Corporate social responsibility (CSR) has been attacked as an anti-capitalist and economically dangerous ‘fallacy’ in a new study from an influential right-wing think tank.
The Adam Smith Institute report says that a business world influenced by stakeholders ‘would have deleterious consequences for economic well being’. Its author Norman Barry, who is professor of social and political theory at the University of Buckingham, says CSR ‘must be firmly resisted, not least because it is a superficially anodyne form of anti-capitalism.’
The report, Respectable trade: the delusions of business ethics, is the second recent study to attack the growth of corporate social responsibility. In the spring, Elaine Sternberg, a research fellow at the University of Leeds Centre for Business and Professional Ethics, argued in a discussion paper that the term ‘stakeholder’ was now so loosely defined as to be ‘deeply dangerous’. (EP1, 2000)
Her paper, published by the Foundation for Business Responsibilities, said pressure groups were using the stakeholder concept to drive through anti-business objectives.
Barry’s study accepts business must fulfil a ‘generic moral code that encompasses respect for property, the sanctity of contract and the promotion of trust and reliability’, but says there is an economic rationale for this.
It claims that, by contrast, there is ‘no serious scientific evidence’ to back up the business case for social responsibility, which it dismisses as ‘the superficially alluring phrase of the moment’.
His report argues that much CSR work can damage a business by using resources inefficiently and ignoring the profit motive.
It adds that it is ‘perfectly acceptable for privately owned companies to engage in virtuous activity’ because the money at stake belongs to their owners, ‘but in a public company shareholders’ money is not available as a costless resource for the moralist’.
It says: ‘If a myriad of socially significant but non-owning groups have an influence over the company, and its aims are more to do with satisfying their demands than securing satisfactory returns to shareholders, the motivation to invest will be reduced.’
The study concludes that an increase in part-time and home working may diffuse CSR initiatives because fewer workers will be tied to a single employer. This means ‘there will be no institution to which [the CSR question] can be addressed.’
Kenneth Rushton, director of the Institute of Business Ethics, said the report reflected concern in some quarters about the spread of CSR policies, but he dismissed the suggestion that a backlash against CSR was developing.
‘I think the concern is that some non-governmental organizations are encouraging companies to go overboard at the expense of taking their eye off the bottom line, and that is valid, but I don’t detect a backlash,’ he said.