Journal of Management Studies 43:1 January 2006

0022-2380

Corporate Social Responsibility:

Three Key Approaches

Duane Windsor
Rice University, Texas, USA

 Corporate social responsibility remains an embryonic and contestable

concept. This paper assesses three key approaches and offers a perspective gauging
little prospect of theoretical synthesis. Ethical responsibility theory advocates strong
corporate self-restraint and altruism duties and expansive public policy strengthening
stakeholder rights. Economic responsibility theory advocates market wealth creation
subject only to minimalist public policy and perhaps customary business ethics. These
two viewpoints embed competing moral frameworks and political philosophies. Any
theoretical synthesis must discover some subset of ethical principles yielding
corporate competitive advantage. Corporate citizenship language invokes a political
metaphor providing neither true intermediate positioning nor theoretical synthesis.
Two conflicting interpretations abandon responsibility language without adopting the
economic viewpoint. An instrumental citizenship interpretation expands philanthropy
as a strategic lever for increasing corporate reputation and market opportunities
while retaining managerial discretion. An ideal citizenship interpretation restates
ethical responsibility into voluntarism language intended to influence managerial
discretion concerning universal human rights.

INTRODUCTION
Corporate social responsibility (CSR) is, regardless of specific labelling, any
concept concerning how managers should handle public policy and social issues.
Developmental history of relevant literatures indicates a ‘marketplace’ of three
competing approaches. The strategic target of competition is managerial psy-
chology (Donaldson, 1999). This paper assesses these key approaches. Long-
established ethical responsibility and revived economic responsibility approaches
are antithetical theoretical perspectives embedding competing moral frameworks
and political philosophies. Any satisfactory theoretical synthesis must discover

Address for reprints: Duane Windsor, Rice University, Jesse H. Jones Graduate School of Management,
MS-531, PO Box 2932, Houston, Texas 77252-2932, USA (odw@rice.edu).

© Blackwell Publishing Ltd 2006. Published by Blackwell Publishing, 9600 Garsington Road, Oxford, OX4 2DQ ,
UK and 350 Main Street, Malden, MA 02148, USA.
94 D. Windsor
some unknown subset of ethical principles also yielding corporate competitive
advantage. A new corporate citizenship conception employs a political metaphor
(Moon et al., 2003). This metaphor is not a true intermediate position. Either of
two conflicting interpretations pragmatically abandons responsibility language
without adopting restrictive economic responsibility theory. Neither an instru-
mental interpretation emphasizing managerial discretion to manipulate philan-
thropy strategically nor an idealized interpretation substituting voluntarism
arguments for ethical CSR duties provides a theoretical synthesis of economics
and ethics.
The intuition motivating this paper is that the still embryonic and contestable
condition of CSR conceptualization reflects the vital circumstance, affecting man-
agement and scholarship, that the concept confronts difficult balances between
private conduct and public policy, and between economics and ethics. Prescribing
solutions for any specific issue collides, as in the 1995 Brent Spar incident in the
North Sea, directly both with competing moral frameworks and political philoso-
phies and with conflicting, powerful stakeholder interests.
Since a theoretical synthesis is not readily discernible and no compelling case
yet favours any one approach, this paper also aims at three other, limited goals for
its contribution. Goal one is descriptive accuracy for comparative assessment. Eco-
nomic CSR restricts purely fiduciary agents to computing net market gains on
jointly utilitarian and investor property rights rationales (Sternberg, 1996). Instru-
mental citizenship is mostly atheoretical pragmatism, if not ‘realpolitik’ (Machi-
avelli, The Prince, 1513), retaining the managerial discretion explicitly criticized in
economic CSR. Ethical CSR advocates impartial moral reflection tolerating strong
corporate self-restraint and altruism duties and expansive public policy strength-
ening stakeholder rights. Idealized citizenship is this ethical CSR in alternative
voluntarism language advocating focus of managerial discretion on forwarding
universal human rights domestically and globally. Goal two is a proposed criterion
for theory building. A satisfactory theoretical synthesis must place profitable busi-
ness in a moral framework acceptable to utilitarianism-based economics and
broader ethical notions of duties, rights, and just consequences. Goal three is nor-
mative. In the absence of satisfactory theoretical synthesis or compelling demon-
stration of superiority, the long-established ethical approach is less risky than
economic or citizenship approaches. The latter approaches respectively may
improve material wealth or even lead to globally higher standards of business, but
bear respectively risk of moral insensitivity or abuse of discretion.
The remainder of the paper develops as follows. The second section proposes
strictly non-hierarchical conceptual relationships among the three approaches.
The third section compares ethical and economic viewpoints. Direct extension of
economic CSR introduces minimalist public policy and moral reflection into an
unregulated market economy. Ethical CSR pushes public policy and moral reflec-
tion much further, perhaps with only vague limits. The fourth section argues the
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 Corporate Social Responsibility 95
instrumental citizenship interpretation will not serve as a viable theoretical syn-
thesis along the lines of Jones’s (1995) insightful instrumental stakeholder theory.
This final section emphasizes implications of conflicting views for managers and
scholarship.

DESCRIPTIVE COMPARISON OF THREE KEY APPROACHES

Figure 1 depicts in non-hierarchical terms conceptual relationships among the
three competing approaches. Ethical and economic viewpoints are mutually exclu-
sive and do not overlap conceptually. These two antithetical theoretical perspec-
tives must appear in Figure 1 as polar-opposites of a conceptual continuum and
separated by a distinct conceptual gap. This gap is the conceptual region through
which must work any theoretical synthesis of the utilitarian moral core of eco-
nomic CSR and an ethical CSR which is a vague composite of several moral
frameworks such as Kantian duties, Rawlsian justice, and stakeholder rights. A sat-
isfactory theoretical synthesis would cause ethical and economic perspectives to
overlap in Figure 1. The citizenship metaphor envisions typically multinational
enterprises (MNEs) operating across multiple legal jurisdictions and managers
focused on strategically building political influence and corporate reputation.
Limits to public policy and moral duties frame the vital disputes.
These competing approaches superficially share two common themes. First, all
profess to improve general welfare. A firm today cannot appear otherwise. Each

Corporate
Citizenship
Conception

GENERAL PRIVATE
WELFARE WEALTH

Multiple
Jurisdictions
Ethical Economic
Conception Conception
Corporate Fiduciary
Self-Restraint Corporate Strategic Responsibility
Expansive Reputation Philanthropy Minimalist
Public Policy Public Policy
Corporate Customary
Altruism Ethics
Political
Influence

