1.4.2.2.1. Typologies of levels of responsibility

The works of Carroll (in collaboration with other authors) [CAR 79, CAR 91, CAR 10, SCH 03], among others, offer a fundamental typology that has been reused by all authors involved in this domain. This typology identifies four levels of corporate “social” responsibility, or three in the case of an article written in collaboration with Schwartz [SCH 03].

First, companies have an economic responsibility “to produce goods and services that society desires and to sell them at a profit” [CAR 79, p. 500]. Following Friedman’s theory, economic viability is the first social aim of a company, which, otherwise, would have no reason to exist. Companies, which at least partly respond to individual needs, only exist because the investors who finance them have the assurance of remuneration in case of success, in the form of maximization of profits. However, moving away from the traditional neoclassical framework, Carroll and Shabana [CAR 10, p. 91] consider that profit maximization should be a long-term concern (not merely a short-term aim), allowing for a reduction in the potentially excessive pressure to create profit. Building on this idea, the introduction of a longer temporality might be considered to allow for the inclusion of other objectives within the weighting process, moving away from an exclusive focus on maximum profit in the here and now. These objectives include, for example, the need to optimize the use of natural resources, or contribution to a better social distribution of wealth, based on the idea that increasing inequality is a source of economic instability.

Second, again following Friedman, companies must respect the legal constraints applicable to the geographical space in which they operate, whether in relation to fundamental rights, employment law or business law. Laws are the “codified ethics” of society [CAR 91, p. 41]; they thus form a necessary element in “the social contract between economic activity and society”. This element is necessary, but not sufficient: as Carroll and Shabana indicate [CAR 10], there is ongoing debate between authors in the field of CSR concerning whether legal constraints should be increased in order to improve regulation of corporate activity or, on the contrary, standards of responsibility should remain within the moral domain in the form of voluntary engagements [for example, see PHI 03b]. Without taking a definitive position on the long-standing issue of the hierarchization of morality and law (covered in greater detail in Chapter 2), it is, at least, possible to note that legal standards cannot cover the whole domain of corporate responsibility [CAR 10].

For this reason, companies also have ethical and philanthropic responsibilities²⁴ that are merely, respectively, expected and desired (whereas economic and legal responsibilities are required) [CAR 10, p. 90]. First, philanthropy, which covers the charitable activities of companies, represents the first stage in the historical development of CSR, as we have seen. It emerged with the explosion of the great American fortunes in the early 20th Century, which gave rise to complex social ambitions for control and improvement of community welfare, as exemplified by the Fordist development model.

Next, Carroll pinpoints a more specifically ethical responsibility, which embodies:

“those standards, norms, or expectations that reflect a concern for what consumers, employees, shareholders, and the community regard as fair, just, or in keeping with the respect or protection of stakeholders’ moral rights” [CAR 91, p. 41].

It is thus easier to see why Garriga and Mélé [GAR 04] placed Archie Carroll’s approach in the category of “integrative” theories, aiming to respond to a social demand. The standards of what is “good” are established neither by researchers, nor by politicians, nor by members of a company, significantly or exclusively, but are defined in conjunction by all of these different parties. Carroll promotes a constructivist perspective²⁵ in terms of determining the social good, for which the norms of the “good” are created based on the expectations of members of society. In a later version of his model, developed in collaboration with Schwartz [SCH 03, p. 512], Carroll specifies the normative source of the prescriptions of CSR: ethical codes of conduct and standards of responsibility may involve justifications based on consequentialism or on deontological theory²⁶. Finally, however, while “context matters when deciding what is right or what is wrong”, actions must comply with a set of “minimal ethical standards” [SCH 03, p. 512], citing Donaldson [DON 96, pp. 6–7]. There is therefore a common normative core, offering the possibility of consensus, from which ethical principles for CSR may be constructed.

However, the thorny issue of establishing a form of agreement (whether or not this results from a partial consensus) around this set of minimum standards is not addressed²⁷. This is one of the limits of this form of moral constructivism, which makes too ready use of the hypothesis of the existence of a community of standards with the capacity to govern social order. Economic and political history shows that this is not the case: the question of determining norms for “good” or “responsible” practice requires further discussion. This point is clearly understood in explicitly normative approaches to CSR. SHT, in particular (see section 1.4.2.2.2), pays particular attention to the interaction between various social actors and the way in which standards are created within the context of these interactions.

