Corporate responsibility and the idea of the firm

Abstract

An appeal to some version of corporate responsibility has become a strategic issue for business. There are many interpretations of this idea, but it is unlikely that companies can ignore the debate about this issue. Many companies and most global corporations make public claims about their corporate responsibilities in addition to claims about financial outcomes and success. These claims range from informal contributions to public debate, to responses to issues of public concern, to formal reporting on the basis of sets of objectives and targets.

This raises a conceptual question: to what extent, if at all, do claims about corporate responsibility have implications for the idea of the firm. The argument developed in this paper is one attempt to address this conceptual question.

I will start by setting out one version of the idea of the firm and its core or traditional responsibilities, and then work through a series of possible further responsibilities. Each of these further responsibilities will be incorporated into the initial version in order to understand potential implications for the idea of the firm.

The argument in this paper does not assume that this initial version of the idea of the firm is the only possible version, or that the particular dimensions of responsibility described here are the only possible dimensions. However, given this version and these dimensions the paper will consider the kinds of issues that various claims about corporate responsibility would raise for the idea of the firm, and in particular for the boundaries of the firm. The structure of the argument and the specific implications of the responsibilities identified can be assessed separately; the former may continue to be useful even if the latter are disputed or incorrect. In addition, the structure of the argument should make it possible to change the content or the ordering of the specific responsibilities while retaining the overall argument.

This paper does not explicitly distinguish between a series of concepts related to the broad idea of corporate responsibility including corporate social responsibility (CSR), sustainability, and corporate citizenship among others. These concepts may refer to different aspects of a firm’s responsibilities. For example ‘sustainability’ is increasingly central to the public claims made by firms, and in many cases refers to a specific set of primarily environmental responsibilities. The issues raised by these various concepts can be discussed further.

The argument developed does not make claims about whether the implications discussed are desirable, even if the arguments about the implications for the firm are accurate. However, the argument does aim to open up some of the issues that these claims would need to address if any of these implications were considered desirable.

This paper is intended as a contribution to a continuing debate and is not a closed argument. It is intended to promote a discussion of the adequacy, the empirical implications, and the ethical implications of the arguments presented, and to stimulate further critical analysis.