Figure 1. Proposed relationship of three key competing approaches to CSR

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96 D. Windsor
approach however takes a different path to general welfare. Economics invokes
Adam Smith’s invisible hand argument against acting for the public interest (The
Wealth of Nations, 1776, Book Four, Ch. 2). Economic CSR restricts companies to
utilitarian ethics dependent on protection of investor property rights. Instrumen-
tal citizenship emphasizes managerial discretion concerning the latter. Yet Fried-
man (1970) criticizes precisely such managerial discretion as a form of slippery
slope. Ethics and idealized citizenship define welfare outcomes more broadly to
include expanded duties, rights, and just consequences. Second, all approaches
accept public policy compliance. Acceptance does not constitute a unifying ethics
subset because it is required by practical necessity independently of any moral
duty. Economics and instrumental citizenship concur on minimalist public policy
and treat public policy formulation as strictly a marketplace of interest-group com-
petition to be influenced. This concurrence ignores a long tradition going back to
Aristotle that citizenship involves much more than private-interest competition.
Ethical CSR looks to expansive public policy and moral duties. Idealized citizen-
ship emphasizes voluntary self-restraint and altruism concerning realization of
universal human rights. From managerial and economic perspectives, ethical CSR
and ideal citizenship assert undesirably broad corporate duties (Scherer and Smid,
2000) and rights of stakeholders (Donaldson and Preston, 1995).
Economic and ethical perspectives embody competing moral frameworks and
political philosophies. Assessment is not directly between amoral and moral
approaches, with the latter automatically dominating. The contest pits efficiency-
oriented utilitarianism, investor property rights, and minimalist public policy in
the economic viewpoint against strong corporate duties of self-restraint and altru-
ism and expansive public policy strengthening stakeholder rights (Dodd, 1932;
Donaldson and Preston, 1995) in the ethical viewpoint. The economic approach
advocates strict limits on both discretionary and mandatory responsibilities (Fried-
man, 1970) and predicts strong long-term social benefits of relatively unfettered
markets operated by self-interested actors ( Jensen, 2000). The ethical conception
argues that such a narrow view is both insufficient and myopic, and that impar-
tial moral reflection by managers and investors is instrumentally necessary in busi-
ness, normatively commanded, and socially desirable.
State Unemployment Tax Act (SUTA) dumping illustrates conflict of ethical
and economic approaches. Many states by omission permit a lower ‘new company’
rating if a firm shifts most of its workers to a new subsidiary (Washington Post, 2003).
About one-third of states make such action illegal. In autumn 2003, a bipartisan
US House of Representatives group introduced federal legislation to require all
states to impose anti-dumping criminal penalties on companies and outside advis-
ers. Until enactment, there remains a window of opportunity to save on unem-
ployment taxes while laying off employees. Ethics must argue that SUTA dumping
is morally irresponsible, and that public policy should expand if corporate self-
restraint and altruism fail. An economically rational fiduciary agent must engage
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 Corporate Social Responsibility 97
in such behaviour where not illegal and consider influencing public policy content
to delay or prevent change. The chief constraints would be concern for corporate
reputation or employee productivity damages.
By construction of Figure 1, the citizenship metaphor falls into the conceptual
gap between ethical and economic perspectives. Despite any resulting superficial
appearance, citizenship is neither a true intermediate position nor a satisfactory
theoretical synthesis. The citizenship metaphor is not parallel conceptually with
the two theoretical approaches or historically grounded. The metaphor separates
into two conflicting interpretations. An alternative argument might be that instru-
mental citizenship simply reflects economics in disguise and idealized citizenship
simply reflects ethics in disguise. If so, the metaphor wholly subdivides between
economic and ethical variants. There would still be no intermediate position much
less theoretical synthesis. This paper argues the situation is more complicated,
because either citizenship interpretation takes a largely pragmatic stance partly
independent of economic or ethical CSR approaches.
Conceptually, instrumentalism (Logan et al., 1997; World Economic Forum,
2003) advances into the Figure 1 gap from the economic position through strategic
use of philanthropy. But it pragmatically abandons economic CSR without endors-
ing ethical CSR. The instrumental interpretation exploits a new strategic philan-
thropy lever aimed solely at self-interested promotion of corporate reputation and
market opportunities. This strategic lever is far broader than simple prudent altru-
ism (Friedman, 1970). Instrumentalism stresses managerial discretion to consider
costs and benefits of CSR activities. Since managerial discretion typically deterio-
rates into self-interested opportunism risky to investors and society (Friedman,
1970), instrumental citizenship is not the strict economic viewpoint in disguise.
Conceptually, ideal citizenship (Logsdon and Wood, 2002; Waddock, 2002)
advances into the Figure 1 gap from the ethical CSR position through concern
for corporate reputation. But it pragmatically abandons responsibility language
while opposing strictly economic CSR. Carroll (1998) argues that the four ‘faces’
(i.e. dimensions) of CSR, discussed in the next section, are consistently the four
‘faces’ (i.e. dimensions) of corporate citizenship. If so, one can directly substitute
citizenship language for responsibility language without losing any moral or public
policy content. However, idealized citizenship does not reduce strictly to ethical
CSR. Idealized citizenship seek to influence managerial psychology concerning
universal human rights without expansion of public policy (which might be
blocked by business influence efforts), and without invoking responsibility language
already discarded by instrumentalist managers.

COMPARISON OF ETHICAL AND ECONOMIC APPROACHES

Relational hierarchy of competing moral frameworks and political philosophies is
an unresolved matter within the discipline of ethics itself. Rorty (2000) character-
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98 D. Windsor
izes moral philosophy as trapped between Kant (i.e. duties) and Dewey (i.e. prag-
matism). Kagan (1989) argues that consequentialism (a rubric including utilitari-
anism) is ultimately superior (Ghemawat, 1991, pp. 46–9). Rachels (2003) relaxes
utilitarianism for duties and rights. Kelman (1981) argues that rights and duties
are sometimes superior to consequences. Lack of consensus makes rank-ordering
of competing approaches to CSR unavoidably contestable. One can only compare
approaches.

