a sense that businesses will “give back,” and this constitutes the “expectation” aspect of the responsibility. When one examines the social contract between business and society today, it typically is found that the citizenry expects businesses to be good corporate citizens just as individuals are. To fulfill its perceived philanthropic responsibilities, companies engage in a variety of giving forms – gifts of monetary resources, product and service donations, volunteerism by employees and management, community development and any other discretionary contribution to the community or stakeholder groups that make up the community.
Although there is sometimes an altruistic motivation for business giving, most companies engage in philanthropy as a practical way to demonstrate their good citizenship. This is done to enhance or augment the company’s reputation and not necessarily for noble or self-sacrificing reasons. The primary difference between the ethical and philanthropic categories in the four part model is that business giving is not necessarily expected in a moral or ethical sense. Society expects such gifts, but it does not label companies as “unethical” based on their giving patterns or whether the companies are giving at the desired level. As a consequence, the philanthropic responsibility is more discretionary or voluntary on business’s part. Hence, this category is often thought of as good “corporate citizenship.” Having said all this, philanthropy historically has been one of the most important elements of CSR definitions and this continues today.
In summary, the four part CSR definition forms a conceptual framework that includes the economic, legal, ethical, and philanthropic or discretionary expectations that society places on businesses at a given point in time. And, in terms of understanding each type of responsibility, it could be said that the economic responsibility is “required” of business by society; the legal responsibility also is “required” of business by society; the ethical responsibility is “expected” of business by society; and the philanthropic responsibility is “expected/desired” of business by society (Carroll 1979 , 1991 ). Also, as time passes what exactly each of these four categories means may change or evolve as well.
The Pyramid of CSR
The four-part definition of CSR was originally published in 1979. In 1991, Carroll extracted the four-part definition and recast it in the form of a CSR pyramid. The purpose of the pyramid was to single out the definitional aspect of CSR and to illustrate the building block nature of the four part framework. The pyramid was selected as a geometric design because it is simple, intuitive, and built to withstand the test of time. Consequently, the economic responsibility was placed as the base of the pyramid because it is a foundational requirement in business. Just as the footings of a building must be strong to support the entire edifice, sustained profitability must be strong to support society’s other expectations of enterprises. The point here is that the infrastructure of CSR is built upon the premise of an economically sound and sustainable business.
At the same time, society is conveying the message to business that it is expected to obey the law and comply with regulations because law and regulations are society’s codification of the basic ground rules upon which business is to operate in a civil society. If one looks at CSR in developing countries, for example, whether a legal and regulatory framework exists or not significantly affects whether multinationals invest there or not because such a legal infrastructure is imperative to provide a foundation for legitimate business growth.
In addition, business is expected to operate in an ethical fashion. This means that business has the expectation, and obligation, that it will do what is right, just, and fair and to avoid or minimize harm to all the stakeholders with whom it interacts. Finally, business is expected to be a good corporate citizen, that is, to give back and to contribute financial, physical, and human resources to the communities of which it is a part. In short, the pyramid is built in a fashion that reflects the fundamental roles played and expected by business in society. Figure 1 presents a graphical depiction of Carroll’s Pyramid of CSR.
Ethics permeates the pyramid
Though the ethical responsibility is depicted in the pyramid as a separate category of CSR, it should also be seen as a factor which cuts through and saturates the entire pyramid. Ethical considerations are present in each of the other responsibility categories as well. In the Economic Responsibility category, for example, the pyramid implicitly assumes a capitalistic society wherein the quest for profits is viewed as a legitimate, just expectation. Capitalism, in other words, is an economic system which thinks of it as being ethically appropriate that owners or shareholders merit a return on their investments. In the Legal Responsibility category, it should be acknowledged that most laws and regulations were created based upon some ethical reasoning that they were appropriate. Most laws grew out of ethical issues, e.g., a concern for consumer safety, employee safety, the natural environment, etc., and thus once formalized they represented “codified ethics” for that society. And, of course, the Ethical Responsibility stands on its own in the four part model as a category that embraces policies and practices that many see as residing at a higher level of expectation than the minimums required by law. Minimally speaking, law might be seen as passive compliance. Ethics, by contrast, suggests a level of conduct that might anticipate future laws and in any event strive to do that which is considered above most laws, that which is driven by rectitude. Finally, Philanthropic Responsibilities are sometimes ethically motivated by companies striving to do the right thing. Though some companies pursue philanthropic activities as a utilitarian decision (e.g., strategic philanthropy) just to be seen as “good corporate citizens,” some do pursue philanthropy because they consider it to be the virtuous thing to do. In this latter interpretation, philanthropy is seen to be ethically motivated or altruistic in nature (Schwartz and Carroll 2003 ). In summary, ethical motivations and issues cut through and permeate all four of the CSR categories and thus assume a vital role in the totality of CSR.
Tensions and trade-offs
As companies seek to adequately perform with respect to their economic, legal, ethical and philanthropic responsibilities, tensions and trade-offs inevitably arise. How companies decide to balance these various responsibilities goes a long way towards defining their CSR orientation and reputation. The economic responsibility to owners or shareholders requires a careful trade-off between short term and long term profitability. In the short run, companies’ expenditures on legal, ethical and philanthropic obligations invariably will “appear” to conflict with their responsibilities to their shareholders. As companies expend resources on these responsibilities that appear to be in the primary interests of other stakeholders, a challenge to cut corners or seek out best long range advantages arises. This is when tensions and trade-offs arise. The traditional thought is that resources spent for legal, ethical and philanthropic purposes might necessarily detract from profitability. But, according to the “business case” for CSR, this is not a valid assumption or conclusion. For some time it has been the emerging view that social activity can and does lead to economic rewards and that business should attempt to create such a favorable situation (Chrisman and Carroll 1984 ).
The business case for CSR refers to the underlying arguments supporting or documenting why the business community should accept and advance the CSR cause. The business case is concerned with the primary question – What does the business community and commercial enterprises get out of CSR? That is, how do they benefit tangibly and directly from engaging in CSR policies, activities and practices (Carroll and Shabana 2010 ). There are many business case arguments that have been made in the literature, but four effective arguments have been made by Kurucz, et al., and these include cost and risk reductions, positive effects on competitive advantage, company legitimacy and reputation, and the role of CSR in creating win-win situations for the company and society (Kurucz et al. 2008 ). Other studies have enumerated the reasons for business to embrace CSR to include innovation, brand differentiation, employee engagement, and customer engagement. The purpose for business case thinking with respect to the Pyramid of CSR is to ameliorate the believed conflicts and tensions between and among the four categories of responsibilities. In short, the tensions and tradeoffs will continue to be important decision points, but they are not in complete opposition to one another as is often perceived.
The pyramid is an integrated, unified whole
The Pyramid of CSR is intended to be seen from a stakeholder perspective wherein the focus is on the whole not the different parts. The CSR pyramid holds that firms should engage in decisions, actions, policies and practices that simultaneously fulfill the four component parts. The pyramid should not be interpreted to mean that business is expected to fulfill its social responsibilities in some sequential, hierarchical, fashion, starting at the base. Rather, business is expected to fulfill all responsibilities simultaneously. The positioning or ordering of the four categories of responsibility strives to portray the fundamental or basic nature of these four categories to business’s existence in society. As said before, economic and legal responsibilities are required; ethical and philanthropic responsibilities are expected and desired. The representation being portrayed, therefore, is that the total social responsibility of business entails the concurrent fulfillment of the firm’s economic, legal, ethical, and philanthropic responsibilities. Stated in the form of an equation, it would read as follows: Economic Responsibilities + Legal responsibilities + Ethical Responsibilities + Philanthropic Responsibilities = Total Corporate Social Responsibility. Stated in more practical and managerial terms, the CSR driven firm should strive to make a profit, obey the law, engage in ethical practices and be a good corporate citizen. When seen in this way, the pyramid is viewed as a unified or integrated whole (Carroll and Buchholtz 2015 ).
The pyramid is a sustainable stakeholder framework
Each of the four components of responsibility addresses different stakeholders in terms of the varying priorities in which the stakeholders might be affected. Economic responsibilities most dramatically impact shareholders and employees because if the business is not financially viable both of these groups will be significantly affected. Legal responsibilities are certainly important with respect to owners, but in today’s litigious society, the threat of litigation against businesses arise most often from employees and consumer stakeholders. Ethical responsibilities affect all stakeholder groups. Shareholder lawsuits are an expanding category. When an examination of the ethical issues business faces today is considered, they typically involve employees, customers, and the environment most frequently. Finally, philanthropic responsibilities most affect the community and nonprofit organizations, but also employees because some research has concluded that a company’s philanthropic involvement is significantly related to its employees’ morale and engagement.
The pyramid should be seen as sustainable in that these responsibilities represent long term obligations that overarch into future generations of stakeholders as well. Though the pyramid could be perceived to be a static snapshot of responsibilities, it is intended to be seen as a dynamic, adaptable framework the content of which focuses both on the present and the future. A consideration of stakeholders and sustainability, today, is inseparable from CSR. Indeed, there have been some appeals in the literature for CSR to be redefined as Corporate Stakeholder Responsibility and others have advocated Corporate Sustainability Responsibilities. These appeals highlight the intimate nature of these interrelated topics (Carroll and Buchholtz 2015 ). Furthermore, Ethical Corporation Magazine which emphasizes CSR in its Responsible Summit conferences integrates these two topics – CSR and Sustainability—as if they were one and, in fact, many business organizations today perceive them in this way; that is, to be socially responsible is to invest in the importance of sustainability which implicitly is concerned with the future. Annual corporate social performance reports frequently go by the titles of CSR and/or Sustainability Reports but their contents are undifferentiated from one another; in other words, the concepts are being used interchangeably by many.
Global applicability and different contexts
When Carroll developed his original four-part construct of CSR (1979) and then his pyramidal depiction of CSR (1991), it was clearly done with American-type capitalistic societies in mind. At that time, CSR was most prevalent in these more free enterprise societies. Since that time, several writers have proposed that the pyramid needs to be reordered to meet the conditions of other countries or smaller businesses. In 2007, Crane and Matten observed that all the levels of CSR depicted in Carroll’s pyramid play a role in Europe but they have a dissimilar significance and are interlinked in a somewhat different manner (Crane and Matten 2007 ). Likewise, Visser revisited Carroll’s pyramid in developing countries/continents, in particular, Africa, and argued that the order of the CSR layers there differ from the classic pyramid. He goes on to say that in developing countries, economic responsibility continues to get the most emphasis, but philanthropy is given second highest priority followed by legal and then ethical responsibilities (Visser 2011 ). Visser continues to contend that there are myths about CSR in developing countries and that one of them is that “CSR is the same the world over.” Following this, he maintains that each region, country or community has a different set of drivers of CSR. Among the “glocal” (global + local) drivers of CSR, he suggests that cultural tradition, political reform, socio-economic priorities, governance gaps, and crisis response are among the most important (Visser 2011 , p. 269). Crane, Matten and Spence do a nice job discussing CSR in a global context when they elaborate on CSR in different regions of the globe, CSR in developed countries, CSR in developing countries, and CSR in emerging/transitional economies (Crane et al. 2008 ).
In addition to issues being raised about the applicability of CSR and, therefore, the CSR pyramid in different localities, the same may be said for its applicability in different organizational contexts. Contexts of interest here might include private sector (large vs. small firms), public sector, and civil society organizations (Crane et al. 2008 ). In one particular theoretical article, Laura Spence sought to reframe Carroll’s CSR pyramid, enhancing its relevance for small business. Spence employed the ethic of care and feminist perspectives to redraw the four CSR domains by indicating that Carroll’s categories represented a masculinist perspective but that the ethic of care perspective would focus on different concerns. In this manner, she argued that the economic responsibility would be seen as “survival” in the ethic of care perspective; legal would be seen as “survival;” ethical would be recast as ethic of care; and philanthropy would continue to be philanthropy. It might be observed that these are not completely incompatible with Carroll’s categories. She then added a new category and that would be identified as “personal integrity.” She proposed that there could be at least four small business social responsibility pyramids – to self and family; to employees; to the local community; and to business partners (Spence 2016 ). Doubtless other researchers will continue to explore the applicability of the Pyramid of CSR to different global, situational, and organizational contexts. This is how theory and practice develops.
Conclusions
CSR has had a robust past and present. The future of CSR, whether it be viewed in the four part definitional construct, the Pyramid of CSR, or in some other format or nomenclature such as Corporate Citizenship, Sustainability, Stakeholder Management, Business Ethics, Creating Shared Value, Conscious Capitalism, or some other socially conscious semantics, seems to be on a sustainable and optimistic future. Though these other terminologies will sometimes be preferred by different supporters, CSR will continue to be the centerpiece of these competing and complementary frameworks (Carroll 2015 ). Though its enthusiasts would like to think of an optimistic or hopeful scenario wherein CSR would be adopted the world over and would be transformational everywhere it is practiced, the more probable scenario is that CSR will be consistent and stable and will continue to grow on a steady to slightly increasing trajectory. Four strong drivers of CSR taking hold in the 1990s and continuing forward have solidified its primacy. These include globalization, institutionalization, reconciliation with profitability, and academic proliferation (Carroll 2015b ). Globally, countries have been quickly adopting CSR practices in both developed and developing regions. CSR as a management strategy has become commonplace, formalized, integrated, and deeply assimilated into organizational structures, policies and practices. Primarily via “business case” reasoning, CSR has been more quickly adopted as a beneficial practice both to companies and society. The fourth factor driving CSR’s growth trajectory has been academic acceptance, enthusiasm, and proliferation. There has been an explosion of rigorous theory building and research on the topic across many disciplines and this is expected to continue and grow. In short, CSR, the Pyramid of CSR, and related models and concepts face an upbeat and optimistic future. Those seeking to refine these concepts will continue to do so.
