Int. J. Business Governance and Ethics, Vol. 1, No.

4, 2005

277

Corporate social responsibility and stakeholder approach: a conceptual review Nada K. Kakabadse*
University College Northampton, Northampton Business School Park Campus, Boughton Green Road, Northampton, NN2 7AL, UK E-mail: Nada.Kakabadse@Northampton.ac.uk *Corresponding author

Cécile Rozuel
University of Surrey, School of Management Guildford, Surrey, GU2 7XH, UK E-mail: c.rozuel@surrey.ac.uk

Linda Lee-Davies
University College Northampton, Northampton Business School Park Campus, Boughton Green Road, Northampton, NN2 7AL, UK E-mail: linda.lee-davies@northampton.ac.uk
Abstract: Corporate Social Responsibility (CSR) and the notion of a stakeholder approach are pivotal concepts when examining the role of business in society, but their relationship has been studied and much debated for decades. Academic research on the social or societal responsibilities of business organisations and the public interest in social and environmental issues incumbent upon businesses have changed since the 1950s. This article provides an overview of the existing research on CSR over the past 50 years and identifies key characteristics defining the concept of CSR. It also examines the challenges and implications of the stakeholder approach as highlighted by previous research, often in relation to research on CSR. Keywords: Corporate Social Responsibility (CSR); stakeholder approach; stakeholder theory; social and environmental responsibilities. Reference to this paper should be made as follows: Kakabadse, N.K. Rozuel, C. and Lee-Davies, L. (2005) ‘Corporate social responsibility and stakeholder approach: a conceptual review’, Int. J. Business Governance and Ethics, Vol. 1, No. 4, pp.277–302. Biographical notes: Nada K. Kakabadse BSc Grad Dip MSc MPA PhD, is currently Professor in Management and Business Research at the Northampton Business School and the Co-editor (with Andrew Kakabadse) of the Journal of Management Development. He is also Editor of the Corporate Governance journal. Nada has published widely in the areas of Leadership, application of IS/IT in corporations, corporate governance, government, boardroom effectiveness, diversity management and ethics, including six books, 36 chapters in international volumes, three monographs and over 80 scholarly and reviewed articles. Nada has acted as Consultant to numerous public and private sector organisations. Copyright © 2005 Inderscience Enterprises Ltd.

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N.K. Kakabadse, C. Rozuel and L. Lee-Davies
Cécile Rozuel is currently researching for her PhD at the University of Surrey Management School. She particularly looks at the issues of management and organisational structure, morality and social roles. She holds a BBA from the Helsinki School of Economics, a master from ESCEM and a MA in International Business Analysis from the Northampton Business School. She has co-authored three articles with Prof. Nada K. Kakabadse, one of which drew upon her Master’s research project examining Corporate Social Responsibility in a local French hospital. Linda Lee-Davies is currently Lecturing at Northampton Business School within University College Northampton. Responsible for a wide portfolio of delivery from undergraduate to post-graduate level, Linda now heads the commercial, part-time management suite through to and including MBA. To ensure material is relevant and useful to the workplace, Linda works as a Business and Management Consultant in the local area representing Northampton Business School and its commitment to the local business community. Before moving to an academic position, Linda held a senior role in a large recruitment firm where in addition to business diagnostics, development and direction setting, she groomed managers for leadership positions. Following a BA in Business Linda gained her MBA at Henley Management College.

1

Introduction

The relationships between business and society have been studied for decades with outcomes being influenced by the prevailing economic paradigm at a specific point in time (Moir, 2001). If the idea that business has duties towards society, and more specifically towards identified constituents (i.e., the stakeholders), is widely acknowledged, it is only since the 1950s and 1960s that society’s expectations have dramatically changed, that is, increased (Carroll, 1999; Lantos, 2001). This article will examine first the various contributions to the CSR concept and will draw upon proposed paradigms to identify the core elements of CSR. Secondly, it will explore the implications inferred by the development of the stakeholder model through the stakeholder literature.

2

The concept of corporate social responsibility

2.1 Corporate social responsibility in the literature
Adam Smith’s 1776 opus, The Wealth of Nations, is considered as the landmark of modern capitalism (Smith, 1991). Smith’s proposition states that when business is free to pursue profits and efficiency, it eventually benefits the common good, i.e. it serves both its interests and those of society at best (Lantos, 2001). Milton Friedman’s neo-classical position draws upon the Smithian argument by explaining that profitability is the ultimate social responsibility of business, if done in an ethical way and in obedience to the law. Adopting the Agency theory framework, Friedman explains that the alleged social responsibilities of business people are nothing but agents acting inappropriately as ‘civil servants’. Therefore, when using the resources of the principals they should ultimately

1999). The core idea was that business could and should be reasonably expected to serve society in a way that goes beyond its previous obligations. Thévenet. Bowen introduced the idea of ‘social responsibilities’ of business people in a wider sphere than pure profit-seeking. The 1960s and 1970s brought a significant expansion of academic interest in the CSR field. 2001. CSR has been used as ‘the base point’ or integrated as an element of other related concepts. 2003). The concept was examined and discussed in depth resulting in the emergence of models of CSR and debates on the managerial implications of CSR and introduction of related concepts of Business Ethics and Corporate Social Responsiveness (Carroll. In 1953. Lantos. Alternative themes to balance the argument were a major focus of research in the 1980s. Lantos. Current research explores in particular how CSR applies to the public sector since public organisations have turned into more network-type entities alongside the private sector (Scholl. business in society. however. as well as from the evidence of the inconsistency of the ‘economic man’ model. especially in the USA where rampant consumerism highlighted the people’s outcry against immoral business practices (Carroll. 1970. Figure 1 Evolution of CSR research since the 1950s • Shareholder model predominance • Social responsibilities of business people • Development of academic research on CSR – models. Figure 1 summarises evolution in the CSR research since the 1950s. business people eventually do more of a disservice than good to society (Friedman. a rational decision-maker seeking to pursue his own benefit only (Takala. 2001). Society itself reacted strongly to the disillusion of the liberal economic model that brought moral compromises along with business success.Corporate social responsibility and stakeholder approach 279 serve. • CSR as a base point/element of broader concepts • Debate: CSR as a management field or integrated within existing management theories 1990s 2000s 1950s 1960s Consumerism 1970s 1980s Source: Compiled by authors Although being a key part of the debate on businesses’ role in society. the concept of CSR. 2001). Since the 1990s. Moir. etc. managerial implications • Research on business ethics and corporate social responsiveness • Sustainability and sustainable development explored • Stakeholder theory debated • Research on corporate social performance and stakeholder management models • Research on corporate governance. Doubt arose among scholars due to growing discrepancies between liberal assumptions and socio-economic reality. for example. notably Corporate Social Performance (CSP) and the stakeholder theory and stakeholder management models. 1999. 2001. is still questioned by some with regards to its righteousness for economic Corporate scandals . 1999). This concept known as the ‘shareholder model’ has started to be questioned by academics.