Ethics of Corporate Social Responsibility

The ethical approach to CSR argues defects of morally indifferent business
conduct and social advantages of morally-sensitive stakeholder management prac-
tices and expansive public policy. Although drawing on a composite of various
moral frameworks (e.g. Kant, Rawls, stakeholder rights) other than utilitarianism,
ethical CSR uses a basic shared principle of impartial moral reflection on toler-
ating expansive public policy and practicing broad self-restraint and altruism.
Altruism is voluntary contribution to society and stakeholders based on other-
regarding attitudes. Altruism may involve uncompensated or costly contributions
to stakeholders or general welfare. Philanthropy is discretionary wealth transfer of
net income to stakeholders. Self-restraint is moral and/or political choice to avoid
exploiting market opportunities left legally unregulated.
Tracing the developmental history of the long-established CSR terminology
and conceptualization through key works illuminates evolution and content of the
ethical perspective. Even in the Gilded Age of legally and morally unconstrained
‘robber barons’ there was disagreement between ‘the public be damned!’ and
industrialist philanthropy views (Carnegie, 1900). The Progressive Era increased
governmental regulation and produced an early scholarly version of responsibil-
ity (Clark, 1916). The Great Depression increased concern for outcomes-oriented
corporate social performance (Kreps, 1940). Bowen (1953) marshalled ethical
CSR reasoning (Carroll, 1999). Corporate community involvement and stake-
holder responsiveness practices characterized World War II and post-war eras well
into the 1960s (Reich, 1996).
Carroll (1991) completed differentiation of Bowen’s basic CSR notion into a
still canonical set of defined cumulative responsibilities, not tradeoffs, depicted
classically as a subdivided ‘pyramid’ cross-walked to stakeholder categories. The
pyramid is a vertical triangle with four internal subdivisions for economic, legal,
ethical, and philanthropic responsibilities in that order from foundation to apex.
All four responsibility dimensions are morally infused (Carroll, 1995): a moral
manager behaves differently in every dimension. This pyramidal construct embeds
a proposed theoretical synthesis of economics and ethics.
Both economic and legal responsibilities are mandatory. Broad economic
responsibilities (for producing goods and services yielding jobs and profits) are the
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 Corporate Social Responsibility 99
pyramid’s foundation: a legitimate firm out of business cannot address any respon-
sibilities. Economic, citizenship, and ethical perspectives logically can concur on
the economic dimension so long as corporate social performance (CSP) satisfies
shared conditions (e.g. full employment, ecological sustainability, and no signifi-
cant negative externalities) empirically unlikely as a global set. The three per-
spectives also concur of practical necessity on legal compliance as a meaningless
abstraction. The three perspectives profoundly disagree however on scope and
content of criminal and regulatory law, and on whether to litigate or settle civil
lawsuits based on their merits.
The apex of the pyramid is voluntary corporate philanthropy viewed as desir-
able by society and some stakeholders. The economic perspective treats philan-
thropy as either discretionary altruism by undisciplined managers violating
short-term fiduciary responsibility or at best a prudent altruism marching with
long-term fiduciary responsibility in being intended strategically to minimize intru-
sive public policy (Friedman, 1970). The ethical perspective and idealized citizen-
ship promote altruism (prudent and discretionary) as socially desirable and morally
commendable. Instrumental citizenship transforms philanthropy well beyond
prudent altruism into a strategic tool for developing corporate reputation and
market opportunities.
Ethical responsibilities lie between unarguably mandatory compliance (eco-
nomic and legal) and arguably desirable philanthropy (prudent or voluntary).
Society and stakeholders still expect ethical behaviour beyond mandatory legal
compliance. Ethical managers engage in impartial moral reflection beyond the law.
Self-restraint is prudent morally as well as at law. Economic CSR eschews moral
choices in business: matters of private values are best addressed in public policy
(Wilson, 1989). But unethical managers cannot be trusted even to fulfil fiduciary
responsibility (Friedman, 1970), as illustrated by recent corporate scandals.
From an instrumental citizenship view, philanthropy might be better positioned
in Carroll’s pyramid as a subdivision (or allocation) of financial outcomes within
economic responsibilities, as positioned roughly in Figure 1 earlier. The economic
perspective treats all forms of discretionary CSR as voluntary wealth transfer away
from investors. Ethical CSR is a much broader conception of expansive public
policy, self-restraint, and altruism. Two leading instances of moral conduct by
executives in privately owned or closely dominated firms may be commended and
compared to recent corporate scandals at Enron, Tyco, or WorldCom. Ben &
Jerry’s, an ice cream company, practiced philanthropy and ecological awareness
until sold to a publicly traded firm. A fire destroyed the Malden Mills facility.
Owner Aaron Feuerstein kept non-producing employees on payroll; and assumed
debt for rebuilding the facility. There followed a struggle for control with lenders
seeking to make Feuerstein a fiduciary agent.
The modern outcomes-oriented corporate social performance (CSP) framework
(Wood, 1991) proposes measurement of all corporate impacts on general welfare.
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100 D. Windsor
An unresolved issue is whether positive corporate contribution in one dimension
can offset negative corporate impact in another. The framework embeds Carroll’s
(1991) multidimensional conception of responsibilities. The framework also
embeds Davis’s (1960) proposed ‘Iron Law of Responsibility’: if the business sector
sufficiently offends society, increased government regulation likely follows. The US
Sarbanes-Oxley Act of 2002 was such a reaction to corporate scandals. Socially
illegitimate firms reform or disappear.
The composite moral content and expansive public policy orientation of ethical
CSR theory in relationship to superficially less ambiguous and less constrained
economic and citizenship approaches may create genuine puzzles for managers.
The chief defect of the ethical perspective is that it is a broad principle, covering
differing situations, and an amalgam of several ethical theories, so that substan-
tive content of business decisions must be addressed case by case. Frameworks for
ethical CSR are multiple-disciplinary and composite rather than interdisciplinary
and integrated. There is no consensus in ethical CSR literature on common pre-
scriptions for private management or public policy or specific social and stake-
holder issues. But there is a continuing thread of impartial moral reflection on
duties, rights, and outcomes.
A manager understandably wants to know what to make of and what to do
about public policy, social, and stakeholder issues in practical terms affecting cor-
porate resource allocation decisions. Concrete definition, measurement, and pre-
diction are arguably critical to effective management of multiple activities and
issues ( Jensen, 2000). Short chains of robust deductive reasoning are prominent
and preferred in economic analysis (Marshall, 1920, pp. 771, 773, 781). Ethical
CSR arguably meets neither criterion.
Neither criterion is however a valid description of management process. Busi-
ness strategy is not a formula but a process striving for profitable insight; man-
agement is not a science but an art. In reality, an intellectual marketplace of
competing ideas interfaces with a political contest to shape the content of public
policy away from or towards a broad conception of CSR. The three key
approaches contend in politics and law over the reach and content of public policy
and the roles of corporate self-restraint and altruism. This situation is a challenge
to scholarship and management rather than an indictment of ethical CSR. The
strict fiduciary responsibility rule, operating under a permissive business judgment
rule (a type of minimalist public policy), denigrates moral reflection and treats cor-
porate morality as a social bad. Recent corporate scandals signal where unregu-
lated economic CSR and instrumental citizenship can lead – to violation of even
fiduciary responsibility much less customary business ethics.
Ethical CSR appears ambiguous only if viewed as a rigid rule (which economic
CSR is) when it is necessarily diffuse, and thus lacking in logical rigour when it is
properly a general stance or principle. There is a vital difference between a prin-
ciple and a rule. Principles, generally broad or even vague, must be ordered hier-
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 Corporate Social Responsibility 101
archically by relative weights; rules, generally narrow and concrete, are simply
functional (Dworkin, 1978, pp. 26–7). The basic notion of CSR is straightforward.
A narrowly economic or instrumentalist conception is insufficient, and counter-
productive for society and firm. A moral person reflects upon self-restraint, altru-
ism, and general welfare. There are circumstances in which moral concerns are
superior to legally permitted fiduciary responsibility. No moral person can rigidly
follow a functional rule without reflecting in principled fashion on origins and
effects of the rule.
Ethical CSR advice to instrumentalist managers can only be situational. Advice
can be stylized into four typical situations defined within a two-by-two matrix of
relationships between change in financial performance and change in corporate
social performance. Both financial performance and social performance rises or
declines from a status quo. From any status quo situation, a change in firm activ-
ity or external conditions results in one of four general outcomes:

• If financial performance and social performance rise jointly, the outcome is

a win–win efficiency gain without governmental intervention or moral reflec-
tion. Strategic investment in market conditions under the guise of citizenship
behaviour falls into this category. This outcome corresponds to Adam Smith’s
expectation about a relatively free market economy. If financial performance
rises while social performance stays constant – a Pareto efficient gain, this
circumstance borders dangerously on business incentive always to ignore
social performance.
• If both financial performance and social performance decline, the outcome
is a lose–lose inefficiency loss. Governmental intervention is likely to be
desirable, because corporate self-restraint and altruism have proven
inadequate.
• In the case of a rise in financial performance and a decline in social perfor-
mance, there is a conflict between fiduciary responsibility and social respon-
sibility. The conflict is a welfare transfer from society to the firm, as occurs
with negative externalities. This transfer is an absurd tax on society in Adam
Smith’s sense (The Wealth of Nations, 1776, Book One, Ch. 11, Conclusion).
An invisible hand case justifying strict fiduciary responsibility would be that
in the longer run social performance will be higher than in the short run.
• In the case of a decline in financial performance and a rise in social perfor-
mance, also a conflict between fiduciary and social responsibilities, there is a
welfare transfer from the firm to society. Friedman (1970) admitted to a strate-
gic case for prudent altruism. The more complicated case would be that a
short-run rise in social performance leads over time through a decline in finan-
cial performance to an even worse social performance outcome. Adam
Smith’s invisible hand argument predicts this possibility of unintended nega-
tive consequences.
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102 D. Windsor
Evaluation of relationships between financial and social performance dimensions
becomes more complicated where the latter’s own components do not move
together. For instance, more job creation for less ecological sustainability is a tough
trade-off.

Economics of Corporate Social Responsibility

The revived economic CSR does have a moral core independent of investor prop-
erty rights. The utilitarian standard for general welfare and thus corporate social
performance (CSP) is consumption. ‘Consumption is the sole end and purpose of
all production; and the interest of the producer ought to be attended to only so
far as it may be necessary for promoting that of the consumer’ (Smith, The Wealth
of Nations, 1776, Book Four, Ch. 8). This utilitarian moral core emphasizes mate-
rial gains for society as a whole achieved through reasonably efficient and
competitive markets. Investor property rights while defended are ultimately
subordinate to general welfare. This position is at variance from instrumental
citizenship investing in such property rights. While utilitarianism is a variant of
consequentialism and similarly an outcomes orientation explicitly defines the
dominant ethical CSP model (Wood, 1991), an outcomes orientation is not in itself
a satisfactory theoretical synthesis. Utilitarianism and ethical CSR remain com-
peting moral frameworks linked to competing political philosophies.
The economic viewpoint argues that no costly responsibility action should be
undertaken voluntarily. Responsibility must be defined in minimalist public policy,
to which one may reasonably add customary business ethics. Recent economic
CSR literature tends to omit the latter, which was emphasized by Friedman
(1970). Apparent restriction of a firm’s external constraints to public policy
in recent literature is more likely an oversight, not a fixed rule. It seems a reason-
able extension to permit customary business ethics. The debate between economic
and ethical CSR then really concerns expanding ethical concerns and public
policy.
The economic viewpoint traces directly back to Adam Smith. Two centuries of
experience ( Jensen, 2000) strongly supports Smith’s thesis that better economic
performance occurs where capital allocation for production and distribution of
wealth operates under conditions of relatively free and competitive markets within
minimalist public policy. ‘Without any intervention of law, therefore, the private
interests and passions of men naturally lead them to divide and distribute the stock
of every society among all the different employments carried on in it as nearly as
possible in the proportion which is most agreeable to the interest of the whole
society’ (Smith, The Wealth of Nations, 1776, Book Four, Ch. 7, Part 3). Smith’s
approach links actor self-interest generally governing market activities with the
desirable public interest outcome of general welfare improvement through the
mechanism of the invisible hand. Governmental interventions and corporate altru-
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 Corporate Social Responsibility 103
ism likely produce unintended negative consequences in this setting. However,
widespread security and justice are necessary conditions antecedent to socially
desirable market outcomes. Ethical CSR addresses these conditions.
Friedman (1970) states the basic case for minimalist government regulation of
markets as doing what firms cannot accomplish voluntarily: effective control of
incentives for producer monopolization at the expense of consumer welfare. US
corporation law divides by state between a relatively lax business judgment rule
and so-called constituency statutes permitting consideration of stakeholder
impacts. Smith raised the likelihood that law will be imperfect: ‘People of the same
trade seldom meet together, even for merriment and diversion, but the conversa-
tion ends in a conspiracy against the public, or in some contrivance to raise prices.
It is impossible indeed to prevent such meetings, by any law which either could be
executed, or would be consistent with liberty and justice’ (The Wealth of Nations,
1776, Book One, Ch. 10, Part 2). This very circumstance implies moral rules and
impartial moral reflection (Smith, The Theory of Moral Sentiments, 1759). Prudent,
even if not moral, actors should recognize and avoid such conspiracies or
contrivances.
Friedman (1970) rejected any discretionary CSR in favour of strict fiduciary
responsibility focused on economic wealth creation as the best contribution of busi-
ness (i.e. CSP) to the general welfare. The rejection stretches definition of discre-
tionary altruism to encompass much of ethical CSR, in the sense that the rejection
marches with minimalist public policy and reduces moral reflection to customary
business ethics. Friedman recognized an instrumental case for prudent altruism to
forestall expansion of public policy. Friedman particularly asserted lack of logical
rigour and substantive ambiguity of ethical CSR. Some advocates of stakeholder
theory or the global corporate citizenship concept basically concede ambiguity
and lack of rigour in CSR ( Jones, 1995).
The revived economic perspective ( Jensen, 2000; McWilliams and Siegel, 2001),
while harking back to Adam Smith, Friedman, and the utilitarian moral core of
economics, addresses new conditions of rising market-like demand and political
agitation for various kinds of CSR by increasingly activist stakeholders (Baron,
2001). This revival argues that corporate resource allocation decisions should
respond only to breakeven or profitable opportunities as if in a relatively unfet-
tered market. Any other conduct, which covers essentially all of ethical CSR
beyond legal compliance, is broadly speaking treated as discretionary altruism by
management at investors’ expense. Economic CSR narrows duty to strict fiduciary
responsibility to investors’ property rights except as constrained by law (and
by extension argued here customary business ethics). Jensen emphasizes long-term
or sustainable wealth creation rather than short-term profit maximization. He
proposes an enlightened stakeholder management of considering productivity
effects of not heeding employees’ sentiments concerning other stakeholders’
welfares.
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104 D. Windsor
Table I. Stylized facts assumed in revived economic approach to corporate social responsibility