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Carroll’s CSR Pyramid explained: Theory, Examples and Criticism
Carroll’s CSR pyramid: this article provides a practical explanation of Carroll’s CSR pyramid . Next to a brief explanantion of this theory, this article also highlights the definition Corporate Social Responsibility (CSR), the relevance of Archie Carroll’s Pyramid of CSR, the four main components, various examples and criticism on this strategy approach. Enjoy reading!
Archie Carroll’s CSR Pyramid explained, the basic theory
Carroll’s CSR pyramid is a framework and theory that explains how and why organisations should take social responsibility. The pyramid was developed by Archie B. Carroll and highlights the four most important types of responsibility of organisations.
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- Economic responsibility
- Legal responsibility
- Ethical responsibility
- Philanthropic responsibility
The Pyramid of CSR base is profit. This foundation is necessary for a company to meet all laws and regulations, as well as the demands of shareholders. Before a company can and should then take its philanthropic responsibility or discretionary responsibility, it must also meet its ethical responsibilities.
Corporate Social Responsibility (CSR) as defined by Archie B. Carroll
Corporate Social Responsibility (CSR) has been a popular phrase since the 1950s. The importance of the term and its execution didn’t become clear until much later, however.
The basis of the modern definition of CSR is rooted in the work that led to Archie Carroll’s pyramid. This four-part definition was originally published by Archie B. Carroll in 1979: CSR refers to a business’s behaviour, that it’s economically profitable, complies with the law, is ethical, and is socially supportive.
Profitability and compliance with the law are the most important conditions for corporate social responsibility and when discussing the company’s ethics, and the level to which it supports the society it’s part of with money, time, and talent.
In 1991, he expanded on this definition using a pyramid. The goal of the pyramid was to illustrate the building-block character of the four-part framework. This geometric shape was chosen because it’s both simple and timeless.
The economic responsibility was placed at the pyramid’s foundation, since it’s a fundamental requirement to survive in business.
As with a building’s foundation that keeps the entire structure up, durable profitability helps to support the expectations of society, shareholders, and other stakeholders .
The relevance of Carroll’s pyramid
Almost 30 years after the pyramid was developed, it’s as important as ever. The design is still regularly quoted, changed, discussed, and criticised by business leaders, politicians, scholars, and social pundits.
In order to understand the real relevance of Carroll’s CSR pyramid, we have to go beyond the debate and focus more on the practical application of corporate social responsibility.
The importance of the pyramid will continue to exist because the methods explained in it are understood by all organisations and can be used to reach the top of the pyramid.
What are the four components of Carroll’s CSR pyramid?
figure 1 – the four components of Archie Carroll’s Pyramid of CSR
Economic responsibility in Carroll’s CSR pyramid
The economic responsibility of companies is about producing goods and services that society needs and to make a profit on them.
Companies have shareholders who expect and demand a reasonable return on their investments , they have employees who want to do their jobs safely and fairly, and have customers that want quality products for fair prices. That’s the foundation of the pyramid upon which all the other layers rest.
Economic responsibility in CSR is:
- The responsibility to be profitable
- The only way for a business to survive and support society in the long term
Legal responsibility in Carroll’s CSR pyramid
The legal responsibility of companies is about complying with the minimum rules that have been set. Organisations are expected to operate and function within those rules. The basic rules consist of laws and regulations that represent society’s views of codified ethics.
They determine how organisations can conduct their business practices in a fair manner, as defined by legislators on national, regional, and local level. Legal responsibility in CSR is:
- Operating in a consistent way in accordance with government requirements and the law
- Complying with different national and local regulations
- Behaving as loyal state and company citizens
- Meeting legal obligations
- Supplying goods and services that meet the minimum legal requirements
Ethical responsibility in Carroll’s CSR pyramid
The ethical responsibility of businesses goes beyond society’s normative expectations – laws and regulations. In addition, society expects organisations to conduct and manage their business in an ethical manner.
Taking ethical responsibility means that organisations embrace activities, standards, and practices that haven’t necessarily been written down, but are still expected.
The difference between legal and ethical expectations can be difficult to determine. Obviously, laws are based on ethical premises, but ethics goes beyond that.
Ethical responsibility in CSR includes:
- Performing in a way that’s consistent with society’s expectations
- Recognising and respecting new or evolving ethical and moral standards that have been adopted by society
- Preventing ethical standards from being infringed upon to achieve objectives
- Being proper business citizens by doing what’s ethically or morally expected
- Acknowledging that business integrity and ethical behaviour go beyond compliance with laws and regulations
Philanthropic responsibility or discretionary responsibility in Carroll’s CSR pyramid
The philanthropic responsibility of businesses includes the voluntary or discretionary activities and practices of businesses.
Philanthropy isn’t a literal responsibility, but nowadays business are expected by society to take part in such activities. The nature and quantity of these activities are voluntary and are guided by companies’ desire to take part in social activities that are generally not expected from organisations in an ethical sense.
Businesses developing philanthropic or discretionary activities give the public the impression that the company wants to give something back to the community.
In order to do so, businesses adopt different types of philanthropy, such as gifts, donations, volunteer work, community development, and all other discretionary contributions to the community or groups of stakeholders that make up that community.
Various examples of Archie Carroll’s CSR pyramid
Successful businesses often have plenty of ways in which they can take responsibility. They don’t always do so, however. Here are a few examples of businesses that either have or have not.
Example of economic responsibility
Companies’ economic responsibilities are aimed at methods that enable the business in the long term , while at the same time meeting the standards for ethics, philanthropy, and legal practices.
Companies that adapt manufacturing processes to be able to use recycled products and lower material costs are examples of economically responsible companies. This benefits society in several ways; increased profitability, reduced ecological footprint.
Example of legal responsibility
The second layer of Carroll’s CSR pyramid is the legal obligation of companies to comply with laws and regulations.
That also includes not looking the other way when grey areas of the law are being ignored or circumvented. This endangers the company. Fines can be steep when these laws aren’t being complied with.
An example is meeting regulations set by the food standards agency. If someone becomes ill due to an organisation’s action, this could result in expensive legal proceedings which might even destroy the company. This would then lead to job losses and financial setbacks for suppliers.
Example of ethical responsibility
The organisational focus on ethics is often about offering fair working conditions for employees, both of the business itself as well as its suppliers. Honest business practices include equal pay for equal work and compensation initiatives.
An example of ethical business practices is the use of products which have fair-trade certification. Ben & Jerry’s, for instance, only uses fair-trade certified ingredients, such sugar, coffee, bananas, and vanilla.
Example of philanthropic / discretionary responsibility
Philanthropic initiatives include donations in the form of time, money, or resources to regional, national, or international charities. The co-founder of Microsoft, Bill Gates , is a good example of that.
Together with his wife Melinda Gates, they founded the Bill and Melinda Gates Foundation , to which he has donated billions.
The Bill and Melinda Gates Foundation focuses on developing education, eradicating malaria, and agricultural development, among other things. In 2014, Bill Gates was the most generous philanthropist in the world, donating 1.5 billion to the Bill and Melinda Foundation.
Carroll’s CSR pyramid criticism
Archie Carroll’s CSR model was the first one to emphasise how important it is that organisations take social responsibility beyond maximising profits. However, he did underline the importance that organisations have to make a profit. This is a strength compared to other CSR theories.
Cultural differences
However, the model also has its limitations. One being that it’s based on American (Western) experiences. Researchers Crane and Maten, for example, claim that the model doesn’t address conflicting obligations, nor how both the national and corporate culture manifest themselves.
They came to this conclusion when applying it to European companies and noticing how different layers of the pyramid had different meanings in different European countries. According to them, that was the result of the highly diverse historical and religious traditions and norms.
Other points of criticism
- In part due to the criticism mentioned above, the model is considered by many to be overly simplistic
- Others claim that the ethical responsibility should be given a more prominent position within the pyramid
- Organisations don’t always do what they say when it comes to CSR
Carroll’s CSR pyramid summary
In short, the four-part definition of corporate social responsibility (CSR) and Carroll’s CSR pyramid offer a conceptual framework for organisations that consists of the economic, legal, ethical, and philanthropic or discretionary responsibility.
Businesses’ economic responsibility to make a profit is expected of them by their shareholders. The ethical responsibility of businesses is expected by society.
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Now it’s your turn
What do you think? Do you recognise the explanation about Carroll’s CSR pyramid? What other responsibilities do you think businesses have? What role do companies play in solving major or even global issues? Do you have any tips or additional comments?
Share your experience and knowledge in the comments box below.
More information
- Carroll, A. B. , & Näsi, J. (1997). Understanding stakeholder thinking: Themes from a Finnish conference . Business Ethics: A European Review, 6(1), 46-51.
- Carroll, A. B. (1999). Corporate social responsibility: Evolution of a definitional construct . Business & society, 38(3), 268-295.
- Carroll, A. B. (2016). Carroll’s pyramid of CSR: taking another look . International journal of corporate social responsibility, 1(1), 3.
- Jamali, D., & Carroll, A. B. (2017). Capturing advances in CSR: Developed versus developing country perspectives . Business Ethics: A European Review, 26(4), 321-325.
- Pinkston, T. S., & Carroll, A. B. (1996). A retrospective examination of CSR orientations: have they changed? . Journal of Business Ethics, 15(2), 199-206.
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Understanding & Applying Carroll’s CSR Pyramid
Pyramids have gotten a bad rap in the business world—especially when the word “scheme” is involved.
But Archie Carroll’s Pyramid of Corporate Social Responsibility (CSR) might just change your mind about pyramids in the context of corporations.
Because CSR can be complex, messy work that involves legions of internal and external stakeholders often relying heavily on qualitative metrics, frameworks like Carroll’s Pyramid of Corporate Social Responsibility help to simplify a rather nuanced field.
Now that CSR has firmly moved into the C-suite and today’s consumers expect companies to be good corporate citizens, the stakes are higher than ever. Organizational survival is on the line and profits are no longer the singular metric.
Recent research in the journal Management Science found that companies practicing CSR demonstrated higher profit margins, increased valuation, and lower risk . Researchers even discovered that CSR has the tendency to boost product differentiation (meaning consumers leaned towards companies with a solid CSR reputation) as well as deliver a more stable return on assets even amidst economic fluctuations.
Such data confirm Archie Carroll’s framing of how CSR works for modern companies.
It’s multi-faceted.
From the economic to the philanthropic, organizations are expected to demonstrate just how socially responsible they are at all levels. Let’s tackle precisely what those levels are and how they play out for contemporary organizations.
What is Carroll’s Pyramid of Corporate Social Responsibility?
Ask Danielle Holly , CEO of Common Impact , whether frameworks matter in CSR.
As a leader in the field, she’ll likely tell you that they matter a great deal. She’ll probably even show you the measurement framework her team developed to evaluate the impact of skills-based volunteer programs.
While CSR activities can range from outright philanthropic giving and skilled volunteerism to in-kind donations and issue area advocacy, those activities still need to be framed at the outset and measured throughout the CSR campaign.
That’s why frameworks like Carroll’s pyramid are supremely helpful.
As Holly notes, “The best CSR programs take into account a company’s overall strategy, its core competencies and employee talents, and the social impact area that it’s best positioned to address.”
In other words, great CSR campaigns vertically integrated through all levels of an organization’s work—internal and external.
To craft a CSR foundation that will resonate with employees and community stakeholders, Holly says that C-suite and mid-level business leaders must be focused on HR, employee engagement and philanthropy.. It’s a package deal.
Carroll’s Pyramid of Corporate Social Responsibility helps companies think about CSR holistically. If one level is missing or under-resourced, the Great Pyramid of CSR never gets built.
Here’s how organizational leaders can focus on each level while addressing all the layers of CSR.
Organizations should engage on all four levels of Carroll’s pyramid of corporate social responsibility
Southwest Airlines’ triple bottom line (Performance, People, and Planet) approach.
H-E-B grocers’ disaster relief efforts during and after Hurricane Harvey.
Patagonia’s giving its entire $10 million tax cut in 2019 to help mitigate climate change.
Workers at the H-E-B Mobile Kitchen prepare hot meals in Rockport on August 29 for people impacted by Hurricane Harvey.
Photograph by R.G. Ratcliffe
If you’re looking for examples of companies with vertically integrated CSR that are making a big impact, Hannah Nokes has you covered. As the Co-founder of Magnify Impact , she guides companies through a process to “help them determine the strongest foundation for their CSR program.”
For Nokes, it’s pretty simple. Leaders of organizations need to carefully consider what kind of social impact they want to make (“purpose”). That self-reflection needs to align with their organizational capacities (“superpowers”). The end result will be social outcomes (“impact”).
Another very useful framework for CSR.
The companies mentioned above are examples of organizations that have thought and planned long and hard with regard to their purpose and superpowers. Armed with the approach that best suited their brand, they executed up and down Carroll’s Pyramid of CSR.
Here’s a bit more on each level of that pyramid with some helpful business examples.
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Economic responsibilities
At the most basic level, organizations need to create profit through growth. Without succeeding here, there’s no business to do any CSR work.
If a company has any interest in supporting society over the long term, it must meet these core economic responsibilities to its shareholders and stakeholders.
For example, companies that change their approach to packaging materials with a move towards more eco-friendly packaging that is lower in cost than traditional materials would be fulfilling its economic obligation while also meeting environmental obligations.
Legal responsibilities
Organizations must comply with laws and regulations.
These rules are set by governments as part of the social contract. It’s that simple.
