Need assessment

The problem

Problem statement

Our interconnected world, growing in population, shrinking in resources, faces stark challenges to become sustainable and strive for well-being for all humankind.  Past paradigms for doing business, assumptions about economics, such as markets being led by an invisible hand, and the assumption of human acting rational have come into question.  Capitalist philosophies that saw a correlation between global well-being and economic growth failed to account for the present environmental and ideological crises; watersheds that are becoming more and more severe by affecting a larger number of people.

Searching for answers, scholars started to find interest in the connection of economy and psychology, as the rationality assumption of human actors does not accurately account for nowadays market behaviors.  This ‘new’ approach extends our scope of economic thinking towards mind and impact of our behavior for future generations.  The hitherto suggested proposal wants to take this theoretical endeavor further and attempts to find practical answers how we can alter belief and value systems, acknowledging the need for change and allowing working together on a better future for humanity.

Causes

Globalization has not only impacted the way we understand and do business, in particular the emergence of multi-national players has given rise to questions of allocation of social responsibilities between government and company entities.  However, whereas nation-states lack geographical scale and economies of scope – limiting them operationally – are corporations non-political and shall hence not influence policy decisions.  Multinationals do compete for natural resources in multiple regions and beyond borders, but if we were to assign them political duties, we would create conflicts of interests among their multiple stakeholders and might risk tackling issues too short-sighted.

Policy decisions need to balance various social needs and allocate all available resources according to certain measures and determinants; which would contradict a prevailing assumption that a company is best off when concentrating on core competencies.  Thus, one could argue that a business might have the reach, but neither interest nor abilities to make decisions that are beneficial for our global community.  Governments, in contrast, should have an understanding of needs and available resources, but usually lack scale and scope; a situation that, in turn, has increasingly led to an outcry for global governance, though it also has been debated ever since if mutually agreeable ends can be found in a world as complex as ours through centralization.  It appears impossible to entirely allocate responsibilities to the one or the other; hence, it has been suggested moving beyond the national/international dichotomy and finding pragmatic ways of moral relevance to solve our world’s most pressing needs.

Importance and Scale

Corporate Social Responsibility in its fundamental elements is nothing new; one could find predecessors in the 1st century BC when Cicero began advocating for controlling the greed of landlords of the Roman Empire.  Hence, in its beginnings CSR was mainly concerned with the social dimension of doing business.  Mainly in the 19th century an ethical dimension was added as people boycotted crops that were produced by slave labor, to induce a moral vision of entrepreneurship.  Nowadays, CSR as a term depends on the context it is considered in, i.e. the entity it is subject to (not-for-profit vs. for-profit, private, non-governmental vs. governmental) and its cultural as well as social scale.  Though the term emerged within the Anglo-Saxon philosophy of capitalism (capitalist dimension), has mostly been associated with profit maximization, globalization has changed the field to become one of more international concern (global dimension).  Scope and expectations of companies’ place in society started to include debates about a firm’s duties to support development efforts and even substituting or complementing governmental efforts in regards to human rights.

Exhibit 1 – CSR imporance and scale

Increasing social ills, violations of human rights and conflicts that appear to have become ubiquitous, in an interconnected world, inevitably influenced businesses around the globe as those as well have become more influential than governments, in comparison.  Yet it largely remains a voluntary effort and definitions are vague.  However, debates usually center on three different responsibilities that sometimes more, sometimes less, are assumed to be inevitable components for ethical and sustainable business behavior: first, a company shall be responsible in mitigating the negative impact that have had on environment and society; second, to be at least aware of the reciprocal relationship between own and stakeholders’ behavior or even be accountable for their wrongdoings; third, proactively contribute to the greater good and add value to overall society through business operations, products, services, and ethical leadership.

At first sight Corporate Social Responsibility (CSR) could be understood as subsidizing business dollars for social causes.  If we were to assume perfect market conditions this would provide a competitive advantage for the ones not investing in such initiatives, making CSR a much debated function.  We may ask ourselves if ‘social commitment drives a firm’s profitability, or does profitability allow the firm to invest in social initiatives?’ (p. 504[1]).

For quite a few decades CSR has been harshly criticized to be just another school of capitalism, but a bad one.  This so called Friedman[2] school of capitalism argues that,

There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud. (p. 133)

Whether or not one agrees with Friedman, if we were to understand a company’s executives as the one’s behaving on behalf of their stakeholders, than it’s not the firm’s, but an individual’s duty to act morally responsible.  This, in turn, assumes that management decisions can be made autonomously and without ambiguity, with the best interest for overall society.  However, the much stated concerns that human behavior is not rational and anything but free of external influence (i.e. hubris), requires some form of regulation and guiding principles from within and outside a company.

Blowfield and Frynas were, ‘concerned that CSR is becoming a field of passionately felt answers and too many unasked questions’ (p. 506).  Never have corporations’ responsibilities more fiercely debated than today, when multi-nationals have become more influential than local governments and scandals more vividly touched.   We ought to find a balance between voluntary commitment and mandatory duties, the latter as a guideline to help individuals overcoming ethical challenges.  The growing interdependency in our global landscape needs further considerations; to find the right path we are walking on, as an evolutionary process, than discussing short-term outcomes that are too limited in scope, too culturally biased, and may rather intensify than mitigate issues of global concern.  Companies, governments, developmental agencies, and the public need to work hand in hand, establishing a business case that goes beyond profit maximization, giving managers the freedom to do what is right and offer solution that are needed, not externally inflicted.

[1] Blowfield, M., & Frynas, J. G. (2005). Setting New Agenda: Critical Perspectives on Corporate Social Responsibility in the Developing World. Intemational Affairs, 80, 499-513.

[2] Friedman, M. (1962). Capitalism and Freedom. Chicago, IL: University of Chicago Press.