• A board of directors elected by the shareowners (i.e. principals) appoints the CEO (i.e. senior
agent) to apply the strict fiduciary responsibility rule.
• The firm (i.e. CEO, directors, and shareowners) interacts with all other stakeholders in power-
based bargaining relationships.
• Minimalist public policies regulate rights and duties of all participants.
• The CEO retains significant discretion of action due to separation of ownership and control
(embedding information asymmetry), and also both imprecision of laws and legal outcomes and
lagging of laws behind commercial practices.
• The board of directors retains significant discretion of action and insulation against liability to
the shareowners under the loosely defined business judgment rule.
• A CEO can handle only one objective at a time ( Jensen, 2000). Any other objective other than
wealth creation must be handled in strictly hierarchical subordination. The theory is critical of
multiple (e.g. triple) ‘bottom line’ performance frameworks.
• Two mutually reinforcing rationales justify a purely market wealth creation focus. One rationale
is long-term social welfare ( Jensen, 2000). The deregulated market economy will outperform
excessive governmental intervention. The other rationale is property rights of investors, who are
entitled to organize firms and pursue wealth creation (Sternberg, 1996).
• The CEO cannot properly engage in discretionary CSR action at the expense of the
shareowners’ wealth creation objective (McWilliams and Siegel, 2001). Friedman (1970)
characterizes any degree of discretionary CSR by the CEO as ‘theft’ from the firm’s primary
stakeholders: customers, employees, and/or shareowners. (Since such discretionary CSR is legal
under the business judgment rule, the admonition is purely moral.)
• The shareowners should not engage in discretionary CSR action, understood as corporate
altruism, through the agency of the firm. (Smith denigrates begging; The Wealth of Nations, 1776,
Book One, Ch. 2.) Discretionary CSR erodes the distinction between public and private action
(Friedman, 1970).
• The firm should engage in CSR activities demanded or pressured by stakeholders only to the
degree that customers or someone else are prepared to pay for such activities (McWilliams and
Siegel, 2001).
• Because discretionary CSR is forbidden theoretically and breakeven or profitable CSR is a
business judgment, any costly form of CSR is a matter solely for public policy to define or for
stakeholders able to pressure firms effectively (Baron, 2001).
• Implicit in the previous argument is the political freedom of corporations to attempt to
influence public policy in direct competition with stakeholders without regard to public interests.
• The firm can engage in prudent altruism (Friedman, 1970), intended under the business
judgment rule to avoid even more costly governmental or stakeholder reactions in the future, or
in strategic philanthropy intended to develop corporate reputation and market opportunities.
• A firm can take reasonable account of the sentiments of its employees (presumably excluding
the CEO per Friedman, 1970) concerning impacts on other stakeholders and nature to the
degree that such sentiments affect employee morale and hence productivity ( Jensen, 2000).
• No strong empirical evidence exists concerning the relationship between CSR activity and
financial performance. A purely strategic calculation is therefore involved, because no natural
law is known to be at work (McWilliams and Siegel, 2000).

Economic CSR rests on highly stylized assumptions, detailed in Table I. The

table description is consistent with Friedman and therefore should not be an
unfairly narrow depiction of the economic approach. The stylized explication
focuses on publicly traded joint stock corporations. The setting is a capitalist
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 Corporate Social Responsibility 105
market economy in which government intervention for purposes of activity regu-
lation and public goods provision operates at the level of some minimalist state
meeting Smith’s prescription (updated where necessary for modern conditions).
The stylization may be taken as idealization of the Gilded Age, or as political plat-
form for socially desirable deregulation and privatization. The shareowners have
adequate liberty to pursue private wealth (Smith, The Wealth of Nations, 1776, Book
Four, Ch. 9). Fiduciary responsibility is not an absolute standard (practical relaxa-
tions include the business judgment rule) but rather takes an instrumental and
long-term definition ( Jensen, 2000). Strategy permits prudent altruism, and that
notion might keep stretching with expanding expectations of stakeholders and
society.
Economic science is rigorous logic connecting premises and conclusions applied
to interpretation of empirical facts (Marshall, 1920, p. 759, n. 2). Following
Cournot’s view, however, an economic problem is not a chain of causation but a
set of mutually determining elements (Marshall, 1920, pp. ix–x, introduction to
first 1890 edition). It must be appreciated that logic and verification may well
grapple with considerable complexity. ‘Economic language seems technical and
less real than that of common life. But in truth it is more real, because it is more
careful and takes more account of differences and difficulties’ (Marshall, 1920,
p. 759). Ethical CSR grapples with complexity; economic CSR parsimoniously
abstracts away from it.
Even within a purely economic logic, uncompensated negative externalities
suffice to produce a theory of public policy beyond basic security and customary
justice. By extension this theory signals desirability of moral reflection on CSR in
the absence of strong public policy. A negative externality impacting a stakeholder
or society constitutes real cost. Negative externalities can distort production
and/or consumption to the detriment of general welfare. Such burden must be
addressed by the affected party through complaint or lawsuit or change in public
policy. In the absence of public policy or moral constraint in some form, the firm
operating under the strict fiduciary responsibility rule should not internalize the
externality. Internalizing cost directly reduces profit performance. With negative
externalities, public policy and moral reflection become socially desirable, and thus
a proper object of study by managers and directors. Economics and instrumen-
talism reduce public policy formulation to a marketplace, one not likely empiri-
cally to be very competitive.

