Defining the principle of responsibility as the obligation to behave in a responsible manner raises the question of what responsibility specifically means and entails. Generally business responsibility is depicted as an entire scope of different responsibilities (Geva 2008, p. 24). The scope of corporate responsibilities is quite often discussed from the framework of Carroll (1979, 1999) who divided business responsibilities into economical, legal, ethical and discretionary ones in their respective priority order. Simply put, corporations are responsible for being profitable, obeying the law, behaving ethically and contributing to the betterment of society by giving resources to philanthropic ventures. There are however diverse views on what is considered as the adequate scope for business responsibility.
The economic responsibility to make profit is recognised widely as one of the most fundamental responsibilities of corporations as profitability is what keeps the business in business. Since profitability is the basic premise of business operation the economic responsibility is considered to deserve the position as the main responsibility of corporations. Often views that focus on the centrality of economic responsibility consider the legal responsibility to obey the law a sufficient scope of responsibility together with the economic one. As the famous statement of Friedman (1970) goes, the responsibility of corporations is to “increase its profit so long as it stays within the rules of the game [by engaging] in open and free competition without deception or fraud”. For the most part the literature on business responsibility stresses that alongside making profit while obeying the law corporations have a
7 responsibility to behave in an ethical manner and that the principle of Friedman of “doing good by doing well” is not enough (Hearit 2007, p. 167).
Instead, the agenda of business responsibility argues that corporations have wider societal obligations towards society than making profit and obeying the law (Rowe 2006, p. 441; Balmer, Fukukawa & Gray 2007, p. 10). From the original conceptualisation of Carroll (1979, 1999), the economic and legal responsibilities are deemed as insufficient for the definition of business responsibility. The main reason behind this is that economic and legal responsibilities are regarded as mandatory demands. Corporations must make profit in order to survive and obey the law in order to avoid punishments. The business responsibility agenda however emphasizes the role of discretionary and ethical responsibilities as important part of the scope of business responsibility especially due to their voluntary nature.
Matten, Crane & Chapple (2003) perceive ethical responsibility and philanthropy as the two central areas of business responsibility because they
“differentiate corporate behaviour from mere compliance”, making them the most normative forms of responsibility (p. 110). The discretionary responsibility refers to corporate involvement in philanthropic ventures such as donations to social causes. Ethical responsibility in turn refers to behaving in line with general societal norms and standards guiding right and wrong behaviour. (Seeger & Hipfel 2007, p. 156-157.) Philanthropy and ethical behaviour both could be categorized as voluntary when making a comparison to legal responsibility. There is however a difference between philanthropy and ethical responsibility.
Philanthropy is often regarded as the sole voluntary responsibility because ethical behaviour is expected from corporations (Carroll 1999, p. 283-284). As Matten et al. (2003) describe, ethical behaviour is expected while philanthropy is something that is desired (p. 11). Philanthropy seen this way is only desirable because it is generally considered to cover only “a narrow
8 set of social needs” (Seeger and Hipfel 2007, 156-157.) such as sponsorship of youth athletic clubs or donations to charities. Ethical behaviour in contrast places a responsibility to act in accordance with the norms of society that is a wider and also more ambiguous responsibility than engaging in philanthropy.
Responsibility to behave ethically is the most extensive responsibility because it applies to all activities the corporation takes. Ethical behaviour is in essence about acting in a manner that society considers to be good and right. For this reason ethical responsibility is about making value judgments on the behaviour of corporations whether or not the behaviour is good for society (Geva 2008, p. 26-27). Ethical responsibility is thus connected intimately to the initial norm of reciprocity stating a responsibility to prevent harm on society. When ethical responsibility is place in the centre of discussion it means that the whole process of defining what is the considered to be responsible is about making normative value judgments on whether the behaviour of the corporations is good or bad, right or wrong, for society.
Interestingly the other three responsibilities presented here – economic, legal and discretionary – can be regarded as norms held against corporations:
corporations are expected to be profitable, law-abiding and philanthropic businesses. For this reason it can be simply stated that corporations are expected to behave in an ethical manner, according to the norms and standards of society. The normative nature of ethical corporate behaviour means that the definition of what is considered good or bad behaviour is open to change. The meaning of the concept is dependent on the contingent societal conditions in time and space1. There is naturally a certain rigidity of the evolvement of meanings of societal concepts but basically there are no
1 According to social-constructivist theory reality is constructed by giving meaning to objects with the usage of language, see further Berger & Luckmann 1966, 1991
9 absolute, stable conceptual meanings. As a result, there is not an absolute, stable meaning for what ethical corporate behaviour means.
In sum, business responsibility is therefore best approached as the responsibility to behave ethically, acting in line with the norms and values reflected in the expectations set by society towards corporations. Carroll (1979/1999) described the concept similarly by saying that it is about
“expectations that society has for organizations at a given point in time” (p.
283). There is no stable definition for ethical corporate behaviour because it is dependent on contingent expectations on society and therefore can potentially cover almost “every possible obligation, concern, or effect that a corporation might encounter (Werhane 2007, p. 460). The next two chapters focus on elaborating the two prominent discourses describing the content of ethical corporate behaviour.