The effects of business ethics and corporate social responsibility on intellectual capital voluntary disclosure

Journal of Intellectual Capital

ISSN : 1469-1930

Article publication date: 9 March 2021

Issue publication date: 17 December 2021

This study aims to examine the potential effect that business ethics (BE) in general and corporate social responsibility (CSR) more specifically can exert on the voluntary disclosure (VD) of intellectual capital (IC) for the ethically most engaged firms in the world.


The research design is based on an inductive approach. As part of the global quantitative investigation, the authors have analyzed the impact of BE and CSR on the transparent communication of the IC. The data under analysis have been investigated using multiple linear regression.

Based on a sample of 83 enterprises emerging as the most ethical companies in the world, the results have revealed that the adoption of ethical and socially responsible approach is positively associated with the extent of VD about IC. This finding may help attenuating the asymmetry of information and the conflict of interest potentially arising with corporate partners. Hence, IC-VD may stand as an evidence of ethical and socially responsible behaviors.

Practical implications

Global and national regulators and policymakers can be involved by these results when setting social reporting standards because they suggest that institutional and/or cultural factors affect top management's social reporting behavior in the publication of the IC information.

Social implications

Direct and indirect stakeholders, if supported by ethical and socially responsible behaviors of the company, could assess more in detail the quality of the disclosed information concerning the IC.


Most of the studies that have been conducted in this field have examined the effect of BE and CSR on the firm's overall transparency, neglecting their potential effect on IC disclosure. This study is designed to fill in this gap through testing the impact of ethical and socially responsible approaches specifically on IC-VD.

  • Business ethics
  • Corporate social responsibility
  • Voluntary disclosure
  • Intellectual capital
  • Transparency

Rossi, M. , Festa, G. , Chouaibi, S. , Fait, M. and Papa, A. (2021), "The effects of business ethics and corporate social responsibility on intellectual capital voluntary disclosure", Journal of Intellectual Capital , Vol. 22 No. 7, pp. 1-23.

Emerald Publishing Limited

Copyright © 2021, Matteo Rossi, Giuseppe Festa, Salim Chouaibi, Monica Fait and Armando Papa

Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at

1. Introduction

Over the last few decades, firms have been generating value not only from securities and financials but also from other intangible elements, such as skills of employees (human capital), novelty in technology (structural capital), relationships with customers (direct relational capital) and reputation on the market (indirect relational capital or social capital), all forms of potential intellectual capital (IC), whose contribution, however, is probably riskier than industrial assets ( Su, 2014 ; Cruz-González et al. , 2014 ). In fact, the impact of IC on the business results is uncertain, and in addition, it is often more difficult to identify and measure its characteristics ( Murray et al. , 2016 ).

The uncertainty about its representation and measurement still poses issues related to accounting, evaluation and governance ( Hussi, 2004 ; Guthrie et al. , 2006 ; Hamed and Omri, 2014 ). To limit these problems, managers may choose voluntary disclosure (VD) to reduce the asymmetry of the information ( Branco and Rodrigues, 2008 ).

IC is a driving factor and creator of lasting value ( Lin et al. , 2015 ; Vaz et al. , 2019 ), and disclosure by applying ethical and social principles improves the trust of information and reduces the conflict of interest ( Alves et al. , 2012 ; Chung et al. , 2015 ; Al Maskati and Hamdan, 2017 ). These behaviors may exert a positive effect on the global quality of the IC-VD ( Melloni, 2015 ), and in this study, more specifically, VD of nonfinancial information about IC are assumed to be positively influenced by ethical and socially responsible behaviors of the company's decision-makers ( Corvino et al. , 2019 ).

In this respect, interest in the development of business ethics (BE) and corporate social responsibility (CSR) in accounting, evaluation and management has gained increasing attention in the academic literature ( Nahapiet and Ghoshal, 1998 ), and the last 20 years (or even more) of empirical research on these issues have generated vast literature ( Gray et al. , 1995 ; Chen and Gavious, 2015 ; Singh and Gaur, 2020 ). Accordingly, the quality of the information published by companies about their IC has received an ever more peculiar interest in managerial research ( Ousama and Fatima, 2012 ; Muttakin et al. , 2015 ; Devalle et al. , 2016 ; Bellucci et al. , 2020 ), with specific concerns about the effect of BE and CSR on the quality of the disclosed information on voluntary or mandatory basis, also considering several financial scandals that have added doubts about relevance and reliability of some company data ( Lehnert et al. , 2016 ).

Subsequently, a critical question is the following: is it adequate, opportune and reliable to take into consideration only the accounting information that mandatorily concern IC, especially considering that this entity is so difficult to identify and measure? This issue seems deserving huge attention particularly in the current context, constantly and continuously marked by the rise of BE and CSR, with consequent effect also on the relevance of the quality of the disclosed information.

For example, the legitimacy theory provides some contributions regarding environmental reputation, and the related effect of VD on reputational capital ( Alvino et al. , 2020 ). In this respect, the reputation of the company is a social construct stemming from the process of legitimization ( Bond et al. , 2016 ).

However, empirical studies investigating the effect of BE and CSR on VD have proved mixed results, mostly because of the different meaning about ethics and responsibility in each institutional and cultural context ( Ting et al. , 2020 ). The current study aims to combat this diversity and its consequences in terms of value creation, analyzing more specifically the potential effect of BE and CSR on the VD of IC ( Giacosa et al. , 2017 ).

The perimeter of the research regards the companies that are ranked by the Ethisphere Institute – most probably the global leader in the world for defining and advancing the standards of ethical and social practices that fuel corporate character, market trust and business success – as the most ethical companies in the world. More precisely, the contribution of the study is in checking whether the companies' behavior about IC disclosure is influenced by BE and CSR, aspect that has been often neglected in other studies.

In this respect, a research concerning companies displaying high level of ethical and socially responsible commitment has been conducted, with two main ambitions. First, results should enable to explicitly identify the characteristics that are more likely to influence the diffusion of information about IC in the annual reports through adoption of BE and CSR; second, it should help exploring the contribution of the several company characteristics as assessed in terms of ethics-based scoring.

The empirical evidence emerging from the research has demonstrated that the adoption of approaches that are based on BE and CSR noticeably help in enhancing the disclosure extent of the IC information as figuring in annual reports. Thus, this study should serve to provide further recommendations to the companies intending to adopt codes of ethics, or to put forward CSR practices, encouraging these behaviors also from the point of view of the IC disclosure (and consequent accounting, evaluation and management).

The structure of this paper is organized as follows; Section 2 presents the basic theoretical background and the hypotheses that have been developed: in this section, the relationship between the potential effect of BE and CSR on the VD of IC has been analyzed. Section 3 displays the methodology that has been adopted, while the empirical results are exposed and discussed in Section 4 ; finally, the discussions of the findings, the concluding remarks and their implications are provided in Section 5 .

2. Theoretical background and hypotheses development

As aforementioned, the following investigation is about the effect of BE and CSR on IC-VD, also for clarifying the distinct influences that may arise from concepts that sometimes are considered in ambiguous connection ( Fassin et al. , 2011 ). Therefore, the first step of the research is about a general analysis of the studies focusing on the association between ethical as well as socially responsible behaviors and IC-VD as core aspect of a more global knowledge management approach that cutting-edge enterprises should adopt to succeed ( Serenko and Bontis, 2013 ).

2.1 Theoretical background

To present main reasons and usefulness of the VD of information about IC, the theory of planned behavior has been adopted as fundamental approach. In fact, although extensive research has focused on the variables that externally and internally may influence the managers' decision about disclosing information on IC, few studies have examined in this respect the psychological factors and have used a theoretical decision-making framework ( Coluccia et al. , 2017 ; McPhail, 2009 ).

The theory of planned behavior, largely used to explain the process of individual decision-making behavior ( Ajzen, 1991 ), can emerge as a theoretical framework for investigating the psychosocial factors stimulating the managers' decision to disclose IC information in a mandatory and/or voluntary way. In addition, this model has demonstrated its superiority over other theoretical approaches in many contexts of VD, including IC ( Zhang et al. , 2019 ).

This theory assumes that when individuals, considering altogether internal attitudes and external considerations, perceive a manageable activity as capable of providing business benefits, such as those that may arise from IC-VD, they receive intention, support and encouragement in adopting that specific behavior, also making assumptions about their ability to perform the task ( Passaro et al. , 2018 ; Mura et al. , 2012 ).

For example, Armitage and Conner (2001) examined 185 empirical studies that were conducted prior to 1997, finding that about 39 and 27% of the variance of intention and behavior, respectively, was caused by the theory of planned behavior. In fact, this theory is a rational decision-making model, which is mainly used to predict the potential behavioral intentions of the managers (in this specific case, adopting VD of IC).

Three key independent variables are at the basis of this framework: (1) the attitudes toward a particular behavior; (2) the perceptions of others' approval or disapproval of a particular behavior (subjective norms) and (3) the perceived behavioral control about easiness or difficulty in performing a particular behavior ( Ajzen, 1991 ). This configuration is adopted as methodological basis for the theoretical model in which assessing the following hypotheses.

2.2 Hypotheses development (H1) : BE and VD of IC

Transparent and reliable communication is essential to reflect the true image of a company ( Bhimani, 2008 ): with this regard, financial transparency is a necessary condition for a firm that is involved in the BE process. In the specific context of disclosure, several authors have recognized that BE rooted in organizational culture has a tremendous influence on the development of IC-VD ( Branco and Rodrigues, 2008 ).

For example, Jo et al. (2008) have analyzed the development of ethical standards in the business to improve the quality of the disclosed information, finding that entrepreneurs and managers that consider the promotion of ethical behaviors are urged to ensure permanent disclosure of the company's IC. Later, Navid et al. (2015) have found that unethical behaviors are at the basis of corporate financial scandals, workplace frauds and harassment or misleading financial reporting: such issues have raised awareness about the positive benefits of ethical behavior, also in improving VD (and then, also about IC), to limit the problems of the agency theory.

Mouritsen (2004) has found a significant gap between the market value and the book value resulting from the failure of the companies' hidden value in their annual reports: consequently, BE oriented to IC-VD would limit the problem of the business undervaluation (more specifically, VD of information about IC is positively influenced by the ethical behavior of the company's decision-makers).

