Straighten Up And Fly Right

Based on research by Duane Windsor 

• Clearer concepts of corporate social responsibility and irresponsibility would make it easier to measure whether companies are meeting ethical standards. 
• Establishing a reliable method of evaluating corporate social responsibility could lead to more consistent business practices worldwide.
• Crafting a new approach that’s both theoretical and practical could pave the way for improving corporate responsibility worldwide.

What’s the definition of a fair wage? What obligation do corporations have to protect the environment — or to maintain human rights? The answer depends on who you ask. 

Corporate social responsibility and irresponsibility are nettlesome, ambiguous concepts — and nearly impossible to enforce. The literature about both currently spans several disciplines, forming a patchwork of principles. And this theoretical chaos poses a serious practical problem, both for corporations and for the countries where they do business. Consumers may suffer most of all.

But what if someone devised a formula for evaluating good business practices — one that could pave the way for consistency in corporate social responsibility across the globe?

Rice Business professor Duane Windsor resolved to try. In a recent paper, he tapped institutional theory, international policy regime theory, stakeholder theory and theories of how firms operate. He brought them all together with one overarching assumption: that people all over the world want better lives for themselves and their families. 

To understand what role corporations could — and should — play in helping to maintain and improve the lives of stakeholders (and non-stakeholders), Windsor looked at the way theory and experience influence each other in the workplace. Secondly, he analyzed the ways persuasion and negotiation can encourage social responsibility and still allow for progress. This could involve UN and EU sponsorships that directly address such corporate policy issues as fighting corruption, promoting environmental protection, supporting human rights and developing and maintaining industry standards. 

Pairing logical analysis with a review of the literature, Windsor articulated 19 specific points that could be tested, such as a firm’s performance outcome, the well-being of shareholders and non-shareholders and overall social welfare in the communities that corporations serve.  

Since corporate social responsibility is currently evaluated across a variety of disciplines, specific conceptual boundaries could make good practices easier to identify — and to enforce. A consistent set of guidelines would also shape legal and ethical standards for public policy and business practices. 

But these boundaries can only be created through a consensus between nations and corporations. And that can only take place with steady scholarship, persuasion and negotiation, Windsor says.

Windsor’s vision for consistent corporate social responsibility wouldn’t require strict regulations carved into stone tablets. Instead, he argues, participants need to strike a balance between high ethical standards and the freedom for companies to grow — and allow room for standards to evolve over time. This is crucial, he says, since lasting success depends on balancing corporate social responsibility and an environment where companies can flourish and succeed. 

An international standard of corporate responsibility would not only help businesses interact better with each other and the governments that oversee them, but, ideally, would increase transparency and improve quality of life around the world. 

A consistent framework alone won’t make this happen — it will also take a commitment to meaningful enforcement by company leaders and government officials. But it would help if they could all start out on the same page. 

Duane Windsor is the Lynette S. Autrey Professor of Management and Strategic Management at Jones Graduate School of Business at Rice University.

To learn more, please see: Windsor, D. (2013). Corporate Social Responsibility and Irresponsibility: A Positive Theory Approach. Journal of Business Research, 66, 1937–1944.