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/academy of Management Review 1979, Vol. 4, No. 4.

497-505

A Three-Dimensional Conceptual
Model of
Corporate Performance
ARCHIE B. CARROLL
University of Georgia

Offered here is a conceptual model that comprehensively describes es-


sential aspects of corporate social performance. The three aspects of the
model address major questions of concern to academics and managers
alike: (1) What Is included in corporate social responsibility? (2) What are
the social issues the organization must address? and (3) What is the
organization's philosophy or mode of social responsiveness?

Concepts of corporate social responsibility have at least partially beyond the firm's direct economic
been evolving for decades. As early as the 1930s, or technical interest" [p. 70]. Eells and Walton, in
for example, Wendell Wilkie "helped educate the 1961, argued as follows:
businessman to a new sense of social responsibili- When people talk about corporate social responsi-
ty" [Cheit, 1964, p. 157, citing historian William bilities they are thinking in terms of the problems
Leuchtenburgj. The modern era of social responsi- that arise when corporate enterprise casts its
bility, however, may be marked by Howard R. shadow on the social scene, and of the ethical
principles that ought to govern the relationships
Bowen's 1953 publication of Social Responsibili- between the corporation and society [pp. 457-458).
ties of the Businessman, considered by many to be
the first definitive book on the subject. Following The real debate got underway in 1962 when Mil-
Bowen's book, a number of works played a role in ton Friedman argued forcefully that the doctrine of _
developing the social responsibility concept [Berle social responsibility is "fundamentally subversive."
& Means, 1932; Cheit, 1964; Davis & Blomstrom, He asserted: "Few trends could so thoroughly un-
1966; Greenwood, 1964; Mason, 1960; McGuire, dermine the very foundations of our free society as
the acceptance by corporate officials of a social
1963]. By the mid-1950s, discussions of the social
responsibility other than to make as much money
responsibilities of businesses had become so
for their stockholders as possible" [p. 133].
widespread that Peter Drucker chided business-
Joseph McGuire, in 1963, acknowledged the
men: "You might wonder, if you were a conscien-
primacy of economic concerns, but also accommo-
tious newspaper reader, when the managers of
dated a broader view of the firm's social responsi-
American business had any time for business"
bilities. He posited that:
[1954].
One of the factors contributing to the ambiguity The idea of social responsibilities supposes that the
that frequently shrouded discussions about social corporation has not only economic and legal obli-
gations, but also certain responsibilities to society
responsibility was the lack of a consensus on what which extend beyond these obligations [p. 144].
the concept really meant. In 1960, Keith Davis sug-
gested that social responsibility refers to "busi- Arguing in a similar vein, Jules Backman has
nessmen's decisions and actions taken for reasons suggested that "social responsibility usually refers