Taking a rather different approach, Prakash Sethi proposed another typology of responsibility in the mid-1970s, aligning standards of responsibility with the demands expressed by society. Sethi begins by noting that criteria for what may be considered to be responsible are historically and culturally marked, and may evolve [SET 75]; he then defines three levels of corporate behaviors, governed by different processes of legitimation. The economic and legal dimensions are combined in the form of social obligations, which correspond to the requirement to respond to market forces and to respect legal constraints. Next, companies have a social responsibility which, as in the case of Carroll, reflects the efforts made by the company to satisfy prevailing social norms, values and expectations (other than those which are exclusively financial) at a given time. Social “expectations” identified in the 1970s included the fight against racial and gender discrimination, pollution reduction, the improvement of health and safety in the workplace, pricing equality for consumers, increased product quality and the provision of information for investors [FRE 08]. Social responsibility becomes prescriptive if a company is required to behave in a way which is “congruent” to norms, values and expectations relating to the “social” performance of a company [SET 75, p. 62].

Finally, Sethi considers a third level of corporate adaptation to social norms, which he refers to as social responsiveness. In this, the company must not only adapt to existing standards, but also anticipate future developments before the potential harmful effects of its activity lead to large-scale social crises [SET 75, p. 63]. Compared to social responsibility, social responsiveness is therefore preventive in character and requires forecasting in order to identify new social norms, which companies may need to respect. This aspect of responsibility, seen in terms of responsiveness, is central to the idea of responsible innovation, and will be covered in greater detail in Chapter 2.

In conclusion, Carroll and Sethi’s typologies constitute a first attempt to distinguish different levels of responsibility arising from (1) market forces, (2) legal constraints and (3) social expectations. This distinction creates a space outside of the traditional constraints imposed by law and the economic system, in which companies may freely consent to respect moral standards promoted by social actors.

However, the question of how and why this type of injunction is imposed on companies remains open, as does that of the way in which these standards are identified, weighted and put into practice by the company. The following chapter is dedicated to the first of these two questions. We shall consider the different arguments that oppose or promote the idea of ethical corporate responsibility, in addition to legal and economic elements. The following sections concern the second part of this problem: the means by which a company can identify standards to which they should conform, and the mechanisms by which these standards, upheld by social actors with different and potentially conflicting value systems, evolve into constraints for a company. SHT, an essential element within CSR, allows us to trace lines of response, by defining the sphere of influence of the company and defining the actors with whom it must communicate.

1.4.2.2.2. Responsibility toward “stakeholders”

Within CSR, SHT alone has generated a considerable volume of literature. The origins of this theory are often attributed to Edward Freeman [FRE 83, FRE 84]²⁸. It became widespread following the waves of protest in the 1960s and 1970s across Europe and the United States, while offering an alternative to more radical socialist political theories. The social movements prevalent in the Western world before the major petrol crises reopened debates over working conditions, ecology and environmental protection, feminism and discrimination as a whole, which first emerged in the late 19th and early 20th Century; these debates fed into reflection in terms of SHT. Furthermore, the political shift of the 1970s toward a more dynamic form of democracy, based on citizen participation and reflection, also had an effect on the fields of management and organizational theory, raising the idea that companies should be envisaged in relation to their environment with a view to the quality of the relationship they build with this environment.

We therefore need a more precise definition of the notion of “environment”. Several different visions of “stakeholders” can be found in the published literature. These generally focus on groups of individuals who are subject to or benefit from the actions of a company, beyond the immediate sphere of the market (suppliers, clients or competitors, for example), to whom the company has obligations that are not simply contractual in nature [JON 80, p. 59].

In “neo-classical” approaches to economic theory, the only stakeholders that a firm needs to take into account are shareholders or stockholders. Freeman’s seminal works [FRE 83, and especially FRE 84] popularized the neologism “stakeholder”, in use since the 1960s²⁹, derived from the term “stockholder” [MER 06, MUL 07].