It’s important to remember that governments create the markets in which companies exist. Through taxes, fines, and legal interventions of all sorts, citizens empower their leaders to govern the context in which companies conduct their business.
The easy example here is the regulation of our environment.
We have legal frameworks to defend basic human rights to clean air and water because we need those things to survive. Organizations can create and sell their products and services in ways that affect the environment—but only to a point as designated by the government.
When those negative business consequences become too much, companies could face legal proceedings and other levies that set them back financially and threaten their existence. It’s a delicate balance.
Ethical responsibilities
This level of Carroll’s pyramid is all about societal expectations.
Admittedly, those can be opaque. In other words, from company to company, your mileage may vary.
It’s up to management to make those moral decisions that will impact the business, consumers, employees, and the environment. This is where the idea of reputation looms large. Word of mouth and consumer perception has a huge impact on a company’s bottom line.
This is by far the hardest metric that business leaders have to track and manage. It’s also one of the most important.
For example, when employees speak out against internal company practices , companies are often well within their economic and legal “rights” to fire that employee. But should they?
In moments like these, organizational leaders are making difficult cost-benefit calculations. They’re weighing external perception against potential damage that could be inflicted on the company’s economic reality if they choose a different path.
Ethical considerations are rarely easy and they cut to the core of an organization’s values.
Philanthropic responsibilities
These days, businesses are expected to give back.
Generous contributions from companies back to the communities that support them are the baseline nowadays. Modern consumers are hip to the idea that organizations are interconnected with the people and neighborhoods where they do business.
Put succinctly by Senator Elizabeth Warren, everyday citizens just expect well-heeled companies to pay their fair share . Whether it’s corporate taxes or oversized checks handed to deserving students onstage, people have an innate sense that companies should pony up.
One of the most shining examples of corporate philanthropy is Bill Gates. The billionaire who is now getting credit for being ahead of the curve on the threat posed by global pandemics has built a juggernaut philanthropic operation in the form of the Bill and Melinda Gates Foundation .
From education reform to seeding advancements in agricultural technology, his billions have gone a long way towards key CSR goals.
Integrating the pyramid of corporate social responsibility into your CSR management platform
Just like all pyramids, even Archie Carroll’s has its dull edges.
Some researchers have noted that Carroll’s Pyramid of Corporate Social Responsibility fails to tackle conflicting obligations that companies often face and the ethical contours of those decisions. Critics have also noted that culture plays a huge role in organizational decision-making and that Carroll’s model fails to meaningfully take this into account.
This might limit how the framework can be applied across cultural contexts. And what happens when companies don’t do what they promise when it comes to CSR? Even the best theoretical models have a hard time accounting for deception.
While it’s important to note the weaknesses of the model, organizations can still benefit from integrating Carroll’s Pyramid of CSR into their broader social impact strategy. One helpful step in that direction would be managing all CSR work from all-in-one CSR software . This allows companies to measure KPIs at various levels of the pyramid and track progress towards overarching CSR goals.
With all of your CSR work being coordinated in one place, corporate managers of CSR can embrace the holistic approach to achieving social change, and start both growing and giving back.
Paul Perry is a writer and former educator with significant experience in nonprofit management. He has a soft spot for grant-seekers striving to make the world a better, more just place.
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Carroll's pyramid of Corporate social responsibility
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For the past 27 years, Carroll’s corporate social responsibility pyramid (CSR) has been widely used by top management and journals to better define and explore CSR. The different components in the pyramid help managers see the different types of obligations that society expects of businesses. It is easily understandable and simple. However, the new challenges faced by corporations in the 21st century have warranted a re-examination of Carroll’s pyramid.
Carroll’s CSR PyramidCarroll’s four part CSR pyramid depicts the economic, legal, ethical and discretionary responsibilities that society expects of organizations.
Carroll has integrated concepts of stakeholders and corporate citizenship into his pyramid.
The base of the pyramid is economic responsibility and it gives top priority to economic performance. A business has to be profitable; maximising profits, minimizing costs, plan for the future and provide shareholders with sufficient and attractive returns. The stakeholders affected most in this group are its employees and shareholders.
The legal responsibility is second in the hierarchy.
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Businesses are expected to pursue profits within the framework of the law. Society expects businesses to adhere to all regulations and laws, honour its contracts, warranties and guarantees.
Third is ethical responsibility and it involves avoiding questionable practices. It includes all activities which have not been anticipated or legislated by society. Organizations must accept emerging values and norms of society. Businesses are to operate above mere compliance of the law. Ethical responsibilities are more difficult to deal with as they tend to be new, ill-defined or continually under public debate.
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At the top of the pyramid is philanthropic responsibility. It involves giving back to the community and being a good corporate citizen through donations and active participation in charities or other community welfare programs. Such responsibility is desired but may not be necessarily performed and hence is separate from other responsibilities. (Carroll and Buchholtz, 2006:22-42)Descriptive accuracyThere have been four surveys conducted on Carroll’s pyramid from 1985 to 2000. Statistical analysis has shown that the relative importance assigned to each responsibility in the pyramid reflects the empirical importance of the four categories. It also confirms that the four responsibilities are empirically interrelated but mutually exclusive.
In the survey conducted by Burton, Farh and Hegarthy in 2000 on 165 Hong Kong and 157 U.S. students, they gave equal or greater value to ethical responsibility than legal responsibility. Similarly, in a 1999 survey conducted by Edmondson and Carroll on 503 black-owned businesses in U.S, ethical responsibility was ranked higher than legal responsibility.
Burton, Farh & Hegarty (2000)Mean valuesEconomic orientationsLegal orientationsEthical orientationsPhilanthropic orientations-Hong Kong3.112.322.321.84-USA2.812.422.511.99Edmondson & Carroll (1999)3.162.122.192.04(Adapted from http://www.csrquest.net/default.aspx?articleID=12770&heading)These events are noteworthy. It questions whether corporate ethical responsibility has increased and if these ethical responsibilities outweigh its legal obligations.
The changing social contractThe notion of CSR implies the existence of a “social contract” between a society and the corporation. (Crowther, 2004)”The social contract between business and society is to a large extent formulated from shared understandings that exist in each area in the pyramid.” (Carroll and Buchholtz, 2006: 19)If society’s preferences change, there would be a redefining and thus renegotiation of the social contract. Corporations in the 21st century are experiencing significant challenges in this relationship. The increased power of business, technological advancement, and society’s heightened awareness towards moral ethical behaviour has caused a rise in the ethical responsibility in business.
Increased power of CorporationsCorporations are primary agents for advancement in technology innovation, industrialism and capitalism. (Hopkins, 2006) Multi-national companies (MNC) such as Wal-Mart have revenues which exceed the gross domestic product of nations. MNCs dominate the global marketplace.
Businesses need to expand internationally to remain competitive. Globalization has come to encompass everything from “factories shifting around” to “international bodies that set the rules for the global economy.” It has resulted in the outsourcing of jobs to less-developed nations. In the United States, jobs in manufacturing are being outsourced to China and India. In a USA Today poll in 2004, 68 percent of Americans felt outsourcing of jobs was bad for the economy. (Carroll and Buchholtz, 2006:293)Companies from banks to pharmaceuticals operate and compete in a global environment. When MNCs start work in another country, they must fulfil their social responsibilities in order to be perceived as legitimate. MNCs are caught in dilemmas. For example, if it were to repatriate a large part of its profits, it would be seen as depriving the host country of wealth. If it were to invest profits locally, it may be perceived to be tightening its control on the host country’s economy.
Pay is another sensitive issue. MNCs seem to be exploiting labour with its low wages. However, if it were to pay more to its employees, local businesses would be hurt in the long run. (Carroll and Buchholtz, 2006: 297-300)MNCs may also be assailed for not adhering to standards from their home country. Two classic ethical issues are human rights abuses in “sweatshops” and questionable marketing and plant safety practices. Plant safety issues have been on-going since the Union Carbide Bhopal crisis in 1984. More recently, Mattel found lead in its toys made in China. In both cases, companies broke no laws in its host countries. (Carroll and Buchholtz, 2006: 306-311) Coating toys with lead paint is legal in China! However, it has to ensure the quality and safety of its products and employees.
Society has also grown more distrustful of corporations after a spike in corporate scandals in 2001. Accounting and securities fraud have led to the demise of Enron, Arthur Andersen and WorldCom. The Sarbanes-Oxley act was created to restore public confidence in accounting and reporting practices. Society today requires not only business financial transparency but also social and environmental transparency. This is to address a broader spectrum of stakeholders. Many multinational companies including Coca-cola, Shell and Starbucks have the adopted the triple-bottom line approach to corporate reporting. ISO 26000, launching in 2009, aims to develop an international standard in accessing social responsibility.
Google was criticized by Privacy International for potentially storing data on individuals using its search engines. It went a step further in ethical behaviour by calling for new international laws to be set up to protect personal information online and is now working with UNESCO and OECD to draw up guidelines. This has shown businesses are seriously considering its ethical responsibilities to society although it is not required to do so by law. (Palmer 2007
)With the increased power that corporations are yielding, there are companies like The Body Shop who use this power and profits to raise awareness to their social causes. Other businesses have been giving large amounts to philanthropy. Japanese MNC firms such as Sony, Canon and Toyota practise kyosei. US firms gave $400 million in the few weeks after the 2004 tsunami disaster. (Hopkins, 2006) Thus corporations are setting a benchmark in society and causing a revolution of rising expectations. Future organisations must attempt to exceed these expectations.
Another dimension to the increased power and scope business wields come from the privatization of government companies. It is estimated that $700 billion dollars worth of assets have been privatised worldwide (Carroll and Buchholtz, 2006:344). Governments usually provide a service for society. There is conflict of interest between maximising shareholder returns and maintaining a low cost service to the public. In Singapore, SMRT, although still partly owned by the government through Temasek Holdings, was not allowed to raise its prices in 2007 because it was already making profit margins similar to that of Singapore Airlines.
Technological advancementBiotechnology and information technology are new areas in corporate growth. In biotechnology, an area called bioethics has emerged. Although biotechnology holds great promise for enhancing life and health, it could have unprecedented ethical consequences.
Genetic engineering could increase supply of food as it can make plants more resistant to pests or to grow in harsher conditions. However, the issue of using or eating genetically modified food has opposition. In Europe, there is a ban on bioengineered crops. In 2004, McDonalds did not want Monsanto to introduce its bug-resistant wheat as it did not want to be caught up in the biotech debate when people eat their fries. Another area of concern is in embryonic stem cell research. It holds the greatest hope for diseases like cancer, Alzheimer’ and Parkinson disease but American law denies the use of new embryos to carry out research. Scientists clone stem cells to loop around this restriction. (Carroll and Buchholtz, 2006: 260-284
)Information Technology has undergone immense growth even after the dot-com bubble burst. Emails and the Internet have enabled communication without the need of a fixed place and time. It can be a fermenting ground for Non-Governmental Organisations (NGO). Individuals who were once powerless can now rally, surround and infiltrate even the most powerful organizations through the internet. For example, the Royal Dutch Shell Company changed its disposal strategy of offshore platforms after protests from Internet stakeholder swarms. (Hopkins 2006) Similarly in 2001, Nike’s global sweatshop allegations were started by an email sent out by Jonah Peretti to a few friends.
Society’s increased awareness of ethical behaviourThe rising education and affluence of society have increased awareness in the ethical responsibility of firms. Most MBA and business undergraduate students now undergo some form of ethics training. Business ethics training courses are being carried out by large companies such as Lockheed Martin and Sun Microsystems. People are more aware of discrimination issues and their rights. In 2003 the Ethnic Resource Centre National Business survey showed that two-thirds of organisations provided a way to report misconduct anonymously. (Carroll and Buchholtz, 2006:243-251)The rise in social investing has also shown society’s preference for moral corporate behaviour. Socially screened portfolios in the U.S. have climbed to $2.15 trillion in 2003 and are expected to hit $3 trillion by 2011. Europe SRI market has grown $0.6 trillion from 2005 to 2007.
Modification to Carroll’s CSR pyramidOne of the main weaknesses in Carroll’s pyramid is the inability to convey the tensions between the component responsibilities. To better show these organization realities it might be better to use two triangles instead.
The economic responsibility surrounds and supports all the other responsibilities in the model and is the “foundation” of this model. This is because profitability is still the basis in any corporation. Corporations focus on profitability even when undertaking CSR programs. In KPMG’s International Survey of Corporate Social Responsibility (2005), 74% of respondents found economic considerations as drivers of corporate responsibility.
The relative priorities of CSR should be adjusted with the rise in ethical responsibilities in corporations. The increased compliance with new standard accounting practices and laws have increased the task of legal responsibility. However, law often cannot address all new issues business face in a fast-paced global environment.
Although there is an increased expectation for a corporation to give back to the community and business philanthropic responsibilities are greater than before, these are still not as large as its legal obligations. Hence, it remains the smallest out of the four components of CSR.
ConclusionThe gap between society’s expectations of business ethics and that of actual business ethics has given rise to ethical problems. Globalisation has led to the broadening of the term ‘Society’. As the rate of technological change speeds up, ethical responsibilities will play a greater role in the CSR pyramid.
Bacchus, Rayman L. and Crowther D, (2004). Perspectives on Corporate Social Responsibility. London: Ashgate.
Carroll’s CSR pyramid:http://www.csrquest.net/default.aspx?articleID=12770&headingSeptember 17, 2007.
Carroll, Archie B. and Ann K. Buchholtz, 2006, Business and Society: Ethic and Stakeholder Management, 6th Edition, USA: South-Western, Thomson Corporation.
