CSR Behavior: Between Altruism and Profit Maximization

Abstract

While Corporate Social Responsibility (CSR) is a very broad concept, it mostly refers to firms’ activities that account for the interests of all stakeholders such as customers, employees, shareholders, society (community) and environment and go beyond legal obligations. In other words, firms should actively consider and improve the impact they have on society and drive change towards a sustainable development of their business. The concept of CSR has therefore two important dimensions: (1) the (measurable) integration of social and environmental needs in the firms’ business operations and (2) the voluntary nature of CSR activities. According to the PWC Global CEO survey (2016) 64% of the CEOs see CSR as a core part of their business, 59% of them believe social values are important to attract top employees and 37% agree that CSR attracts investments. Furthermore, the importance of CSR is expected to rise within the next 5 years. However, according to CECP (2016) 53% of the surveyed companies did not increase total CSR spending between 2013 and 2015 (47% decreased total giving, 8% did not change the total sum) leading to an increase in overall spending of only 1%, while 87% of the companies measure societal outcomes and became aware of the strategic dimension of societal outcome measurement. Managers are often caught between the expectations of ethical consumers and the profit-maximizing expectations of the investors, and therefore often use CSR in order to promote their image or their brand. Corporate philanthropy is therefore also used as an instrument to uphold the image of companies (Porter and Kramer 2002). This raises the question whether CSR behavior of firms is more driven by profit maximization strategies that might concentrate on communicating instead on enhancing CSR activities than by altruism and philanthropy and whether altruism is necessary in order to increase CSR behavior.