A lot may be said concerning the different developments of this theory, notably with regard to the various stakeholder typologies that have been proposed [for example BON 14, MER 11]. Proponents of SHT often differ in their assessment of the number and nature of groups of stakeholders, and the justifications used to delimit relevant groups. For Freeman, for example, stakeholders are “those groups without whose support the organization would cease to exist” [FRE 84]. In another text, Freeman offers another definition, which, like the first, is widely used; this second version focuses more on the transformation of relationships between different social actors as a result of reciprocal influence. Stakeholders are thus seen as “any group or individual who can affect or is affected by the achievement of the organization's objectives” [FRE 84, p. 46]. This bilateral dimension of relationships between a company and its stakeholders was represented by Donaldson and Preston [DON 95] in a widely reproduced diagram. While the central focus on the interest of directors and the company in this representation has been debated [MER 10, p. 151³⁰, BON 14, see Chapter 3], it clearly illustrates an approach to the firm as “the center of a network of interdependent interests and constituents” [POS 02, p. 8].

Within the literature, we also find a range of opinions as to the extent of the set of stakeholders, with notable differences in terms of scale. The narrowest visions (for example that given in [CLA 95]) only include stakeholders who are voluntarily or involuntarily subject to risk, through the investment of capital or another element of value in the company (this includes shareholders, employees and suppliers). The broadest visions include any social group affected by or affecting the firm. Stakeholders may thus be divided into primary stakeholders, essential to the survival of the company (owners, employees, clients and suppliers), and secondary stakeholders, who may be affected by or have an effect on the company and its performance (media, consumers, governments, competitors, pressure groups and non-profits, along with society as a whole) [CLA 95, MET 98]³¹.

Certain critics, for example [JEN 02], have highlighted the risk of unfettered expansion of the sphere of actors to whom a company may have a responsibility. In more general terms, should the environment [JEN 02, STA 95, PHI 00], terrorists [JEN 02, PHI 03a], blackmailers or thieves be considered to be stakeholders [JEN 02, p. 236]? Should we include animals in the definition [MER 06]?

Precise definitions have been put forward to clearly define who or what may be considered as stakeholders, organized according to certain criteria. For example, groups may be considered as stakeholders if they respond to one or more of the following criteria: legitimate relations with the company; the power to influence organizational decisions; urgent demands made on the company [MIT 97]. According to Kochan and Rubinstein, stakeholders are defined by the provision of critical resources for the company, a certain level of risk-taking, and the potential to exercise power that affects the performance of the firm [KOC 00].

Stakeholders are thus identified and taken into account on a case-by-case basis, adapted to the specific context in which the company finds itself on each occasion. Preston and Post [PRE 81] identified both primary (economic and legal) and secondary environments (including other considerations of a more ethical nature), suggesting that this distinction between stakeholders would contribute to the development of a specific social agenda for each company. Their model thus rejects the idea that there is a single “social performance agenda”, applicable to all companies, and “denies that the firm should develop an accommodating response to whatever social issues may be raised, regardless of their source or substance” [PRE 81, p. 57]. The selection of stakeholders to take into account at a given moment makes it possible to trace the limits of corporate responsibility. Amaeshi et al. [AMA 08], for example, restrict the sphere of corporate responsibility to the actors involved in the supply chain (including suppliers and consumers) over whom influence may be exerted. It is thus meaningless to consider a company as having responsibility outside of its sphere of influence (see Chapter 2).

This type of theory demonstrates tensions that are also found in legal interpretations of responsibility, ranging from a holistic notion of the firm, according to which the company “interacts” directly with stakeholders, and an individualist understanding, wherein the company can only be considered as the sum of its parts. According to the latter view, only physical persons (directors, and more generally any individual in possession of a certain authority) can interact legitimately with stakeholders, themselves considered as a group of individuals rather than as groups motivated by a collective will. Both views include relevant aspects. Companies sometimes interact with their stakeholders as a relatively unified organizational whole (for example in cases where a firm responds to remarks made by a non-profit); in other cases, it is more meaningful to consider individual and specific relationships between company directors and specific suppliers, for example, or local heritage protection agencies.