Jones. Bishop claims that society’s outcries about some companies’ decisions actually impede the development of an economic system which has proved globally beneficial over the past decades (Salls. 2. stakeholders’ involvement (Lépissier. 2002). a portfolio of concepts expresses society’s expectations as to the role and responsibilities of business. 2001). McWilliams and Siegel. what does CSR mean precisely? Although the debate on the relationships between business and society. 2003). but as more evidence has shed light on a positive relationship between CSR programmes and (long-term) economic performance (Post et al. Thus. 2003). Moreover. argued recently. This view is shared by some scholars and business people. Lantos. 2001). 1993. i. Therefore. Although there are many guidelines and standards. 1991. and the implied responsibilities. notwithstanding the issue of literary translation. This variety of themes in itself is interesting and demonstrates the richness of the concept itself as well as the criticality of research (Carroll. from Business Ethics to Corporate Social Contract. there is still no consensus on a commonly accepted definition of CSR (Carroll.K. 1999.. CSR-oriented programmes implemented by companies are mere attempts to keep civil pressure at bay rather than an acknowledgement that business people should respond to stakeholders’ as much as shareholders’ concerns (Salls. has been on going for decades. employ. the criteria may change according to the society in question.. 2002. 2004). It is also worth noting that the shareholder-focused model is not as predominant in Asian or some European countries as it is in the USA (Emiliani. promote and defend different interpretations that have emerged over the past three decades. with the value of partnerships.280 N. the absolute standards of corporate responsibility do not exist and they may change with each generation in terms of culture as well (Daugherty. while in the northern states companies mainly bear their responsibility by paying taxes. philanthropy has a long tradition. Yet. Definitions of CSR thus range from highly conceptual to very practical or managerial statements. 2004). This may be partly due to the fact that people within (and outside) the field. credibility and value of research on the social and environmental responsibilities of business towards society (Angelidis and Ibrahim. These range from Corporate Social Responsibility to Sustainable Development. Rozuel and L. for example. Ougaard and Nielsen. this research area still lacks a ‘common ground’ which is accepted by the majority and a necessary development to assert legitimacy. . C. from Corporate Accountability to Business in Society and from Corporate Citizenship to Corporate Governance. McAdam and Leonard. Margolis and Walsh. Ougaard and Nielsen. 2003. In the USA. business editor of The Economist. 2001. Kakabadse.2 Definition(s) of CSR Yet. 2001). The concept of CSR by itself is also often put in relation to other concepts such as Corporate Social Responsiveness or Corporate (Social) Performance by academics. CSR in a Continental European welfare society. Table 1 introduces some definitions of CSR from academic researchers over the past 50 years. 1999. On the other hand CSR and/or Sustainable Development are considered central issues by business organisations and civil society’s representatives. 1995. 2002). but none of them can actually be labelled as ‘the’ definition of CSR (ORSE. 2001). has a different meaning than in the USA or in developing or transition societies. As Matthew Bishop. it may be expected that proponents of the “shareholder model” will have deeper understanding of CSR in the coming years (Thévenet. 2004).e. Lee-Davies survival.

or society-centred way. and expectations of performance. Depending on the stakeholders’ interests. The basic idea of corporate social responsibility is that business and society are interwoven rather than distinct entities. Table 2 presents some interpretations of CSR by representatives from business and society. legal. In that perspective. There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game. . Corporate social responsibility is the notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law and union contract. which is to say. values. therefore. refers to a person’s obligation to consider the effects of his decisions and actions on the whole social system. the meaning of CSR is often more practical or managerial in scope. Frederick (1960) Friedman (1962) Davis and Blomstrom (1966) Sethi (1975) Carroll (1979) Jones (1980) Wood (1991) Baker (2003) Source: Compiled by authors Similarly. and it is frequently related to the concept of sustainability. to make those decisions. CSR is defined either in a business. The social responsibility of business encompasses the economic. ethical and discretionary expectations that society has of organisations at a given point in time.Corporate social responsibility and stakeholder approach Table 1 Author Bowen (1953) Definitions of CSR – academic research Definition 281 [CSR] refers to the obligations of businessmen to pursue those policies. engages in open and free competition without deception or fraud. or to follow those lines of action which are desirable in terms of the objectives and values of our society. Social responsibility in the final analysis implies a public posture toward society’s economic and human resources and a willingness to see that those resources are used for broad social ends and not simply for the narrowly circumscribed interests of private persons and firms. Social responsibility implies bringing corporate behaviour up to a level where it is congruent with the prevailing social norms. Social responsibility. CSR is about how companies manage the business processes to produce an overall positive impact on society.

examine some of the key characteristics of CSR that make the concept meaningful but at the same time a still-to-be-developed research area. Corporate Responsibility involves the ‘fit’ businesses develop with the societies in which they operate. Rozuel and L. This applies to our employees and the people whose healthcare needs we serve. corporate responsibility goes beyond this core function. organisation and operations. Organisation World Business Council for Sustainable Development (WBCSD) (2003) CSR Europe (2003) Organisation for Economic Co-operation and Development (OECD) (2003) Amnesty International – Business Group (UK) (2002) The Corporate Responsibility Coalition (CORE) (2003) Novethic (2003) Unilever (2003) Novo Nordisk (2003) Source: Compiled by authors It is not intended to exhaustively review the existing literature on CSR. . C. (ii) impact of (business’s direct) operations. to provide jobs and to produce goods and services that consumers want to buy. To respect these principles. Social responsibility for Novo Nordisk is about caring for people.282 Table 2 N. Companies [have] to recognise that their ability to continue to provide goods and services and to create financial wealth will depend on their acceptability to an international society which increasingly regards protection of human rights as a condition of the corporate licence to operate. the local community. companies have a responsibility to safeguard human rights within their direct sphere of operations as well as within their wider spheres of influence. but instead. Corporate Social Responsibility is the way in which a company manages and improves its social and environmental impact to generate value for both its shareholders and its stakeholders by innovating its strategy. the concept of CSR integrates three dimensions: an economic dimension (efficiency. a social dimension (social responsibility) and an environmental dimension (environmental responsibility). in the process. As such. social responsibility is more than a virtue – it is a business imperative. and society at large to improve their quality of life. We define social responsibility as the impact or interaction we have with society in three distinct areas: (i) voluntary contributions. profitability). and (iii) impact through the value chain. Linked to the application by corporations of the sustainable development principle.K. However. […] The function of business in society is to yield adequate returns to owners of capital by identifying and developing promising investment opportunities and.. Businesses are expected to obey the various laws which are applicable to them and often have to respond to societal expectations that are not written down as formal law. It also considers the impact of our business on the global society and the local community.] which inform on the expectations of civil society and the business environment. As an ‘organ of society’. corporations must pay more attention to all the stakeholders [. Kakabadse. Lee-Davies Definitions of CSR – business and civil society’s representatives Definition Corporate Social Responsibility is business’ commitment to contribute to sustainable economic development working with employees. their families..

