«Investigating Instrumental Corporate Social Responsibility through the Mafia Metaphor Jean-Pascal Gond, Guido Palazzo & Kunal Basu Research Paper ...»
Strategic philanthropy – a term coined by Porter and Kramer (2002) – is aimed at achieving a convergence between corporate performance and social welfare (see also Porter and Kramer, 2006; Kanter, 1999; Kotler and Lee, 2005). In a very similar vein, the Sicilian Mafia has been known for providing free services to its potential ‘customers’ of private protection in order to create a syndrome of dependency and an obligation for reciprocity among local stakeholders. Strategic philanthropy or cause-related marketing practices to highlight CSR could as well enhance the dependency of even the most strident of all stakeholders, namely the civil society organizations who might stand to benefit from such programmes.
3. Implementing a code of conduct
Implementation an employee’s code of conduct is often portrayed as a good practice to improve CSR by reinforcing the corporate esprit de corps (e.g. Maignan & Ferrell, 2001, 2004). The Sicilian Mafia has proved itself to be extremely efficient in this regard. The tradition of Omertà, previously mentioned, guarantees the secrecy around its activities through a scrupulously observed code of honour (for illustrations of this practice in novels, see Sciascia, 2003, 2004). However, as the example of the Mafia demonstrates, not even a strong code of conduct or the embeddedness of the organization in its own societal context (Weaver et al., 1999) is enough to ensure true human development and welfare, especially when the driving motive is none other than profit maximization.
The above practices reveal how a mindset of instrumental CSR might potentially contribute in the transformation of a legal business entity into a mafia-type organization. Such a trend is illustrated in the third column of the Table 1, with examples of how each of the instrumental CSR practices could be perverted into irresponsible and damaging forms of managerial action. It is significant to note that some of these perverted practices have in the past led to infamous CSR controversies.
For instance, the creation of customer dependency through (an apparently philanthropic) free sampling of powered milk products by Nestlé had led to the controversy over infant formula.
Agle and Kelley (1997) have suggested that an excessive focus on the outcomes of a CSR programme designed with instrumental ends in mind could in fact encourage deviant behaviours. They have shown how processes to manage CSR (in their case, political fund raising) could easily come to transgress the basic principles of social responsibility (for instance by stigmatizing non donors) and simply come to rest on generating economic benefits. Further, as the case of the Mafia demonstrates, CSR programmes should not be taken at face value, but attention focussed on their underlying drivers.
In addition to relying on the Mafia metaphor to illuminate the pathologies of instrumental CSR, our understanding of such an organization could also be used to derive more general lessons concerning CSR analysis that we turn to next.
Lessons from the Mafia for CSR and Organization Studies Our account of the Mafia delivers three specific insights for both CSR analysis and organization studies: (1) it points to the risks associated with viewing CSR simply as a means rather than as an end; (2) it highlights the importance of a corporation’s social embeddedness in achieving its CSR objectives; and (3) it invites a carefully consideration of problems faced by multinationals in a global context. In the following sections we discuss each of these in light of future research.
Lesson 1: Differentiate between CSR as a means and CSR as an end
As the case of the Mafia clearly demonstrates, the adoption of ‘CSR best practices’ do not necessarily guarantee socially responsible behaviour. A number of authors have argued that several organizational factors might immunize managers from ethical reasoning (see Swanson, 1995, 1999), with impression management helping to create a symbolic shield around the company in order to guard it from external pressures (Weaver et al. 1999).
Our analysis strengthens such insights by suggesting that CSR, if solely perceived as a means employed towards instrumental ends, could reinforce corporate immunization and create an ethical myopia among managers. Yet, the growing popularity of such a means-driven view among practitioners is exemplified by Crane (2000) for green marketing in the UK, for the French investment sector (Déjean, Gond & Leca, 2004), and for NGOs in Israel (Shamir, 2005). Chatterji and Levine (2006) have recently advocated that tools such as a code of conduct, often perceived as a way of enhancing corporate responsibility, can in fact be counter-productive, immunizing corporations from outsiders’ evaluations. In their view, the increasing number of social performance metrics can paradoxically decrease corporate social performance. In a similar vein, our research suggests evaluating CSR in ways that would differentiate firms simply using CSR as a means and erecting a façade of social responsibility to those that actually consider it to be the end goal. In this regard, the case of Enron appears to be the most apt.
“Now, when most people hear the word ‘Enron’ they think of corruption on a colossal scale... Not long ago, the same company had been heralded as a paragon of corporate responsibility and ethics - successful, driven, focused, philanthropic and environmentally responsible” (Sims & Brinkmann, 2003: 243).
Lesson 2: Recognize CSR as arising out of social embeddedness A unidimensional approach to a firm’s role in society, one that takes the legitimacy of its activities for granted and focuses merely on the instrumental value of its CSR, threatens to disembed the corporation and its decision-makers from interests other than the maximization of profit. In the extreme case, it might even turn the corporation into a mafia type of organization. Similar to the Mafia, if the firm’s relationship with society is strictly based on a set of self-centred calculations, then it risks isolating itself from external expectation and values. Oestreich has pointed at the widening gap between internal and external perceptions of a firm: where external critics might for instance see “families uprooted and lives destroyed” as a result of certain corporate actions, managers might only see “the end of an old inefficient industry” (Oestreich, 2002: 215).