Carroll, Archie B. (1991, July). The Pyramid of Corporate Social Responsibility: toward the moral management of organizational stakeholders balancing economic, legal and social responsibilities. Business Horizons.
Hopkins, M. (2006). Corporate Social Responsibility and International Development. London: Earthscan.
KPMG. (2005). KPMG Global Survey of Corporate Social Responsibility Reporting 2005: KPMG International.
Revisting Carroll’s CSR Pyramid:http://www.waynevisser.com/csr_pyramid.htmSeptember 17, 2007.
Palmer, M. (14, September 2007). Google to call for web privacy shake-up. The Financial Times. P21.
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Carroll’s CRS Pyramid
1. Discuss what is meant by Corporate Social Responsibility according to Carroll’s Model of CSR (Carroll’s Pyramid). Include some examples in your discussion.
Carroll’s view is that profit is significant, but business has a deeper purpose on social accountability and responsibility. He developed the Corporate social responsibility model which means when a company responsibly runs its business operations and ensures that it has a positive impact on society ethically, legally and economically.
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Legal is the second responsibility: it is the business responsibility to make sure that they are complying the laws and policies. The community is expecting the businesses to follow all regulation and laws, honor its contracts, warranties, and guarantees. It includes environmental laws, consumers laws, laws protecting employees and labor laws, meeting all contractual commitments and honoring warranties and guarantees. Legal responsibility is important because it tells that the business is performing in a way to meet with the expectations of government and the law, it shows that the business is complying with many laws and regulations, and it shows that provide goods and services that least meet the minimal legal requirements.
Ethical is the third responsibility: it consists of what is generally expected by the community which is above economic and legal expectations. Ethical responsibilities are not necessarily should be imposed by law, but they are expected from ethical businesses by the public and governments. It is one of the businesses responsibilities to do what is right, just, and fair and to avoid or to have minimum harm to stakeholders, workers, consumers, environment, and others, and also by avoiding questionable practices. So, it’s things the community says its wrong and right that the company should follow if they want to be ethical. It is a benefit to the company to perform in a manner that is consistent with the expectations of the society norms and to recognize and consider new or evolving ethical norms adopted by the community. It is important that good business should be defined as doing what is expected morally or ethically. Philanthropic is the fourth responsibility: businesses are expected to be a good corporate citizen—to meet its philanthropic responsibility to share financial and human resources to the society and to increase the quality of life. It includes giving back to the community by donation and ongoing support in charities and other social welfare programs. It concentrates on developing the quality of life of workers, local societies and community. Some examples, employees are going on projects for society, having or participate in programs that support society—education, wellness, and human services, culture, and creativity. Managers and workers can be part of charitable and voluntary activities within the local societies, providing support to public and private educational systems and helping voluntarily those projects that improve a society’s ‘quality of life.
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Carroll's pyramid of Corporate social responsibility: A review and modification
Essay by foopfoop , University, Bachelor's , October 2007
download word file , 8 pages download word file , 8 pages 3.4 5 votes
IntroductionFor the past 27 years, Carroll's corporate social responsibility pyramid (CSR) has been widely used by top management and journals to better define and explore CSR. The different components in the pyramid help managers see the different types of obligations that society expects of businesses. It is easily understandable and simple. However, the new challenges faced by corporations in the 21st century have warranted a re-examination of Carroll's pyramid.
Carroll's CSR PyramidCarroll's four part CSR pyramid depicts the economic, legal, ethical and discretionary responsibilities that society expects of organizations. Carroll has integrated concepts of stakeholders and corporate citizenship into his pyramid.
The base of the pyramid is economic responsibility and it gives top priority to economic performance. A business has to be profitable; maximising profits, minimizing costs, plan for the future and provide shareholders with sufficient and attractive returns. The stakeholders affected most in this group are its employees and shareholders.
The legal responsibility is second in the hierarchy. Businesses are expected to pursue profits within the framework of the law. Society expects businesses to adhere to all regulations and laws, honour its contracts, warranties and guarantees.
Third is ethical responsibility and it involves avoiding questionable practices. It includes all activities which have not been anticipated or legislated by society. Organizations must accept emerging values and norms of society. Businesses are to operate above mere compliance of the law. Ethical responsibilities are more difficult to deal with as they tend to be new, ill-defined or continually under public debate.
At the top of the pyramid is philanthropic responsibility. It involves giving back to the community and being a good corporate citizen through donations and active participation in charities or other community welfare programs. Such responsibility is desired but may not be necessarily performed and hence is separate...
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The Pyramid Of Corporate Social Responsibility
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Carroll’s pyramid of Corporate social responsibility Essay
Carroll’s pyramid of Corporate social responsibility Essay.
For the past 27 years, Carroll’s corporate social responsibility pyramid (CSR) has been widely used by top management and journals to better define and explore CSR. The different components in the pyramid help managers see the different types of obligations that society expects of businesses. It is easily understandable and simple. However, the new challenges faced by corporations in the 21st century have warranted a re-examination of Carroll’s pyramid.
Carroll’s CSR PyramidCarroll’s four part CSR pyramid depicts the economic, legal, ethical and discretionary responsibilities that society expects of organizations.
Carroll has integrated concepts of stakeholders and corporate citizenship into his pyramid.
The base of the pyramid is economic responsibility and it gives top priority to economic performance. A business has to be profitable; maximising profits, minimizing costs, plan for the future and provide shareholders with sufficient and attractive returns. The stakeholders affected most in this group are its employees and shareholders.
The legal responsibility is second in the hierarchy.
Businesses are expected to pursue profits within the framework of the law. Society expects businesses to adhere to all regulations and laws, honour its contracts, warranties and guarantees.
Third is ethical responsibility and it involves avoiding questionable practices. It includes all activities which have not been anticipated or legislated by society. Organizations must accept emerging values and norms of society. Businesses are to operate above mere compliance of the law. Ethical responsibilities are more difficult to deal with as they tend to be new, ill-defined or continually under public debate.
At the top of the pyramid is philanthropic responsibility. It involves giving back to the community and being a good corporate citizen through donations and active participation in charities or other community welfare programs. Such responsibility is desired but may not be necessarily performed and hence is separate from other responsibilities. (Carroll and Buchholtz, 2006:22-42)Descriptive accuracyThere have been four surveys conducted on Carroll’s pyramid from 1985 to 2000. Statistical analysis has shown that the relative importance assigned to each responsibility in the pyramid reflects the empirical importance of the four categories. It also confirms that the four responsibilities are empirically interrelated but mutually exclusive.
In the survey conducted by Burton, Farh and Hegarthy in 2000 on 165 Hong Kong and 157 U.S. students, they gave equal or greater value to ethical responsibility than legal responsibility. Similarly, in a 1999 survey conducted by Edmondson and Carroll on 503 black-owned businesses in U.S, ethical responsibility was ranked higher than legal responsibility.
Burton, Farh & Hegarty (2000)Mean valuesEconomic orientationsLegal orientationsEthical orientationsPhilanthropic orientations-Hong Kong3.112.322.321.84-USA2.812.422.511.99Edmondson & Carroll (1999)3.162.122.192.04(Adapted from http://www.csrquest.net/default.aspx?articleID=12770&heading)These events are noteworthy. It questions whether corporate ethical responsibility has increased and if these ethical responsibilities outweigh its legal obligations.
The changing social contractThe notion of CSR implies the existence of a “social contract” between a society and the corporation. (Crowther, 2004)”The social contract between business and society is to a large extent formulated from shared understandings that exist in each area in the pyramid.” (Carroll and Buchholtz, 2006: 19)If society’s preferences change, there would be a redefining and thus renegotiation of the social contract. Corporations in the 21st century are experiencing significant challenges in this relationship. The increased power of business, technological advancement, and society’s heightened awareness towards moral ethical behaviour has caused a rise in the ethical responsibility in business.
Increased power of CorporationsCorporations are primary agents for advancement in technology innovation, industrialism and capitalism. (Hopkins, 2006) Multi-national companies (MNC) such as Wal-Mart have revenues which exceed the gross domestic product of nations. MNCs dominate the global marketplace.
Businesses need to expand internationally to remain competitive. Globalization has come to encompass everything from “factories shifting around” to “international bodies that set the rules for the global economy.” It has resulted in the outsourcing of jobs to less-developed nations. In the United States, jobs in manufacturing are being outsourced to China and India. In a USA Today poll in 2004, 68 percent of Americans felt outsourcing of jobs was bad for the economy. (Carroll and Buchholtz, 2006:293)Companies from banks to pharmaceuticals operate and compete in a global environment. When MNCs start work in another country, they must fulfil their social responsibilities in order to be perceived as legitimate. MNCs are caught in dilemmas. For example, if it were to repatriate a large part of its profits, it would be seen as depriving the host country of wealth. If it were to invest profits locally, it may be perceived to be tightening its control on the host country’s economy.
Pay is another sensitive issue. MNCs seem to be exploiting labour with its low wages. However, if it were to pay more to its employees, local businesses would be hurt in the long run. (Carroll and Buchholtz, 2006: 297-300)MNCs may also be assailed for not adhering to standards from their home country. Two classic ethical issues are human rights abuses in “sweatshops” and questionable marketing and plant safety practices. Plant safety issues have been on-going since the Union Carbide Bhopal crisis in 1984. More recently, Mattel found lead in its toys made in China. In both cases, companies broke no laws in its host countries. (Carroll and Buchholtz, 2006: 306-311) Coating toys with lead paint is legal in China! However, it has to ensure the quality and safety of its products and employees.
Society has also grown more distrustful of corporations after a spike in corporate scandals in 2001. Accounting and securities fraud have led to the demise of Enron, Arthur Andersen and WorldCom. The Sarbanes-Oxley act was created to restore public confidence in accounting and reporting practices. Society today requires not only business financial transparency but also social and environmental transparency. This is to address a broader spectrum of stakeholders. Many multinational companies including Coca-cola, Shell and Starbucks have the adopted the triple-bottom line approach to corporate reporting. ISO 26000, launching in 2009, aims to develop an international standard in accessing social responsibility.
Google was criticized by Privacy International for potentially storing data on individuals using its search engines. It went a step further in ethical behaviour by calling for new international laws to be set up to protect personal information online and is now working with UNESCO and OECD to draw up guidelines. This has shown businesses are seriously considering its ethical responsibilities to society although it is not required to do so by law. (Palmer 2007
)With the increased power that corporations are yielding, there are companies like The Body Shop who use this power and profits to raise awareness to their social causes. Other businesses have been giving large amounts to philanthropy. Japanese MNC firms such as Sony, Canon and Toyota practise kyosei. US firms gave $400 million in the few weeks after the 2004 tsunami disaster. (Hopkins, 2006) Thus corporations are setting a benchmark in society and causing a revolution of rising expectations. Future organisations must attempt to exceed these expectations.
Another dimension to the increased power and scope business wields come from the privatization of government companies. It is estimated that $700 billion dollars worth of assets have been privatised worldwide (Carroll and Buchholtz, 2006:344). Governments usually provide a service for society. There is conflict of interest between maximising shareholder returns and maintaining a low cost service to the public. In Singapore, SMRT, although still partly owned by the government through Temasek Holdings, was not allowed to raise its prices in 2007 because it was already making profit margins similar to that of Singapore Airlines.
Technological advancementBiotechnology and information technology are new areas in corporate growth. In biotechnology, an area called bioethics has emerged. Although biotechnology holds great promise for enhancing life and health, it could have unprecedented ethical consequences.
Genetic engineering could increase supply of food as it can make plants more resistant to pests or to grow in harsher conditions. However, the issue of using or eating genetically modified food has opposition. In Europe, there is a ban on bioengineered crops. In 2004, McDonalds did not want Monsanto to introduce its bug-resistant wheat as it did not want to be caught up in the biotech debate when people eat their fries. Another area of concern is in embryonic stem cell research. It holds the greatest hope for diseases like cancer, Alzheimer’ and Parkinson disease but American law denies the use of new embryos to carry out research. Scientists clone stem cells to loop around this restriction. (Carroll and Buchholtz, 2006: 260-284
)Information Technology has undergone immense growth even after the dot-com bubble burst. Emails and the Internet have enabled communication without the need of a fixed place and time. It can be a fermenting ground for Non-Governmental Organisations (NGO). Individuals who were once powerless can now rally, surround and infiltrate even the most powerful organizations through the internet. For example, the Royal Dutch Shell Company changed its disposal strategy of offshore platforms after protests from Internet stakeholder swarms. (Hopkins 2006) Similarly in 2001, Nike’s global sweatshop allegations were started by an email sent out by Jonah Peretti to a few friends.
Society’s increased awareness of ethical behaviourThe rising education and affluence of society have increased awareness in the ethical responsibility of firms. Most MBA and business undergraduate students now undergo some form of ethics training. Business ethics training courses are being carried out by large companies such as Lockheed Martin and Sun Microsystems. People are more aware of discrimination issues and their rights. In 2003 the Ethnic Resource Centre National Business survey showed that two-thirds of organisations provided a way to report misconduct anonymously. (Carroll and Buchholtz, 2006:243-251)The rise in social investing has also shown society’s preference for moral corporate behaviour. Socially screened portfolios in the U.S. have climbed to $2.15 trillion in 2003 and are expected to hit $3 trillion by 2011. Europe SRI market has grown $0.6 trillion from 2005 to 2007.
Modification to Carroll’s CSR pyramidOne of the main weaknesses in Carroll’s pyramid is the inability to convey the tensions between the component responsibilities. To better show these organization realities it might be better to use two triangles instead.