and eventually for “social power” (Davis. Corporate Philanthropy basically refers to the idea of the firm ‘giving back’ (financially) to society some of the wealth it has created thanks to society’s inputs.3.e. 1999). This is even more essential in a knowledge-based society where organisational assets are intangibles (reputation.3 Core elements of CSR 2.g.. 1970.1 CSR vs Philanthropy It is important to explain first the difference between CSR and Corporate Philanthropy. philanthropy (or charity) does not necessarily mean that a firm develops a broader strategy to comprehensively assess its impacts on society. CSR is in the domain of ‘moral obligation’ or ‘normative principles’. By itself. 1991. etc.) (e. The ‘charity principle’ goes along with the ‘stewardship principle’ (i. 1999).g. This idea is reminiscent of the concept of sustainability. technology. policies and tools to improve its overall performance towards society. i.3. it would be argued here that philanthropy is highly desired and prized but actually less important than the other three categories of social responsibility” (Carroll. Carroll’s Pyramid. 1995) introduced the ‘charity principle’ as an obligation for the wealthy to support the less fortunate. 1980. ethical and philanthropic responsibilities respectively). technical. Johnson and Scholes (2002.. see definition by WBCSD or OECD in Table 2).3 Beyond the law A second characteristic on which academics agreed by the 1970s is that CSR is about going “beyond the narrow economic. In fact. Therefore. These two concepts are sometimes combined in broad models of CSR (e..220) highlight that aspect. 2. but they do have specific meanings. 1991). Carroll. as opposed to purely economic or legal imperatives (Jones. see definition by Carroll or Jones in Table 1).e.g. Mitnick.p. abiding by the law does not immediately mean being socially responsible and CSR is implicitly the expression of a voluntary effort by which the firm complies with ethical standards.) as much as tangibles (financial resources. Carroll. buildings and equipment. and legal requirements of the firm” (Davis.p.Corporate social responsibility and stakeholder approach 283 2. etc. business does not pursue only short-term profits.. Scholl.42).p. 1999. and to design plans. Indeed. 2. and clearly states that “CSR includes philanthropic contributions but is not limited to them.. stating that: “corporate social responsibility is concerned with the ways in which an organisation exceeds the minimum obligations to stakeholders specified through regulation and corporate governance”. 2001) (e. and not only a question of obedience to the law (Kilcullen and Ohles Kooistra. Carroll.3. legal.2 A long-term perspective The first characteristic of CSR is that it is part of a long-term perspective of economic gain that may not be financially measurable but may provide a valuable asset for future profitability. Carroll (1991) defines CSR as a pyramid made up of four layers (economic. 1999). know-how. business as the guardian of ‘society’s resources’) to justify the theory of CSR. Frederick (1987.312. 1973. but rather a multitude of goals which all combine to guarantee business’s survival and prosperity in a changing environment. .

3. Frederick or Jones in Table 1. This authorisation gives the corporation the right to own. to sue and be sued. employment. Given that a social contract states society’s expectations of business as well as business’s expectations of society. Mitnick. 1999) This definition alone gives a scary taste of what corporations could do if they operate ‘free of any moral restraints’. and definition proposed by Amnesty International in Table 2).5 Social contract In relation to stakeholder arguments. Jones. and that most certainly affect their performance”.g. both directly and indirectly. the environment.599) (e. public-private sector relationships and . which leads them to cause. 2001. moral effects in society” (L’Etang. and which relates to the themes of legitimacy. C.. buy and sell property. In that perspective: “A corporation is defined as an entity created and empowered by a state charter to act as an individual.” (Nisberg. Owen and Adams’s definition of society to explain why business may engage in CSR. Proponents of CSR argue that “the source of this responsibility is based on the power and influence that organisations have.13) explains that CSR is related to various layers of behaviour.284 N. and to have legal accountability for damages and debt only to the limit of the stockholders’ investment. Rozuel and L. and on the other hand.p. 1987.p. 1999). created.g. see definition by Wood in Table 1. see definition proposed by The Corporate Responsibility Coalition in Table 2). Therefore “the enterprise’s responsibilities should be commensurate with its economic. but because it is part of how society implicitly expects business to operate” (Moir.19). on the one hand. Lantos (2001) suggests that the content of this social contract may have evolved over time.6 The notion of power This notion of power is often at the core of the debate on CSR (e.. 2. This point will be more thoroughly developed later when the stakeholder theory is introduced (e. Wilson (2000.. He argues that the social contract perspective enables a firm to act responsibly not “because it is in its commercial interest. either legally mentioned or morally expected. CSR is also often associated with the theme of the ‘social contract’ or alternatively of ‘licence to operate’.K. in part. 2001. 2. At the beginning mainly directed to profit-maximisation within the constraints of the law. which specifies society’s ethical expectations. the ‘new social contract’ popularised in the 1950s claims that social progress should be linked with economic progress. and definition proposed by Novethic or Novo Nordisk in Table 2). He defines CSR as a ‘set of new rules’ somewhere in between these two positions. to enter into contracts. see definition by Davis and Blomstrom. social and political power” (Lantos. 1995. Kakabadse.3.4 Accountability to stakeholders A third characteristic of CSR is the idea that business is accountable to various stakeholders who can be identified and have a claim.p. “the basic need to meet commonly accepted ethical principles of ‘good behaviour’”. Kilcullen and Ohles Kooistra. governance. Moir (2001) draws on Gray. whose extremes are. Lee-Davies 2.g. equity. But the idea of a licence to operate implies that society allows business to operate assuming that it will behave fairly and show accountability for its actions beyond legal requirements. on the business activities that affect them (Frederick.74. “an insistence that corporations have a social responsibility to help solve social problems […] they may have. 1988.p. 1995).3.

and to clamp down on those who do not follow the rules. the latter being one part of the former.Corporate social responsibility and stakeholder approach 285 ethics (Wilson. CSR cannot be a static concept because the environment society members live in is dynamic. Especially in the for-profit sector.7 Legitimacy of business activity Citing the work of Suchman in 1995. individual citizens. This is an interesting argument which actually (re)balances the power and forces between society and business. it may actually be that “society grants legitimacy and power to business. If legitimacy is so important for business. Moir (2001) examines the reasons that make legitimacy a key issue for businesses. those who do not use power in a manner which society considers responsible will tend to lose it” (Davis. “the firm is meant for society. The first one is the view of CSR as a process rather than “a set of outcomes” (Jones. social and political position. it may be refreshing to think that society.. 1999). brings us back to the concept of a social contract. 1998).e. i.8 A contextual process Two final characteristics of CSR are also relevant to the research project. which emerges from cycles of dialogue between the firm and its stakeholders (Wheeler and Sillanpää. to monitor societal members’ compliance with its judgements. . Also.3. 2000). Wood. 1995).13). 2. the society is not for the firm” (Takala. 1980. 1973. Comparison with continuous improvement sounds appropriate because it helps picture CSR as the product. i. 1975. the power to judge. Campaigns in favour of CSR and civil society’s outcry against business abuses can then be understood as a manifestation of this control and a way for citizens to regain the control they legitimately (should) have. Yet. the responsibilities of constituents change as well. 1999) or as a citizen entitled to social responsibilities just as is expected from any other citizen (Davis. The rule of legitimacy for Wilson implies that “to earn and retain social legitimacy. In other words. Takala. and as the environment changes. up to serving as an incentive to engage in social responsibility. (also known as the ‘Iron Law of Responsibility’). ultimately has the control. 1999). under continual review. and introduces Lindblom’s four strategies that organisations can use to overcome ‘legitimation threats’. society ultimately has the power to decide on what is right and wrong.e.3. 1999). the firm should act as “public steward” (Chen. and even its existence. at a time when multinational corporations have a truly significant influence on politics and world order. This suggests that business is granted its power and influence under some specific conditions decreed by society and that the non-fulfilment of those obligations seriously challenges the business’s economic. 1991).. the corporation must define its basic mission in terms of the social purpose it is designed to serve rather than as the maximisation of profit” (Wilson. 2000. this is a point still too unclear to arrive at a straight conclusion (Wood. So.p. In the long run. 2. Carroll. This statement. 1991). CSR becomes “an ongoing process constantly monitoring the environment and relationships and not a fixed mission in relation to specific groups with a predetermined priority that remains static” (L’Etang. Indeed. 1975. Takala. As the relationships between the constituents change.

