The Three Models of Corporate Social Responsibility

It's hard to miss the conversation in the business media about responsibility. While some concept of corporate social responsibility has been around since the 1950s, businesses have seen both an evolving conversation and a growing interest in this area of management. Increasingly, corporations both large and small are using commitments to social responsibility to promote their products. Examining the three dominant models of social responsibility is one way managers and investors can make sure not to miss out on this important conversation.

Corporate social responsibility is the commitment a company has to the community outside of its shareholders and employees. The subject isn't without controversy, with some claiming corporations have no role in social responsibility and others asserting that they can't escape it. Business researcher Elizabeth Redman proposed the three models of corporate social responsibility as a way of understanding this often contentious conversation. In her work on corporate social responsibility, published in the Roosevelt Review, Redman contends that the discussion often involves one of three conceptual models for CSR: a conflict model, an added value model and a multiple goals model.

In the traditional conflict model for corporate social responsibility, social values and benefits are seen as in conflict with shareholder profits. Under this model, corporations opting to practice forms of social responsibility are likely to see added costs for doing so. Proponents of this conceptual model generally argue that the nature of business is one of trade-offs between economic and moral values, and corporate managers will inevitably be forced to decide between their social and fiduciary responsibilities or their commitment to shareholder equity value.

A second model for conceptualizing corporate social responsibility is to see social and environmental commitments as a means to increase profit. While proponents of this model tend to acknowledge that conflicts persist in business decisions, they also believe that CSR investments are also capable of generating new revenues. This model tends to focus on issues like the value of CSR in attracting socially conscious consumers, finding socially conscious employees and managing the risks of negative press.

Finally, a third model for corporate social responsibility posits a role for social values in corporate decisions that are untethered to economic values. Under this model, corporations have goals beyond shareholder value, including the enhancement of their community without respect to monetary gain. According to Redman, this model is thought to be relatively radical, though some corporate officers have expressed support for it. Proponents of this model emphasize quality of life as the basis of economic activity.