The economic responsibility surrounds and supports all the other responsibilities in the model and is the “foundation” of this model. This is because profitability is still the basis in any corporation. Corporations focus on profitability even when undertaking CSR programs. In KPMG’s International Survey of Corporate Social Responsibility (2005), 74% of respondents found economic considerations as drivers of corporate responsibility.
The relative priorities of CSR should be adjusted with the rise in ethical responsibilities in corporations. The increased compliance with new standard accounting practices and laws have increased the task of legal responsibility. However, law often cannot address all new issues business face in a fast-paced global environment.
Although there is an increased expectation for a corporation to give back to the community and business philanthropic responsibilities are greater than before, these are still not as large as its legal obligations. Hence, it remains the smallest out of the four components of CSR.
ConclusionThe gap between society’s expectations of business ethics and that of actual business ethics has given rise to ethical problems. Globalisation has led to the broadening of the term ‘Society’. As the rate of technological change speeds up, ethical responsibilities will play a greater role in the CSR pyramid.
Bacchus, Rayman L. and Crowther D, (2004). Perspectives on Corporate Social Responsibility. London: Ashgate.
Carroll’s CSR pyramid:http://www.csrquest.net/default.aspx?articleID=12770&headingSeptember 17, 2007.
Carroll, Archie B. and Ann K. Buchholtz, 2006, Business and Society: Ethic and Stakeholder Management, 6th Edition, USA: South-Western, Thomson Corporation.
Carroll, Archie B. (1991, July). The Pyramid of Corporate Social Responsibility: toward the moral management of organizational stakeholders balancing economic, legal and social responsibilities. Business Horizons.
Hopkins, M. (2006). Corporate Social Responsibility and International Development. London: Earthscan.
KPMG. (2005). KPMG Global Survey of Corporate Social Responsibility Reporting 2005: KPMG International.
Revisting Carroll’s CSR Pyramid:http://www.waynevisser.com/csr_pyramid.htmSeptember 17, 2007.
Palmer, M. (14, September 2007). Google to call for web privacy shake-up. The Financial Times. P21.
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Carroll’s pyramid of Corporate social responsibility Essay
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For the past 27 years, Carroll’s corporate and business social responsibility pyramid (CSR) has been trusted by top management and journals to higher define and explore CSR. The different parts in the pyramid help managers see the different types of obligations that society wants of businesses.
It is easily understandable and simple. Yet , the new problems faced by simply corporations nowadays have warranted a re-examination of Carroll’s pyramid. Carroll’s CSR PyramidCarroll’s four part CSR pyramid depicts the economic, legal, ethical and discretionary tasks that culture expects of organizations. Carroll has built-in concepts of stakeholders and corporate citizenship in his pyramid.
The base in the pyramid is economic responsibility and it gives top priority to economic overall performance. A business should be profitable; maximising profits, lessening costs, cover the future and supply shareholders with sufficient and attractive returns. The stakeholders affected the majority of in this group are it is employees and shareholders.
The legal responsibility is definitely second in the hierarchy. Web based expected to pursue profits in the framework from the law. World expects businesses to adhere to almost all regulations and laws, honor its legal agreements, warranties and guarantees. Third is honest responsibility and it involves avoiding sketchy practices.
It provides all activities which have certainly not been predicted or legislated by world. Organizations must accept appearing values and norms of society. Companies are to operate above mere compliance of the regulation.
Ethical obligations are more difficult to deal with because they tend to become new, ill-defined or continuously under general public debate. Near the top of the pyramid is philanthropic responsibility. That involves helping the community and being a great corporate citizen through charitable contributions and lively participation in charities or perhaps other community welfare courses.
Such responsibility is wanted but may not be necessarily performed and hence is definitely separate from all other responsibilities. (Carroll and Buchholtz, 2006: 22-42)Descriptive accuracyThere have already been four research conducted upon Carroll’s pyramid from 85 to 2k. Statistical evaluation has shown which the relative importance assigned to each responsibility in the pyramid displays the scientific importance of the four categories. It also verifies that the several responsibilities happen to be empirically related but contradictory. In the review conducted simply by Burton, Farh and Hegarthy in 2000 on one hundred sixty five Hong Kong and 157 U. S. learners, they gave equal or perhaps greater worth to ethical responsibility than legal responsibility.
Similarly, in a 1999 survey conducted by simply Edmondson and Carroll on 503 black-owned businesses in U. T, ethical responsibility was ranked higher than legal responsibility. Burton, Farh & Hegarty (2000)Mean valuesEconomic orientationsLegal orientationsEthical orientationsPhilanthropic orientations-Hong Kong3. 112. 322. 321.
84-USA2. 812. 422. 511. 99Edmondson & Carroll (1999)3. 162. 122. 192. 04(Adapted from http://www.csrquest.net/default.aspx?articleID=12770&heading)These events are noteworthy. It questions if corporate ethical responsibility has increased and if these kinds of ethical tasks outweigh its legal obligations. The changing social contractThe notion of CSR suggests the existence of a “social contract” between a society plus the corporation. (Crowther, 2004)”The cultural contract among business and society is to a large degree formulated by shared understandings that exist in each region in the pyramid. ” (Carroll and Buchholtz, 2006: 19)If society’s personal preferences change, there is a defining and thus renegotiation of the social contract.
Businesses in the 21st century are experiencing significant challenges from this relationship. The increased power of business, technological advancement, and society’s improved awareness toward moral moral behaviour offers caused an increase in the moral responsibility in corporate. Increased benefits of CorporationsCorporations happen to be primary providers for advancement in technology advancement, industrialism and capitalism. (Hopkins, 2006) Multi-national companies (MNC) such as Wal-Mart have income which go beyond the major domestic product of nations. MNCs dominate a global marketplace. Businesses need to increase internationally to remain competitive.
The positive effect has come to encompass everything from “factories shifting around” to “international bodies that set the guidelines for the global economy. ” It has led to the outsourcing techniques of jobs to less-developed nations. In the United States, jobs in manufacturing are staying outsourced to China and India. Within a USA Today poll in 2004, sixty-eight percent of american citizens felt outsourced workers of jobs was detrimental to the economy. (Carroll and Buchholtz, 2006: 293)Companies from banks to drugs operate and compete in a global environment. When MNCs start operate another nation, they must fulfil their social responsibilities in order to be perceived as reputable. MNCs happen to be caught in dilemmas.
For instance , if it would have been to repatriate a large part of the profits, it will be seen as underfeeding yourself the host country of wealth. If it were to make investments profits locally, it may be perceived to be tightening up its control on the host country’s overall economy. Pay is yet another sensitive concern. MNCs seem to be exploiting work with its low wages.
Nevertheless , if it would be to pay more to its personnel, local businesses would be harm in the long run. (Carroll and Buchholtz, 2006: 297-300)MNCs may also be assailed for not sticking with standards from their home country. Two classic ethical issues happen to be human rights abuses in “sweatshops” and questionable marketing and plant basic safety practices. Flower safety issues had been on-going considering that the Union Carbide Bhopal catastrophe in 1984. More recently, Mattel found business lead in its toys made in China.
In equally cases, businesses broke not any laws in the host countries. (Carroll and Buchholtz, 2006: 306-311) Finish toys with lead fresh paint is legal in Chinese suppliers! However , it has to ensure the product quality and protection of usana products and staff. Society has additionally grown even more distrustful of corporations after a spike in corporate scandals in 2001.
Accounting and securities scams have resulted in the death of Enron, Arthur Andersen and WorldCom. The Sarbanes-Oxley act was created to restore general public confidence in accounting and reporting procedures. Society today requires not only business economical transparency nevertheless also social and environmental openness.
This is to deal with a wider spectrum of stakeholders. A large number of multinational firms including Skol, Shell and Starbucks have the adopted the triple-bottom line approach to corporate and business reporting. INTERNATIONALE ORGANISATION FUR STANDARDISIERUNG 26000, starting in 2009, aims to develop a worldwide standard in accessing cultural responsibility. Google was criticized by Level of privacy International pertaining to potentially keeping data in individuals featuring a search engines. That went one step further in ethical behavior by asking for new foreign laws to be set up to shield personal information on the internet and is now dealing with UNESCO and OECD to draw up rules.
This has demonstrated businesses are really considering their ethical obligations to contemporary society although it is not instructed to do so by law. (Palmer 2007 )With the increased power that corporations happen to be yielding, you will discover companies just like the Body Shop who employ this power and profits to raise awareness to their social causes. Other businesses have been providing large amounts to philanthropy. Japan MNC organizations such as Fiat, Canon and Toyota practise kyosei. US firms gave $400 , 000, 000 in the couple of weeks after the 2004 tsunami tragedy. (Hopkins, 2006) Thus companies are environment a benchmark in world and causing a revolution of rising targets.
Future organisations must make an effort to exceed these expectations. One more dimension for the increased power and scope business wields come from the privatization of government firms. It is estimated that $700 billion dollars worth of assets have been completely privatised around the world (Carroll and Buchholtz, 06\: 344). Government authorities usually supply a service intended for society.
There may be conflict of interest between maximising aktionar returns and maintaining a low cost service to the general public. In Singapore, SMRT, although still to some extent owned by the government through Temasek Loge, was not in order to raise the prices in 2007 because it was already making profit margins a lot like that of Singapore Airlines. Scientific advancementBiotechnology and information technology will be new areas in company growth. In biotechnology, a location called bioethics has surfaced.
Although biotechnology holds wonderful promise pertaining to enhancing your life and well being, it could have got unprecedented moral consequences. Hereditary engineering can increase supply of food as it could make crops more resistant to pests or grow in harsher conditions. However , the issue of applying or consuming genetically altered food has opposition.
In Europe, we have a ban upon bioengineered vegetation. In 2004, McDonalds would not want Monsanto to introduce its bug-resistant wheat as it did not want to be caught up inside the biotech controversy when people take in their french fries. Another area of concern is in wanting stem cell research. It holds the greatest expect diseases just like cancer, Alzheimer’ and Parkinson disease nevertheless American legislation denies the usage of new embryos to carry out research. Scientists identical copy stem skin cells to trap around this constraint. (Carroll and Buchholtz, 2006: 260-284 )Information Technology provides undergone enormous growth possibly after the dot-com bubble burst.
Emails plus the Internet have got enabled conversation without the need of a set place and time. It can be a fermenting ground for Non-Governmental Organisations (NGO). Individuals who were once incapable can now move, surround and infiltrate your most powerful companies through the internet.
For example , the Royal Dutch Shell Firm changed its disposal approach of offshore platforms following protests from online stakeholder swarms. (Hopkins 2006) Similarly in 2001, Nike’s global sweatshop allegations had been started by an email sent by Jonah Peretti to a couple friends. Society’s increased awareness of ethical behaviourThe rising education and wealth of contemporary society have improved awareness in the ethical responsibility of firms. Most MBA and business undergraduate college students now undertake some form of ethics training.
Business ethics training courses are becoming carried out by significant companies just like Lockheed Matn and Sunshine Microsystems. Individuals are more aware about discrimination issues and their privileges. In 2003 the Ethnic Resource Hub National Organization survey revealed that two-thirds of organisations provided ways to report wrong doings anonymously. (Carroll and Buchholtz, 2006: 243-251)The rise in interpersonal investing has additionally shown society’s preference for moral corporate and business behaviour. Socially screened portfolios in the U. S. possess climbed to $2.
15 trillion in the year 2003 and are supposed to hit $3 trillion by 2011. Europe SRI market has grown $0. 6 trillion from june 2006 to 2007. Modification to Carroll’s CSR pyramidOne of the main disadvantages in Carroll’s pyramid is definitely the inability to convey the worries between the element responsibilities.
To higher show these organization realities it might be far better to use two triangles rather. The economic responsibility surrounds and helps all the other tasks in the style and is the “foundation” with this model. The reason is , profitability is still the basis in just about any corporation. Corporations focus on profitability even when executing CSR programs. In KPMG’s International Survey of Corporate and business Social Responsibility (2005), 74% of participants found monetary considerations while drivers of corporate responsibility.
The comparative priorities of CSR must be adjusted with the rise in honest responsibilities in corporations. The increased complying with new standard accounting practices and laws have increased the job of culpability. However , legislation often cannot address all new issues organization face in a fast-paced global environment.
Although there is an increased expectation for a company to give back in the community and business philanthropic responsibilities are greater than just before, these are continue to not as huge as its legal obligations. Hence, it remains to be the smallest from the four pieces of CSR. ConclusionThe gap between society’s expectations of business ethics and this of real business ethics has given rise to ethical problems.
Globalisation has led to the broadening of the term ‘Society’. While the rate of technological alter speeds up, moral responsibilities may play a greater role in the CSR pyramid. Sources Bacchus, Rayman L. and Crowther M, (2004). Viewpoints on Corporate Social Responsibility. London: Ashgate.
Carroll, Archie B. and Ann K. Buchholtz, 06\, Business and Society: Ethic and Stakeholder Management, 6th Edition, UNITED STATES: South-Western, Thomson Corporation. Carroll, Archie W. (1991, July). The Pyramid of Business Social Responsibility: toward the moral management of organizational stakeholders balancing economic, legal and interpersonal responsibilities. Business Horizons.
Hopkins, M. (2006). Corporate Cultural Responsibility and International Development. London: Earthscan. KPMG. (2005).
KPMG Global Survey of Corporate Sociable Responsibility Revealing 2005: KPMG International. Revisting Carroll’s CSR Pyramid: http://www.waynevisser.com/csr_pyramid.htmSeptember 17, 2007. Palmer, M. (14, September 2007). Google to require web privateness shake-up.
The Financial Occasions. P21.
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What is the Pyramid of Corporate Social Responsibility?