IMPLICATIONS FOR MANAGERS AND SCHOLARS

In the 1980s and 1990s, a new Gilded Age flourished on deregulation, privatiza-
tion, and greed – until now notorious scandals revealed ‘dens of thieves’ in some
firms and some fund managements. Prosecutions are underway, and the US
Sarbanes-Oxley Act of 2002 illustrates Davis’s (1960) ‘Iron Law of Responsibility’.
© Blackwell Publishing Ltd 2006
106 D. Windsor
Adam Smith would not find recent scandals surprising, given his comments on
directors of the East India Company (The Wealth of Nations, 1776, Book Four, Ch.
7, Part 3) and persistence of business conspiracies against the public interest, cited
earlier (see also Book One, Ch. 11, Conclusion).
This very period saw sharper delineation of competing economic, ethical, and
citizenship perspectives. The combination of various criticisms of ethical CSR,
marked success of shareholder wealth maximization strategy, and increasing
importance of multinational enterprises (MNEs) in a globalizing economy con-
tributed to emergence of the new concept of corporate citizenship based on a
loose political metaphor. This metaphor competes with both CSR theories and
abandons the language of responsibility. The metaphor serves as an escape from
the continuing debate between ethical and economic viewpoints on CSR.
Citizenship is however a double-edged sword. A citizen has both duties (i.e.
responsibilities) and rights (i.e. privileges). An idealized interpretation emphasizes
expanding moral duties of idealized citizenship that Aristotle might recognize. An
instrumental interpretation emphasizes privileges of citizenship to do nothing
more than make strategic investments in moral reputation and market opportun-
ities and lobby governments to obtain corporate benefits and avoid corporate costs.
While individuals are natural citizens of a society, firms are artificial citizens (i.e.
licensed creations). Whether privileges of artificial citizens should be less and
responsibilities greater or not, the true standard for citizenship is self-restraint
and altruism beyond self-interest: ‘He is not a citizen who is not disposed to respect
the laws and obey the civil magistrate; and he is certainly not a good citizen who
does not wish to promote, by every means in his power, the welfare of the whole
society of his fellow-citizens’ (Adam Smith, The Theory of Moral Sentiments, 1759,
p. 339).
Conflicting developments will likely bear on future CSR practice. On the one
hand, there is some tendency to increased regulation or re-regulation as illustrated
by the US Sarbanes-Oxley Act of 2002. Recent corporate scandals not restricted
to the USA, and readily predictable from agency theory and Adam Smith,
have drawn increased attention to ethical decision-making and legal deterrents.
Scandals reveal financial frauds by managements of firms and funds in blatant
violation of even fiduciary responsibility and arguably exploiting deregulation and
re-privatization (Palepu and Healy, 2003). These scandals may tend to reinforce a
vaguely hostile (and possibly sensible) public opinion concerning big business.
On the other hand, there is some tendency to increased voluntarism. A devel-
opment, criticized by some CSR activists while praised by others, is the European
Commission’s decision pursuant to its Green Paper on CSR (European Commis-
sion, 2001) to address CSR within the European Union (EU) through a multi-
stakeholder forum on voluntary initiatives in lieu of direct regulation. Some
international developments concern multilateral efforts such as the UN Global
Club to obtain voluntary participation by businesses in initiatives about human
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 Corporate Social Responsibility 107
POSITIVE IMPACTS

Expectations of
Command Positive
Corporate Externalities
Duties Altruism
PUBLIC POLICY CORPORATE
COMPLIANCE DISCRETION
Prohibit Impartial Moral
Violations of Reflection on
Stakeholder Negative
Rights Externalities

NEGATIVE IMPACTS
Figure 2. Four relationships between public policy compliance and corporate discretion