© '979 ty the Academy ot Managemenl 0363-7425

497
to the objectives or motives that should be given and Blomstrom [1975].
weight by business in addition to [emphasis added] George Steiner's concept of corporate social re-
those dealing with economic performance (e.g., sponsibility is a continuum of responsibilities rang-
profits)"[1975, p. 2]. ing from "traditional economic production" to
Though McGuire and Backman see social re- "government dictated" to a "voluntary area" and
sponsibility as not only including but also moving lastly to "expectations beyond reality" [1975, p,
beyond economic and legal considerations, others 169]. It is thus similar to the Davis and Blomstrom
see it as involving only pure voluntary acts, thus and CED conceptualizations.
conceptualizing social responsibility as something In recent years, several writers have suggested
a firm considers over and above economic and that our focus on the social "responsibility" of busi-
legal criteria. Representative of this view is Henry ness indicates undue effort to pinpoint accountabil-
Manne, who has argued "Another aspect of any ity or obligation and therefore is too narrow and too
workable definition of corporate social responsibil- static to fully describe the social efforts or perfor-
ity is that the behavior of the firms must be volun- mance of business. For example, Robert Ackerman
tary" [Manne & Wallich, 1972, p. 5, emphasis and Raymond Bauer criticize the expression "social
added]. responsibility," holding that "the connotation of're-
Another approach to the question of what social sponsibility' is that of the process of assuming an
responsibility means involves a definition simply obligation. It places an emphasis on motivation
listing the areas in which business is viewed as rather than performance." They elaborate: "Re-
having a responsibility. For example. Hay, Gray, sponding to social demands is much more than
and Gates suggest that one aspect of social re- deciding what to do. There remains the manage-
sponsibility requires the firm to "make decisions ment task of doing what one has decided to do, and
and actually commit resources of various kinds in this task is far from trivial." They go on to argue that
some of the following areas: pollution probiems . . . "social responsiveness" is a preferable orientation
poverty and racial discrimination problems... con- [1976, p. 6].
sumerism . . . and other social problem areas" S. Prakash Sethi takes a slightly different, but
[1976, pp. 15-16]. related, path in getting from social responsibility to
One of the first approaches to encompass the social responsiveness. He sets forth a three-state
spectrum of economic and non-economic concerns schema for classifying the adaptation of corporate
in defining social responsibility was the "three con- behavior to social needs: (1) social obligation, (2)
centric circles" approach espoused by the Commit- social responsibility, and (3) social responsiveness
tee for Economic Development (CED) in 1971. The [1975, pp. 58-64]. Social obligation involves cor-
inner circle "includes the clear-cut basic responsi- porate behavior in response to market forces or
bilities for the efficient execution of the economic legal constraints. Social responsibility "implies
function — products, jobs, and economic growth." bringing corporate behavior up to a level where it is
The intermediate circle "encompasses a respon- congruent with the prevailing social norms, values,
sibility to exercise this economic function with a and expectations." Social responsiveness, the third
sensitive awareness of changing social values and state in his schema, suggests that what is important
priorities: for example, with respect to environmen- is "not how corporations should respond to social
tal conservation, hiring, and relations with em- pressures, but what should be their long-run role in
ployees. . . . The outer circle "outlines newly a dynamic social system." Business, therefore,
emerging and still amorphous responsibilities that must be "anticipatory" and "preventive" [pp. 58-
business should assume to become more broadly 64].
involved in actively improving the social environ- In sum, social responsibility has been defined or
ment" [Committee for Economic Development, conceptualized in a number of different ways, by
1971, p. 15]. The outer circle would refer to busi- writers of stature in business, and in its various
ness helping with major social problems in society definitions the term has encompassed a wide range
such as poverty and urban blight. This "widening of economic, legal, and voluntary activities. Indeed,
circle" approach has also been adopted by Davis it has been suggested that the term should give way

498
to a new orientation referred to as social respon-
Definition of Social Responsibility
siveness. Below is a summary listing of some of
these various views as to what social responsibility For a definition of social responsibility to fully
means: address the entire range of obligations business
1. Profit making only (Friedman) has to society, it must embody the economic, legal,
2. Going beyond profit making (Davis, Back- ethical, and discretionary categories of business
man) performance. These four basic expectations reflect
3. Going beyond economic and legal require- a view of social responsibility that is related to some
ments (McGuire) of the definitions offered earlier but that categorizes
4. Voluntary activities (Manne) the social responsibilities of businesses in a more
5. Economic, legal, voluntary activities (Steiner) exhaustive manner. Figure 1 shows how the social
6. Concentric circles, ever widening (CED,, responsibilities can be categorized into the four
Davis and Blomstrom) groups. (The proportions simply suggest the rela-
7. Concern for the broader social system (Eells tive magnitude of each responsibility.)
and Walton)
8. Responsibility in a number of social problem Discretionary
areas (Hay, Gray, and Gates) Responsibilities
9. Giving way to social responsiveness (Acker-
man and Bauer, Sethi)
Ethical
The Social Performance Model Responsibilities