On the other hand, the complexity and uncertainty of strategic decision-making require different combinations of data, information and knowledge. In this respect, some research has been conducted to examine the factors influencing disclosure of IC: Ferreira et al. (2012) have found that ownership concentration and firm size have a positive influence on the disclosure of IC, and ethical behaviors also positively influence this disclosure.

Several studies suggest that there are many benefits to acting ethically, such as improving the financial and nonfinancial performances as well as creating a sustainable competitive advantage ( Goel and Ramanathan, 2014 ; Khondkar et al. , 2016 ). In addition, in highly risky and uncertain contexts, policymakers are forced to select powerful tools over VD.

BE behaviors have positive impact on the extent of the IC-VD.

2.3 Hypotheses development (H2) : CSR and VD of IC

The economic value of the company is expressed not only by its means of production but also by the global impact that fundamentally derives from its IC ( Campanella et al. , 2014 ), activating human, structural and relational resources to generate shared value ( Porter and Kramer, 2011 ) at business, social and environmental level ( Elkington, 1998 ). As result, a new path on IC reporting sustains that all companies are increasingly required to be socially responsible and to better manage their environmental impact ( Aslam et al. , 2018 ).

In this vein, organizations have developed accounting and management systems and improved their disclosure practices according to social and environmental principles ( Khondkar et al. , 2016 ). In part, this has been due also to the fact that companies may have incentives for adopting globally responsible approaches and operating socially responsible initiatives ( Gangi et al. , 2019 ); however, a study by Türkel et al. (2016) on the European Union has provided evidence that CSR is a mean that companies may voluntarily decide to adopt to contribute to better society and cleaner environment.

From one side, Sun et al. (2010) have found that companies that need to pursue a strategy of VD of IC are brought to value CSR, and this should be positively interpreted by the various stakeholders. On the other side, regarding the potential asymmetry of information and conflict of interest that may exist, CSR should constitute a behavioral method that would have positive effect on the corporate behaviors, as it promotes transparency, also with regard to the potential VD of IC ( Beretta et al. , 2019 ).

Coherently to the dynamic resource capability perspective of (Bamel and Bamel, 2018) , Luthan et al. (2016) found that in an uncertain world, the adoption of a CSR approach could help reducing uncertainty, especially if the company discloses information about its IC. Similarly, some researchers argue that CSR is a very broad domain, and VD of IC should be considered as a social responsibility action ( Chan et al. , 2014 ).

Polo and Vázquez (2008) have described the relationship between CSR and the VD of information, to ensure the sustainability of the business in general and its operational goals more specifically. In other words, CSR is an asset for the company and the various stakeholders ( Fukukawa et al. , 2007 ) because of its direct contribution to IC (indirect relational capital, for example), with consequent influence on the relevance of the information provided by the company about its IC and knowledge properties more in general ( Rechberg and Syed, 2013 ).

Moreover, as aforementioned, Khondkar et al. (2016) have studied the effect of CSR on the quality of the information disclosed in companies' annual reports. They have found a positive relationship between the level of disclosure and the intensity of CSR, concluding that greater disclosure is a form of socially responsible behavior, thus directly and/or indirectly impacting IC ( Vrontis et al. , 2020 ).

CSR behaviors have positive impact on the extent of the IC-VD.

3. Research design

3.1 sample construction and data collection.

Being the main purpose of this study to explore the effect of BE and CSR on IC-VD, a sample of firms already involved in the process has been selected. In other words, the selectable companies have been detected among those with evident commitment and involvement in ethical and social behaviors.

Several statistical institutes are responsible for making an appropriate classification in this specific field: however, since 2007, the Ethisphere Institute ( ) has been analyzing the global market to identify, sector by sector, the most committed companies in the field of ethical behaviors, drawing up a list of the most ethical companies in the world and gaining at international level high reputation in the field ( ).

Then, the following investigation has been grounded on the Ethisphere Institute database, which considers more than 100 criteria; the most important are social responsibility, good governance, environmental impact, implementation of code of good behavior, commitment of the direction to questions of ethics and CSR, setting up of internal monitoring indicators, citizen investment and so on (it also considers negative criteria, such as the existence of disputes or infringements to sector regulations). This database provides a global overview, and the list of elected representatives reveals a real geographical diversity with several companies located outside the United States, such as the United Kingdom, Australia, Sweden, Germany, India, Guatemala, Poland, Switzerland, Saudi Arabia, Portugal and Belgium.

The data under investigation have been obtained from the Global-100 KPI 2015 database published by the independent Ethics Expert Group of the Ethisphere Institute (secondary, which have been then summarized into composite indexes, and not empirical data have been used to avoid any potential bias deriving from individual interviews concerning BE and CSR, most of all in the context of the planned behavior theory). Considered as one of the most authoritative indexes in the world due to its methodology and reliability, the Corporate Knights Global 100 designates each year the top 100 companies (out of several thousands) that are the most responsible in terms of ethical behavior.

The year 2015 has been chosen so that the data under analysis could be taken as definitively reliable, considering the time that sometimes is necessary to validate all the accounting information, most of all from a social and environmental point of view. Thus, the 2015 database, to the best of the authors' ability, is the latest publicly available for which it has been possible to collect all the necessary information for implementing the current investigation, but evidently the methodology can be replicated for any other year, when all necessary data would be available (for example, searching for the adequate data starting from ).

The initial population consisted of 4,353 companies (candidates); in a second step, 4,253 companies that did not meet the classification criteria for the first 100 companies were excluded. From the 100 best ranked companies, for the specific scope of the current research firms that are part of the financial sector, considering the very peculiar rules that govern this industry, have been excluded (i.e. 17 companies); thus, the final sample has included 83 firms, with Table 1 summarizing the sampling selection criteria.

Tables 2 and 3 describe the distributional profiles by country and by sector, respectively: the sample includes 18 developed countries belonging to 35 industries, according to the 48 industry group affiliations as figuring in Fama and French (1997) , with most firms that are based in the USA, the UK and France (these three countries make up 54.28% of the total sample).

The companies from the USA are at the top of the list, with 25% of the sample (20 firms out of 83, 24.09%): French and British companies are entitled of the second position in this ranking, respectively, represented with 10 companies on an equal basis. Then, Canada ranks fourth, since it is represented with eight firms, corresponding to 10% of the total sample (hence, these four countries account for almost 60% of the total sample).

In Table 3 , the most represented sectors are Oil, Gas & Consumable Fuels (eight firms), Pharmaceuticals (seven firms) and Chemicals (four firms), respectively. Concerning other sectors, the number of companies is more limited (three or less).

3.2 The regression model

DISC_SCO: composite index about IC-VD, calculated as combination of several elements (cf. Table 4 ).

ETH_SCO: composite index about BE, calculated as combination of several elements reflecting ethical principles.

CSR_INDEX: composite index about CSR, calculated as combination of 40 indicators reflecting principles of individual and collective social responsibility.

INVT: the degree of innovation intensity is the ratio between research and development (R&D) costs and the turnover (concerning 2015).

TAX_PAID: the effective tax rate is the ratio between tax expenses and earnings before interest and taxes.

ETH_COUNTRY: the scores about this variable range from 1 to 7, with 1 indicating a very low level of country ethics and 7 indicating a very high level of country ethics.

WOM_BOARD: this variable measures the proportion of women that are present in the boards of directors.

LEG_SYST: the legal system works as a binary variable, which numbers 1 if the company belongs to the Anglo-Saxon legal system (globally recognized as stricter), and 0 otherwise.

LEVE: the level of indebtedness is the ratio between long- and medium-term debts and total assets.

POL_SECTOR: the pollutant sector works as a binary variable, which numbers 1 if the company belongs to the polluting sectors (more regulated), and 0 otherwise.

3.3 Variables definition

To operationalize the hypotheses under test, all the variables that have been included in the empirical model are defined and commented as follows.

3.3.1 Dependent variable (“DISC_SCO”)

To measure this dimension, Li et al. (2008) have adopted a content analysis method, investigating the annual reports of selected companies to derive the qualitative, quantitative, financial as well as nonfinancial data relating to IC. In Table 4 the several components for human, structural and relational capital are reported.

In the current research, according to the measure used by Li et al. (2008) , cited also in Maaloul and Zeghal (2015) , the variable “DISC_SCO” has been adopted as a proxy of IC-VD, concerning published items about IC. Based on the examination of the annual reports, this dimension appraises the disclosed information on IC.

3.3.2 Independent variables

As aforementioned, several categories of explanatory variables have been selected to test their combined effects on the VD of IC. In the empirical model under analysis, to test H1 and H2 , two explanatory variables are naturally the most relevant, namely, BE and CSR. BE (“ETH_SCO”)

The ethical measurement has been differently implemented in different contexts because this concept is highly complex and relates to several nonmeasurable dimensions. In addition, several studies have recently operationalized this measure by various means, originating from several international organizations.

In this research, the Ethisphere Quotient developed by the Ethisphere Institute has been adopted to measure the BE of the firms, as result of an investigation that consists of a series of multiple-choice questions that count the company's ethical performance. It is a composite index based on the combination of several items, reflecting each company's level of ethical principles. CSR (“CSR_INDEX”)

In the current study, this measure has been derived from Dias et al. (2017) , who have constructed a list of indicators for measuring the CSR associated practices. The construct involves 40 CSR indicators categorized into three CSR dimensions (5 economic, 15 environmental and 20 social), as shown in Table 5 , thus providing a global view on the CSR of each firm.

The choice of the 40 indicators has been influenced by the most widely adopted standards on CSR disclosure (CSRD), i.e. the Global Reporting Initiative (GRI) Guidelines ( Bebbington et al. , 2008 ). Dias et al. (2017) have primarily focused on the GRI core indicators representing the well-established CSR indicators, and the selected items have been adapted to avoid penalizing companies that do not apply the GRI model.

CSR_INDEX = Level of CSR disclosure

e j  = Attributed analysis (1 if the disclosure item is found, and 0 otherwise)

e  = Maximum number of items a company can disclose (40).