rights, labour rights, and environmental sustainability; or the UN World Health

Organization (WHO) to obtain increased governmental regulation of tobacco
products. These approaches are presently instrumental citizenship or prudent
altruism at best. But they hold the useful potential of raising global business stan-
dards even if not approximating ideal citizenship behaviour.
Figure 2 depicts four possible relationships between public policy and corporate
discretion. The vertical axis makes a distinction between positive social impacts
and negative social impacts of businesses. Both society and firm can share an
objective of maximizing the former and minimizing the latter. The issue separat-
ing ethical and economic CSR is how to proceed. The horizontal axis makes a
distinction between increasing mandatory public policy compliance and increas-
ing unregulated corporate discretion. The figure generates a two-by-two matrix of
four cells displayed here in a different layout to emphasize the axes. One aspect
of public policy prohibits specific negative impacts, because they invade defined
rights of stakeholders or society. Another aspect of public policy commands posi-
tive impacts as duties for welfare contributions to stakeholders or society. This
interpretation, in the left-hand cells, works well enough for criminal and regula-
tory law, to which obedience is mandatory.
Civil law affords much more discretion to a firm: it can elect to settle or litigate
by cost-benefit calculation (Haslem, 2003). It may be convenient to conceive of
civil law as located roughly where the vertical and horizontal dimensions intersect.
Until a final decision in civil litigation, it is difficult to determine negative impact
and nature of rights, duties, and justice.
The upper right-hand cell defined by positive impacts in relationship to corpo-
rate discretion includes positive externalities (i.e. costless altruism) and various
forms of costly altruism. This cell is purely discretionary: there cannot be a com-
© Blackwell Publishing Ltd 2006
108 D. Windsor
pelling corporate duty to be benevolent. Society, through public policy or opinion
or stakeholder expectation, can signal desirability of positive impacts. SUTA
dumping falls into this upper right-hand cell. Prudent altruism leads to a policy of
not inviting public policy expansion. Even absent expansion, impartial moral
reflection should lead firms to focus on positive externalities and altruism.
The lower right-hand cell is defined by negative impacts in relationship to cor-
porate discretion. Negative externalities illustrate the point. The firm gains from
unpriced burdens imposed on others, and social performance may be presumed
to be reduced by such burdens. The various forms of this situation require moral
reflection concerning human rights. Civil lawsuits may address this cell. Two
pending civil lawsuits against US firms by non-citizens reflect this circumstance
and illustrate risks of purely instrumental citizenship. Lawsuits against Unocal and
ChevronTexaco, filed under the Alien Tort Claims Act (ATCA) of 1789, intended
to deal with issues arising from piracy and ambassadors, invoke universal human
rights.
Unnamed plaintiffs, citizens of Myanmar (Burma), sued in US federal court
arguing that Union Oil of California bears liability for alleged human rights abuses
by the Myanmar government. Unocal was a passive minority investor in a pipeline
built and operated by a Myanmar state enterprise and a French firm to transport
natural gas from the Andaman Sea to Thailand. The state enterprise and the
French firm have been dismissed from the case for want of jurisdiction. The suit
against Unocal was dismissed and then reinstated on appeal. The suit was ordered
to trial. The essential argument alleges that Unocal knew what its Myanmar
partner would likely do (if the alleged facts are true) and invested for financial gain
in disregard of that knowledge. Both international law and federal common law
forbid slavery or near equivalents, and plaintiffs allege slave-like abuse in
Myanmar’s role in the pipeline. Unocal eventually settled out of court.
Indian communities in Ecuadorian Amazonia sued Texaco (now part of
ChevronTexaco) for alleged environmental damages. Texaco ceased operations
there about a decade ago and contends that it met Ecuadorian laws of the time
and conducted such clean-up operations and compensations as then required. The
plaintiffs’ basic contention is that those standards were insufficient and Texaco had
the capacity for better conduct (such as re-injecting wastes rather than leaving on
the surface). The case was dismissed from US federal court but moved to Ecuador.
ChevronTexaco could be found liable for adhering to local law while knowingly
ignoring superior practices of the time expected in some other jurisdictions.
Even if defendants prevail, corporate reputations may or may not suffer. Little
is known empirically about the mechanism of reputation. If plaintiffs prevail, then
there could be two competing explanations for the criticized managerial conduct.
Bounded rationality suggests managerial miscalculation. Either public reaction or
the power of affected stakeholders was not adequately understood, or likelihood
of change in public policy was not adequately appreciated, or legal outcomes and
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 Corporate Social Responsibility 109
their consequences were not reliably predicted. The alternative explanation is
moral defect of managers owing to or camouflaged within strict fiduciary respon-
sibility. The CEO of each firm considered that corporate wealth, in which the
CEO participated, was the overriding consideration. Recent corporate scandals
suggest that agent opportunism is in ample supply, and even fiduciary responsi-
bility well short of CSR is apparently in scarce supply.
Jones (1995) points out that there have been various attempts over the years to
identify an integrating theme for the field of inquiry commonly labelled business
and society. Some of the proposed integrating models have been corporate social
performance, social control of business (i.e. expansive public policy), and stake-
holder theory. These three models have played only modest roles in the present
article thus far. Jones proposed a ‘formal instrumental theory of stakeholder man-
agement’ representing a synthesis of ‘the stakeholder concept, economic theory,
insights from behavioral science, and ethics’ (1995, p. 404). The instrumental stake-
holder theory features relevantly a proposed synthesis of ethics and economics.
Jones’s core theory argues ‘that a subset of ethical principles (trust, trustworthiness,
and cooperativeness) can result in significant competitive advantage’ for the prac-
ticing firm (1995, p. 404) where mutually shared with stakeholders. This core theory
emphasizes ‘the role of ethics in efficient contracting’ (Jones, 1995, p. 404) devel-
oped through a review of both agency and transactions cost perspectives on con-
tracting. Jones’s insight is that opportunistic behaviour can be reduced more
efficiently through ‘the voluntary adoption of standards of behaviour that limit or
eliminate it’ (1995, p. 412). That is, mutually trusting and trustworthy principal and
agent relationships reduce opportunism behaviour and transactions cost.
There is a long tradition back to Adam Smith that ‘competitive market
economies operate far better where shared values of honesty and integrity prevail’
( Jones, 1995, p. 412). One can associate this notion of shared values with Fried-
man’s (1970) concept of customary business ethics. One might apply this insight,
as did Adam Smith, to the relative efficiency of social control of business and vol-
untary self-restraint and altruism by business. If voluntary but genuine building of
trust and cooperation reinforces positive responses among partners and stake-
holders, then reliability of behaviour effectively and efficiently restrains oppor-
tunism. Jones applies this insight to corporate social performance, a concept closely
related to corporate social responsibility ( Jones, 1995, p. 430).
Jones’s proposal requires trustworthy agents (as well as principals), who however
could be acting out of instrumental rather than moral motives. Instrumental citi-
zenship is socially satisfactory to the degree that it generates positive social out-
comes. There is however nothing much to prevent such instrumentalism from
being pure camouflage for or sliding step-by-step into misconduct. Jones was fully
aware of the possibility. Jones’s proposal does not require impartial moral reflec-
tion, but only an instrumental calculation by an agent that competitive advantage
will accrue over time by trustworthy behaviour.
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110 D. Windsor
Dodd (1932), in criticizing fiduciary responsibility, was explicit that he did not
favour a multi-principal approach to discretionary agent duties. On the contrary,
he favoured strengthening legal rights of consumers and employees because man-
agers are not to be trusted with instrumental discretion for multiple responsibil-
ities. Similarly, Preston and Post (1975) argued from an expansionist viewpoint that
CSR should be defined solely by public policy and not by management discretion.
Recent corporate scandals rediscover the point even with respect to fiduciary
responsibility. In principle, no agent can be perfectly a representative of one or
even several constituencies, but must function in the capacity of a trustee of the
public interest.
Modern managerial practice arguably has deteriorated back towards conditions
and standards of the Gilded Age. Three general causes are likely. One cause is the
marked success over the past two decades of shareowner wealth maximization
strategies. There has been concrete demonstration that emphasis on fiduciary
responsibility creates considerable wealth for someone. Distribution of resulting
wealth is however poorly studied. A second cause is deregulation and privatization
in search of market efficiency. Deterrence and enforcement became laxer in par-
allel with strengthened incentives for misconduct. A third cause may lie in the
nature of business school education (Ghoshal, 2003; Pfeffer and Fong, 2004;
Starkey et al., 2004) in promoting an ideology of utilitarian wealth creation
grounded in individual liberty, property rights, and market efficiency and barely
restricted by minimalist public policy. Recent corporate scandals likely illustrate
where this ideology can lead in absence of moral reflection.
There are important implications for future scholarship. The strength of eco-
nomics is that it does not rely on perhaps unreasonable expectations concerning
morality of market actors. A corresponding weakness is that such actors cannot
be relied on even to apply the strict fiduciary responsibility rule absent expansive
public policy. A weakness of the ethical approach is that it asks all market actors
to practice impartial moral reflection. The corresponding strength lies in the pre-
diction that if actors behave badly, expansive public policy will follow. The citi-
zenship metaphor partakes of these strengths and weaknesses in proportion to
whether an instrumental or ideal interpretation is pursued. The vital matter is real-
istic relaxation of strict fiduciary responsibility to recognize not managerial dis-
cretion (which typically results in agent violation even of fiduciary duty) but
circumstances requiring moral reflection. Some sense of producer moral and social
responsibility is a legally and socially desirable buffer between market selfishness
and expansive public policy. There are circumstances when fiduciary responsibil-
ity must yield to public interest. A purely functional rule such as fiduciary respon-
sibility leading to utilitarian social outcomes states that one simply maximizes one’s
self-interest without respect to moral principle (customary, utilitarian, rights and
duties, or justice).