Implicit in the various views of social responsibil-


ity are a number of different issues. Some defini-
tions, for example, face the issue of what range of
eoonomic, legal, or voluntary matters fall under the
Legal
purview of a firm's social responsibilities. Other def-
Responsibilities
initions address the social issues (e.g., discrimina- TOTAL
tion, product safety, and environment) for which SOCIAL
business has a responsibility. A third group of defi-
RESPONSIBILITIES
nitions, suggesting social responsiveness, is more
concerned with the manner or philosophy of re-
sponse (e.g., reaction versus proaction) than with
the kinds of issues that ought to be addressed.
Because all three of these views are important, I
suggest the following three distinct aspects of cor-
porate social performance that must somehow be Economic
Responsibilities
articulated and interrelated:
1. A basic definition of social responsibility (i.e..
Does our responsibility, go beyond economic
and legal concerns?)
2. An enumeration of the issues for which a so- Figure 1
cial responsibility exists (i.e.. What are the Social Responsibility Categories
social areas — environment, product safety,
discrimination, etc. — in which we have a These four categories are not mutually exclusive,
responsibility?) nor are they intended to portray a continuum with
3. A specification of the philosophy of response economic concerns on one end and social con-
(i.e.. Do we react to the issues or proact?) cerns on the other. That is, they are neither cumula-
Each of these needs elaboration. tive nor additive. Rather, they are ordered in the