3.3.3 The control variables: characteristics about the firm and the environment of the firm

BE and CSR are not the only factors that may influence the VD of IC. A control has been operated about other determinants of VD that have been documented in prior studies and that might explain the effects of financial and economic peculiarities of the firms on the scale and design of voluntary, and sometimes even mandatory, disclosure of IC ( Ribeiro Lucas and Costa Lourenço, 2014 ).

More specifically, control variables related to the characteristics of the firm are the following: the degree of innovation intensity (INVT), the effective tax rate (TAX_PAID), the percentage women on board of directors (WOM_BOARD), the leverage level (LEVE) and the pollutant sector (POL_SECTOR). Control variables related to the characteristics of the environment of the firm are the following: the level of country ethics (ETH_COUNTRY) and the legal system (LEG_SYST) because the sample includes several countries.

Generally, positive signs should be expected for INVT, WOM_BOARD, ETH_COUNTRY and LEG_SYST, whereas negative signs should be expected for LEVE, and POL_SECTOR, while no directional prediction is assumed for TAX_PAID. Finally, for an overall overview about the model variables composition, cf. Table 6 .

4. Empirical results and discussion

The current research, although engineered for testing specific hypotheses, has an explanatory purpose, aiming at identifying the potential determinants for the VD of the IC through ethical-and-social responsibility approach. As a result, a linear relationship could be established between the variable to be explained (IC-VD) and the potential explanatory variables (BE and CSR).

4.1 Descriptive analysis

Sections A and B, as figuring in Table 7 , provide the descriptive statistics characteristics concerning the continuous and dichotomous variables under investigation. Section A depicts mean, standard deviation, minimum and maximum relevant to the continuous variables, whereas Section B provides the frequency of the dichotomous variables; globally speaking, the sample seems to be evenly distributed.

Starting with the analysis of Section A in Table 7 , the descriptive analysis provides evidence that the mean level of IC-VD (DISC_SCO) is 0.59; this score is high with respect to the Maaloul and Zeghal (2015) reached index (0.46), relevant to a sample of US companies in 2013. Moreover, the current sample encloses firms that should also tend to improve their informational capacity related to IC.

The BE score (ETH_SCO) has a mean value of 0.608. Most companies in the sample tend to be more involved in BE activities.

The CSR scores range from a minimum of 0.15 to a maximum of 0.95, with a mean of 0.698. A higher CSR score denotes that the company displays a better CSR performance ( Hassan and Guo, 2017 ).

As regards the control variables, the following considerations may arise. The intensity of innovation (INVT) displays an average of 0.068, with a minimum of 0 and a maximum of 0.745; whereas the mean level of debt (LEVE) scores 33.3 (that seems an appreciable level of indebtedness), and the effective tax rate (TAX_PAID) exhibits an average of 0.166.

Regarding women's percentage on directors' boards (WOM_BOARD), it has been discovered that, on average, 0.223 of board members are female, with a minimum and a maximum value of 0.10 and 0.429, respectively. Consequently, there is predominance of men in the boards of directors.

As concerns the measure of the level of the country ethics (ETH_COUNTRY), Finland (6.4), Denmark (6.2) and Japan (6) rank as the most ethical, while Spain (3.8), Canada (3.51) and South Korea (0) exhibit the lowest ethical values. This finding is very relevant, affecting the potential influence of the countries' ethical approach on the adoption of IC-VD policies on behalf of enterprises.

From the analysis of Section B in Table 7 , highlighting the binary variables related frequencies, as regards the legal system (LEG_SYST) most of the companies in the sample turn out to pertain to the Anglo-Saxon rules (55%). Additionally, concerning the pollutant sector variable (POL_SECTOR), 51% of the companies in the sample appears to belong to nonpolluting sectors.

4.2 Correlations analysis

The Pearson coefficients were computed to examine the associations between the independent variables. According to Gujarati (2004) , if the pair-wise comparison between two independent variables is over 0.8, serious multicollinearity exists.

The maximum pair-wise value in the current investigation is 0.2649 (cf. Table 8 ); thus, multicollinearity should not be a concern for the regression analysis. Nonetheless, the null hypothesis of autocorrelation can be accepted because the explanatory variables are weakly correlated with each other, indicating that autocorrelation is not a problem. Table 8 presents all the correlation coefficients between the various explanatory variables that have been adopted in the empirical model.

The intercorrelations for all the explanatory variables have been examined by applying the variance inflation factors (VIF) analysis, which revealed no sign of multicollinearity. In fact, the VIF values corresponding to all the independent variables ranged from 1.05 to 1.47, very far below the acceptable upper bound of 10 ( Hair et al. , 2006 ).

The VIF values have been reported for each regression to demonstrate the model stability. Finally, both tests suggest that the regression estimations are not degraded by the presence of multicollinearity.

4.3 Regression analysis

The empirical results reveal that 32.5% of the variation for the level of IC-VD is explained by BE, CSR and control-related variables (cf. Table 9 ). As per Fisher's ( F ) statistics, equal to 2.8, the model's reliability is confirmed at a significant threshold lower than 0.01, and consequently, we tend to reject the null hypothesis, and assume that regression has significant potential to exist.

As expected, the empirical findings, even though with not definitive statistical values, in accordance with the exploratory nature of the research, show some evidence about supporting the research hypotheses ( H1 and H2 ), as further analyzed in detail. Thus, it can be concluded that the model is statistically significant and somehow fruitful for exploring the phenomenon under investigation.

4.3.1 Empirical evidence on BE impacting IC-VD ( H1 )

This hypothesis has been assumed to verify whether the ethical behavior of the companies under analysis positively influences the level of VD of IC: examination of the statistical tests (beta coefficient, t -test and p -value) shows that this variable has a positive and significant effect on the VD of IC. Indeed, the study of causal relationships shows that the coefficient associated with the link between BE and IC-VD is positive (0.485) and statistically significant (the value of the associated t is 1.99 with p  = 0.045), corroborating the hypothesis predictions ( H1 ).

It could be noted the existence of some similarity between these findings and those published by Wirth et al. (2016) . In addition, the results show that divergence of interests and information asymmetry are issues that hinder the success of the enterprise ( Rubinstein et al. , 2001 ); similarly, the rigidity of the corporate governance system could also prevent managers from disclosing information about IC.

The problems of moral hazard and adverse selection are obvious; nevertheless, the results found in this study show that the abovementioned risks are not constraints that prevent the company from disclosing information on IC. These results turn out to be in-line with those reported by Goel and Ramanathan (2014) .

As a further result, the company's commitment in the BE process is a trigger for improving VD of IC, corroborating the results found by Areal and Carvalho (2012) on a sample of the most ethical companies in the world, as these companies can have advantages over others because of three distinct effects, namely, culture, diversity and reputation. This attitude positively influences the level of IC-VD, suggesting for example that these companies may benefit from special protection in the event of a crisis.

4.3.2 Empirical evidence on CSR impacting IC-VD ( H2 )

This hypothesis has assumed that CSR has a positive influence on the level of VD of IC. The statistical tests analysis shows that this variable positively and statistically influences the VD of information.

The estimated coefficient of CSR_INDEX is positive and statistically significant (0.116, p  < 0.01), meaning that CSR influences the VD of the IC. This corroborates the hypothesis predictions ( H2 ).

These results turn out to be in-line with those reported by Branco and Rodrigues (2008) and Dias et al. (2017) . In this respect, CSR is positively interpreted by the various stakeholders via its effect on the decisions made by the company's organs and on the cognitive and mental patterns of the managers as well as on the legitimacy of the decisions ( Fontana et al. , 2019 ).

Likewise, these results align perfectly with the conclusions about the legitimacy of the company's managers ( Bond et al. , 2016 ). Thus, in some cases, and more specifically those based on the postulates of the agency theory, the manager who engages in specific activities related to CSR seems to reduce asymmetric information adopting these actions.

Indeed, the current findings support the view suggesting that VD of information about IC is sustained by CSR, in a mutual influence. Nevertheless, the commitment of the company in the activities of social responsibility, also when impacting IC-VD, is an asset that improves the confidence of investors in the business in the long run ( Saeidi et al. , 2015 ).

These results show the potential existence of a link between CSR and socially responsible disclosure and therefore, the transparency of information. Indeed, as shown by Su (2014) , engagement in social responsibility is a form of commitment to sustainable development and integration into VD that is needed for the most innovative companies.

In addition, as indicated by Garcia-Sanchez et al. (2016) , the company's commitment to social responsibility activities may affect the level of VD and promote financial transparency. Therefore, engagement in social responsibility activities could be dominated by a strategy of transparency and reliability, which may have significant impact on IC-VD.

4.3.3 Complementary considerations

Regarding the control variables, not all the related coefficients show the expected signs. The degree of innovation intensity (INVT) is positively and significantly associated ( p  < 0.1) with VD of IC: this finding suggests that the most innovative firms worldwide have adopted more VD practices about IC; in fact, innovative firms are often under greater pressure from the part of investors and financial analysts to disclose IC relating information.

In addition, the influence of pollutant sector (POL_SECTOR) turns out to be negatively and significantly correlated ( p  < 0.1) with the IC-VD, as expected. Similar confirmation can be found also as concerns the ethical level of the country (ETH_COUNTRY), positively associated with IC-VD.

However, the legal system relevant to each country (LEG_SYST) seems to be involved in controlling the corporate transparency, but this variable appears to be negatively correlated and statistically significant ( p  < 0.05) with IC-VD. Most probably, and differently from what expected, stricter legal system may stimulate in reinforcing potential conflicts of interest and information asymmetry.

Similarly, the percentage of women on boards of directors and the level of indebtedness present directions that are contrary to what expected. Globally speaking, these potential contradictions about the control variables estimations suggest caution and confirm the initial assumption about the exploratory nature of the research.

5. Theoretical and practical implications

The overall results of the research show some applicative potential. From a scientific point of view, essentially, the study helps highlighting the persistence of several connections associating corporate ethics and the extent of IC-VD, within a context characterized with a new tendency of the companies to be responsible in this respect. From a managerial point of view, furthermore, the current study can be useful to promote the implementation of BE and CSR-related strategies, enabling to protect majority or minority shareholders through an enhanced high-quality disclosure of IC.