e. when academics define CSR as going beyond the prescription of the law. organisational. academics will rather examine the influence of business through the idea of legitimacy whereas civil society will refer to the price of power business is granted. Jones. Rozuel and L. This characteristic makes CSR a very rich but highly complex concept. whose terms enable society to take back the social power it has granted business with in case of non-fulfilment of stated obligations (i. CSR fits into a long-term perspective and refers to ethical principles that are not necessarily codified by the law. Similarly. Its rationale may be the existence of a social contract between society and business. and submitted to macro environmental as much as very personal factors of influence. 2002). but an attempt to highlight the main drivers in the development of CSR’s meaning and scope. Not least. To sum up.286 N. It is a neither absolute nor exhaustive classification. but the terminology used may somehow change the implications for implementing and assessing CSR (see Ougaard and Nielsen. One should note that both academics and business and society identify similar themes for debate. which is probably more easy to translate into managerial and operational goals.. even individual specificities (Singhapakdi et al. Figure 2 identifies the major contributions to the CSR concept by academics on one hand. Indeed. 2002). Kakabadse. beyond the philosophical or religious frameworks it fits into. very sensitive to environmental. and by business and society on the other. 1996. which may be highly contextual in practice. 1999). not only economic but also social. and certainly difficult to define once and for all. academics will tend to assess CSR more in terms of social contract than of sustainability. Finally. It can be viewed as a process involving various stakeholder groups. C... which ought to be examined through a wide range of lenses (Ougaard and Nielsen. business and society will focus on the discretionary or voluntary aspect of CSR. ethical). i. CSR tends to be a multidisciplinary rather than distinct management discipline. tends to be very contextual. Lee-Davies The second element is that CSR in practice.e.K. Both academics and business and society acknowledge the multistakeholder framework and the fact that CSR is in practice ultimately dependent on the context. Figure 2 The CSR concept: major contributions Academic contribution Multi stakeholders Business and civil society contribution Social contract Sustainability Economic Social Environmental Process Beyond the law CSR Voluntary Power Legitimacy Contextual .

the TQM approach needs an ‘ethical anchor’ to combine normative demands and instrumental expectations. To some extent. 1995). Corporate Social Responsiveness (or CSR 2). this framework responds to the need for a clearer definition of the boundaries of CSR because it argues that there are different levels of responsibility depending on the level of analysis one elects. McAdam and Leonard. these three scopes of CSR can be compared to the characteristics highlighted in the literature.4 Further developments on CSR Some authors have examined and redefined CSR (hence reshaping the debate on CSR) with the view of integrating CSR into a larger model. and aims to achieve “sustainable performance through valuing people and the environment” (McAdam and Leonard. which is Corporate Social Responsibility. the development of processes to evaluate environmental and stakeholder demands and the implementation of programs to manage social issues” (Thomas and Simerly. and historically may have passed through. and in particular TQM. This is more comprehensive than a CSR model since it involves “the identification of the domains of an organisation’s social responsibility. Wood (1991) then uses these three principles to build a Corporate Social Performance model (CSP). The individual-focused principle of managerial discretion sees managers as “moral actors” (Wood. [these] three alternative stances with respect to their relationships with society” (Mitnick. McAdam and Leonard (2003) propose that CSR be integrated into organisations more efficiently and rapidly by being added to existing quality benchmark processes. or Corporate Social Responsiveness. . Another significant contribution to the CSR literature is that of Wood (1991). Robertson and Nicholson. CSR 2 refers to the idea of CSR as a process to be designed in relation to multistakeholders. while CSR 3 suggests the possibility of a social contract that would settle the wrong and right things to do for corporations. Frederick argues that: “firms may adopt. 1991. CSR 2.p. admitting that CSR 1 is Frederick’s definition of CSR.Corporate social responsibility and stakeholder approach 287 2. with no necessary hierarchy between them. 1998. the TQM concept shares with the CSR concept the need for both a strong ethical focus and a clear business case (McAdam and Leonard. Indeed. the CSR concept has been explored within a Total Quality Management (TQM) framework (Wheeler and Sillanpää. CSR 3 focuses on the values that are used as normative references to assess corporate behaviour (Mitnick. 2003). tends to be more managerial in essence and explores how a firm should respond to societal pressures. who reorganised the CSR literature into three major principles: 1 2 3 The principle of legitimacy is about the societal expectations from businesses at an institutional level. is often referred to as a ‘doctrine’. for Frederick. developed three perspectives on CSR: Corporate Social Responsibility (or CSR 1). 1995). for instance. Indeed. 1987). It is argued that similarly to CSR. 1995).38). CSR 1. The principle of public responsibility operates at the organisational level and concerns the potential impacts of business activities. 1986. 1996). 2003). Finally. More recently. Since quality. CSR 2 assumes that CSR 1 has previously examined the question of whether firms should be sensitive to social issues. have become mainstreamed references in companies. and proposes six precepts that lead to a socially responsible corporate behaviour. Frederick (1978/1994. and Corporate Social Rectitude (or CSR 3). Actually. 2003.