499
Figure only to suggest what might be termed their ties. They are left to individual judgment and choice.
fundamental role in the evolution of importance. Perhaps it is inaccurate to call these expectations
Though all of these kinds of responsibilities have responsibilities because they are at business's dis-
always simultaneously existed for business organi- cretion; however, societal expectations do exist for
zations, the history of business suggests an early businesses to assume social roles over and above
emphasis on the economic and then legal aspects those described thus far. These roles are purely
and a later concern for the ethical and discretionary voluntary, and the decision to assume them is guid-
aspects. Furthermore, any given responsibility or ed only by a business's desire to engage in social
action of business could have economic, legal, roles not mandated, not required by law, and not
ethical, or discretionary motives embodied in it. The even generally expected of businesses in an ethical
four classes are simply to remind us that motives or sense. Examples of voluntary activities might be
actions can be categorized as primarily one or an- making philanthropic contributions, conducting in-
other of these four kinds. house programs for drug abusers, training the
Economic responsibilities The first and fore- hardcore unemployed, or providing day-care cen-
most social responsibility of business is economic ters for working mothers. The essence of these
in nature. Before anything else, the business institu- activities is that if a business does not participate in
tion is the basic economic unit in our society. As them it is not considered unethical per se. These
such it has a responsibility to produce goods and discretionary activities are analogous to Steiner's
services that society wants and to sell them at a "voluntary" category and the CED's third circle
profit. All other business roles are predicated on this (helping society).
fundamental assumption. This four-part framework provides us with cate-
Legal responsibilities Just as society has gories for the various responsibilities that society
sanctioned the economic system by permitting bus- expects businesses to assume. Each responsibility
iness to assume the productive role, as a partial is but one part of the total social responsibility of
fulfillment of the "social contract," it has also laid business, giving us a definition that more complete-
down the ground rules — the laws and regulations ly describes what it is that society expects of busi-
— under which business is expected to operate. ness. This definition can therefore be stated:
Society expects business to fulfill its economic mis- The social responsibility of business encompasses
sion within the framework of legal requirements. the economic, legal, ethical, and discretionary ex-
The dotted lines in Figure 1 suggest that, although pectations that society has of organizations at a
we have four kinds of responsibilities, they must be given point in time.
met simultaneously, as in the case of economic and This definition is designed to bring into the fold
legal responsibilities. those who have argued against social responsibility
Ethical responsibilities Although the first two by presuming an economic emphasis to be separ-
categories embody ethical norms, there are addi- ate and apart from a social emphasis, it requires a
tional behaviors and activities that are not neces- recognition of the possibility of movement from one
sarily codified into law but nevertheless are category to the next, such as an ethicai expectation
expected of business by society's members. Ethical (business should manufacture safe products) be-
responsibilities are ill defined and consequently are coming a legal expectation (the requirements of the
among the most difficult for business to deal with. In Consumer Product Safety Commission). Neil
recent years, however, ethical responsibilities have Churchhill has referred to this characteristic in as-
clearly been stressed — though debate continues serting that "social responsibility is a moving target"
as to what is and is not ethical. Suffice it to say that [1974, p. 266]. The definition does not "nail down"
society has expectations of business over and the degree of specific responsibility in each cate-
above legal requirements. gory, but it was not meant to. it purports only to
Discretionary responsibiiities Discretionary provide a classification scheme for the kinds of
(or volitional) responsibilities are those about which social responsibilities business has.
society has no clear-cut message for business — The reader should note, too, that a given busi-
even less so than in the case of ethical responsibili- ness action may simultaneously invoive several of
500
these kinds of social responsibilities. For example, most interest to the organization. A recent survey by
if a manufacturer of toys decided it shouid make Sandra Holmes illustrates this point quite well. In
toys that are safe, it would be (at the same time) her survey of managers of large firms, she asked
economically, legally, and ethically responsible, what factors are prominent in selecting areas of
given today's iaws and expectations. The four-part social involvement by their firms [1976, p. 87]. The
framework can thus be used to help identify the top five factors were:
reasons for business actions as weil as to call atten-
tion to the ethical and discretionary considerations 1. Matching a social need to corporate need or
that are sometimes forgotten by managers. ability to help.
2. Seriousness of social need
The Social Issues Involved 3. interest of top executives
In developing a conceptual framework for cor- 4. Public reiations value of social action
porate social performance, we not only have to 5. Government pressure
specify the nature (economic, legal, ethical, discre-
That these disparate factors should show up in a
tionary) of social responsibility but we also have to
response to a question of this kind suggests clearly
identify the social issues or topical areas to which
that business executives do not have a consensus
these responsibilities are tied.
on what social issues should be addressed.
No effort will be made here to exhaustively iden-
Thus, we are left with a recognition that social
tify the social issues that business must address. issues must be identified as an important aspect of
The major problem is that the issues change and corporate social performance, but there is by no
they differ for different industries, it is partly for this means agreement as to what these issues should
reason that the "issues" approach to examining be.
business and society relationships gave way to
managerial approaches that are more concerned Philosophy of Responsiveness
with developing or specifying generalized modes of
response to all sociai issues that become significant To complete our conceptual model it is necessary
that a third component be identified and discussed.
to a firm.
The third aspect of the modei addresses the phil-
One need not ponder the social issues that have osophy, mode, or strategy behind business (man-
evolved under the rubric of social responsibility to agerial) response to social responsibility and social
recognize how they have changed over time. For issues. The term generally used to describe this
example, product safety, occupational safety and aspect is "social responsiveness."
health, and business ethics were not of major inter- Social responsiveness can range on a continuum
est as recently as a decade ago; similarly, preoccu- from no response (do nothing) to a proactive re-
pation with the environment, consumerism, and sponse (do much). The assumption is made here
employment discrimination was not as intense. The that business does have a social responsibility and
issues, and especiaiiy the degree of organizational that the prime focus is not on management accept-
interest in the issues, are aiways in a state of flux. ing a moral obligation but on the degree and kind of
As the times change, so does emphasis on the manageriai action. In this connection, William
range of social issues business must address. Frederick has articulated the responsiveness view,
Also of interest is the fact that particular social which he terms CSRg:
issues are of varying concern to businesses, de-
pending on the industry in which they exist as well Corporate social responsiveness refers to the ca-
as other factors. A bank, for example, is not as pacity of a corporation to respond to social pres-
pressed on environmental issues as a manufac- sures. The literal act of responding, or of achieving
a generally responsive posture, to society is the
turer. Likewise, a manufacturer is considerably focus. ... One searches the organization for me-
more absorbed with the issue of recycling than is an chanisms, procedures, arrangements, and beha-
insurance company. vioral patterns that, taken collectively, would mark
Many factors come into play as a manager at- the organization as more or less capable of re-
sponding to social pressures [1978, p. 6].
tempts to get a fix on what social issues should be of
501
lan
Wilson Reaction Defense Accommodation Proaction