Ethically, nevertheless, companies should allot greater engagement about the necessity and importance of transparent and reliable communication helping reflecting the firm's true image ( Mathuva et al. , 2017 ). In this respect, financial transparency constitutes a necessary condition for the effective promotion of a firm involved in ethical and socially responsible behaviors, and with this regard, several studies have acknowledged that global ethics, as engraved within the organizational culture, has a remarkable impact on the development of VD, and specifically on the various components of IC ( Luthan et al. , 2016 ).

For example, Rezaee et al. (2020) have stressed the promotion of ethical standards within the company to improve the quality of disclosed information. Indeed, it has been recently discovered that the companies envisaging to promote ethical behaviors are called upon to adopt a rather intensive disclosure policy regarding their IC characteristics: in other words, the quality of disclosed information about IC contributes to outline the social legitimacy ( Slack and Munz, 2016 ).

The quality of information disclosed about the company's IC as based on corporate ethics should necessarily help improving the confidence of the user of the information, while enhancing the firm's social legitimacy. In this context, Su (2014) has found that companies involved in stakeholders' ethical issues can gain a competitive advantage and higher performance attracting excellent employees, as concerns human capital, and enhancing the brand image, as concerns relational/social capital ( Pedrini, 2007 ).

The VD program is an organized process that abides by specific rules conforming to the company's social approach and the executive's behavior. In this respect, the agency theory helps only partially reflecting the reality of the company, as it outlooks other aspects of the business value, especially within the new context of the knowledge-based economy ( Long Kweh et al. , 2014 ).

More particularly, managers are representative agents that rationally respond to the firm's economic stakeholders and the control mechanisms/contractual motivations ( Bamber et al. , 2010 ). Yet, the enterprises' decision-makers are not interchangeable, and companies' actions are a reflection of the values, skills and cognitive competences of the human capital ( Rodriguez Perez and de Pablos, 2003 ); thus, as an organizational option, VD is rather potentially dependent on other considerations than on just the firm's environmental characteristics.

Moreover, the process of communication is complex, as it involves judgments and arbitrations that account for the various constraints relating to the environment of the company, and managers act on the basis of their personal interpretations of the strategic situations they encounter. These interpretations are therefore based also on the individual and organizational values that the manager enjoys ( López-González, 2019 ).

To this end, the theory of planned behavior has been considered as means whereby the disclosure decision about IC could be influenced by several attitudes about BE and CSR. Indeed, it helps understanding a certain behavior in individual's psychological processes, as subjected to various influences, particularly to ethical and social factors.

Like any other behavior, information disclosure about IC also rests on perceived opportunities as well as probable outcomes, as entirely based on managers' values and proper knowledge. Moreover, the generated and disseminated information highly depends on the capacity of the company's information systems not only in terms of quantity but also in terms of growth and ability to account for the needs issued by parties that are external to the company, along with other organisms' requests, ever more with respect to IC.

At even more practical level, the reached findings appear to provide effects for global regulators and policymakers intending to install social reporting standards. They may provide ground that institutional and/or cultural factors affect top management's social reporting behavior or ethical/social values more in general, influencing the quality of published information about IC.

6. Research limitations and future avenues

The study shows several constraints, and two seem quite relevant. First, the research sample corresponds to firms without homogeneous characteristics, especially with regard to their pertinence to two different legal systems (the selected sample encloses several countries with two distinct legal system assumptions), probably affecting the companies' behaviors in terms of VD (mandatorily for sure); for this reason, it seems very desirable to control more thoroughly the legal system's effect, for example, subdividing further research samples into subsamples on the basis of the legal system pertinence. Furthermore, it could be useful to implement a comparison of the investigated model between companies pertaining to civil law or common law, since the legal system directly influences the accounting system, and then, the quality of the financial information.

Second, this finding appears to demonstrate that VD depends highly on corporate culture rather than the respective countries' accounting culture: this should also highlight that IC-VD stands as a form of socially responsible behavior, or an outcome of ethical behavior regarding the entirety of partners, more than mere legal constraint. Thus, further research on cross-cultural management influence could be useful, along with longitudinal analyses that could support major reliability of the global research.

7. Conclusion

This study has explored the impact of BE and CSR on the process of IC-VD, concerning a sample including 83 of the most ethical companies in 2015 in the world. Among the research motivations, it is to highlight that very few empirical studies appear to demonstrate the persistence of a relationship between ethical and social approaches and IC-VD: attempting to fill such a noticeable gap, the current study has been conducted to investigate, empirically, the relationship binding both variables.

Findings support arguments that companies with ethical behaviors and socially responsible practices appear to be highly committed to VD about their IC. It could follow, therefore, that IC-VD can also be considered as a form of ethical and socially responsible behavior.

The results achieved in this research afford empirical evidence as to the extent of external disclosure practices in the global context, also considering ever more frequent interfirm networks, providing useful means for investors seeking profitable investment opportunities and for financial report users, acting as operative orientations of knowledge management and IC strategy ( Del Giudice and Maggioni, 2014 ). In this respect, an ethical behavior (structural capital), influenced by personal values (human capital), affects IC-VD and then, practically, also the relational/social capital of the organization.

Sample selection process

Note(s) : *, ** and *** represent significance at 0.1, 0.05 and 0.01, respectively

Source(s) : Authors' calculation

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The article is based on the study funded by the Basic Research Program of the National Research University Higher School of Economics (HSE) and by the Russian Academic Excellence Project “5-100”.

Corresponding author

About the authors.

Matteo Rossi is an Associate Professor of Corporate Finance at the University of Sannio, Benevento, Italy, where he received the PhD degree in Management. He is also an Adjunct Professor of Advanced Corporate Finance at LUISS, Rome, Italy. Dr Rossi is the Editor-in-Chief for the International Journal of Managerial and Financial Accounting and for the International Journal of Behavioral Accounting and Finance.

Giuseppe Festa is an Associate Professor of Management at the Department of Economics and Statistics of the University of Salerno, Italy, EU. He holds a PhD in Economics and Management of Public Organizations from the University of Salerno, where he is the Scientific Director of the Postgraduate course in Wine Business and the Vice-Director of the Second Level Master's in Management of Healthcare Organizations – Daosan. He is also the Chairman of the Euromed Research Interest Committee on Wine Business. His research interests focus mainly on wine business, information systems and healthcare management.

Salim Chouaibi is a PhD Student in Accounting at the Faculty of Economic Sciences and Management of the University of Sfax (Tunisia).

Monica Fait is an Assistant Professor of Management at the Department of Management Economics Mathematics and Statistics of the University of Salento, Lecce (Italy), where she teaches Business Economics and Management. Her research looks at the effects of Information and Communication Technology (ICT) on company behavior, knowledge sharing and sustainability. She is the author of several scientific publications and papers on the Web 2.0 marketing strategies, and her studies have been published on international journals like Technological Forecasting and Social Change , Journal of Knowledge Management and British Food Journal . She also serves as reviewer for several international journals and is a speaker at national and international conferences and industry forums.

Armando Papa is an Associate Professor of Management at the Faculty of Communication Sciences of the University of Teramo (Italy) and at the National Research University Higher School of Economics (HSE) of Moscow (Russian Federation). He received the postgraduate master's degree in corporate finance from IPE (Naples, Italy) and the PhD degree in management from the “Federico II” University of Naples. He is an Associate Editor for the Journal of Knowledge Economy (Springer) and an Editorial Assistant for the Journal of Knowledge Management (Emerald).

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  • Published: 26 April 2023

Exploring the factors affecting the implementation of corporate social responsibility from a strategic perspective

  • Chao-Chan Wu   ORCID: 1 ,
  • Fei-Chun Cheng 2 &
  • Dong-Yu Sheh 1  

Humanities and Social Sciences Communications volume  10 , Article number:  179 ( 2023 ) Cite this article

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  • Business and management

In general, the objective of a company is to pursue higher returns for its shareholders. Corporate social responsibility (CSR) is an ethical practice that seems to be contrary to the objectives of companies; as a result, companies lack sufficient motivation to implement CSR. Academics and practitioners have recently begun considering CSR from a strategic perspective. However, the definition and scope of strategic CSR have not been clearly defined or discussed in previous studies. This study uses the strategic triangle perspective as a theoretical basis to explore the key factors affecting the implementation of strategic CSR. Three main factors and ten sub-factors were summarized to form a hierarchical network structure based on a literature review. The weights of each factor and sub-factor were then prioritized using the analytic network process (ANP). The results of this study show that “company” is the most important main factor, while “corporate image”, “innovation ability”, “reputation risk”, “financial capacity”, and “investment intention” are the top five important sub-factors. The hierarchical network structure and critical factors suggested in this study contribute to implementing strategic CSR. The findings of this study will also help the theoretical development in the field of CSR.

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The purpose of businesses is to produce products or services that meet consumer demand. However, with the depletion of resources and environmental pollution, people have gradually realized the importance of sustainable development. Furthermore, with better living standards, people pay attention to social issues such as health and human rights. Various factors have led to higher expectations regarding the role of businesses in society (Huang, 2014 ). In addition to their growth, companies need to consider the overall well-being of society and make moral contributions beyond economic and legal aspects. Enterprises are not only economic entities that operate for profit but also exist to create an ideal society (Carroll and Shabana, 2010 ). Therefore, corporate social responsibility (CSR) has become an important research topic in recent years (Yuan et al., 2020 ).

The motivation for CSR implementation changes with the social environment (Bergquist, 2017 ). The goal of an enterprise is to make profits and maximize shareholder value. Thus, it is necessary to establish formal regulations to enforce the implementation of environmental protection and social issues by enterprises. Nevertheless, if CSR is merely a response to legal requirements, companies will not realize the value and benefits of this action. For organizations such as businesses that pursue economic benefits, implementing CSR may be viewed as a cost. This reactive motivation prevents companies from effectively implementing CSR (Bansal, 2022 ).

