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Commentary Post - Georges Enderle

Clarifying the terms of business ethics and CSR

April 6, 2010

Forthcoming 2010 in the Business Ethics Quarterly published by the Philosophy Documentation Center.

In the last 30 plus years, the “fields” of business ethics and CSR have evolved considerably, and a great number of journals, textbooks, societies, encyclopedias, and surveys have emerged. Since we are far from a consistent terminology, I try to clarify a few key terms by comparing three recent documents: The Oxford Handbook of Business Ethics (Brenkert et al., Oxford, 2010), The Oxford Handbook of Corporate Social Responsibility (Crane et al., Oxford, 2008), and the Encyclopedia of Business Ethics and Society (Kolb, Los Angeles, 2008). Each publication speaks of the “field” of business ethics, corporate social responsibility, and business and society. For Brenkert et al., the field of business ethics is clearly defined. First, it consists of the (Western) philosophical analysis of moral problems and case studies of business including internal and external issues. Second, it is a “practical” matter viewed from “a business orientation”, dealing with “various relationships that obtain largely within business.” With this double notion and 26 contributors from the USA (and one from Canada), this handbook represents the typical “American” approach to business ethics. It claims to reflect “the work … done in these last four decades”, insinuating to covering the entire world. The philosophical orientation generally relates to systemic, organizational, and individual moral issues. But the focus is on the internal and external relations of business organizations (on “corporate ethics”, properly speaking), which are also the subject of the practical “business orientation” taken from a business insider viewpoint alone.

This double notion of (American) business ethics has important implications for understanding “corporate social responsibility.” The “philosophical orientation” places little emphasis on the perspective and analyses of social sciences, which have been adopted more vigorously by CSR scholars. Moreover, the business insider view has been dramatically challenged by business outsiders such as NGOs, consumer organizations, and governmental agencies. One can conclude that the claim of business ethics to consider CSR as a sub-area of business ethics is as right (or wrong) as the opposite claim of CSR to regard business ethics as a sub-area of CSR.

The editors of the CSR handbook are more cautious in describing their field by trying to help the reader “understand the messy and multifaceted reality of CSR” and “identify the core areas of research activity and establish the[ir] key themes, arguments, and findings.” In contrast to the business ethics handbook, an equal number (22) of scholars from the United States and from outside provide a more international profile of this field. At the center of attention is the business firm that relates to “society” and is challenged by “society.” Internal relations to the firm are only relevant for its external relations. Normative demands (of moral responsibility) are often stated explicitly and underpinned by social scientific arguments, but not justified by ethical reasoning. Individual ethics beyond the firm’s “social” responsibility is rarely discussed, and the relevance of the economic system is hardly articulated. Although the term of responsibility is fundamental for CSR, it is seldom defined or explained with its three components: the subject (who is responsible?), the contents (for what is one responsible?), and the authority (toward whom is one responsible?).

Take, for instance, Archie Carroll’s widely used definition of corporate social responsibility that includes economic, legal, ethical, and discretionary responsibility. It seems that “corporate responsibility” stands for the ethical obligation of the business firm and relates to its economic, legal, ethical, and discretionary activities. But what does it mean to have an ethical obligation for an ethical activity that is separate from the other three types of activity? This implies a rather strange and confusing notion of ethics. Moreover, what is the proper place of “environmental” responsibility? Is it absent or part of “social” responsibility or integrated in all four types of responsibility? And what does “social” mean? Is it about contents specified with “economic”, “legal”, “ethical” and “discretionary”? Or does it indicate that the business firm is responsible to “society”? Or does it mean both contents and authority? Clearly, this notion of CSR does not help to clean up “the messy reality of CSR.”

The Encyclopedia of Business Ethics and Society with its five volumes is the biggest encyclopedia of “business ethics” and “business and society” to date. Like the business ethics handbook, it displays an impressive predominance of US-scholars: 28 Americans (plus 1 non-American) editors and about 290 American contributors (plus circa 40 non-Americans). The fields are meant to be both distinct and inherently united. “Business ethics aims to specify the principles under which [business organizations] must operate to behave ethically”, drawing on the Western philosophical tradition; and “business and society explores the entire range of interactions between business entities and societies”, relying strongly on the tools of the social sciences. Since “commerce” is “by its very nature a normative enterprise”, both “the questions of value” and “the findings of business and society” are indispensable and interdependent. Undoubtedly, this is a tall order, though hardly followed in key entries such as business ethics and corporate social responsibility. Moreover, besides the entry on capitalism, there is little reflection on the ethics of economic systems and on individual ethics. Like the two handbooks, this encyclopedia also remains practically silent about religious matters of business and economic ethics (comprising eight of almost 900 entries).

What can we take away from this snapshot of three important documents? The fields of business ethics and corporate social responsibility/business and society need much more conceptual clarity and consistency. Their further developments would certainly benefit from a stronger inclusion of scholars outside the United States, not only from Europe but also from Asia, Africa, and Latin America. In moving toward a more integrated field, more attempts should be made “to walk on two legs”, that is, philosophy and social sciences. By taking a truly global perspective, the relevance of religions – as drivers and obstacles of business and economic ethics – should be taken seriously. Finally, the clarification of the purposes of business and economic life – beyond making money, adding value, and maximizing profit – should take center stage in the more united field of business ethics and corporate responsibility.

Previous encyclopedic works to consult are: Lexikon der Wirtschaftsethik (in German 1993; Portuguese 1997; Chinese 2001); Encyclopedia of Ethics (2 volumes 1992; 3 volumes 2001); Encyclopedia of Business Ethics (1997 and 2005); Handbuch der Wirtschaftsethik, 4 volumes (1999); A Companion to Business Ethics (1999); The A to Z of Corporate Social Responsibility (2007); Handbook of Research on Global Corporate Citizenship (2008).