Terry Fight all Do only what Be Lead the


McAdam the way Is required Progressive Industry

Public
Davis & Relations Legal Problem
Blomstrom Withdrawal Approach Approach Bargaining Solving

DO * DO *
NOTHING MUCH

Figure 2
Social Responsiveness Categories

Several writers have provided conceptual for social responsibility, CSR^ (corporate social re-
schemes that describe the responsiveness continu- sponsibility), as Frederick [1978] terms it — our first
um well, lan Wilson, for example, asserts that there aspect of the conceptual model — has ethical or
are four possible business strategies — reaction, moral threads running through it and, hence, is
defense, accommodation, and proaction [1974], problematical. In contrast, CSRg (corporate social
Terry McAdam has, likewise, described four social responsiveness) — our third aspect — has no moral
responsibility philosophies that mesh well with Wil- or ethical connotations but is concerned only with
son's strategies and, indeed, describe the mana- the managerial processes of response. These
gerial approach that would characterize the range processes would include planning and social fore-
of responsiveness. His philosophies are (1) "Fight casting [Newgren, 1977], organizing for social re-
all the way," (2) "Do only what is required," (3) "Be sponse [McAdam, 1973], controlling social activi-
progressive," and (4) "Lead the industry" [1973]. ties [Carroll & Beiler, 1975], social decision making,
Davis and Blomstrom, too, describe alternative re- and corporate social policy [Bowman & Haire, 1975;
sponses to societal pressures as follows: (a) with- Carroll, 1977; Fitch, 1976; Post & Mellis, 1978;
drawal, (b) public relations approach, (c) legal Preston & Post, 1975; Steiner, 1972; Sturdivant &
approach, (d) bargaining, and (e) problem solving Ginter, 1977], Figure 3 puts the three aspects to-
[1975]. These correspond, essentially, with the gether into a conceptual social performance model.
above schemas. Figure 2 plots these responses on The social issues identified in Figure 3 are illus-
a continuum: trative only. Each organization should carefully as-
Corporate social responsiveness, which has sess which social issues it must address as it plans
been discussed by some as an alternate to social for corporate social performance.
responsibility is, rather, the action phase of man-
agement responding in the social sphere. In a Uses of the Model
sense, being responsive enables organizations to This corporate social performance conceptual
act on their social responsibilities without getting model is intended to be useful for both academics
3ogged down in the quagmire of definitional prob- and managers. For academics, the model is pri-
ems that can so easily occur if organizations try to marily an aid to perceiving the distinction among
3et a precise fix on what their true responsibilities
definitions of social responsibility that have ap-
are before acting.
peared in the literature. What heretofore have been
The responsiveness continuum presented here regarded as separate definitions of social responsi-
epresents an aspect of management's social per- bility are treated here as three separate issues per- I
ormance that is distinctly different from the concern taining to corporate social performance.
502
PHILOSOPHY
OF
SOCIAL
RESPONSIVENESS Proaction
Accommo- ^^^^
dation _ ^ ^ ^
. Defense