Social responsibility and corporate benefits do not conflict. This means that companies should not treat CSR as an expense incurred by contributions to fulfill public interest. Instead, companies should transform CSR from an ethical practice to one of their strategies (Porter and Kramer, 2006 ). If CSR is combined with a company’s strengths and strategies, its potential will maximize the benefits to society and the company (Branco and Rodrigues, 2006 ; Yuan et al., 2020 ). A strategic vision of CSR will allow companies to avoid seeing it as a cost or expense when implementing CSR, but will instead consider the relationship between CSR and the company’s core business and how to help the company achieve its strategic goals (Lepoutre and Heene, 2006 ; Manasakis, 2018 ). Strategic CSR can help companies achieve a win-win situation regarding economic benefits and social responsibility.

To implement strategic CSR, companies must identify the capabilities and resources that influence their social responsibility (Branco and Rodrigues, 2006 ). In addition, resources are limited to businesses, so selection and prioritization are important parts of strategic thinking (Porter, 2008 ). Identifying the key factors affecting the implementation of strategic CSR and recognizing the relative importance of these factors will help companies plan their strategic CSR activities. Therefore, it is important to explore the key factors that influence the implementation of strategic CSR. According to the strategic triangle perspective proposed by Ohmae ( 1982 ), the strategic thinking of a business is mainly based on company, customer, and competitor aspects. From the company aspect, the main description is the importance of internal resources in implementing a strategy. The customer aspect focuses on how a company uses its resources to provide attractive products and services to satisfy its customers. The principle of the competitor aspect is that a company should create as much competitive advantage as possible to enable it to compete with its competitors (Ohmae, 1982 ; van Vliet, 2009 ). The strategic triangle perspective can be used to develop a conceptual framework for strategic CSR.

This study aims to explore the key factors affecting the implementation of strategic CSR. Based on a literature review of the CSR concept and the strategic triangle perspective, this study identifies the main factors and sub-factors affecting the implementation of strategic CSR and establishes a hierarchical network structure for these factors. This study then uses the analytic network process (ANP) method to prioritize the relative weights of each factor and sub-factor in the hierarchical network structure. The results of this study contribute to determining the important factors that influence the implementation of strategic CSR to plan relevant strategies.

Literature review

This study examines the key factors influencing companies’ implementation of strategic CSR. In this section, we first review the general altruistic view of CSR. Second, the essence of corporate strategy was discussed within the framework of the strategic triangle. Then, we explain how to incorporate the strategic triangle perspective into the CSR concept to form strategic CSR. Finally, factors affecting the implementation of strategic CSR were selected to build a hierarchical network structure.

The concept of CSR

With the rise in sustainable development, CSR has become a popular topic. CSR means that enterprises are responsible for promoting social interests while pursuing their benefits (Carroll and Shabana, 2010 ; Josiah and Akpuh, 2022 ). The concept of CSR is a company’s response to social welfare and its responsibility to stakeholders affected by its development (Chang et al., 2014 ). CSR is strongly related to customers, investors, the government, and other stakeholders. Companies with social responsibility balance the needs of the company and stakeholders when making decisions so that they can contribute to society and stakeholders while pursuing profits (Hopkins, 2012 ). CSR mainly focuses on the positive actions of enterprises on social and environmental issues while paying attention to the rights and interests of stakeholders. However, it is difficult to link the ethical behavior of these companies to their own operations (Sheh, 2022 ). The traditional concept of CSR focuses on public interest but ignores the necessity of continuous profitability of companies (Matytsin et al., 2023 ). Companies must learn to integrate CSR actions into their operations rather than viewing CSR as additional philanthropy (Zollo, 2004 ). The current meaning of CSR is that companies must voluntarily incorporate social and environmental issues and interactions with stakeholders into their operations (Commission of the European Communities, 2001 ). Therefore, companies must consider both social responsibilities and operational performance, as well as their complementary strengths.

Strategic perspective and CSR

The purpose of strategy is to efficiently achieve the specific goal of an individual or organization, given the resources and capabilities. Strategic thinking integrates internal and external resources to achieve a competitive advantage in an uncertain and high-risk environment (Khalifa, 2020 ). In other words, the execution of strategy considers not only the current state within the company but also the situation of the external environment to choose the most appropriate way to achieve the goal (Hambrick and Fredrickson, 2005 ). Furthermore, Ohmae ( 1982 ) suggests a strategic triangle perspective and indicates that enterprises should focus on three factors when formulating their strategies, including the company, customer, and competitor. Companies must consider their own conditions and customer needs to provide products or services that are consistently better than those of their competitors and consider the interrelationships among the three factors.

In general, companies play a passive role in CSR implementation (Lindgreen et al., 2009 ). The main reason is that companies lack the motivation to implement CSR. The altruistic behavior of a company does not necessarily bring benefits to the company, and even the implementation of CSR conflicts with corporate profitability (Sprinkle and Maines, 2010 ). In this context, CSR is more of a moral act implemented by a company based on social expectations after making a profit. Even when CSR is linked to business operations, companies do not know how to convert it into business value and competitive advantage. If long-term investment in CSR does not give a company a competitive advantage, CSR will likely be seen as the cost of doing business. Companies tend to lack the motivation to implement CSR, which is not conducive to long-term sustainable development. In fact, companies rarely implement social responsibility purely from an altruistic perspective (Wang et al., 2016 ). The core concept of a company is to pursue performance; therefore, companies should rethink CSR through strategic thinking and select social issues or goals that enable them to fully utilize their core competencies to implement CSR (Porter and Kramer, 2006 ). In this way, companies can turn social responsibility issues into business opportunities, creating more benefits and competitive advantages (Drucker, 1984 ; Padgett and Galan, 2010 ; Manasakis, 2018 ).

Previous studies have mentioned that it is necessary to use a strategic perspective to examine CSR (Porter and Kramer, 2006 ; Wang et al., 2016 ). When thinking strategically, companies usually need to consider how they are positioned against their competitors and how they can use their resources and capabilities to achieve their goals (Porter and Kramer, 2002 ). In other words, companies must assess their internal resources and capabilities, evaluate the stakeholders and competitors involved, and develop appropriate strategies to achieve the desired CSR outcomes (Husted and de Jesus Salazar, 2006 ). Nevertheless, strategic CSR remains a relatively abstract concept requiring further exploration of its specific elements and components.

Therefore, the strategic triangle perspective can be used to establish the structure of strategic CSR and to form a precise concept. From a strategic triangle perspective, companies must take stock of their core competencies and resources, and then consider how to meet the needs of their customers. By integrating this perspective into CSR, strategic CSR can impact customers and stakeholders related to the company. Based on the above discussion, this study explicitly focuses the concept of strategic CSR on three main factors, including company, stakeholder, and competitor. The company factor refers to the resources and assets owned by the company, the stakeholder factor refers to stakeholders who interact with the business, and the competitor factor refers to the competitive advantage over competitors (Husted and Allen, 2007 ). The three main factors that affect the implementation of strategic CSR and the sub-factors within these main factors were discussed below.

From a strategic triangle perspective, the resources within a company can be considered the basis for strategy execution. According to the resource-based theory, valuable resources are the main source of a company’s competitive advantage (Barney, 1991 ). Promoting CSR is not only the responsibility of senior management or specific departments but also the recognition and participation of all employees in the company. Hence, human resources play an important role in CSR implementation (Arnaud and Wasieleski, 2014 ). Adequate professional manpower is a condition for companies to implement CSR (Meyer, 1999 ; Cohen et al., 2010 ). It ensures that sustainability-related strategies and proposals are sufficiently driven to help organizations achieve their goals and ultimately improve their effectiveness (Paillé et al., 2014 ; Voegtlin and Greenwood, 2016 ).

In addition to human resources, companies with sufficient financial resources to support the execution of operational strategies can significantly increase their likelihood of achieving their goals. Similarly, CSR implementation requires sufficient financial capacity (Branco and Rodrigues, 2006 ; Lepoutre and Heene, 2006 ). Moreover, the Fortune 500 spent $19.9 billion on CSR-related activities (Business Backs Education, 2015 ). This not only shows the importance that companies attach to CSR but also reflects that the implementation of CSR requires considerable financial resources.

On the other hand, corporate image is more abstract than other tangible resources because it is an overall performance composed of many factors related to a company (Moon, 2007 ). It is most widely defined as the reputation of a company, the overall impression of the company in the public’s minds (Agyei et al., 2014 ; Huang et al., 2014 ; Li et al., 2022 ). A great corporate image can be built based on a company’s ability, that is, the reputation that a company has built by consistently providing high-quality products or services. Thus, corporate image can also be derived from a company’s contribution to CSR (Vo et al., 2019 ). The image formed by CSR refers to the subjective feelings, attitudes, and evaluation of the public towards the social responsibility implemented by the company (Berens et al., 2005 ; Pérez and Rodríguez del Bosque., 2013 ). By engaging in charitable activities, such as protecting the environment, caring for community issues, and making charitable donations, a company can strengthen its public perception. A company’s image can be used as intangible capital for future public relations strategies to help it gain a competitive advantage.

Accordingly, human resources, financial capacity, and corporate image were adopted as sub-factors within the main factor of company in this study.


In conventional business operations, a company operates by meeting its customers’ needs, and the results are ultimately reflected in its performance. As the external environment becomes more complex, the actual operation of a company will involve not only customers but also individuals or groups such as investors, media, and governments, all of whom will be affected by the company’s actions or influence its decisions (Freeman, 1984 ). In general, business strategy mainly focuses on the customer aspect, but strategic CSR affects a wider group of people than traditional strategies. According to previous studies, CSR has a significant relationship with corporate performance and stakeholder responsiveness (Alniacik et al., 2011 ; Ansu-Mensah et al., 2021 ). This means that companies can communicate with more stakeholders through CSR implementation (Manasakis, 2018 ). Several stakeholders that may influence CSR implementation, such as consumers, inventors, media, and governments, were discussed below.

First, Bhattacharya and Sen ( 2004 ) suggest that consumers consider a company’s actions towards the environment and society when making purchase decisions and state that CSR actions can increase consumers’ willingness to purchase a company’s products or services. When a company focuses on and contributes to a specific issue, consumers will likely translate their support for the issue into a willingness to buy its products (Thi et al., 2020 ; Zhang, 2022 ). Companies can choose to invest in CSR because consumers will respond to their efforts on social and environmental issues with a higher willingness to buy (Bhattacharya and Sen, 2004 ; Walker et al., 2021 ).

