Why has Corporate Social Responsibility so-far failed to usher in a new, more sustainable paradigm? In his article “Is Corporate Social Responsibility a New Spirit of Capitalism?”, Professor Bernard Leca, with co-authors Kazmi (Aston Business School) and Naccache (INSEEC Business School), argues that a bottom-up approach, focusing on the participation of employees and not just managers.
Market capitalism, once seen as a source of limitless prosperity, has been singled out in the 21st century as the primary driver of intolerable inequality and unsustainable exploitation in the reckless pursuit of profits. In the absence of any viable alternative system, Corporate Social Responsibility (CSR) has been positioned as the go-to solution for capitalism’s ills: a strategy for putting pressure on companies to create economic and societal value.
The jury is still out on CSR’s effectiveness. Researchers have poured over how to best conceive, plan and implement CSR strategies. Some remain optimistic, seeing a potential to encourage the development of management that challenges the social injustice and environmental destructiveness of current corporate capitalism. Other scholars have been ambivalent about CSR, arguing that it’s merely a smokescreen, concealing the exploitative nature of corporate capitalism - a nature that can’t be changed.
Or can it?
Our research contributes to this debate by drawing from the work of sociologists Eve Chiapello and Luc Boltanski who argued in their book The New Spirit of Capitalism (2006) that this system has reinvented itself no fewer than three times since the end of the 19th century. Capitalism’s most recent incarnation, which materialized since the 1990s, was a ‘project-based’ spirit which justified capitalism as the best way for anyone to express individual creativity and talent. In this study, we ask whether CSR might become a new spirit of capitalism, and usher-in a new, sustainable capitalism 2.0.
According to Boltanski and Chiapello, to be successful a justification of capitalism should be able to offer excitement by convincing people and organizations that working within this system will enliven them, it should offer security by protecting people and their families, and it should offer fairness in determining whose actions should be valued.
Let’s look at the naissant CSR-based justification of capitalism and see if and where it falls short...
We analyzed 22 influential books on CSR management written by prominent authors in the domain and management gurus, searching for how CSR was justified to readers of those books.
Does a CSR spirit of capitalism offer excitement?
Boltanski and Chiapello argue that capitalism is not exciting in itself, as it involves a restless drive to accumulate capital as well as a ‘willing’ subordination by wage-earners, who have to relinquish both the fruit of their labour and the wealth it generates. In such an order, the ‘spirit’ needs to provide protagonists of capitalism with a source of excitement. The texts we analysed present two distinct but interrelated sources of excitement.
- For individuals, CSR offers them a richer, more diverse work experience, where several forms of value—besides financial profits—are considered important. The value-based management made possible with CSR is a way to reinforce the sense of community at work and to consolidate organizational identity and culture.
- For organizations, CSR offers an opportunity to accomplish both social and reputational goals by improving the relations between corporations and the wider community in which they operate. This is possible, according to authors, because there is allegedly an alignment between the social and the economic performance of the firm. CSR is a way to restore public trust in the corporate world, it follows that CSR enhances the corporation’s reputation and confirms its licence to operate.
What is remarkable here is that CSR-related sources of excitement appear to be in sharp contrast with the sources of excitement in the previous spirit of capitalism identified by Boltanski and Chiapello. According to them, a central common characteristic of the sources of excitement provided by successive spirits of capitalism relates to ‘freeing’ wage-earners. Texts promoting CSR offer a sharp contrast, stressing one’s duties to the collective. Part of the excitement offered by CSR as a potential new spirit is to reduce what is presented as a current anomie by reconnecting business to wider society, as well as by offering the possibility of aligning the moral values of the protagonists of capitalism with their economic interests.
Does it guarantee security?
Boltanski and Chiapello argue that to gain support for a new spirit of capitalism, its promoters must convince people that engaging with the proposed version of capitalism will bring them some security. Security is a central part of the argument developed by CSR promoters. However, the approach to security developed here is different from that in previous spirits of capitalism:
- as a solution to the threat from the current version of capitalism to the long-term security of society as a whole;
- as a guarantor of security for future generations;
- and as a way to ensure the long-term security of corporations, as it should strengthen ties between corporations and the wider society.
The books also enumerate several other benefits from CSR that are likely to increase companies’ economic success and chances of survival, including the development of new markets, innovation and repositioning, reduction in risk and increased capacity to attract bright people willing to work for CSR-driven corporations.
What’s noticeable, however, is that while the long-term security of society and corporations is discussed and argued about at length, limited attention is paid to improving the security of wage-earners, for example, by promising lifelong careers.
Does it guarantee fairness?
One last but very important dimension of the spirit of capitalism, according to Boltanski and Chiapello, is to give people a sense that, by supporting and working within capitalism, they will be rewarded in a fair way. For example, in the current spirit of capitalism—evident in project-based organizations—fairness is embedded in the evaluation of wage-earners, based on their adaptability, mobility and capacity to fulfil projects. Our analysis of managerial texts suggests a distinction emerging among wage-earners, that is, between managers and workers.
While the authors address the issue of fairness for managers, for whom they recommend rewards, they give little attention to the workers. The texts we analysed are targeted at managers rather than workers. They insist on the importance of top leadership and regard managers, in particular, senior managers and CEOs, as the main driving force in CSR policies. Some authors recommend direct financial rewards for managers’ engagement in CSR.
In sharp contrast, when considering rewards for workers, the texts tend to perceive the rewards as more symbolic and less financial. CSR is presented as a way of giving staff an opportunity to express their idealism, to be seen as smart and concerned citizens, to create for themselves a ‘positive working environment, and even improve their employability. Yet, it’s argued that for workers, “motivation is based on values rather than purely on financial reward’. Ironically, while remuneration is viewed as too narrow a motivation for workers, it is considered a valuable motivation for managers.
In other words, many see the implementation of CSR as a major change requiring a top-down process, where leadership from managers is essential. Within this perspective, the lack of tangible rewards for workers may be just an omission, as the texts concentrate on those issues that the authors view as more important.
It might become problematic when trying to convince the protagonists of capitalism and to ensure implementation, especially since it creates a divide between managers and workers in the incentives to implement CSR.
Capitalism 2.0 needs a bottom-up approach
Our analysis suggests that CSR does exhibit the core characteristics of a spirit of capitalism: it introduces changes in practice, makes recommendations regarding how those changes should be introduced, and spells out the benefits that corporations, managers and employees may obtain. CSR theorists and gurus don’t promote the maintenance of “business as usual”, but call for reforms and aim to influence the current management of corporations, arguing that a new form of capitalism might be part of the solution, much as the current one is part of the problem.
However, two characteristics of this new spirit of capitalism remain underdeveloped: there appears to not be enough attention paid to the security of the individuals within the company, and in regards to compensation, some individuals are treated more fairly than others.
In other words, until now this new spirit of capitalism has been ushered in through a primarily top-down approach. Most critically, this has lead to a rather unusual view of fairness, where managers who lead, develop and enact CSR can expect financial rewards, while workers receive only the symbolic satisfaction of working in a company engaged in CSR. This could potentially lead workers to consider CSR as a way to increase managers’ financial gains but not their own.
In short, the current incarnation of a CSR-based spirit of capitalism may succeed in producing collective value for corporations and society, but it does not include employees in creating or benefiting from it.
A new spirit of capitalism is still developing. However, if long-term change is to be produced, workers need to be placed at the centre of this critical CSR project. By taking a bottom-up approach, this new system could more easily be brought to fruition.