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In 1991, Archie B Carroll wrote a paper that was destined to change the dynamics of ethics in business and reshape questions of corporate social responsibility. His paper The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders aimed at the ambivalence of high profile corporations towards ethics.
Long gone, Carroll argued, are the days of Milton Friedman (discussed in detail further on) when the ethics of the ‘unfettered free market’ represented the summa totalis of a firm’s worldly responsibility.
Indeed, following the formation of agencies like, for example, the Equal Employment Opportunity Commission (EEOC, 1964 ) and the Environmental Protection Agency (EPA, 1970 ), ethical responsibility became tied to legal responsibility.
To help firms process their responsibility concerning their shareholders (which, after the 1970s, appeared to include employees, customers, and even the environment), Archie B Carroll developed his famous pyramid of corporate social responsibility.
What Does the Pyramid of Corporate Social Responsibility Entail?
Carrol’s Pyramid by The CSR Journal
Carroll’s pyramid presents four dimensions of corporate responsibility, each ontologically exclusive while simultaneously building upon one another like a pyramid.
The four dimensions of Carroll’s pyramid of corporate social responsibility (CSR) are, in this order, economic responsibilities, legal responsibilities, ethical responsibilities, and finally philanthropic responsibilities .
Though these four dimensions of CSR first appeared in a 1979 paper , it wasn’t until Carroll’s 1991 paper that these were ordered into a pictographic.
At the base of Carroll’s CSR pyramid is the economic responsibility. This implies what our intuition could tell us easily anyway: the CSR pyramid is based on an economically profitable and sustainable business . Without sustainability, the point of whether or not a business is taking care of its shareholders is moot.
Connected to the idea of economic responsibility, however, is the next step of the pyramid. Legal responsibility is the due process of a firm’s operation whereby a business expects to be treated fairly in legal disputes concerning the growth and expansion of their business.
In developing countries without a powerful or fair legal framework, businesses find it more difficult to grow sustainably .
The next step of the pyramid is that of ethical responsibility. Now halfway up the pyramid, we move from notions of “what is required by society” to notions of “what is expected by society.” In countries like the United States, legislation increasingly ties ethical responsibilities to legal responsibilities, to the point that often these categories flow together.
Take the Consumer Product Safety Commission ( CPSC ), for example. This government agency exists to prevent products that present unreasonable risks to the public from getting into the public’s hands. Under CPSC, firms have a legal responsibility to do what many would say is ethically right.
The CPSC represents an extreme case, however. When ethical responsibility becomes a matter of a company’s discretion, public opinion can weigh heavily on a firm’s actions. As public opinion and sustainability are today inextricably linked, Carroll’s pyramid suggests that it behooves a company to “act ethically” even if it doesn’t seem to “make cents.”
We can look to Walmart as a powerful case study of the aforementioned effect. After facing immense public pressure, Walmart raised its minimum wage for hundreds of thousands of employees.
Clearly, Walmart was doing well for many years with its payment structure, but in this case, public opinion outweighed corporate frugality (or miserliness, depending on who you’re asking).
The final tip of the CSR pyramid is that of philanthropic responsibilities. Considering proper economic development within the confines of a country’s legal framework, ethics and philanthropy follow one another, though philanthropy is, we might say, the most optional of the four segments of the CSR pyramid.
Philanthropic responsibility has been a part of ideas of business since time immemorial. Even the infamous “robber barons” of the early 20th century took pride in their philanthropic duty.
Think, for example, of the over $500 million Rockefeller donated to public causes following his stratospheric rise to financial power during the industrial revolution.
In this final step of the CSR pyramid, philanthropy moves from being a category of business operation “expected” by the public to that of an ideal “desired” by the public.
The History of Corporate Social Responsibility
While the framework of the corporate social responsibility pyramid is well-worked-out and generally well-understood by the executives of today’s corporations, corporate social responsibility has had a long and winding journey.
From the first foundation of the idea of a business to where we are today, the idea of CSR has evolved greatly. The most progress first occurred during the industrial revolution.
CSR in the Late 19th Century
In June of 1889, Andrew Carnegie published an essay entitled “ Wealth ” for the North American Review magazine.
In this essay, Andrew Carnegie outlined what he deemed to be the moral, ethical, and even religious responsibilities of business owners. “The true Gospel concerning wealth,” as Carnegie termed it, included the great responsibility those with wealth have.
Specifically, Carnegie said, those that make money must give that money back to the community in ways that edify and make better the world around the wealthy.
Many of the wealthiest business owners followed Andrew Carnegie’s example. John D. Rockefeller, as we mentioned earlier, spent hundreds of millions of dollars before the end of his life founding Universities (like the University of Chicago), libraries, scientific organizations, and arts foundations.
It wasn’t until the 20th century, however, that ethics and morality became codified in business practices.
The First Community Foundation
In 1914, Frederick Goff founded the first community foundation . A community foundation is a public charity whose efforts support a specific geographic region – hence the “community” of the name.
Frederick Goff , who had amassed a great deal of wealth as a banker and achieved a great deal of community support as the mayor of Cleveland, was instrumental in founding the Cleveland Foundation.
The Cleveland Foundation , now the third-largest community foundation in America, was designed to support the community interest of Cleveland with thoughtful investment.
In the work of Frederick Goff, John D. Rockefeller, and Andrew Carnegie, the idea of a business owner’s responsibility began to expand beyond pure money-making.
Modern ideas of CSR, however, came into practice in the mid-20th century.
See Related: Capitalism and Homelessness: Is There a Correlation?
Before 1970: Two Contrasting CSR Camps
Before 1970, two major names in the idea of the ethics of a businessman effectively formed two contrasting CSR camps.
The Father Of Corporate Social Responsibility
The first name to know is Howard Bowen . Considered by many to be the father of modern Corporate Social Responsibility, Bowen related his ideas on a businessman’s ethics in his groundbreaking 1953 Social Responsibilities of the Businessman .
Social Responsibilities of the Businessman made a huge impact on the thoughts surrounding business ethics. By asking the question, “what ethical expectations can society put on businesses and those that run them,” Bowen implicitly makes the statement, “businesses have certain ethical responsibilities.”
Today, Social Responsibilities of the Businessman , despite its alarmingly patriarchal title by today’s standards, remains a seminal book in understanding the ethical expectations society places on businessmen and businesswomen.
It would not be an understatement to say that every work on CSR today must contend with Social Responsibilities of the Businessman .
Part of what makes Social Responsibilities of the Businessman so timeless is its reframing of the idea of business ethics in terms of strategic planning.
As Carrol’s much later pyramid of corporate social responsibility suggests, building a strong ethical and philanthropic reputation for your business can be part of an effective strategy for business growth in an increasingly socially conscious and self-aware society.
A Responsibility to Profitize
On the converse side of the debates about the social responsibility of the businessman came a voice from academic economics.
In his 1970 paper The Social Responsibility of a Business Is To Increase Its Profits , Milton Friedman argued that as far as social responsibility goes, a business exists purely to make a profit.
Idealistically (and, as many argue today, naively ), Friedman contended that a business watching out for its bottom line will inevitably improve the society that he or she lives in.
Though Friedman represents just one point in a long and sprawling history of laissez-faire economics, we can trace his thoughts back to Adam Smith.
The Father of Modern Economics in many ways, proposed the fundamentals of modern capitalism for a captive audience. In particular, Smith writes, we don’t rely on the baker to provide bread from his own sense of goodwill. Rather, we rely on the baker to provide bread based on his own self-interests.
By taking care of one’s own interests, capitalism contends, all are made better, and society is made stronger.
Consider, for example, the idea of a lake that sits on the edge of a city. A factory in the city has a practice whereby they dump chemicals into the leak because this is the cheapest way to dispose of them. Many today would say, “we need legislation to prevent this factory from dumping chemicals into the lake.”
Friedman, however, would say, “We must allow the factory to do what works best for it.” Over time, a laissez-faire purist would argue, an environmentally harmful practice won’t allow the business to sustain itself. People may begin to move away from the town, for example, which would effectively reduce the potential employees for the factory and require the factory to shut down.
Looking after the lake, a Friedmanist might tell us, fits into the social responsibility of the business as it helps their bottom line .
On the other hand, a devil’s advocate might point out that only hindsight is 20-20, and while profit motivations might make the world a better place in the long run, in the short term, government non-intervention can lead to monopolies and the current carcinogenic drama now unfolding in Laredo .
See Related: What is Corporate Socialism? Definition & Examples
1971: The Age of the Social Contract
We can trace the modern era of the “social contract” for businesses to 1971. In 1971, the United States Committee For Economic Development published its Social Responsibilities of Business Corporations .
This study had begun in the late 1960s as a way of considering the economic objectives of large businesses and laying out a ground plan as to how these businesses might restructure their work to include social responsibility.
As researchers worked, however, the objective of the study transformed to an analysis of social problems extant in society which the efforts of large businesses might ameliorate.
Social Responsibilities of Business Corporations was wildly influential to businesses, corporations, and the public writ large.
As we’ve mentioned above, the “social contract” declared by the Committee for Economic Development forced the hand of many businesses through legislation. The EPA, Occupational Health And Safety Administration (OSHA), and the CPSC all have roots in the idea of a business’s social contract.
The Pyramid of Corporate Social Responsibility Today
Today, despite the still heavy reliance on the 1991 work of Archie B Carroll, there are present efforts to rework the pyramid of CSR.
Denise Baden, in a recent (2016) essay , “A reconstruction of Carroll’s pyramid of corporate social responsibility for the 21st century,” argues that in the 21st century, the model of “economics first” ought not to be considered the foundation of a business’s ethical pyramid.
Considering the increasing power of businesses in the 21st century, Baden contends, ethical responsibilities ought to rank number one and therefore be at the bottom of the pyramid. Legal, economic, and finally philanthropic interests, Baden writes, should follow in that order.
Obviously, this restructuring of the pyramid represents a massive, foundational restructuring of the way we think about business ethics. As this research is relatively new, there is no doubt still much room for debate.
However, in an earlier 2014 paper , Baden shows that ethical responsibility in Cuba can effectively follow an “ethics first” model and remain profitable.
CSR: Other Interpretations
Beyond the work of Baden, other thinkers in the field of business ethics restructure the conversation about CSR to different pillars.
According to a recent Harvard Business School article , for example, the four types of corporate social responsibility are listed as environmental, ethical, philanthropic, and economic.
Others replace the term “ethical” with “human rights.”
Still, others cite 3 branches of corporate social responsibility: environmental, social (ethics and human rights), and supply chain (transparent and responsible sourcing).
The Future of CSR: A Conclusion
In this article, we’ve covered the growth and development of ideas of CSR from its earliest conception to today. We’ve discussed Carroll’s pyramid and the four traditional dimensions (economic, legal, ethical, philanthropic).
Over the next few years, we’ll likely continue to see developments on the pyramid of corporate social responsibility. As the article has hopefully demonstrated, the world of CSR is a continually evolving, many-headed hydra. Even the works of Milton Friedman, though largely dismissed today, have their proponents in some serious online forums.
Over the next ten years, though, it’s probable that we’ll see a new and convincing study with implications similar to that of Carroll’s The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders . In this paper, it seems inevitable that the question of economic self-interest will fall away from its central place on the CSR pyramid, moving to a tertiary position if it appears at all.
Why? In the socially-conscious age, we’re currently amidst, transparency is no longer an option for businesses. Young people more and more are supporting businesses on ethical and moral grounds, rather than for the sake of convenience, quality, or other conventional models for business success.
In this global age that is in many ways the age of the influencer, private citizens will dictate more and more the success of a business.
At the same time, locality will continue to decrease in importance all while ethicality remains on the rise.
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Carroll, Archie “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders.” Analytical Essay
Introduction, background information, critical evaluation.
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This article intends to review Archie Carroll’s article titled “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders”. The main point of focus for this review will include background information about the article, a summary of the key points highlighted in the article as well as undertaking a critical evaluation of the article with particular emphasis on how well the article achieves its goals, possibilities suggested by the article and personal experiences that can relate to the article. The main agenda of Carroll’s article revolves around creating awareness for corporate social responsibility (CSR). To generate a better understanding of this subject, Carroll has identified the various components of CSR and developed a pyramid that indicates how these components are interlinked as well as their position from a hierarchical perspective. Further, Carroll has linked the concept of corporate social responsibility to stakeholders and the role of managers towards actualizing the four components (Carroll 39). This article is enlightening in that it creates more awareness and advocates for CSR.
The importance of corporate social responsibility has gained momentum over the years as it plays a crucial role in determining the success or failure of any given organization. This has been attributed to the fact that, with time, the society has become more aware of organization’s responsibilities as it appertains to the rule of law. The criteria for judging Carroll’s article will include the ability of the article to capture the themes presented, article presentation and the evidence presented.