Second, investors must consider various factors when selecting investment targets. The reason why investors are willing to invest their capital in a company depends mainly on its profitability (Lin et al., 2018 ). Companies that contribute to CSR can manage their relationships with employees, suppliers, and other stakeholders, resulting in more stable operational and financial performance (Platonova et al., 2018 ). Moreover, companies that do not integrate environmental and social issues into their business models have a higher chance of being sanctioned by the government or law, including fines and litigation dilemmas, as well as loss of profits due to revelations of corporate misconduct or the outbreak of major industrial and environmental accidents (Brown, 1997 ). A Company that integrates CSR into its business strategy is less susceptible to negative events, convincing investors that it is a better investment target than its competitors.

Third, with the boom in information technology and media, the public has much faster and easier access to information than in the past, and both positive and negative news can be disclosed at the first opportunity (Dhëmbo et al., 2021 ; Fortunato and Pecoraro, 2022 ). The more prestigious a company, the more likely it is to receive media attention and be maliciously attacked by negative media. Companies that are good at preventing reputation risks use the media as a stakeholder to avoid damaging their reputation and improve their ability to respond to external events by voluntarily implementing CSR (Diageo, 2005 ; Unerman, 2008 ). In addition, by evaluating the results of their investments in social and environmental issues, companies can diagnose the potential risks that may arise in their operations and formulate timely improvement plans to avoid reputational damage (GRI, 2002 ).

Finally, the government is an important stakeholder that can force companies to implement CSR (Zueva and Fairbrass, 2021 ). From a strategic perspective, CSR is more than a passive response to regulatory pressure. By proactively engaging in CSR, companies can build bridges and maintain good relationships with the public sector, thereby increasing their influence on public decision-making. CSR increases trust between businesses and the government; helps companies obtain licenses, permissions, and other official documents faster and more smoothly; and avoids redundant bureaucratic costs (Mathis, 2008 ).

Based on these arguments, this study includes purchase intention, investment intention, reputation risk, and government relations as sub-factors within the main factor stakeholder in the hierarchical network structure.

According to the strategic triangle perspective, companies achieve superior financial performance by leveraging their strengths to satisfy their customers while creating a relative advantage over their competitors (Ohmae, 1982 ). In the competitor aspect, the factor that affects a company’s profitability is the price of product relative to the competitor. CSR is an important evaluation criterion for consumers when making purchases. Companies can make consumers perceive that they are concerned about social issues through CSR, which affects consumers’ perceptions of products (Bhattacharya and Sen, 2004 ). Even though not everyone is willing to pay a higher price for the products of companies that implement CSR, for advocates of social and environmental issues, paying a price premium can symbolize their concern and support for a particular issue and serve as a reward for responsible companies (McGoldrick and Freestone, 2008 ). Accordingly, companies can use this feature to set higher product prices (Danko and Nifatova, 2022 ).

Companies that have already established positions in a specific industry must protect themselves from potential competitors and maintain their market share. From a traditional strategic perspective, companies usually adopt cost-cutting strategies to take advantage of price wars to defeat competitors or invest more resources in research and development to build barriers to entry into the industry (Porter, 2008 ). Furthermore, Buccella and Wojna ( 2017 ) suggest that incumbent companies in the industry can regard CSR as a moat against potential competitors and turn it into a weapon to maintain their market position.

On the other hand, a company’s growth is driven by the continuous development of new products or the improvement of existing business models. Innovation ability has become one of the most important strategic considerations in companies’ decisions (Chkir et al., 2021 ). Innovation ability is the driving force behind the implementation of CSR if companies can integrate CSR thinking into their products (Padgett and Galan, 2010 ). Companies that implement CSR are better able than their competitors to use efficient processes for product development and manufacturing (Husted and Allen, 2007 ).

Based on the above points, this study summarizes price premium, entry barrier, and innovation ability as sub-factors within the main factor competitor.


The hierarchical network structure.

When applying ANP, the decision problem needs to be clearly structured, and the interrelationships between the factors must be presented in a network manner. The hierarchical network structure can be established mainly through the literature review and the opinions of experts in the field, which contains goal, main factors, and sub-factors (Saaty, 2005 ). This goal indicates that a decision problem must be resolved. The main factors, sub-factors, and interdependencies among factors can be obtained by reviewing the literature and collecting expert opinions on the decision problem (Saaty, 2004 ).

This study aims to identify the factors that may affect the implementation of strategic CSR. Based on the literature review, three main factors and ten sub-factors were obtained to construct the hierarchy. The main factors contain company, stakeholder, and competitor. Company consists of three sub-factors, including financial capacity, human resources, and corporate image. Stakeholder has four sub-factors, including purchase intention, investment intention, reputation risk, and government relations. Competitor has three sub-factors, including entry barrier, price premium, and innovation ability. Then, this study collects expert opinions on the interdependence of factors through questionnaires to form a network structure based on Ngeru et al. ( 2011 ). To ensure that the experts are sufficiently professional and to improve the quality of the data collected, they were selected from among professionals with experience in the field of CSR. A total of twelve experts have an average of 10 years of experience in public relations, consulting, manufacturing, and financial industries, and they are all engaged in CSR-related work in these industries. Twelve questionnaires were distributed and collected, with a 100% return rate. Finally, a hierarchical network structure, including the interrelationships among factors, was established, as shown in Fig. 1 . The operational definitions of the three main factors and ten sub-factors were described in Tables 1 and 2 .

figure 1

It includes three main factors, ten sub-factors, and the interdependence of factors.

The procedure of ANP

ANP is a scientific approach to decision-making when factors have dependencies and feedbacks, and is an extension of analytic hierarchy process (AHP) (Saaty, 2004 ). One of the assumptions of AHP is that the factors are independent of each other (Stein and Ahmad, 2009 ). However, in reality, many decision problems cannot be structured hierarchically because elements in the hierarchy involve many interactions and interdependencies. Therefore, the structure of ANP usually includes many networks of elements with interdependent relationships, which makes analysis results more realistic (Lee and Lee, 2012 ). The reason for adopting ANP in this study is that it addresses the complexities of implementing strategic CSR and provides best possible outcome for decision-making. The specific steps of ANP were shown as follows (Chung et al., 2005 ).

Step 1: Constructing the pairwise comparison matrix

In this step, a series of pairwise comparisons were conducted to determine the relative importance of factors. Paired comparisons are two-by-two comparisons of factors based on ANP questionnaire, which uses a scale of one to nine as proposed by Saaty ( 2005 ). As shown in Table 3 , a score of 1 means that two factors are equally important to each other, while a score of 9 means that one factor is extremely important compared to the other. And then, the experts in the given field were asked to judge the relative importance between factors in the questionnaire.

The pairwise comparison matrix was obtained by the judgments of experts using ANP questionnaire. If pairwise comparison matrix M is an n  ×  n matrix, then n ( n  − 1)/2 ratings should be calculated. The matrix M was established as below (Saaty, 2004 ).

where b ij is the comparison value of factor i and factor j for one expert, b ij  > 0; b ji  = 1/ b ij ; i, j  = 1, 2,…, n .

Step 2: Calculating priority vector and eigenvalue

The priority vector (also called eigenvector) and eigenvalue of each pairwise comparison matrix in ANP can be derived as in AHP by solving the following formula (Saaty, 2005 ).

where M represents a pairwise comparison matrix, w is the priority vector (eigenvector), and λ max is the largest eigenvalue of M . The priority vector w and the eigenvalue λ max can be computed by the following sub-steps (Al-Harbi, 2001 ).

Step 2-1: Dividing each comparison value of matrix M by the sum of its column to produce the normalized pairwise comparison matrix.

Step 2-2: The priority vector w can be calculated by dividing the sum of each row in the normalized pairwise comparison matrix by the number of factors in the matrix.

Step 2-3: Firstly, multiplying matrix M by priority vector w to generate the vector Mw . And then, divide the values of the vector Mw by their respective values of priority vector. Finally, the eigenvalue λ max can be calculated by averaging the values generated above.

Step 3: Consistency test

The consistency test must be implemented to ensure that there are no logical fallacies in the judgments. The consistency index (CI) and consistency ratio (CR) can be utilized to check the consistency of each matrix. The CI was formulated as follows (Saaty, 2005 ).

where n is the number of factors.

And then, the CR of each matrix can be computed as below (Saaty, 2005 ).

where the random index RI represents the random consistency of various size of matrices. The values of RI were shown as Table 4 . If CR is less than a threshold value, then the matrix has acceptable consistency. The thresholds value proposed by Saaty ( 2005 ) is 0.1.

Step 4: Building the supermatrix

To address the dependencies between factors in the research framework, ANP uses supermatrix to calculate the relative weights of factors. A supermatrix consists of a combination of sub-matrices, each of which contains dependencies of elements within each cluster and is compared cross-cluster with elements from other clusters. If there is no correlation between the elements, the pairwise comparisons in the sub-matrices are equal to zero (Saaty, 2005 ). In this study, the main factors represent clusters and the sub-factors represent elements.

As shown in Eq. ( 5 ), W ij is the eigenvectors generated by comparing the element in cluster i with the element in cluster j . If the cluster j has no effect on the cluster i , the value is equal to zero. The structure of supermatrix is generated based on this logic (Saaty, 2004 ).

The standard form for a supermatrix was shown in Eq. ( 6 ) (Saaty, 2004 ). In general, each column of this matrix is not normalized or equal to one, which makes this matrix an unweighted supermatrix.

ethics and corporate social responsibility research paper

where C h is the cluster of a decision system; h  = 1, 2,…, n , and each cluster h has m h elements, denoted by e h 1 , e h 2 ,…, e hmh .

The supermatrix needs to be column-stochastic in order for convergence to occur. To achieve this, the weighted supermatrix W’ was established after the normalization (Saaty, 2004 ). Furthermore, it is necessary to raise the weighted supermatrix to exponential powers in order to reach stabilization or convergence. The resulting matrix is called limit supermatrix W limit , as shown in Eq. ( 7 ) (Saaty, 2005 ). The form of limit supermatrix is the same as the weighted supermatrix, but each column of the limit supermatrix is the same. Finally, the global weight of each factor can be obtained in the limit supermatrix.

where k is an arbitrarily large number.