Compared to other major threads in CSR, SHT is based on a dynamic vision of the ecosystem within which a firm operates, used to specify the function of stakeholders with which it interacts and the nature of connections that should be established. SHT provides a framework that runs parallel to the constraints exercised by the economic and legal fields, used in selecting social standards to regulate company activities, taking account of the strategic element of this process. However, the purpose of this reflection is not solely to identify and characterize the social actors involved in normative production. It also offers arguments to legitimize the obligations and responsibilities of the firm in relation to stakeholders. The different strategies put forward by SHT to ensure stakeholder interests are taken into account will be analyzed in detail in Chapter 2.

First, however, we shall consider a final dimension of corporate responsibility as found in CSR literature. This arises from the firm’s position within a political context as a social actor holding a certain degree of power and, according to certain authors, with both rights and responsibilities.

1.4.2.3.1. Corporate citizenship

Among the “political” theories of CSR encountered in published work [FRE 06, CAR 08a, GAR 04, MEL 08], we find the recent idea of corporate citizenship, an important development relating to the latest phase in the development of CSR [GAR 04, FRE 08, MEL 08]. According to this approach, the firm constitutes one social and political actor among others, with associated rights and responsibilities.

The “virtuous” behaviors of companies should notably take account of the transformations of a globalized economy, for which national rules no longer offer sufficient regulation. As a citizen and member of an international community, a company must respect the rights of the members of this community; in the case of globalized companies, this includes those traditionally affected by the firm’s activity (employees or local communities) within a framework, but also beyond national borders. Wood and Logsdon [WOO 02] refer to the Universal Declaration of Human Rights and maintain that companies have an obligation to guarantee certain rights, recognized as universal and fundamental, for all stakeholders, whatever their geographic location. However, to address the multiplicity of cultural contexts and the range of different possible interpretations of fundamental rights, the authors make use of Donaldson and Dunfee’s analysis [DON 99a], according to which there is a limited number of fundamental and general norms (“hypernorms”) that may then be subject to context-specific variations³². Thus, companies are encouraged to assume responsibility toward extraterritorial stakeholders. While this cannot be based exclusively on the notion of individual citizenship, it involves the same recognition of rights and responsibilities for companies in a globalized and multicultural context.

More precisely, for Matten and Crane [MAT 05], companies enter into the sphere of citizenship in response to the failure of traditional actors, i.e. states and governments, to guarantee these rights. Thus, companies are able to play a triple role [MAT 05, p. 174]. They can be providers of social rights by providing their employees with services such as education or healthcare. In respecting fundamental civil rights, such as the freedom of expression and market access, they fulfill a role of enabling rights. Finally, they play a part in channeling political rights; citizens gain access to an alternative route or means of expression from the conventional political channels, expressing opinions through boycott activities, for example.

Although attractive, the idea of corporate citizenship raises a number of issues that stem from and highlight criticisms directed against CSR in general. CSR is often criticized for failing to provide clear principles for action, and for making use of confusing fundamental notions, as discussed in [MEL 08, GAR 04, MER 06, DON 95], for example. The notion of corporate citizenship is less conceptually developed than SHT and includes an additional degree of ambiguity. The political and legal dimensions of corporate citizenship have still to be fully defined, both in theoretical terms and in terms of international law: for the moment, there is no international entity with the capacity to harmonize labor or environmental law, which remains highly variable from country to country. Furthermore, while the globalized context has to be taken into account, the influence of evolving international standards (whether legal or ethical) remains limited.

1.4.2.3.2. Power and responsibility

Taking a different approach, focused more on the relationship between power and responsibility than on the globalization of economic exchanges, Davis [DAV 67] offers an interesting approach to the political justification of the existence of non-economic corporate responsibilities. One key point from the list of reasons given to justify the “social” responsibility of organizations is that companies are not independent and autonomous (the approach taken in microeconomics), but form part of a pluralist social fabric, made up of centers of power (social groups) that are both relatively independent and interconnected. Davis notably considered the company as a joint venture [DAV 67, p. 47] of “responsible citizens and groups of citizens”, such as investors, directors, workers, local communities and scientists.

