Traditionally, prosperity is measured by economic growth and enhanced with higher productivity and cost reductions. The pressure for prosperity growth increases the demand for natural resources, cheap labor, and new markets. Some criticize this phenomenon since it links to human right abuses, environmental risks, and poverty.
At the same time, some say the growth creates new jobs, stimulates local economies and raises living standards. (Blowfield & Murray. 2014, 4) To solve the debate, the concept of Corporate Social Responsibility (CSR) was brought up in the discussion in 1950-1960’s (Wang, Tong, Takeuchi & George, 2016, 1; Benn &
Bolton, 2011). However, still, the best practices and the definition of CSR are argued by different parties.
The triple bottom line of CSR consists of financial, social and environmental outcomes that have effects beyond the shareholders (Benn & Bolton, 2011, ix). It is stated that the ubiquity of the term CSR is a threat to its meaning (Sheehy, 2015, 635). CSR has many definitions and practices, and the way the CSR is understood depends highly on the company and the country of operations (Financial Times Lexicon, 2018). Furthermore, CSR has a long history with no consensus since industry participants, academics and other parties see CSR from a different point of views. (Sheehy, 2015, 635)
For example, for a retailing company H&M, CSR means choosing sustainable materials and reducing “what ends up in the cutting room floor” (H&M, 2018). At the same time the European Union defines CSR as “when companies take responsible actions for their impact on society; sustainability, competitiveness and innovations”
(European Commission, 2018 and Financial Times refer that “CSR is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for stakeholders” (Financial Times Lexicon, 2018). One general definition for CSR within academics is that “CSR is international private business self-regulation.” (Sheehy, 2015, 635).
Thus, the definitions vary and also the concept of CSR has changed over time. In the early days of CSR, in 1950’s, the legality of corporate philanthropy was questioned, and there was a concern that it violates the businesses’ responsibilities to the shareholders (Benn & Bolton, 2011, ix). CSR was seen rather as an individual’s than the business’ responsibility. It was claimed that stakeholder’s equity suffers if executive or CEO acts as “civil servant” spending the stockholders’, customers’ or employees’ money into social responsibility purposes. In this approach, the company’s goodwill to make socially responsible actions was justified as a company’s self-interest to adapt the environment’s demands. (Friedman, 1970, 213-214). However, the interest around the issue arose, and the big question was, whether and how the business could “do good” in society so that it would also benefit from these actions. (Benn & Bolt, 2011, ix)
Even today it can be stated, that one of the fundamentals of economics is the belief that capitalism itself is a way to meet human needs, improve efficiency and creates jobs (Porter & Kramer, 2011). However, at the same time, stakeholders require responsible actions from the businesses (Blowfield & Murray, 2014, 4,10). In today’s business environment there is a growing pressure to engage CSR, and in addition to the regulatory compliance, the organizations are also encouraged to go beyond the laws and take a more active role in meeting societal and environmental needs (Torugsa, O’Donohue & Hecker, 2013, 383).
Customers’ expectations, growing concerns in environment and society, growing social awareness and expectations, political reasons, companies’ ethical attitudes and self-commitment, pressure from regulations, employees and recruits’
expectations, globalization and fast information flow are some of the reasons that push organizations to practice CSR (Kudlak, Szocs, Krumay & Martinuzzi, 2018, 286). Also, public opinion is becoming intolerant for misdemeanors of businesses and even expecting the business organizations to come up with solutions into today’s main social and environmental challenges (Blowfield & Murray, 2014, 5).
Some parties have even gone to another extreme with this statement claiming that businesses should engage CSR that goes beyond the legal requirements whereas business becomes a political actor in society. (Scherer & Palazzo, 2012, 15-17, 37-40)
Nowadays, many organizations aim to exceed stakeholder expectations and policies by engaging CSR actions that for example, minimize waste and reduce energy consumption and by initiating progressive human resource management programs (Padgett & Galan, 2010, 415). One possibility is that public policies would include incentives for organizations that implement measures beyond legal compliance, support the development of CSR and promote CSR as a relevant topic to study in business schools (Kudlak, Szocs, Krumay & Martinuzzi 2018, 288).
Especially IT professionals have the right skills to make changes that also have a positive effect on society. Nowadays IT is a powerful field in making the world a better place and help in restoring the faith in capitalistic business thinking. (Salb, Friedman & Friedman, 2011, 8)
It is claimed that CSR is not as powerful concept as it is argued and that is why laws and regulations are needed to solve environmental and social issues. It is also stated other economic issues are more important, for an organization and CSR is used mostly as a marketing tool. Thus, the reasons to decrease the importance of CSR are also financial and economic concerns. (Kudlak, Szocs, Krumay &
Martinuzzi, 2018, 286) It is noteworthy, that CSR is facing a dilemma where it must act as a civil servant to some extent but at the same time promote capitalism as a solution to the key social and environmental issues of the era (Blowfield & Murray, 2014, 6).
There is no straightforward answer how a business should engage CSR. (Blowfield
& Murray. 2014, 10) Examining conflicts among different stakeholder groups, company’s and stakeholder’s motives behind CSR, the shapes of CSR in different environments and the role of individuals that lead stakeholders to evaluate firms’
social activities differently may help in the research of the complex and still undefined concept of CSR. (Wang & Tong, Takeuchi & George, 2016, 13-120)