This study examines the important factors for companies to implement strategic CSR. As companies consider many aspects in practice, and each factor may be related, ANP was used to obtain the relative weight of each factor. The weights of factors in the hierarchical network structure were generated according to the steps proposed in the methodology section.

In step 1, a series of pairwise comparisons were conducted to construct pairwise comparison matrices. Paired comparisons are two-by-two comparisons of factors based on ANP questionnaire using the scale of 1 to 9 shown in Table 3 . The experts were asked to make three levels of pairwise comparisons in the questionnaire, including the comparisons between main factors, comparisons between sub-factors within each main factor, and comparisons of dependencies for main factors or sub-factors. A total of fifteen experts working in the field of CSR were selected to fill out the questionnaire. These experts have an average of 12 years of CSR-related experience, with ten from industry and five from academia, as shown in Table 5 . After collecting fifteen questionnaires, the data were imported into Excel to form the pairwise comparison matrix of each expert. Next, the pairwise comparison matrices of fifteen experts were integrated into the aggregated pairwise comparison matrices using the geometric mean method, and then imported into Super Decisions V3.2 software for subsequent analysis. Table 6 presents the aggregated pairwise comparison matrix of main factors. Table 7 , Table 8 , and Table 9 describe the aggregated pairwise comparison matrices of sub-factors within each main factor, respectively.

In step 2, the priority vector and eigenvalue λ max of each pairwise comparison matrix was computed by Eq. ( 2 ) using Super Decisions V3.2 software. And then, CR value of each matrix was calculated by Eqs. ( 3 ) and ( 4 ) in step 3. The priority vector and CR value for each matrix was also shown in Table 6 , Table 7 , Table 8 , and Table 9 . Since all CR values are less than 0.1, the consistency of each matrix is acceptable (Saaty, 2005 ). Finally, the limit supermatrix was generated based on Eqs. (6) and ( 7 ) in step 4 and shown in Table 10 . Considering the dependencies among factors and sub-factors, the global weights of sub-factors were computed using Super Decisions V3.2 software.

Table 6 shows the relative importance of three main factors without considering dependencies. “Company” has the highest weight (0.4992), “stakeholder” has a weight of 0.3310, and “competitor” has a weight of 0.1698. Tables 7 to 9 present the relative importance of sub-factors within the main factors of company, stakeholder, and competitor, respectively, regardless of the dependencies. In the “company”, the sub-factor “financial capacity” possesses the highest weight (0.4650). Within the main factor “stakeholder”, “purchase intention” is the most important sub-factor (0.4125). In the main factor “competitor”, the most critical sub-factor is “innovation ability” (0.4783).

The global weights of sub-factors were listed in Table 11 . “Corporate image” has the highest weight (0.1779), followed by “innovation ability” at 0.1653, while “reputation risk”, “financial capacity”, and “investment intention” also have higher weights at 0.1282, 0.1264, and 0.1237, respectively. These five sub-factors are key elements that companies need to consider when implementing strategic CSR. In addition, the three sub-factors at the “company” level account for 0.4028 (0.1264 + 0.0985 + 0.1779) of the global weights. The weights of sub-factors in the “stakeholder” adds up to 0.3766 (0.0944 + 0.1237 + 0.1282 + 0.0303). It can be seen that main factors “company” and “stakeholder” account for nearly 80% of the weight, and these two factors have a significant impact on the implementation of strategic CSR.

This study aims to identify the key factors affecting the implementation of strategic CSR. First, the main factors and sub-factors affecting the implementation of strategic CSR were selected based on a literature review. Subsequently, a hierarchical network structure was constructed for these factors. The ANP method was then utilized to prioritize the relative weights of each main factor and sub-factor in the hierarchical network structure. Based on the results of analysis, this section discusses three aspects of company, stakeholder, and competitor.

“Company” has the highest weight among all main factors in this study. In this main factor, “corporate image” and “financial capacity” are among the top five sub-factors with the highest weights. Primary, “corporate image” has the highest weight among all sub-factors. This finding confirms previous research that corporate image is an important factor related to CSR (Arendt and Brettel, 2010 ; Vo et al., 2019 ). The public’s overall opinion of a company is key to its sustainable operation, and intangible assets such as corporate image can provide the basis for strategic planning. Therefore, building a corporate image is an inevitable incentive for operators when planning CSR strategies.

Furthermore, “financial capacity” is ranked fourth in weighting among all sub-factors. This highlights that the financial resources available to companies impact the implementation of strategic CSR. The result is consistent with previous studies that have made similar arguments about CSR, company size, and financial situation (Branco and Rodrigues, 2006 ; Choi et al., 2018 ). Large enterprises typically have more resources, stable financials, and mature business models than start-ups; therefore, they do not need to worry about the impact of implementing CSR on their financial performance, and their solid foundation increases the likelihood that they will invest in CSR (McGuire et al., 1988 ; Brammer and Millington, 2006 ). Companies should reserve appropriate budgets for CSR strategies in advance according to their financial situation and formulate corresponding CSR strategies based on the available resources.

External groups are one of the factors that influence companies when planning CSR strategies. In this study, “stakeholder” is given secondary weight in all main factors. Among all sub-factors, “reputation risk” within the main factor “stakeholders” has the third highest weight, indicating that companies view CSR as a way of risk management. Avoiding reputational damage is one of the main motivations for enterprises to implement CSR (Branco and Rodrigues, 2006 ; Choi et al., 2018 ). The reason is that if a company’s long-established reputation is destroyed by media coverage, it will cause a great loss to the company. The best way to deal with this risk is to review and improve the company’s negligence in business processes through CSR so that the media cannot criticize the company’s reputation.

“Investment intention” has the fifth highest weighting of all sub-factors. This indicates that when a company pursues its CSR outcome, it is expected to be seen by investors as a company with greater growth potential and ultimately creates higher value for shareholders. This feature allows companies to obtain more capital from investors to support their operational activities and strategic planning (Malik, 2015 ). In fact, CSR investment has already made its mark on the financial market. Investors prefer to invest in responsible companies (Brown, 1997 ; Msiska et al., 2021 ).

Corporate strategy aims to gain a competitive advantage. The second highest weight is given to “innovation ability” among all sub-factors. The result supports the idea that a company’s ability to innovate helps implement CSR strategies and develop more business opportunities by considering the connection to environmental and social issues (Husted and Allen, 2007 ; Padgett and Galan, 2010 ). There is already a precedent for companies combining corporate innovation with social responsibility. Toyota launched a range of innovative vehicles with hybrid fuel and electric engines to address growing environmental concerns and vehicle emissions through product innovation (Iyer and Soberman, 2016 ).


This study integrates the strategic triangle perspective with the concept of CSR to generate strategic CSR and identify the key factors that affect the implementation of strategic CSR. The strategic CSR proposed in this study emphasizes that companies should take the initiative to integrate social responsibility with their own goals and core business while considering internal resources, stakeholders, and the competitive environment to formulate the most appropriate strategic plan. This enables companies to achieve their strategic goals while fulfilling CSR.

This study has several important managerial implications. First, by integrating strategic thinking into CSR, the scope of social responsibility is not only to fulfill the civic duties of enterprises to benefit society but also to maintain relationships with stakeholders and gain competitive advantages. Second, the hierarchical network structure proposed in this study can help CSR practitioners think about strategic CSR from a holistic perspective so that the concept of CSR can be better integrated into business strategies and become an issue to be considered when companies conduct strategic planning.

Third, the findings of this study will enable CSR practitioners to understand the relatively important factors that influence the implementation of strategic CSR and to invest resources and effort in areas related to these key factors. This enables strategic CSR to be implemented more efficiently and ultimately has the greatest impact. Finally, these results help companies comprehend how the implementation of CSR relates to their own goals and performance, and the benefits it can bring them. In this way, CSR will no longer be seen as a cost or expense but as a strategy that can help companies achieve their goals. From this perspective, companies will be more motivated than ever to fulfill their CSR, leading to better social and economic development.

Concerning its methodological contributions, the ANP method has some advantages. Primarily, ANP is an appropriate technique for solving multi-criteria decision-making problems in which there are dependencies among factors. This can simplify complex problems and effectively identify the key factors that affect the implementation of strategic CSR. Next, by applying the ANP method, which combines both qualitative and quantitative information, a precise hierarchical network structure was proposed to systematically examine these factors. Finally, because ANP uses pairwise comparisons derived from the judgments of experts, accurate weights of the main factors and sub-factors can be generated based on professional considerations.

Nevertheless, this study has some limitations that should be examined in future research. Primarily, the main factors and sub-factors were selected from the literature review, which may have confined the range of factors that could be selected. Future research could combine a literature review with other methods, such as focus group, nominal group technique, and in-depth interviews, to identify additional factors. Furthermore, this study uses ANP as a single method to establish a hierarchical network structure for determining the key factors influencing strategic CSR implementation. Future research could further consider the ambiguity associated with the judgments of experts and incorporate fuzzy numbers into the ANP method to evaluate the relative weights of factors.

Data availability

The datasets generated during and/or analyzed during the current study are available from the corresponding author on reasonable request.

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Corporate social responsibility and accountability: a new theoretical foundation for regulating CSR

  • Mallika Tamvada 1 , 2  

International Journal of Corporate Social Responsibility volume  5 , Article number:  2 ( 2020 ) Cite this article

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The absence of consensus on what should constitute Corporate Social Responsibility has inhibited consistent CSR legislation around the world. This paper poses a fundamental question on what should constitute CSR and what should be the nature of CSR regulation? By constructing the boundaries of CSR, the paper offers scope for consistently developing CSR regulation around the world. It construes CSR as consisting of business relation and impact relation, and demonstrates that these are intertwined with legal responsibilities of business and, consequentially, with accountability. It accomplishes this by establishing the obligatory nature of responsibilities using the lens of ethical and legal jurisprudence. This new approach towards CSR recasts it as an obligatory responsibility that is linked to accountability. Furthermore, the framework provides a foundation for consistent development of CSR regulation across different countries that can lead to effective discharge of corporates’ social responsibilities.

