I was having a conversation about CSR with a good friend recently, and he said this:
“It's not easy for CSR these days. I honestly wonder what the future holds for any of it. Will it get so diluted by the major corporations that the public starts to expect very little? Or will the poor execution and minimal impact of the multinationals make it so that smaller companies doing CSR will get a bad rap?”
They’re good questions, and ones that gnaw at those of us working on this problem. In other words, is CSR going to end up like TQM, MBO, or Theory Z – management fads that get lots of media attention, are widely adopted, generally underperform, and are ultimately rejected?
Let’s briefly ignore Betteridge’s law of headlines and the name of the company hosting this blog, and test a hypothesis: Mediocre implementation of corporate social responsibility will eliminate benefits of the practice for everybody.
A 2003 meta-analysis of corporate social performance (CSP) by Orlitzky, Schmidt, & Rynes tends to support our hypothesis. They reported that, “the data suggest that capital market participants dismiss certain concrete behavioral measures of CSP (such as charitable donations), perhaps because they are perceived as direct attempts to manage external impressions.” In other words, giving to charity doesn’t affect share price because the company is obviously just doing it to look good. And it’s not fooling anybody. So is CSR just a management fad?
Qualities of management fads
That brings us to a 2002 HBR article titled "Spotting Management Fads." In the article, Miller and Hartwick studied forty years of management concepts that went from boom to bust to see if they could find some common qualities. They found eight. Let’s see if they apply to corporate social responsibility.
- Fads are simple. In other words, they are easy to describe and come with a pre-packaged, easily enumerated set of pillars or practices. While CSR can be reduced to “doing good” or “triple bottom line,” the concept seems to be much broader than that. Firm practices range from simple corporate philanthropy programs to dead-serious Certified B Corps with a huge variety of flavors in between.
- Fads are prescriptive. That is to say that a management fad can be reduced to follow these steps. This may have more to do with how the concept is presented than whether or not the underlying ideas are sound. In the absence of a really popular business book about CSR, (John Mackey and Raj Sisodia’s Conscious Capitalism was #13 in hardcover business books for one month) I’m not sure we’re in any danger of this.
- Fads are falsely encouraging. All management practices promise some benefits, otherwise they wouldn’t exist in the first place. But just like diet fads, they never seem to be as effective at delivering on those promised benefits. This sounds a little bit like CSR, because we do talk a lot about the benefits to the firm. It’s interesting, however, that much of the research about social responsibility practices isn’t prescriptive (you should do this because…) but descriptive (this is what firms are doing, so let’s find out why.)
- Fads are one-size-fits-all. This one gets a “maybe.” Is a sole-proprietor reselling junk on eBay going to benefit from social responsibility practices? In some cases it does, according to this 2012 article in the Review of Economic Studies, which found that donating a portion of an eBay sale to charity was a proxy for quality and reputation.
- Fads are easy to cut-and-paste. Specifically, it’s possible to just implement a portion of the bigger idea. For CSR this is absolutely true, as evidenced by the now ubiquitous sustainability or social responsibility report.
- Fads are in tune with the zeitgeist. In a large percentage of the conversations I have about social responsibility practices, someone will bring up Millennials and their desire to do work that is somehow meaningful. I usually counter with “everyone probably prefers meaningful work,” but this does seem like a quality of CSR.
- Fads are novel, not radical. Judging from some of the reactions I get from my presentations on CSR, it must be radical. But many activities are really just extensions of existing practices, like expanding employee benefits or adopting customer-friendly return policies.
- Fads are legitimized by prestigious gurus and disciples. Do Ben & Jerry count as gurus? How about Yvon Chouinard? Muhamad Yunus? I’m honestly not sure about this one.
So is CSR a management fad?
Based on the eight criteria above, I believe that the answer is “probably not.” Social responsibility encompasses a broad set of practices that add value to customers, investors and employees if they are thoughtful and strategic. To address the original question, mediocre implementation of CSR practices by big corporations treating it like a fad can’t ruin it for everybody else. Instead, it provides an opportunity for firms that do it the right way to create and capture more value.
Are you interested in setting up a corporate social responsibility program and want to make sure you're doing it the most affordable and effective way? Or are your existing programs exhibiting the qualities of a management fad? Please contact us for a free consultation.
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