“Together these groups offer diverse inputs and expect diverse outputs. Viewed as a whole, the outputs are more than economic; social, psychological, political, and other outputs are also expected. This joint venture involving many groups is not necessarily a conflict or struggle for absolute power. Rather, it represents the efforts of people to reconcile their needs through a variety of organizational interests” [DAV 67, p. 47].

This systemic vision of the firm allows divergent interests of different social groups to be connected to their shared aims (for example when a company responds to a specific need), rather than placing them in opposition. This point will be discussed further in Chapter 4, in the context of an approach to the firm based on the ethics of care.

In addition to highlighting a perspective which Davis referred to as “pluralist”, this relational vision of the firm demonstrates the social power of entrepreneurs, corresponding to their capacity to influence public opinion, particularly in terms of directive decisions in relation to economic laws and policies or labor law. Since “they are leaders, are intelligent men of affairs, and command vast economic resources” [DAV 67, p. 48], entrepreneurs have a social power, demonstrated by their role in advising political actors who willingly seek their advice and support [DAV 67].

This social power engenders a form of social responsibility for entrepreneurs that is proportional to their influence. For Davis, this results in a “power-responsibility equation”, i.e. a form of tension between the two forces that needs to be rebalanced. The responsibility of an actor must increase to counterbalance any extension of their transformational power. This pursuit of a balance of forces is well known in business, and is at the heart of a number of key precepts in management theory for company executives, notably the idea that the responsibility of an employee should be considered in relation to their authority and operational independence [DAV 67].

Finally, the theory of pure and perfect competition used by Friedman to decry CSR falls apart due to its use of the totally unrealistic hypothesis according to which economic activity has a purely neutral effect on social institutions and actors [DAV 67, p. 49]. The consubstantial responsibility that arises from this role can only be recognized through acceptance of the social role of companies. In response to those who fear that CSR might be too great a weight to be borne by firms, Davis notes that, as one of many centers of power, companies are not required to tackle all forms of social deprivation in isolation. They are not required to attempt to solve all of the world’s problems, to take the place of various State institutions responsible for social welfare and the redistribution of resources or, finally, to replace private charity³³. Once again, their responsibility corresponds to the extent of their power and influence over their environment.

Finally, using an argument that is both pragmatic and instrumental, Davis sets out what he refers to as “the Iron Law of Responsibility”: “those who do not take responsibility for their power, ultimately shall lose it” [DAV 67, p. 49]. He justifies his statement using historical examples, rather than a normative vision of responsibility that might appear to be idealized. Each time companies have attempted to deny or evade responsibility, other social groups have taken their place. In the case of unemployment pay in the United States, for example, the State used its legislative powers to limit the freedoms of companies refusing to consider ways of reducing the negative impact of job losses in the early 20th Century. Business thus lost some of its power to act, and found itself, paradoxically, in the position

“of paying unemployment costs it originally denied responsibility for, but having less control than when it did not pay! Business power has drained away to bring the power-responsibility equation back into balance” [DAV 67, p. 50].

This example takes us to the heart of arguments in favor of CSR: by accepting the power for normative creation, companies also ensure greater control of their environment. As social actors, companies do not only respond to social requirements. They also have the capacity to determine their environment in a way that both takes account of social demands and serves their own interests. In addition to the political obligation of responsibility raised by a company’s power and influence, we thus find an instrumental argument relating to the benefits available to those who act decisively in creating regulatory frameworks for activities by which they are directly concerned.

Recognition of the political dimension of corporate responsibility thus provides a first element for understanding the engagement of firms with regard to social actors affected by, and affecting, their activities. The fact that these actions are not neutral for social institutions and organizations, and strengthen or weaken respect for certain rights and the existence of good practices, means that a company may be under the obligation to reduce the negative impacts of its activity. This idea will be considered in greater detail in Chapter 2, with the aim of understanding the nature of voluntary engagement by firms to submit to certain social norms.

In the end, this analysis of the different registers of responsibility discussed within CSR literature shows that these registers are structured around the legal and economic constraints facing firms, the social expectations underpinning the emergence of standards, and a political role proportional to the influence of the company. While different authors and schools of thought in CSR assign various levels of importance to these elements, the previous sections have shown the way in which they can be articulated. In Chapter 3, we shall show the way in which they provide a fertile theoretical framework for principles of governance for responsible innovation.