In a synopsis, Carroll’s article, in his quest to present his arguments on CSR, has vividly traced the origin of CSR back to the 1970s as the rights and claims of the society with regards to the conducts of organizations when it was apparent that “environment, employees, and consumers to be significant and legitimate stakeholders of business” (Carroll 39). Carroll has further elaborated on the evolution of the concept of corporate social responsibility in terms of definition and he asserts that the most salient aspect of the definition “is what managers do with these ideas in terms of implementation” (40). For purposes of building on the understanding of the different components of CSR, Carroll has come up with a pyramid that identifies four components from the most basic as follows: economic, legal, ethical and philanthropic (40-42). According to Carroll, for any business to attain a significant level of CSR, the organization must exercise justice and fairness with the aim of improving the quality of life for all stakeholders. And as such, “The CSR firm should strive to make a profit, obey the law, be ethical, and be a good corporate citizen” (43). In his quest to link the CSR and firms stakeholders, Carroll has highlighted two sets of stakeholders by virtue of their influence on the company in terms of legitimacy or power. Carroll argues that the most difficult task towards actualization of CSR is merging the needs and claims of all stakeholders without compromising on the four components of CSR. Carroll further asserts that, to properly manage the needs of all the stakeholders, it is necessary for the organization to know the nature and the stakes that each stakeholder presents, challenges posed by each and to what extent does the organization owe its stakeholders CSR (43-44). The role of managers towards implementation of CSR has been emphasized by Carroll through identifying and expounding on three moral types associated with management. In this article, Carroll asserts that management skills can be classified as “Immoral, amoral and moral management” (44). According to Carroll, immoral management skills are contradictory to the rule of law and moral ethics, amoral management skills are in accordance with the law, while moral management skills go beyond what is required by the law (44-45).
Carroll’s article has meticulously achieved its goal of explaining and advocating for the different components of CSR, the link between CSR and stakeholders and proper management skills that are essential for implementation of CSR. By using elaborate explanations and providing a point form of the same, Carroll was able to help his audience understand and internalize his themes and concepts. The use of diagrams was also a well thought idea as it made his work more visual and presentable. Further, to build on internal validity and consistency of his concepts and explanations, Carroll has used numerous examples. Throughout the article, Carroll has repeatedly suggested that it is essential for every firm to develop a CSR that ensures the company still remains profitable, operates within the requirements of the law, has ethical values that ensure fairness for all its stakeholders and that they embrace a philanthropic outlook that seeks to improve the living standards of their stakeholders and the community at large (40-44). Carroll concludes the article by suggesting that all managers should strive towards ensuring that their management skills are moral and humane in order to continue with the spirit of the CSR concept. Based on my own experience as a consumer of many products, I can ascertain that more and more organizations are coming up with strategies aimed at ensuring that their consumers associate with their CSR projects. For instance, I regularly consume Coca-cola beverages and I have keenly observed that most of their plastic bottled products have a sign directing the customer on where to dispose the used bottles so as to conserve the environment. This is a form of CSR that ensures environmental sustainability as advocated for in Carroll’s article.
In my view, Carroll has presented a brilliant article that seeks to create more awareness for CSR concepts and their applicability with reference to stakeholder’s claims and management strategies. This article advocates for a morally right management system that ensures continuous profitability of a firm and consequently its success in the current business world. This article was well thought of and carefully presented and hence, I highly recommend it to any individual who holds a management role in their organizations.
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IvyPanda . 2019. "Carroll, Archie “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders.”." November 9, 2019. https://ivypanda.com/essays/carroll-archie-the-pyramid-of-corporate-social-responsibility-toward-the-moral-management-of-organizational-stakeholders/.
IvyPanda . (2019) 'Carroll, Archie “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders.”'. 9 November.
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Part B – The Contemporary Business World
Article: Carroll’s Corporate Social Responsibility Pyramid
Corporate social responsibility.
The basis of our modern understanding of corporate social responsibility is greatly influenced by Archie Carroll’s work and his creation of the CSR pyramid. In 2016, he re-thought his initial concepts and wrote “ Carroll’s pyramid of CSR: Taking another look. ” Excerpts from the article, from the expert, provide a thorough overview of this important concept.
Introduction
The modern era of CSR, or social responsibility as it was often called, is most appropriately marked by the publication by Howard R. Bowen of his landmark book Social Responsibilities of the Businessman in 1953. Bowen’s work proceeded from the belief that the several hundred largest businesses in the United States were vital centres of power and decision making and that the actions of these firms touched the lives of citizens in many ways. The key question that Bowen asked that continues to be asked today was “what responsibilities to society may businessmen reasonably be expected to assume?” (Bowen 1953 , p. xi) As the title of Bowen’s book suggests, this was a period during which business women did not exist, or were minimal in number, and thus they were not acknowledged in formal writings. Things have changed significantly since then. Today there are countless business women and many of them are actively involved in CSR.
Much of the early emphasis on developing the CSR concept began in scholarly or academic circles. From a scholarly perspective, most of the early definitions of CSR and initial conceptual work about what it means in theory and in practice was begun in the 1960s by such writers as Keith Davis, Joseph McGuire, Adolph Berle, William Frederick, and Clarence Walton (Carroll 1999 ). Its’ evolving refinements and applications came later, especially after the important social movements of the 1960s, particularly the civil rights movement, consumer movement, environmental movement and women’s movements.
Dozens of definitions of corporate social responsibility have arisen since then. In one study published in 2006, Dahlsrud identified and analyzed 37 different definitions of CSR and his study did not capture all of them (Dahlsrud 2006 ).
In this article, however, the goal is to revisit one of the more popular constructs of CSR that has been used in the literature and practice for several decades. Based on his four-part framework or definition of corporate social responsibility, Carroll created a graphic depiction of CSR in the form of a pyramid. CSR expert Dr. Wayne Visser has said that “Carroll’s CSR Pyramid is probably the most well-known model of CSR…” (Visser 2006 ). If one goes online to Google Images and searches for “Carroll’s Pyramid of CSR,” well over 100 variations and reproductions of the pyramidal model are presented there ( Google Images ) and over 5200 citations of the original article are indicated there ( Google Scholar ).
The purpose of the current commentary is to summarize the Pyramid of CSR, elaborate on it, and to discuss some aspects of the model that were not clarified when it was initially published in 1991. The ensuing discussion explains briefly each of the four categories that comprise Carroll’s four-part definitional framework upon which the pyramidal model is constructed.
The four-part definitional framework for CSR
Carroll’s four part definition of CSR was originally stated as follows: Corporate social responsibility encompasses the economic, legal, ethical, and discretionary (philanthropic) expectations that society has of organizations at a given point in time. This set of four responsibilities creates a foundation or infrastructure that helps to delineate in some detail and to frame or characterize the nature of businesses’ responsibilities to the society of which it is a part. In the first research study using the four categories it was found that the construct’s content validity and the instrument assessing it were valid. The study found that experts were capable of distinguishing among the four components. Further, the factor analysis conducted concluded that there are four empirically interrelated, but conceptually independent components of corporate social responsibility. This study also found that the relative values or weights of each of the components as implicitly depicted by Carroll, approximated the relative degree of importance the 241 executives surveyed placed on the four components—economic = 3.5; legal = 2.54; ethical = 2.22; and discretionary/philanthropic = 1.30. Later research supported that Aupperle’s instrument measuring CSR using Carroll’s four categories was valid and useful . In short, the distinctiveness and usefulness in research of the four categories have been established through a number of empirical research projects. A brief review of each of the four categories of CSR follows.
Economic responsibilities
As a fundamental condition or requirement of existence, businesses have an economic responsibility to the society that permitted them to be created and sustained. At first, it may seem unusual to think about an economic expectation as a social responsibility, but this is what it is because society expects, indeed requires, business organizations to be able to sustain themselves and the only way this is possible is by being profitable and able to incentivize owners or shareholders to invest and have enough resources to continue in operation. In its origins, society views business organizations as institutions that will produce and sell the goods and services society needs and desires. As an inducement, society allows businesses to take profits. Businesses create profits when they add value, and in doing this they benefit all the stakeholders of the business.
Profits are necessary both to reward investor/owners and also for business growth when profits are reinvested back into the business. CEOs, managers, and entrepreneurs will attest to the vital foundational importance of profitability and return on investment as motivators for business success. Virtually all economic systems of the world recognize the vital importance to the societies of businesses making profits. While thinking about its’ economic responsibilities, businesses employ many business concepts that are directed towards financial effectiveness – attention to revenues, cost-effectiveness, investments, marketing, strategies, operations, and a host of professional concepts focused on augmenting the long-term financial success of the organization. In today’s hypercompetitive global business environment, economic performance and sustainability have become urgent topics. Those firms that are not successful in their economic or financial sphere go out of business and any other responsibilities that may be incumbent upon them become moot considerations. Therefore, the economic responsibility is a baseline requirement that must be met in a competitive business world and so economic responsibility is a critical part of corporate social responsibility.
Legal responsibilities
Society has not only sanctioned businesses as economic entities, but it has also established the minimal ground rules under which businesses are expected to operate and function. These ground rules include laws and regulations and in effect reflect society’s view of “codified ethics”. They articulate fundamental notions of fair business practices as established by lawmakers at federal, state and local levels. Businesses are expected and required to comply with these laws and regulations as a condition of operating. It is not an accident that compliance officers now occupy an important and high level position in company organization charts. While meeting these legal responsibilities, important expectations of business include their
- Performing in a manner consistent with expectations of government and law
- Complying with various federal, state, and local regulations
- Conducting themselves as law-abiding corporate citizens
- Fulfilling all their legal obligations to societal stakeholders
- Providing goods and services that at least meet minimal legal requirements
Ethical responsibilities
The normative expectations of most societies hold that laws are essential but not sufficient. In addition to what is required by laws and regulations, society expects businesses to operate and conduct their affairs in an ethical fashion. Taking on ethical responsibilities implies that organizations will embrace those activities, norms, standards and practices that even though they are not codified into law, are expected nonetheless. Part of the ethical expectation is that businesses will be responsive to the “spirit” of the law, not just the letter of the law. Another aspect of the ethical expectation is that businesses will conduct their affairs in a fair and objective fashion even in those cases when laws do not provide guidance or dictate courses of action. Thus, ethical responsibilities embrace those activities, standards, policies, and practices that are expected or prohibited by society even though they are not codified into law. The goal of these expectations is that businesses will be responsible for and responsive to the full range of norms, standards, values, principles, and expectations that reflect and honor what consumers, employees, owners and the community regard as consistent with respect to the protection of stakeholders’ moral rights. The distinction between legal and ethical expectations can often be tricky. Legal expectations certainly are based on ethical premises. But, ethical expectations carry these further. In essence, then, both contain a strong ethical dimension or character and the difference hinges upon the mandate society has given business through legal codification.
While meeting these ethical responsibilities, important expectations of business include their
- Performing in a manner consistent with expectations of societal mores and ethical norms
- Recognizing and respecting new or evolving ethical/moral norms adopted by society
- Preventing ethical norms from being compromised in order to achieve business goals
- Being good corporate citizens by doing what is expected morally or ethically
- Recognizing that business integrity and ethical behaviour go beyond mere compliance with laws and regulations
As an overlay to all that has been said about ethical responsibilities, it also should be clearly stated that in addition to society’s expectations regarding ethical performance, there are also the great, universal principles of moral philosophy such as rights, justice, and utilitarianism that also should inform and guide company decisions and practices.
Philanthropic responsibilities
Corporate philanthropy includes all forms of business giving. Corporate philanthropy embraces business’s voluntary or discretionary activities. Philanthropy or business giving may not be a responsibility in a literal sense, but it is normally expected by businesses today and is a part of the everyday expectations of the public. Certainly, the quantity and nature of these activities are voluntary or discretionary. They are guided by business’s desire to participate in social activities that are not mandated, not required by law, and not generally expected of business in an ethical sense. Having said that, some businesses do give partially out of an ethical motivation. That is, they want to do what is right for society. The public does have a sense that businesses will “give back,” and this constitutes the “expectation” aspect of the responsibility. When one examines the social contract between business and society today, it typically is found that the citizenry expects businesses to be good corporate citizens just as individuals are. To fulfill its perceived philanthropic responsibilities, companies engage in a variety of giving forms – gifts of monetary resources, product and service donations, volunteerism by employees and management, community development and any other discretionary contribution to the community or stakeholder groups that make up the community.
Although there is sometimes an altruistic motivation for business giving, most companies engage in philanthropy as a practical way to demonstrate their good citizenship. This is done to enhance or augment the company’s reputation and not necessarily for noble or self-sacrificing reasons. The primary difference between the ethical and philanthropic categories in the four part model is that business giving is not necessarily expected in a moral or ethical sense. Society expects such gifts, but it does not label companies as “unethical” based on their giving patterns or whether the companies are giving at the desired level. As a consequence, the philanthropic responsibility is more discretionary or voluntary on business’s part. Hence, this category is often thought of as good “corporate citizenship.” Having said all this, philanthropy historically has been one of the most important elements of CSR definitions and this continues today.
In summary, the four part CSR definition forms a conceptual framework that includes the economic, legal, ethical, and philanthropic or discretionary expectations that society places on businesses at a given point in time. And, in terms of understanding each type of responsibility, it could be said that the economic responsibility is “required” of business by society; the legal responsibility also is “required” of business by society; the ethical responsibility is “expected” of business by society; and the philanthropic responsibility is “expected/desired” of business by society . As time passes what exactly each of these four categories means may change or evolve as well.
The pyramid of CSR
The four-part definition of CSR was originally published in 1979. In 1991, Carroll extracted the four-part definition and recast it in the form of a CSR pyramid. The purpose of the pyramid was to single out the definitional aspect of CSR and to illustrate the building block nature of the four part framework. The pyramid was selected as a geometric design because it is simple, intuitive, and built to withstand the test of time. Consequently, the economic responsibility was placed as the base of the pyramid because it is a foundational requirement in business. Just as the footings of a building must be strong to support the entire edifice, sustained profitability must be strong to support society’s other expectations of enterprises. The point here is that the infrastructure of CSR is built upon the premise of an economically sound and sustainable business.
At the same time, society is conveying the message to business that it is expected to obey the law and comply with regulations because law and regulations are society’s codification of the basic ground rules upon which business is to operate in a civil society. If one looks at CSR in developing countries, for example, whether a legal and regulatory framework exists or not significantly affects whether multinationals invest there or not. A legal infrastructure is imperative to provide a foundation for legitimate business growth.