Our analysis calls for empirical research to understand how corporations might reembed themselves into their relevant societal contexts and go beyond an instrumental CSR orientation. If, as suggested by previous research, purely economic reasoning should act as a barrier to such processes, it might be worthwhile to investigate how managers or corporations could adopt alternatives modes of reasoning (e.g., ethical or that oriented towards social responsibility) and/or balance self-interest with other norms (see Rocha and Ghoshal, 2006).
Lesson 3: Acknowledge instrumental CSR’s limitation in regulating corporate behaviour in the global economy The problems derived from an instrumental approach to CSR are further exacerbated by the global expansion of corporate activities. Globalization has lead to conflicts between national governments and corporations that operate multinationally (Habermas, 2001).
Such conflicts render it difficult to regulate corporate behaviour. Within the space dominated by multinationals, there is often no global law, no sanction mechanisms, no cross-cultural code of ethics, and no global government. Thus, globally active corporations operate in a legal and moral vacuum were they themselves have to define the limiting parameters of their own behaviours. Self-regulation of self-interested actors, however, could turn out to be problematic. As King and Lenox (200) have shown in their analysis of the Responsible Care Program of the chemical industry, selfregulation without external monitoring can lead to opportunism. Instrumental CSR in fact heightens the problems resulting from corporations attempting to replace the state in terms of its political responsibilities. The key research question here, of course, is to what extent the practice of instrumental CSR impedes the development of industrywide governance frameworks, given its own variety of social performance analysis.
Conclusion The rising interest in CSR has led to the popularity of an instrumental approach that reduces social responsibility to a handmaiden of profit maximization. The risk of adopting such an approach lies in an emphasis on the means of achieving CSR reputation rather than the end of social welfare. The instrumental view renders a business firm culpable to similar illegal and immoral acts as the Mafia, particularly as there might be significant parallels between their chosen acts and driving motivations.
Given particular contexts of operations, such parallels might indeed appear striking, raising the danger of corporate scandals. Studying the pathologies of the Mafia, then, might hold lessons for a legal business firm in terms of its contextual behaviours, organizational culture, and its driving objective with respect to the maximization of profit and the achievement of social welfare.
Table 1: Paralleling Mafia and Instrumental CSR Best Practices
Practicing marketing Recruiting through indirect Using CSR baits to open communications through CSR means showcasing bravery and doors, and access scarce communications to increase community service resources social acceptance References Akerlof, G. 1970. The market for "lemons": quality uncertainty and the market mechanism. Quarterly Journal of Economic, 84(3): 488-501.
Agle, B. R. & Kelley, P. C. 2001. Ensuring validity in the measurement of corporate social performance: lessons from Corporate United Way and PAC campaigns.
Journal of Business Ethics, 31: 271-284.
Banerjee, B. 2003. Who sustains whose development? Sustainable Development and the Reinvention of Nature. Organization Studies, 24: 143-180.
Banerjee, B. 2004. Corporate social responsibility: The good, the bad and the ugly. Paper presented at the European Group for Organization Studies Conference, Ljubljana, Slovenia.
Beck, U. 2000. What is globalization? Cambridge, UK: Polity Press.
Bhattacharya, C. B., & Sen, S. 2004. Doing Better at Doing Good: When, Why and How Consumers Respond to Corporate Social Initiatives. California Management Review, 47(1): 9-24.
Blowfield, M. & Frynas, J. G. 2005. Setting new agenda: critical perspectives on Corporate Social Responsibility in the developing world. International Affairs, 81: 499-513.
Chatterji, A., & Levine, D. 2006. Breaking down the wall of codes: Evaluating nonfinancial performance measurement. California Management Review, 48(2):
Colle, S., & Gonella, C. 2002. The social and ethical alchemy: an integrative approach to social and ethical accountability. Business Ethics: A European Review, 11(1): 86-96.
Crane, A. 2000. Corporate greening as amoralization. Organization Studies, 21: 673Déjean, F.,Gond, J.-P., & Leca, B. 2004. Measuring the unmeasured: an institutional entrepreneur strategy in an emergent industry. Human Relations, 57(6): 740Dewey, J. 1954. The public and its problems. Athens: Ohio University Press.
Dickie, J. 2004. Cosa Nostra: A History of the Sicilian Mafia. London: Hodder & Stoughton.
Donaldson, T. 1996. Values in Tension: Ethics away from home. Harvard Business Review, 74: 48-62.
Eisenhardt, K. M., & Sull, D. N. 2001. Strategy as simple rules. Harvard Business Review, 79(1): 106-117.
Falcone, G. 1991. Cose di Cosa Nostra. Milano: Rizzoli.
Ferraro, F., Pfeffer, J., & Sutton, R. I. 2005. Economic language and assumptions: How
theories can become self-fullfilling. Academy of Management Review, 30(1):
Friedman, M. 1962. Capitalism and Freedom. Chicago: University of Chicago Press.
Friedman, M. 1970. The social responsibility of business is to increase its profit. The New York Times Magazine, 13 September: 32-33, 122, 124, 126.
Frynas, J. G. 2005. The false developmental promise of Corporate Social Responsibility:
evidence from multinational oil companies. International Affairs, 81: 581-598.
Gallager, J. A., & Goodstein, J. 2002. Fulfilling institutional responsibilities health care:
Organizational ethics and the role of mission discernment. Business Ethics Quarterly, 12(4): 433-431.