Modern organizations are facing rising pressures to be socially responsible and sensitive to all stakeholders’ needs. The expanded global reach and influence of corporations coupled with rising governance failures, particularly in developing countries, have brought the concept of corporate social responsibility (CSR) center stage. The traditional focus in the CSR debate has been on the private sector, shedding light on its pivotal role and responsibility in leading the CSR movement. Nevertheless, in view of the immense complexity and magnitude of challenges in today’s global environment, promoting social development surpasses the sole responsibility of private corporations acting alone. In fact, even when corporate-led CSR initiatives are truly making progress in promoting development, there will still be gaps to be filled by other community actors. Thus a broader approach to CSR is needed, capitalizing on the active involvement, leveraging of resources and collaboration among four key actors namely the private sector, core governance institutions, the non-governmental sector, and the scientific and research community. This calls for a new definition and understanding of roles, boundaries and responsibilities of different community actors, and the exploration of innovative collaborative modes of dialogue and interaction among them for broader and deeper CSR impact.
Main issues
Corporations today are playing an increasingly influential role. The globalization process has allowed them to increase their reach and find new opportunities, but it has also created many major challenges, through magnifying the scope of their social, economic, and environmental impact. Competitive pressures, unfamiliar risks and growing social expectations are creating all kinds of new leadership challenges. The expansion of the global reach of the private sector has been coupled with increasing expectations of improved corporate conduct. The globalization process has further led to the exposition of national and global governance gaps, for which progressive companies are increasingly expected to compensate. All these drivers have undermined the proposition that the success of corporations hinges on generating economic profits alone. A more holistic view and understanding of value creation prevails today, with companies focusing on long-term CSR strategies as potential solutions for challenges faced at different levels.
It is increasingly accepted that the rising societal and environmental concerns and responsibilities of today cannot be tackled by the private sector — or anyone else — acting alone. As different community parties are inextricably linked to each other, unilateral CSR initiatives would only reflect one-sided efforts and would mostly result in fragmented low-impact activities and interventions. Sustainable development necessarily entails that new governance and business models are set and innovative patterns of dialogue and collaboration explored. CSR should gradually evolve from being conceived as a “business challenge” or problem, to extend to an ever-changing system of relationships and obligations among various key social actors, including the private sector, core governance institutions, the non-governmental sector and the scientific community through mobilizing and consolidating their respective resources and competencies.
The private sector
The role of business in society today has changed significantly and we have come a long way from the era of Milton Friedman, who considered that the one and only responsibility of a business is to “use its resources and engage in activities designed to increase profits so long as it stays within the rules of the game.” The rules of the game seem to have changed and corporations are faced with changing expectations with respect to their responsibilities. The business sector has the potential and the leverage to actively play a leadership role in addressing this paradigm shift and to be the ‘game-changer’ in the CSR movement. This role will necessarily entail a number of structural, operational, and cultural adjustments, changes that are often accompanied by various and sometimes significant costs. The private sector faces in this respect the challenge of evolving beyond a legitimacy driven, public relations or philanthropic CSR approach to a more integrated and strategic approach aligned with core values, competencies, and long-term strategic objectives. This entails moving from reactivity to pro-activity in way of taking the lead and initiative on various CSR activities and finding ways to link them strategically to core competence. It also entails the upholding at all times of a critical mass of core values revolving around integrity and accountability in guiding all CSR activities and stakeholder relationships. The private sector thus needs to sustain its key entrepreneurial and innovative role in leading the CSR movement while gradually anchoring a more institutionalized and systematic orientation.