In addition, business is expected to operate in an ethical fashion. This means that business has the expectation, and obligation, that it will do what is right, just, and fair and to avoid or minimize harm to all the stakeholders with whom it interacts. Finally, business is expected to be a good corporate citizen, that is, to give back and to contribute financial, physical, and human resources to the communities of which it is a part. In short, the pyramid is built in a fashion that reflects the fundamental roles played and expected by business in society. Below is a graphical depiction of Carroll’s Pyramid of CSR.
The pyramid is an integrated, unified whole
The Pyramid of CSR is intended to be seen from a stakeholder perspective wherein the focus is on the whole not the different parts. The CSR pyramid holds that firms should engage in decisions, actions, policies and practices that simultaneously fulfill the four component parts. The pyramid should not be interpreted to mean that business is expected to fulfill its social responsibilities in some sequential, hierarchical fashion, starting at the base. Rather, business is expected to fulfill all responsibilities simultaneously. The positioning or ordering of the four categories of responsibility strives to portray the fundamental or basic nature of these four categories to business’s existence in society. As said before, economic and legal responsibilities are required ; ethical and philanthropic responsibilities are expected and desired . The representation being portrayed, therefore, is that the total social responsibility of business entails the concurrent fulfillment of the firm’s economic, legal, ethical, and philanthropic responsibilities. Stated in the form of an equation, it would read as follows: Economic Responsibilities + Legal responsibilities + Ethical Responsibilities + Philanthropic Responsibilities = Total Corporate Social Responsibility. Stated in more practical and managerial terms, the CSR driven firm should strive to make a profit, obey the law, engage in ethical practices and be a good corporate citizen. When seen in this way, the pyramid is viewed as a unified or integrated whole .
The pyramid is a sustainable stakeholder framework
Each of the four components of responsibility addresses different stakeholders in terms of the varying priorities in which the stakeholders might be affected. Economic responsibilities most dramatically impact shareholders and employees because if the business is not financially viable both of these groups will be significantly affected. Legal responsibilities are certainly important with respect to owners, but in today’s litigious society, the threat of litigation against businesses arise most often from employees and consumer stakeholders. Ethical responsibilities affect all stakeholder groups. Shareholder lawsuits are an expanding category. When an examination of the ethical issues business faces today is considered, they typically involve employees, customers, and the environment. Finally, philanthropic responsibilities most affect the community and nonprofit organizations, but also employees because some research has concluded that a company’s employees’ morale and engagement is significantly related to its philanthropic involvement.
The pyramid should be seen as sustainable in that these responsibilities represent long term obligations that overarch into future generations of stakeholders as well. Though the pyramid could be perceived to be a static snapshot of responsibilities, it is intended to be seen as a dynamic, adaptable framework the content of which focuses both on the present and the future. A consideration of stakeholders and sustainability, today, is inseparable from CSR. Indeed, there have been some appeals in the literature for CSR to be redefined as Corporate Stakeholder Responsibility and others have advocated Corporate Sustainability Responsibilities. These appeals highlight the intimate nature of these interrelated topics. Furthermore, Ethical Corporation Magazine which emphasizes CSR in its Responsible Summit conferences integrates these two topics – CSR and Sustainability—as if they were one and, in fact, many business organizations today perceive them in this way; that is, to be socially responsible is to invest in the importance of sustainability which implicitly is concerned with the future. Annual corporate social performance reports frequently go by the titles of CSR and/or Sustainability Reports but their contents are undifferentiated from one another; in other words, the concepts are being used interchangeably by many.
Text Attributions
- This chapter includes excerpts from “Carroll’s pyramid of CSR: taking another look” by Archie B. Carroll, which is licensed under a CC BY 4.0 licence .
Fundamentals of Business by Pamplin College of Business and Virgina Tech Libraries is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.
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The Pyramid of Corporate Social Responsibility
introduction.
In Archie B. Carroll’s article “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders”, Carroll touches on the four key components of corporate social responsibility (CSR) within a pyramid called Pyramid of Corporate Social Responsibility. The article demonstrates how CSR would benefit the executives and their relationship with their shareholders and ultimately, the stakeholders.
In addition, he also separates the moral or ethical components of CSR and how it relates to the three major ethical approaches. I think Carroll’s idea of corporate social responsibility is decent and executives should follow his ideas but on the other hand, the expectations for management are unrealistic. Background Information Carroll expresses in his article what a firm’s social responsibility is and how they deal with some new changes. For many years, corporate executives were not aware of how important firms were to its society.
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Many argued that the main responsibility for a corporation was to deliver the greatest return to its shareholders. No actions for social responsibility were taken until many years later where the government established regulations that came into play for corporations. Instead of delivering the greatest returns to only the shareholders, corporations had to also balance their stakeholders as well. Summary Since social responsibility has progressed from delivering the greatest returns to attempting to claim ethical and legal rights, Carroll’s Corporate Pyramid of Corporate Social Responsibility plays an important role in the changes.
In the pyramid, there are four key components for CSR, which are: economic, legal, ethical, and philanthropic. First, at the base of the pyramid, are economic responsibilities. Businesses were generally created for economic reasons to supply goods and services to members. Furthermore, the idea of making profit turned into maximizing profit. The second level in the pyramid is legal responsibilities. Businesses are supposed to obey the laws on how they operate. Next is the third level, which are ethical responsibilities for the corporation.
To have ethical responsibilities is to be an ethical person, therefore “to do what is right, just, and fair and to avoid harm. ”Lastly, at the top of the pyramid, are philanthropic responsibilities. Businesses are expected to be good corporate citizens and to act upon goodness to promote quality of life for the society. Next, the author brings up the ethical aspect of CSR. There are three major ethical approaches to CSR: immoral management, amoral management, and moral management. Immoral management is when a manager’s actions, decisions, and behaviors oppose what is considered right or ethical.
Amoral management is when managers are classified in the middle, neither immoral nor moral. In addition, there are two types of amoral managers: unintentional and intentional. Unintentional managers are careless to their actions and they are unaware that their actions may be hurting those that they interact with on a business level. Intentional managers, on the other hand, believe that being ethical is appropriate to their personal life and not for business. As for moral management, “moral managers not only conform to accepted and high levels of professional conduct, they also commonly exemplify leadership on ethical issues.Furthermore, Carroll explains the stakeholders’ orientation toward the five stakeholder groups: owners (shareholders), employees, customers, local communities, and the society-at-large. It appears that immoral management is only concerned with their own self-interest for the executive groups and manipulating employees. Amoral management is good because they obey the laws toward the groups, but they do not care about their shareholders. Lastly, moral management thinks about the employee’s best interest and respect.
I believe that Carroll’s article proposed great ideas by taking economic, ethical, legal, and philanthropic responsibilities into consideration for corporate social responsibility. Managers play a vital role in a corporation to its stakeholders. Mangers have to take others into consideration and the article has listed many improvements, but it is unrealistic because there are managers that only care about themselves. I believe that corporations have the right to maximize their profits because that is their intention, but it does not necessarily mean that they cannot apply good social responsibilities.
Similarly, in the Pyramid of Corporate Social Responsibility, corporate executives have to remain profitable because they own a business and they also have to abide by the laws. Being ethical is a decision that a manager has to ultimately make. Participating in philanthropy may take up some time, but it is a beneficial factor because people love to cooperate with organizations that benefit the community. On the other hand, it is tough to attempt to achieve good social responsibility because most businessmen inhabit the quality of self-interest. Because the business landscape is replete with immoral and amoral managers, moral managers may sometimes be hard to find. ” I agree because it appears that managers only tend to care about themselves along with their gains that they tend to overlook their customers and even employees. Carroll mentioned, “Leadership by example is the most effective way to improve business ethics. I agree to a certain extent because the majority of people tend to be followers than leaders, and by seeing action taken by a moral manager, an immoral manager may take moral actions into consideration.
Moral management is the ideal model that managers should imitate but unfortunately, there are not many managers that follow this model. However, most managers are leaders therefore it may not be such an effective way to improve business ethics because they may already be setting a bad example. All in all, “if the “good society” is to become a realization, such a high expectation only naturally becomes the aspiration and preoccupation of management. ”
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The Pyramid of Corporate Social Responsibility. (2016, Oct 22). Retrieved from https://graduateway.com/the-pyramid-of-corporate-social-responsibility/
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Carroll's four part definition of CSR was originally stated as follows: "Corporate social responsibility encompasses the economic, legal, ethical, and discretionary (philanthropic) expectations that society has of organizations at a given point in time" (Carroll 1979, 1991 ).
Carroll's CSR pyramid is a framework and theory that explains how and why organisations should take social responsibility. The pyramid was developed by Archie B. Carroll and highlights the four most important types of responsibility of organisations. These are: Do you want unlimited ad-free access and templates? Find out more
Carroll's Pyramid of Corporate Social Responsibility helps companies think about CSR holistically. If one level is missing or under-resourced, the Great Pyramid of CSR never gets built. Here's how organizational leaders can focus on each level while addressing all the layers of CSR.
Carroll has integrated concepts of stakeholders and corporate citizenship into his pyramid. The base of the pyramid is economic responsibility and it gives top priority to economic performance. A business has to be profitable; maximising profits, minimizing costs, plan for the future and provide shareholders with sufficient and attractive returns.
Carroll's view is that profit is significant, but business has a deeper purpose on social accountability and responsibility. He developed the Corporate social responsibility model which means when a company responsibly runs its business operations and ensures that it has a positive impact on society ethically, legally and economically.
Carroll has proposed a CSR concept, which states the organizations' 4 business responsibilities - (i) economic, (ii) Legal, (iii) Ethical, and (iv) Discretionary (as shown in diagram 1). These four components are complementary to each other (not mutually exclusive). Diagram 1: Carroll's Pyramid of Corporate Social Responsibility Model
Carroll has integrated concepts of stakeholders and corporate citizenship into his pyramid. The base of the pyramid is economic responsibility and it gives top priority to economic performance. A business has to be profitable; maximising profits, minimizing costs, plan for the future and provide shareholders with sufficient and attractive returns.
According to Archie B. Carroll, The Pyramid of Corporate Social Responsibility focuses on 4 aspects- Economic Responsibilities, Legal Responsibilities, Ethical Responsibilities and Philanthropic Responsibilities. When one thinks of the business model of The Body Shop, one would usually arrive at the notion that The Body Shop is at the forefront ...
Carroll's CSR PyramidCarroll's four part CSR pyramid depicts the economic, legal, ethical and discretionary responsibilities that society expects of organizations. Carroll has integrated concepts of stakeholders and corporate citizenship into his pyramid.
For the past 27 years, Carroll's corporate and business social responsibility pyramid (CSR) has been trusted by top management and journals to higher define and explore CSR. The different parts in the pyramid help managers see the different types of obligations that society wants of businesses. Need Help Writing Your Essay? Get Started
Carroll's Pyramid of CSR provides a framework that organizations can use to clarify and improve their responsibilities across four key areas: Economic. Legal. Ethical. Philanthropic. Carroll argues that successful CSR can only be achieved by ensuring organizational responsibility in all four of these areas.
Perhaps one of the best known concepts of CSR is Carroll's Pyramid of CSR (1979) which segregated the definition of CSR in four key responsibilities Economic, Legal, Ethical and Philanthropy. His proposed definition of CSR that was embedded in a conceptual model of corporate social performance (CSP).
CSR can be defined using the CSR pyramid by Carroll in 1979. "Corporate social responsibility encompasses the economic, legal, ethical, and discretionary (philanthropic) expectations that society has of organizations at a given point in time" (Carroll, 1979). Those include economic responsibility, legal responsibility, ethical responsibility
Carroll's pyramid theory (1983:608) states that "corporate social responsibility involves the conduct of a business so that it is economically profitable, law abiding, ethical and socially supportive. To be socially responsible then means that profitability and obedience to the law are foremost conditions when discussing the firm's ethics ...
Denise Baden, in a recent (2016) essay, "A reconstruction of Carroll's pyramid of corporate social responsibility for the 21st century," argues that in the 21st century, the model of "economics first" ought not to be considered the foundation of a business's ethical pyramid.
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The pyramid of CSR The four-part definition of CSR was originally published in 1979. In 1991, Carroll extracted the four-part definition and recast it in the form of a CSR pyramid. The purpose of the pyramid was to single out the definitional aspect of CSR and to illustrate the building block nature of the four part framework.
In the pyramid, there are four key components for CSR, which are: economic, legal, ethical, and philanthropic. First, at the base of the pyramid, are economic responsibilities. Businesses were generally created for economic reasons to supply goods and services to members. Furthermore, the idea of making profit turned into maximizing profit.
N ati ve A me r i c an s , th e C al i for n i a M i s s i on s , an d th e L on g-T e r m E ffe c ts of C ol on i z ati on. By Jasminder Bains
Santa Clara University is a private Jesuit university in California. The acceptance rate is around 50%, so it's important to write strong essays to help your application stand out. In this post, we'll go over some essays real students have submitted to Santa Clara University and outline their strengths and areas for improvement.
Santa Clara's second prompt falls under the "Political and Global Issues" category. This prompt has two primary goals. The first goal is to show you're an engaged citizen who cares about your community and wants to make a difference in the world. The second goal is to ensure your values align with the values of Santa Clara.
Dan Carroll is a Vice President, Food & Beverage at Wente Vineyards based in Livermore, California. Read More . Contact. Dan Carroll's Phone Number and Email Last Update. 11/7/2022 4:47 AM. Email. d***@wentevineyards.com. Engage via Email. Contact Number