there are those who wonder whether the debate on the social responsibilities of corporations reveals a new consciousness where corporations must be held accountable for acts they were not previously accountable for. Therefore.K. duties. 3 The stakeholder approach 3. and concerns” (Margolis and Walsh. Wiedermann-Goiran et al. CSR literature is partly built on the stakeholder literature. that would drive them to change their behaviour towards higher moral standards. and conclude that the most critical questions have been left aside. finally. The authors emphasise three main drivers behind CSI programmes: the first category is called ‘the competitive advantage factor’ and means that CSI helps strengthen corporate reputation and develop international expansion. C.. The balance (or lack of balance) between relationships of private firms and governments is. 2003. 2003). the third category is called ‘the competitive advantage of private firms’ and suggests that given their position in the marketplace. no research has examined whether how and under which conditions a firm’s social activities could benefit society (Margolis and Walsh. a real concern for some. for they often intertwine. providing a support framework for managers to analyse and face the necessary trade-offs they ought to make (Margolis and Walsh.1 CSR and stakeholder literature It is quite challenging to delineate areas of literature in the field of business in (or and) society. These Corporate Social Initiatives (CSI) differ from corporate philanthropy in so far as they anchor to the organisation’s core competences and core values. As a result. however. either through social reporting or peer pressure. 2002). or to discredit one of the two opposite camps. The value of self-regulation to achieve this is equally questioned (Ougaard and Nielsen. Carroll (1991. and vice-versa. but providing a refreshing insight into the CSR-stakeholder debate.43) expresses this as follows: “There is a natural fit between the idea of corporate social responsibility and an organisation’s stakeholders.. Rozuel and L.284).288 N. Also. They explain that scholars and managers have focused on trying either to reconcile two opposing views of the socio-economic world. (2002) have examined the shift in and rationale for what they call ‘corporate social initiatives’. scholars and practitioners should not try to address the dilemma of whether CSR is good or bad for business. Rather they should adopt a pragmatic approach which aims to “craft a purpose and role for the firm that builds internal coherence among competing and incommensurable objectives. the second category is labelled ‘the new moral marketplace factor’ and refers to the moral pressure companies might feel.” . […] The concept of stakeholder personalises social or societal responsibilities by delineating the specific groups or persons business should consider in its CSR orientation. The authors stress that in order to respond efficiently to society’s needs.p. 2003).p. 2002. This approach would also have the advantage of being more practice-oriented. Margolis and Walsh (2003) review existing research on the social responsibilities of business and the ‘contractarian view of the firm’. There are those who wonder whether the CSR movement results from a shift of responsibilities from governments to private firms due to the weakness of political systems. 2003). firms may hold a competitive advantage over governments to implement social or environmental programmes (Hess et al. Even more challenging. Lee-Davies Hess et al. Kakabadse.

of pleasures and pains. systems theory and organisation theory.. sustain and enhance [their] value-creating capacity” (Post et al. although the explicit relationship defined by Carroll is widely accepted by academics (Jones et al. the concept of stakeholder did not develop consecutively with the concept of CSR. Indeed. 2000. Hillman. Indeed. which can be referred to as “pluralism” (Jones et al.7). researchers have not come to an agreement on the scope of the stakeholder theory (Harrison and Freeman. To create a balanced outcome acceptable to the majority. with these relationships affecting. The latter states that only the shareholders have a legal claim on the purpose of the firm they own (Halal. 2002). Fair and ethical as it may be. or a ‘core competence’ to possess as today’s corporations are viewed as ‘extended enterprises’ that operate at the centre of “a network of interrelated stakeholders that create.. Jones et al. of values. Szwajkowski. 2001. corporate planning. adopting a stakeholder approach is by no means an easy and simple step to make. if CSR aims to define what responsibilities business ought to fulfil. 2002). 2004). 1999). (2002) list the principal theoretical fields which have contributed to the development of the stakeholder conceptual framework. the stakeholder concept addresses the issue of whom business is or should be accountable to. there does appear to be some agreement regarding the general concepts embodied in the stakeholder theory”.Corporate social responsibility and stakeholder approach 289 However. either positively or negatively. Yet. 2003). Emiliani.712) clearly suggests that stakeholders are likely to develop a different understanding of what CSR means. the creation of organisational wealth (Post et al.. Jones et al. . 1991. 2002. Simmons. 2002). The whole environment in which this extended enterprise operates has changed.p. 2003. then concluding to different views on the role of stakeholders. rights and interests’ amongst interpretations. Weiss. 2001. Hummels (1998) also suggests that the various interpretations of the legitimate claim of stakeholder groups on organisational purpose emphasise various sets of stakeholders. which leads to ‘different [expected] distributions of benefits and burdens. 2002. and rather constitutes a daily challenge for managers. and which include CSR. Each field has analysed the stakeholder concept based on a specific body of assumptions and through a specific lens.p. these authors list four main statements at the core of the stakeholder theory: “(1) the firm has relationships with constituent (stakeholder) groups. what they expect from the organisation in relation to CSR and how they assess CSP.. Yet. of the stakeholders. It becomes an even more necessary skill. 3. 2000).2 What does the stakeholder theory entail? Even though the stakeholder concept has been extensively researched over the past two decades it is frequently defined as the ‘opposite’ to the shareholder (or stockholder) model. is a harsh but necessary task for managers (Wood. one major difficulty in examining a ‘stakeholder model’ or ‘stakeholder theory’ lies in the extremely diverse backgrounds of studies that have participated in building a common ground eventually labelled “stakeholder theory” (Scholl. if not all.. and both concepts are clearly interrelated. notwithstanding the possible differences in the value systems and ideological positions of stakeholders. Wood (1991. To date. Keim and Luce (2001) claim that “although a unified stakeholder theory with general acceptance has yet to emerge among stakeholder researchers […]. McAdam and Leonard. and the firm’s relationships to its stakeholders have shifted from essentially transactional to truly relational. Referring to the work of Jones and Wicks (1999).

The ultimate legitimacy of constituents’ claim on the organisational purpose lies on either legal. stakeholder theory interest lies in three premises: “organisations have stakeholder groups that affect and are affected by them. especially the work of Mary Parker Follett. political or power interests. and that managers have obligations to stakeholders which include. C.290 N. 1997. 2002). ..78). shareholders” (Jones et al. From a rather business-driven perspective.. Stakeholder management aims to allocate resources adequately given the outcome of prospective scenarios. In what has become a landmark in the stakeholder research field. Företagsledning in en föränderlig värld) explicitly outlined the stakeholder approach or. the stakeholder theory (Rhenman and Stymne..32. Företagsdemokrati och företagsorganization) and together with Bengt Stymne (1966.to long-term perspective (Carroll. Jones et al. The 1920s and 1930s saw the first theoretical developments on a more extended role of business towards society. most probably in a medium. Jones et al. As a consequence. and perspectives of salient stakeholders affect the viability of strategic options” (Haberberg and Rieple. present. The revival period of the stakeholder concept. 2002. 1966. (4) the focus of stakeholder theory is on managerial decision-making” (Hillman et al. if not survival. ecological. 2001. Rhenman. in academic research and in practical company planning. 2001). This acknowledged an ‘interconnectedness’ among various constituents participating in business performance. Simmons. 2002. 1991). Kakabadse.20). Scholl. 1984. 1999).. as they themselves put it. economic. technological. Rozuel and L. although it was not labelled as CSR or other stakeholder-related concepts. This notion that business must deal with other constituencies than its owners for its prosperity.or future-oriented (Weiss. and stakes are either past-. 2001). 2000.. Other stakeholder theorists summarise the two basic principles defining the stakeholder concept as follows: “that to perform well.74.p. Freeman defines the term stakeholder as “any group or individual who can affect or is affected by the achievement of the organisation’s objectives” (Freeman. these interactions impact on specific stakeholders and the organisation.21) identify similar notions of CSR in classical Greece and in medieval times. 2004). In the 1960s Eric Rhenman alone (1964/1968. 1997. managers need to pay attention to a wide array of stakeholders. though. stakeholder management implies “allocating organisational resources in such a way as to take into account the impact of those allocations on various groups within and outside the firm” (Jones. has been alluded to and studied for quite a while. These works rapidly spread throughout Scandinavia and the stakeholder framework became popular in university management teaching. The ultimate purpose of the stakeholder management theory is to achieve a ‘win-win’ outcome. moral.p. social. 1968). Vinten. Citing Eberstadt’s research. 2003). and that of Chester Barnard in 1938 which stated that corporations were not an end per se but a means to serve society (Morris. (3) the interests of all legitimate stakeholders have value. 2002). Lee-Davies (2) the processes and outcomes associated with these relationships are of interest. Post et al. but it does not infer that managers can manipulate stakeholders to reach the most favourable trade-offs (Post et al.K. it also aims to repair previous damages traditionally left to society’s kind-heartedness. which are referred to as ‘externalities’.p.p. started with the publication of ‘Strategic Management: A stakeholder approach’ by Freeman in 1984 (Morris. thus far beyond the mere for-profit motive of stockholders.p. (2002. but extend beyond.