Discretionary
Responsibilities

Ettiical
Responsibitrties

SOCIAL
RESPONSIBILITY
CATEGORIES

Legat
Responsibitities

Economic
Responsibilities

Consum- Environ- piscrifTi- Product Occupa- Stiare-


erism ment ination Safety tionai hotdars
Safety

SOCIAL ISSUES .JNVOLVED

Figure 3
The Corporate Social Performance Model

One aspect pertains to all that is included in our toward understanding the major facets of social
definition of social responsibility — the economic, performance.
legal, ethical, and discretionary components. The The conceptual model can assist managers in
second aspect concerns the range of social issues understanding that social responsibility is not sepa-
(e,g,, consumerism, environment, and discrimina- rate and distinct from economic performance but
tion) management must address. Finally, there is a rather is just one part of the total social responsibili-
social responsiveness continuum. Although some ties of business. The model integrates economic
writers have suggested that this is the preferable concerns into a social performance framework. In
focus when one considers social responsibility, the addition, it places ethical and discretionary expec-
model suggests that responsiveness is but one ad- tations into a rational economic and legal
ditional aspect to be addressed if corporate social framework.
performance is to be acceptable. The three aspects The model can help the manager systematically
of the model thus force us to think through the think through major social issues being faced.
dominant questions that must be faced in analyzing Though it does not provide the answer to how far
social performance. The major use to the aca- the organization should go, it does provide a con-
demic, therefore, is in helping to systematize the ceptualization that could lead to a better-managed
important issues that must be taught and under- social performance program. Moreover, it could be
stood in an effort to clarify the social responsibility used as a planning tool and as a diagnostic prob-
concept. The model is not the ultimate conceptuali- lem-solving tool. The model can assist the manager
zation; it is, rather, a modest but necessary step by identifying categories within which the organiza-

503
tion can be situated. model to analyze its stance on these issues and
An illustration will perhaps be helpful for an or- perhaps help determine its motivations, actions,
ganization attempting to categorize what it has and response strategies. Managers would have a
done according to the cubic space in Figure 3. systematic framework for thinking through not only
Recently, Anheuser-Busch test-marketed a new the social issues faced but also the managerial
adult beverage called "Chelsea." Because the response patterns contemplated. The model could
beverage contained more alcohol than the average serve as a guide in formulating criteria to assist the
soft drink, consumer groups protested by calling the organization in developing its posture on various
beverage "kiddie beer" and claiming that the com- social issues. The net result could be more syste-
pany was being socially irresponsible by making matic attention being given to the whole realm of
such a drink available to youth, Anheuser-Busch's corporate social performance.
first reaction was defensive — attempting to claim
that it was not dangerous and would not lead Summary
youngsters to stronger drink. The company's later
response was to withdraw the beverage from the Corporate social performance requires that (1) a
marketplace and reformulate it so that it would be firm's social responsibilities be assessed, (2) the
viewed as safe. The company concluded this was social issues it must address be identified, and (3) a
the socially responsible action to take, given the response philosophy be chosen. The model pre-
criticism. sented attempts to articulate these key aspects in a
According to the social performance model in conceptual framework that will be useful to aca-
Figure 3, the company found itself in the consumer- demics and managers alike. The conceptual model
ism segment of the model. The social responsibility is intended to heip clarify and integrate various defi-
category of the issue was ethical (the product being nitional strands that have appeared in the literature.
introduced was strictly legal because it conformed Also, it presents the notions of ethical and discre-
to the maximum alcoholic content standard). As it tionary responsibilities in a context that is perhaps
became clear that so much protest might be turning more palatable to those who think economic con-
an ethical issue into an economic one (as threats of siderations have disappeared in discussions of so-
product boycotts surfaced), the company moved cial responsibility. The model can be used to help
along the responsiveness dimension in the model managers conceptualize the key issues in social
from reaction and defense to accommodation. performance, to systematize thinking about social
issues, and to improve planning and diagnosis in
This example shows how a business's response
the social performance realm. To whatever extent
can be positioned in the social performance model.
the model helps accomplish these objectives, it re- f-
The average business firm faces many such con-
mains but a modest step toward the refinement of
troversial issues and might use the conceptual
the corporate social performance concept.

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Archie B. Carroll is Professor of Management and


Associate Dean, College of Business Administration,
University of Georgia.
Received 9/25/78

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