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 Corporate Social Responsibility 111
If the supply of moral managers is thin, fiduciary responsibility and CSR alike
will prove difficult. If the supply of moral managers is thicker, then CSR releases
such managers from overly strict fiduciary responsibility to put moral reflection
into practice (Carroll, 1991, 1995). Adam Smith expected that rising wealth would
release natural sympathies for one’s neighbours, and that such release could be
accelerated and directed by moral education (Ghoshal, 2003).
At stake for scholarship is conflict between a strict fiduciary responsibility rule
and a broad and thus ambiguous CSR ethics. Managerial needs may make an
essentially functional rule – such as strict fiduciary responsibility operating within
the historically permissive business judgment rule of US corporation law – highly
appealing. It is not clear whether rights and duties are hierarchical, or must be
balanced in some fashion. Fiduciary responsibility concerns purely principal-agent
relations. But the fiduciary responsibility rule is binding on the agent only where
there is no conflict with social performance outcomes and no illegitimate harm
to other stakeholders. The rule cannot compel conflict with moral or social
responsibilities.
CSR concerns principal–principal relations. The CSR principle argues that
society is the superior principal. The relationship between shareowner and other
stakeholders is more contingent. Where a stakeholder’s legal or moral rights are
harmed, then those rights are superior to the interests of the shareowner. A broad
CSR principle automatically suffers in comparison to depiction of a logically
simple and legally codified strict fiduciary responsibility rule on the one hand, or
to genuine success stories in the 1980s and 1990s of shareholder wealth maxi-
mization based on application of such a rule as a model for profitable business
strategy. The true problem arises in the difficult legal and political dimensions of
effecting CSR, rather than in any intellectual failure to provide strong formula-
tions of what would have to be fatally simplistic arguments about profit maxi-
mization, stakeholder satisfaction, or strategic philanthropy. Business is socially
embedded in actor values, power relations, and views of public interest – and
global business operates across multiple societies. The EU could not readily resolve
such disputable matters.
Despite rising stakeholder demand for and recognition of the theoretical and
practical importance of CSR, there is little consensus on substantive content or
decision-making process; and scholarly analysis of CSR through any approach is
still in an embryonic stage. There has never been consensus on an overarching
paradigm for businesses and societies research ( Jones, 1995). To the contrary, there
are multiple, partly overlapping and partly conflicting research streams drawing
on different disciplines and traditions. It is necessary to apply multiple conceptual
lenses to CSR for both scholarly and managerial purposes. What characterizes
science, including economics, is rigorous logic tested against empirical facts. What
characterizes moral philosophy is neither lack of logic nor of empirical founda-

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112 D. Windsor
tion but rather claims about right and wrong conduct (by individuals, groups, or
organizations) typically left to private values and public policy in economic analy-
sis. CSR philosophy investigates moral rights of individuals in relationship to busi-
nesses and moral duties of businesses in relationship to social outcomes.
It is difficult to disentangle science, interest, and ideology in CSR discourses.
Friedman (1970) characterized discretionary CSR by executives or shareowners as
socially dangerous (i.e. leading on to socialism). Fuchs et al. (1997) point out that
there are many policy disputes among economists that turn at least in part on dis-
agreements concerning parameters and/or values. The economic perspective
embeds a science of markets and institutions, and an ideology or worldview of
business–society and business–government relations. An intellectual viewpoint
may march with an ideology (i.e. a set of doctrines and opinions) or a worldview
(i.e. a comprehensive philosophy of the world and of human life). No science is
perfectly value free; no philosophy is necessarily devoid of practical content.
There is as yet little basis for theoretical synthesis of economic and ethical
approaches to CSR. A citizenship metaphor does not substitute. Both managers
and scholars should consider Adam Smith’s The Theory of Moral Sentiments (1759)
and The Wealth of Nations (1776) in combination and in their proper order. Smith
apprehended an important role for moral rules. The fiduciary responsibility rule
while purely functional can perhaps masquerade as a moral rule, in the sense of
defending investor property rights and utilitarian outcomes. The vital aspect of
The Theory of Moral Sentiments however is Smith’s notion of an impartial spectator,
who should objectively evaluate the circumstances of neighbours, self, and the
public interest. That differing views of business ethics (e.g. customary, utilitarian,
rights and duties) simply reflect the difficulties of practical action in business and
government need not delay one much in practice. The businessperson will face
circumstances obliging moral reflection as an impartial spectator on some broad
principle of ethical CSR. In Smith, ethical and economic considerations marched
together, with the former antecedent to the latter. Smith did not lay aside other-
regardingness and ethics in favour of selfishness; he simply expected realistically
that the latter would typically dominate in market activities (The Wealth of Nations,
1776, Book One, Ch. 2). Nevertheless, since ‘economic man’ is not perfectly selfish,
‘ethical forces are among those of which the economist has to take account’
(Marshall, 1920, p. vi, introduction to first, 1890 edition).
Adam Smith rescued economic science from intertwining with ethics, jurispru-
dence, and politics. Economic CSR maintains this analytical separation, partly on
behalf of general welfare. Ethical CSR shoves these subjects back together but
only in composite form, bearing in mind that Adam Smith never got back to this
task as a potential guide. Idealized citizenship is ethical CSR pragmatically stated
in voluntarism language because there is unlikely to be global public policy defend-
ing universal human rights. Instrumental citizenship is managerial discretion
concerning philanthropy in disguise. It is precisely intertwining of such multiple
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 Corporate Social Responsibility 113
considerations that makes CSR issues complex, as Cournot might appreciate.
Smith’s assumptions of security and justice as prerequisite conditions for market
competition find useful reflection in Jones (1995), but broader public policy and
moral reflection may prove necessary to those conditions.

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