2001) stress. The normative stakeholder theory. because it justifies the inclusion of stakeholders’ claims in the strategy-making through merely economic reasons. The stakeholder approach recognises the legitimate claim of shareholders.p.209. instrumental. 2000). there are still problems in measuring CSR and financial performance. Although the two authors identified four ideas at the core of the stakeholder theory (descriptive. instrumental] stakeholder view does not automatically introduce ‘the moral point of view’”. but rather widens the shareholder model. Emiliani. instrumental). principally profitability. Scholl. However. However. As Jones and Wicks (1999. for the organisation and lacks the essential and . Nonetheless. Margolis and Walsh. 3. which argues that each stakeholder holds an intrinsic value by him/herself and calls for ethical guiding standards for managers. normative stakeholder approach Since the work of Donaldson and Preston in 1995. Although adopting a restrictive view of the stakeholder theory (i. 2002). however. but the normative or ethical dimension of the stakeholder theory is often considered critical (Hummels. Organisations must then try to achieve their own objectives (e. 2001). 1998. and the ‘Business Ethics strand’.g. Clarkson (1995) claims that organisations which do not include their primary stakeholders’ concerns within their strategy challenge their long-term survival. 2003). The instrumental stakeholder theory understands stakeholder management theory as an instrument to achieve expected outcomes. and it proves particularly complex to clearly define the causality between economic success and responsible behaviour (Ougaard and Nielsen. acknowledges as primary the ethical legitimacy of the stakeholders’ claims on the organisational purpose (Jones et al. 2003.3 Purpose(s) of a stakeholder approach It is often argued that the stakeholder approach is not viable as it implies the sacrifice of sound business objectives (i. “embracing a strategic [i. it makes good business sense to take into account the stakeholders’ viewpoints that will lead to profitability.e.Corporate social responsibility and stakeholder approach 291 3. profitability) while at the same time satisfying in a fair way the legitimate claims of their stakeholders. namely the ‘Social Science strand’ that examines the instrumental rationale of stakeholder theory. The instrumental aspect of the stakeholder theory can sometimes be considered ‘primary’. the stakeholder approach does not aim ‘to shift the focus of firms away from marketplace success toward human decency but to come up with understandings of business in which these objectives are linked and mutually reinforcing’..3. the literature has essentially explored two dimensions.. 2000). at least not a negative one (Margolis and Walsh. and the general conclusion is that there tends to be a positive relationship. 2002. The instrumental stakeholder theory appears more vulnerable to criticism.. the stakeholder theory does not reject profitability as a corporate purpose. Indeed.. but challenges the idea that shareholders should be either the only claimants or the privileged ones over the interests of other legitimate claimants (Hummels. the stakeholder approach seems to have been developed in two different ways.e. Orlitzky et al. Scholl (2001) distinguishes two strands in stakeholder research. 1998). normative and managerial).. 2003). This is what some authors call a “balanced scorecard” (Vinten.. Extensive research over the past 30 years has questioned the link between social responsibility policies and financial performance.1 Instrumental vs. profits) to morally acceptable (but supposedly economically unsustainable) social goals (Vinten.e. from that perspective.

2003. but remains quite vague when it comes to help managers who concretely deal with stakeholders. 3. 2001).. 1995. some authors have called for the creation of a ‘convergent’ stakeholder theory.p. 1995. Hummels (1998) explains that such questioning. which is the ethical scope. the variety of underlying theories that have contributed to the building of the stakeholder theory may suggest that it is by nature “a hybrid with unclear parenthood” (Scholl. Although contested by some authors (e.p. It also does not allow the organisation to deny the (moral) legitimacy which. 2002. Some stakeholder analysis tools have been designed in response to this issue. 2002. Goodpaster. and that organisations are not simply or only ‘economic’ by nature but can and do act in socially responsible ways as members of communities. 2003). The instrumental stakeholder theory lacks the critical moral aspect that gives the stakeholder concept an intrinsic value by itself. 2000.. 2001). Lee-Davies necessary commitment to “good citizenship” (L’Etang. by itself.30) Indeed.3. Kakabadse. Freeman). 3. Weiss.186). defined as a “theory that is simultaneously morally sound in its behavioural prescriptions and instrumentally viable in its economic outcomes” (Jones and Wicks. Rozuel and L. And yet. fair as it may be. 1999. 2002). Hummels. organisations should not pay attention to their stakeholders merely because it is profitable. Also. justifies the calling for a redefinition of the organisational purpose. They should not pursue purely economic objectives if they want to guarantee their legitimacy in society and be granted the ‘licence to operate’ that recognises the responsibilities of all parties involved in the running of organisations (Vinten. but one may indeed question the value of the stakeholder theory in its managerial dimension. the convergent theory has a strong and explicit moral basis.K. 2002. Besides. Nevertheless. Jones et al. the fact that managers cannot always precisely map the stakeholders does not remove the affectation of these stakeholders by the organisation’s activity.292 N. that regard for individual rights should be extended to all constituencies that have a stake in the affairs of a business.p.p. The stakeholder theory itself asserts that stakeholders’ interests must be taken into account. C.3 ‘Convergent’ stakeholder theory Some of the major (normative) stakeholder theorists have grounded their studies on the Kantian argument that “the goodness of an act is the intention which motivated it” (L’Etang.3. Freeman clearly presented his theory as an “inherently managerial” concept (Freeman.191). Being both normative and instrumental.2 Stakeholder theory in practice Another criticism of the stakeholder approach lies in its relatively poor managerial practicality.g. and that their (public relations) programmes designed to address the needs of the stakeholders eventually end up being purely self-interested actions to pursue economic objectives (L’Etang. There is the danger that organisations only ‘communicate’ on their ethical endeavours. What makes the stakeholder theory a real challenger of the shareholder model is that its ethical dimension maintains that: “Profit maximisation is constrained by justice.” (Weiss. Pesqueux and Biefnot. 1984. does not question the critical dimension of the stakeholder theory. 1991. 1995). 1998). the convergent theory endeavours to fill in the noticeable gap between instrumental and normative approaches (Pesqueux and Biefnot. it nonetheless accepts the only means of that aim is to achieve a morally acceptable end (Pesqueux and Biefnot. and for using the means-end process. For that reason. Scholl. .28).