The role of governments
The state or government is the entity that should take on the responsibility of protecting the public interest at large and ensuring the realization of societal welfare. Nevertheless, trends like globalization have affected state regulation, rendering it more problematic and less centered than before. While it is encouraging that an increasing number of businesses are beginning to voluntarily embrace CSR, it is nevertheless troubling that the business case for CSR is increasingly founded on the diminishing active roles of governments. Governments have every interest in reintegrating themselves into the CSR debate, with their roles lying in the creation of an enabling environment where CSR can mature and flourish and aligning the outcomes of business activity to public policy goals. The government can thus set the overall framework for corporate social engagement, through the promotion of public sector goals and priorities and associated principles relating to respect of human rights, alleviation of corruption, private property rights, and fiscal and market incentives. Besides attending to traditional governance gaps, governments can also catalyze CSR through gentle pressure and soft regulation. The concept of soft regulation as a complement to CSR has gained support across various European governments. The UK was quick to realize that direct regulation may be counterproductive in relation to CSR, adopting instead the concept of ‘alternative to state regulation’ as comprising “all arrangements that stop short of direct government regulation enforced through the courts.” Governments should thus play a more active role in shaping the CSR agenda through a strategy of soft regulation, coupled with the deployment of awards, funding and fiscal incentives.
Non-governmental organizations
While government involvement in the current global marketplace has diminished in recent years, the 1990s witnessed the heightened interest and engagement of civil society in CSR. Various NGOs and their networks are attracted to numerous issues including child labor, sweatshops, fair trade, poor communities, toxic chemicals, oil pollution and tropical deforestation. NGOs today have gained visibility and learned to exhibit a more favorable inclination in pursuit of CSR — specifically, they have been more willing to collaborate with businesses in pursuit of common goals. NGOs can capitalize on a distinctive set of attributes in influencing companies to act with socially responsible behavior. Their adaptability, flexibility, access to information and independence allow them to identify community needs and gaps and act as intermediaries among different social groups to institutionalize change for sustainable development. While it is generally accepted that business firms are differentiated by their managerial efficiency, technical expertise, creativity, dynamism and access to finance, NGOs have expertise and knowledge in what is needed to be done in the field and are better able to reach the impoverished. Through successful collaboration, these two groups can complement each other and better allocate resources for the common good. NGOs fill an important gap in relation to CSR and their nascent interest in CSR needs to be leveraged, reinvigorated and sustained.
The scientific and research community
As new business models and management skills are needed today to help companies respond to bottom line challenges, new demands have been placed on the scientific and research community. There is a growing need for the research community to play a more direct and involved role in the field of CSR to produce and disseminate relevant knowledge. This entails remolding content and delivery and ensuring that programs are tailored to current societal trends and needs. Sustainability concepts thus need to be integrated into business education to reflect the real challenges and strategic decisions facing business managers on a daily basis. In this sense, the scientific and research community has a pivotal role to play in laying a basic ‘cognitive roadmap’, or the ‘infrastructure for CSR’, improving the supply of knowledge, skills, insights and guidelines, while also bridging the gap between the various actors, and mobilizing fruitful interactions. In its function as a neutral and credible actor, the scientific and research community indeed has the vital capacity to act as a link or communications circuit between stakeholders and alleviating the barriers that have traditionally alienated the various actors, as well as reinforcing interactions among them in pursuit of an active and constructive CSR discourse. The research community will thus have to rise to the challenge through the systematic compilation and dissemination of relevant knowledge and the integration of CSR into mainstream business education, but also in terms of liaising actors, facilitating debate, dialogue, exchange, communication and a deeper exploration and wider promotion of CSR-related issues.
The road ahead
In view of the immense diversity and complexity of the CSR landscape at the turn of the 21st century and the current fragmentation of efforts and resources, there is a growing appreciation globally of the need for collaboration. A systemic approach to CSR is indeed likely to leverage opportunities, resources, competencies and networks, supporting in turn the scaling-up of CSR activities while broadening and deepening their impact. This need is even more acute in the context of developing countries in view of the complexity and interdependence of challenges, defying easy solutions and ready consensus and requiring more innovative interactions and interventions. A more systemic approach is thus likely to go a long way in taking CSR deeper and further in the context of Lebanon and the Middle East more broadly. This will require from each actor serious consideration of CSR coupled with a positive propensity to assume responsibility while initiating change in orientation. Beyond this, it will also necessitate that, as informed and sophisticated citizens, we all do our fair share in encouraging and demanding a proactive responsible orientation from our core societal actors and institutions.
Dr. Dima Jamali is Associate Professor of Management at the American University of Beirut.