some authors have proposed sub-categories.. Therefore it is critical to institutionalise and maintain fruitful and open dialogue with key (if not all) stakeholders to secure long-term sustainable growth. Hummels.206). 3. 2002) or terrorists (Scholl. Stakeholder analysis tools. 2002).1 Categorisation of stakeholders To avoid giving the term ‘stakeholder’ a too broadly inclusive scope. the shareholders). 2003). and a major ‘flaw’ of the stakeholder approach (i. L’Etang. Wheeler and Sillanpää. Weiss. Jones et al. 1998. Others prefer the primary/secondary stakeholder framework (e. on an organisation’s activity..e. Preston and Sachs (2002) have recently conceptualised the New Stakeholder View. They propose a comprehensive. Vinten. such as stakeholder mapping. and some favour the social/non-social stakeholders categorisation (e. if not everyone since many people depend. 1995): Who are stakeholders? If stakeholders are “those individuals or groups who depend on the organisation to fulfil their own goals and on whom. 2000). Preston and Sachs (2002) posit that the firm-stakeholders relationships ‘are the essential assets that managers must manage and they are the ultimate sources of organisational wealth’.Corporate social responsibility and stakeholder approach 293 3. And. 2001). 2002. who identifies ‘intrinsic’ or ‘definitional’ stakeholders. 1992.p. Therefore. Managers are actually unable to assess the potential threats stakeholders may represent to the organisation’s objectives (Argenti. i... whilst some separate voluntary from involuntary stakeholders (e. Post et al.. if the organisation is accountable to all its stakeholders (i. Indeed.. for instance competitors (although this can be discussed – see Post et al. Carroll.e. 2002.. 1998)..4 Who are stakeholders? A key question that has not been examined yet is a highly tricky one. 1993. Vinten. 1989.p. if the stakeholder approach can help managers understand the relationships of the organisation with the various constituencies involved in its activities at various levels. Another interesting approach is that of Phillips (2001. either directly or indirectly. power/interest matrix and stakeholder moral responsibilities’ matrix have been developed to provide a practical framework for managers.g.34). 2000. 1995). They help identify the key stakeholders and develop adequate strategies and tactics to achieve as much as possible a win-win outcome (Frederick et al. then the notion of accountability becomes valueless because it is too broadly set and useless from a managerial point of view (Hummels. and ‘instrumental’ stakeholders who affect the definitional . Post. stakeholder-based framework that encompasses within three concentric circles: the resource-base.p. industry-structure and socio-political aspects of a corporation’s environment. the power and bargains of the stakeholders. The most widely used is the external/internal stakeholder framework (Johnson and Scholes. With supporting evidence from a thorough examination of three companies. 2003.. 2002.206). it does not itself provide them with means to apprehend the quality of these relationships. in turn. the organisation depends” (Johnson and Scholes.g. not only should the definition be sufficiently comprehensive and not too inclusive. L’Etang.g.p. Post.4. the forces of influence.31)..e. then one organisation is concerned with a very large amount of people. analytical. Another inconvenience of too broad a definitional scope of stakeholders is that it becomes possible to call stakeholders groups that may harm rather than support the organisation.. 1998. but also should be clear enough to avoid misinterpretations. Weiss. everyone) rather than to one constituency (i.e.

Dialogue is indeed a key element in stakeholder management. or structurally. employees. As Wood (1991. but also specific obligations to definitional stakeholders only. 2002).p. suppliers. In that view. but it is not a sufficient condition for CSR to be meaningful. the constituents’ representative is not affected by the corporation’s activity. and there is evidence that a greater number of managers recognise. local community. Good communication is acknowledged as an essential element in the development of CSR in organisations. interest groups (or sometimes civil society representatives. C. as well as the concept of CSR. Post et al. Commonly identified stakeholder groups include shareholders (or owners). culturally. but as analytical forms to be filled with the content of explicit value preferences that exist within a given cultural or organisational context and that are operationalised through the political and symbolic processes of that context. ‘concerns and capabilities’ of each group of stakeholders. 2003). and explain that ‘such a program implies that business executives would need to understand how attitudes are developed and how an organisation and its employees are influenced’. customers. Wiedermann-Goiran et al. organisations have moral obligations to all stakeholders... This said. 2000. 2003).K.331) propose a six-step procedure to help top managers be CSR-focused. remain highly contextual in their managerial dimension. one may wonder whether various stakeholders really speak the same language (Wiedermann-Goiran et al. This is because “it is difficult to say what kinds of moral obligations are at work. 2003). Even if not in terms of values at least it should be defined more exactly in terms of managerial implementation. but rather endorsed as a didactic tool to foster dialogue and understanding with the stakeholder community for all constituents to eventually benefit.. 1991). 1998. and society-at-large (Carroll.294 N. hence that managers must conform their (and the organisation’s) norms and behaviours to the sensitivity.. accept and use stakeholder-oriented policies (Wheeler and Sillanpää.. when the very nature of who has the obligation is obscure” (Jones et al. Nevertheless. and a major responsibility for top managers (Wheeler and Sillanpää.p. However. Minkes et al.p. competitors. interests and demands. 3. government. Lee-Davies stakeholders. In such cases. 2002. These statements suggest that there is no standard model of stakeholder management. trends suggest that stakeholder management is more than a fashionable concept.” The approach should not be considered as absolute. the media. Szwajkowski (2000) argues that ‘content is everything’. the stakeholder theory. but this engenders problems in identifying a spokesperson with which to discuss the stakeholders’ concerns. Szwajkowski. but they represent the constituents because they share their concerns (Wiedermann-Goiran et al.700) states: “The principles of CSR […] should not be thought of as absolute standards. The environment is sometimes quoted as a stakeholder. Some of these terms by themselves raise significant problems in relation to the value of organisational accountability to stakeholders. (1999.31).5 Stakeholder management The need for a clear definition of stakeholder groups is now more critical. Similarly. especially ‘society-at-large’ and the notion of community. Kakabadse. though slightly more inclusive in definition). because each organisation is specific either historically. Rozuel and L. and because each . 1998.

More generally. . especially because of their key influence on the organisational culture (Hitt. 1993. social and political environment. but also to assess and manage the relationships between the various stakeholder groups (Post et al. 1998). as defined by the economic. aims to secure short-term performance and long-term organisational wealth benefiting the whole society. The argument of corporate morality also emphasises the positive relationship between top management’s stewardship in moral values and the stakeholders’ perceptions of the morality of the organisation (Jones. ‘it is the role of management to balance all the (moral) rights and interests involved.Corporate social responsibility and stakeholder approach 295 stakeholder constituency is specific both socially and culturally. Hummels. Punter and Gangneux. Firms should engage in a constructive and open dialogue with various stakeholders who interact among themselves. For instance. Argenti..p. The environment also influences stakeholders and firms as it may change the members of society’s expectations. stated specificities are also likely to evolve over time if the organisation implements a ‘collaborative communication strategy’ which can “change the perceptions and ‘rules of engagement’ to create ‘win-win’ outcomes” (Weiss. 2003). driven by leaders. Social. 2003. 1999. Figure 3 summarises the main elements and factors of influence in stakeholder management. 1995). Weiss. with a view to creating synergies among stakeholders (Wiedermann-Goiran et al.33). The role of managers. the role of leaders in organisations is acknowledged as very important in ethical issues. 1998. is of crucial importance in the whole process of stakeholder management (Bowie.6 Leadership: a key determinant of the stakeholder approach The statements also imply that the stakeholder concept. Minkes et al. 1990. Managers’ tasks include monitoring and managing the organisation’s relationships with each of the stakeholder groups. and sometimes more specifically top managers. while at the same time safeguarding the objectives of the firm’. Figure 3 Stakeholder management: elements and factors of influence Stakeholders FIRM Leaders Short-term performance Long-term wealth and society’s well-being DIALOGUE + Management Team Stakeholders Economic. 1994. values or priorities.. Political environment Assessing and changing expectations Source: Compiled by authors 3. which affect the dialogue and may change the parameters defining performance. places management at the core of the organisation. This dialogue. in what Hummels (1998) calls an ethical version of the managerial stakeholder theory.. McAdam and Leonard. 2002). 2003). Yet. wealth or society’s well-being. 1991. like other theories of the firm.

. If the extended enterprise is confronted with so many stakeholders towards whom it has so many responsibilities such boundlessness could render CSR meaningless. which suggests that not only top executives but also middle managers and further must fully endorse the values that define the organisation’s stance on CSR (Minkes et al. 2003).L egitim acy o f claim s . 1999).p.p. It may well be that the problem is not in the pertinence of CSR.. Minkes et al. This drives us to an interesting level of analysis. Rozuel and L..D efin itio n .M an agemen t . 1995.L ead ersh ip . more often.. of Corporate Social Performance (CSP) (e.. C. But CSR must be explicitly understood as more than values.T im elin e (p ro active vs reactive) S ta keh old er takeh a p p roa ch W H AT? HOW ? W HEN? Source: Compiled by authors The relationship between CSR and business is traditionally examined through related concepts of Corporate Governance and. 1999). Figure 4 illustrates the principal dimensions of the stakeholder approach. i.296 N. and leaders must embody these values and promote and support them through their own behaviour and attitude. 1985. Figure 4 Main dimensions of the stakeholder approach W HO? . They also suggested that a top manager’s background could play a significant role in his or her sensitivity towards stakeholders’ claims and any CSR issues the organisation might be confronted with (Thomas and Simerly. In their 1995 study of top managers’ profiles in relation to the organisation’s CSP. To that extent. Lee-Davies Leadership is a determinant in shaping and orientating the organisational climate so that the expectations of organisational constituents match more socially accepted norms of behaviour (Bennis and Nannus. 1999). The generally accepted definition of CSP itself suggests that top managers. and top management teams and CEOs are both important to social performance outcomes”... who are citizens themselves entitled to rights. 1995. those who make strategic choices and decisions for organisational development and prosperity. but codes will not prevent stakeholder outcries if they are not embedded into the organisational culture and perceived as reflecting a deep and true commitment from the overall organisational constituents (Minkes et al. 1999. which is that organisations are ultimately made up of people.p.K.411).Id entificatio n . Minkes et al.329).Pu rpo se (in stru m en tal vs no rm ative) . duties and responsibilities (Thévenet. and for this purpose. Kakabadse.e. play “a critical role in the articulation of [the organisation’s] posture vis-a-vis its stakeholders and constituents” (Thomas and Simerly. Thomas and Simerly found that “top managers are important internal determinants of a firm’s CSP. Formalising CSR principles into a code of conduct may be a positive step towards social responsibility (at least publicly).414).g. ‘leadership is required at more than one level in an organisation’.

CSR cannot exist if individuals do not possess enough maturity and competence to act responsibly. According to the survey. along with the difficulty to measure CSR/sustainable performance. highlight the key issues businesses are confronted with when approaching CSR. a social and environmental approach to public procurement. qualitative approach encompass the impact of CSR on competitiveness and sustainable development. 1999. the more likely it is to be developing sustainability programmes” (PricewaterhouseCoopers. CSR is a reality. CSR information availability to stakeholders (EMSF. the numerous organisations created over the past 20 years and dedicated to promote business responsibilities to society and the environment illustrate a clear shift in the debate on . In 2002. What should be underlined in these findings is that there is a real need to develop research on the business case for CSR. a vast majority think that the sustainability movement will gain importance in the coming years. 2004).7 Overview of CSR practices Although some business people keep believing CSR and sustainability concerns are just fads. technology transfer issues. competitive advantages (75%) and cost savings (73%). and in particular to establish standards and quantifiable indicators to measure and monitor performance on economic. Nevertheless. The findings. individual values and responsibilities of the people that make the social organisations (Thévenet. 2002). 3. In terms of research. identified areas in which further projects should be led adopting a multistakeholder. and ensuring an enabling environment for CSR” (EMSF. and the definitions and what they entail may still questionable. but it seems that alhtough actors from all sides are aware of CSR challenges and determined to enact ethical principles. 75% of the respondents have implemented some kind of sustainable business practices. essentially motivated by an enhanced reputation (90%). namely “raising awareness and improving knowledge on CSR. developing the capacities and competences to help mainstreaming CSR. 2003). Thévenet. the lack of key stakeholder interest – including customers. but a rather woolly one. suppliers and investors – (62%) and the lack of senior management commitment (53%). PricewaterhouseCoopers surveyed senior managers of 140 top US-based companies on their stance on sustainability. supply-chain issues and partnerships value. As the European Multi-Stakeholder Forum on CSR concluded in its Final Report. 2004). the license to operate for business and NGO demand (PricewaterhouseCoopers. The 25% who have not adopted sustainable practices justified their choice by the lack of clear business case (82%). It is therefore not surprising that “the larger and more highly visible the company. as well as industry trends. social and environmental practices. To date. In fact. 2002). published in the 2002 Sustainability Survey Report. It is up to companies to train and for society to socialise the individuals towards the development of such necessary competencies (Takala. It is noteworthy that those who believe greater emphasis will be put on CSR and sustainability in the near future identify reputation as a critical driver for such trend as well as. Significant steps have been made to provide corporations with general guidelines on social and environmental issues. and the lack of legal requirements (PricewaterhouseCoopers. CEO/Board commitment and customer demand. the majority stands still.Corporate social responsibility and stakeholder approach 297 but rather on the very personal. among other factors. 2003). there is a need to act at a global and collaborative level towards three main objectives. 2002). CSR or sustainability has been a matter for big corporations.

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