A vast literature has focused on the nature, role and the dynamics of corporate social responsibility. More recently, an emerging body of literature is examining the need for regulating CSR and the role of law (Abah, 2016 ; Amao, 2013 ; Buhmann, 2006 ; Buhmann, 2011 ; Dentchev, Haezendonck, & van Balen, 2017 ; Idemudia & Kwakyewah, 2018 ; Malesky & Taussig, 2017 ; Malesky & Taussig, 2019 ; Nieto, 2005 ; Okoye, 2016 ; Osuji, 2011 ; Osuji, 2015 ; Situ, Tilt, & Seet, 2018 ; Thirarungrueang, 2013 ). However, imposition of regulation on corporates for CSR faces several challenges in the absence of consensus on the nature of obligations that businesses have under current CSR models. This paper theorises the conceptual underpinnings of responsibility and its relationship with accountability to develop a formal model to underscore the nexus between CSR and corporate accountability while providing a novel theoretical foundation for regulating CSR. In the process, the paper constructs boundaries for CSR to enable an appropriate regulatory framework to be put in place.

This paper examines the nature of corporates’ social responsibilities, and their relationship with legal responsibilities to establish a framework for corporate accountability. In particular, the paper attempts to answer the following research questions. Firstly, should CSR be within the realm of voluntarism or does it consist of mandatory obligations? Using the legal theory on morality, the paper underscores the relationship between legal and moral responsibilities to draw a parallel link between economic goals of firms and CSR to demonstrate that CSR obligations are intertwined with legal responsibilities of business. As these responsibilities are connected with accountability, the paper demonstrates that the true nature of CSR is obligatory and not voluntary. In the process, the paper provides a formal model for regulating CSR that can effectively ensure fulfilment of corporates’ social responsibilities. The second question the paper examines is what should be the nature of CSR regulation? In particular, what conditions should CSR regulation satisfy for it to be effective in ensuring that corporates discharge their social obligations? Here, the paper sheds light on the nature of optimal CSR regulation by concretising the exact nature of social obligations that corporates have to focus on for their CSR.

Although CSR scholarship is highly influenced by Carroll’s CSR pyramid (Baden, 2016 ; Carroll, 1979 ; Carroll, 1991 ; Carroll, 1999 ; Carroll, 2016 ; Lee, 2008 ; Visser, 2006 ; Wood, 2010 ), it is greatly fragmented (Aguinis & Glavas, 2012 ). The varied conceptualisations of CSR have lent a broad scope to CSR (Carroll, 1999 ; Waddock, 2004 ; Aguinis & Glavas, 2012 ). For instance, Carroll’s conception includes philanthropic contributions by corporations. Such elements have greatly diluted the scope for introducing regulation within CSR. They gave opportunities to firms to exploit such philanthropic contributions to do more harm subsequently (Luo, Kaul, & Seo, 2018 ). In cases where CSR regulation was brought in, Carroll’s highly influential theory may have contributed to laws that are not necessarily most effective in protecting stakeholder interests. As one example, the Indian government has mandated CSR requiring corporates to spend a proportion of their profit on social projects (Chhaparia & Jha, 2018 ; Gatti, Vishwanath, Seele, & Cottier, 2019 ). Footnote 1 Indian corporates can claim to have discharged their CSR obligations through such philanthropic spending while not adequately addressing the immediate concerns relating to stakeholders (Singh, Holvoet, & Pandey, 2018 ; Subramaniam, Kansal, & Babu, 2017 ). Carroll’s model has contributed to a wide scope and ambit of CSR that has significantly diluted the scope for regulation with the potential to lead to misplaced regulation.

In contrast to Carroll’s approach, we define responsibilities as those that arise while discharging the primary functions associated with a role. These primary functions that intrinsically come with a role are associated with two sets of responsibilities—legal and moral. For example, in case of firms, these legal responsibilities include a wide gamut of economic and legal activities that firms are involved with to discharge their primary function of conducting business. While pursuing such activities, a range of moral responsibilities concurrently arise. We develop the concepts of business relation and impact relation in this paper to encompass these moral responsibilities. The paper suggests that CSR should be within the boundaries of these moral responsibilities that are in the form of business relation and impact relation . This way we identify legal responsibilities and the corresponding moral responsibilities in a more concreate fashion enabling a framework for CSR regulation to be put in place. Footnote 2

CSR has for most part remained voluntary (Carroll and Shabana, 2010 ; Aguinis & Glavas 2012 ; Dentchev et al. 2015 ; Dentchev et al.  2017 ; Lamarche & Bodet, 2018 ; Agudelo et al. 2019 ) and relied on self-regulation through codes of conduct with the decision to comply with the codes of conduct firmly within the forte of corporations (Bondy et al. 2008 ). It allows corporations flexible implementation and evaluation of the codes of conduct based on their choices (Bondy et al. 2008 ). The vast literature on the purpose, role and nature of a company and its management is ambivalent on the obligations of businesses towards CSR although it acknowledges that the ‘corporation has the onus of responsibility to sustain relationships with all stakeholders, in particular with stakeholders who are claiming adverse social and other impacts’ (Ross 2017 ). As Dentchev et al. ( 2017 ) suggest, some scholars emphasize that managers of a company have duties towards the stakeholders as they are agents of the company but they do not go beyond that point. Consequently, CSR lacks legal accountability for non-performance of social obligations by companies. This has steered CSR as a tool to advance strategic interests than as a required obligation for a company (Carroll and Shabana 2010; Shiu & Yang, 2017 ; Lamarche & Bodet, 2018 ).

A compelling development in the quest for accountability is the Triple Bottom Line (TBL) framework proposed by Elkington ( 1994 ). The TBL framework focuses on examining a company’s societal, environmental and economic impacts (Elkington, 1994 ; Elkington, 1997 ). However, as Adams et al. ( 2004 ) suggest, the increased volume of disclosure has not improved the “quality or the level of accountability discharged”. The absence of comprehensive mandatory requirements for TBL accounting and reporting has weakened the system for the discharge of social obligations by the companies (Adams, 2004 ).

The extant scholarship has examined if law has any role in the CSR (Amao, 2013 ). The increasing number of negative externalities of corporate activities and the minimal role that voluntary approaches to CSR have played in mitigating these, have motivated scholars to explore the link between law and CSR (Okoye, 2016 ). ‘In the event of conflict or serious harm to the environment, animals or people, where corporate irresponsibility is occurring, it is manifestly illogical to leave to the corporation the task of self-regulating’ (Ross 2017 ). The discussions on CSR and its relation with law are beginning to focus on the need for regulating CSR (Okoye, 2016 ). However, clarity on the role and nature of obligations under CSR in the functions of business continues to evade these discussions posing significant challenges for designing a framework for CSR regulation.

This paper makes several compelling contributions to the extant scholarship on CSR and the regulation of CSR. It makes a substantial contribution to the debate in the field of CSR by developing the link between CSR and accountability. Firstly, the paper establishes that CSR should be a mandatory obligation and not a voluntary construct. It develops a novel theoretical framework to underscore how moral responsibilities arise concurrently along with legal responsibilities when discharging the primary functions, with fulfilment of both forms of these responsibilities becoming obligatory through accountability. It uses this framework to bring accountability to the CSR literature that has otherwise remained in the realms of voluntarism. Secondly, it defines boundaries for CSR, and provides a basis for determining the social responsibilities for which corporates have to be held accountable through regulation. Thirdly, it provides a framework for regulating CSR while clarifying the fundamental nature of what should constitute CSR regulation. It bridges a glaring gap in the literature with regard to linking social responsibilities and accountability by providing a framework that can be instrumental in developing CSR regulation. Fourthly, it overcomes a severe limitation posed by the existing broad conception of CSR that has significantly restricted the scope for regulation by proposing an alternate framework for CSR that more closely links CSR with moral responsibilities arising along with legal responsibilities when an organisation is discharging its primary functions. Thus, the paper makes fundamental contributions to CSR theory and the theory of CSR regulation.

The rest of the paper is structured as follows. The following section discusses voluntarism in CSR, the effects of ignoring accountability in CSR frameworks, and the need for CSR regulation. The third section develops the new CSR regulation framework. It provides the theoretical basis for linking responsibility and accountability. It classifies responsibilities as legal and moral responsibilities. Using the lens of ethics and legal jurisprudence, it demonstrates that there is a mutual relationship between legal and moral responsibilities and accountability. Furthermore, it examines this responsibility-accountability nexus in the corporate context to develop a formal framework linking CSR to corporate accountability to provide a theoretical basis for regulating CSR. The final section concludes the paper summarising the significance of the new CSR regulation framework that can lead to effective fulfilment of CSR obligations by firms .

Voluntarism and the effects of ignoring accountability in CSR

CSR is a well-established and highly evolved body of knowledge that has explored issues of trust, rights and responsibilities, and decision-making (Aguinis & Glavas, 2012 ; Jenkins, 2005 ). Beginning from early fifties, a large body of literature has examined CSR in both developed and developing countries (Bowen & Johnson, 1953 ; Davis, 1960 ; Friedman, 1970 ; Levitt, 1958 ; Davis, 1973 ; Freeman 1984 ; Drucker, 1984 ; Freeman, 2010 ; Carroll, 2016 ; Meynhardt & Gomez, 2019 ; Panda, D'Souza, & Blankson, 2019 ). McWilliams and Siegel ( 2001 ) define Corporate Social Responsibility (CSR) as ‘actions that appear to further some social good, beyond the interests of the firm and that which is required by law.’ Matten and Moon ( 2008 ) suggest that CSR involves policies and practices of firms that indicate their commitment to wider society. Aguinis ( 2011 ) defines CSR as ‘context-specific organizational actions and policies that take into account stakeholders’ expectations and the triple bottom line of economic, social, and environmental performance.’

Sachs, Rühli, and Kern ( 2009 ) suggest that CSR has roots in morality and underscore corporates’ responsibility to not harm society and environment while positively contributing to the welfare of society and its stakeholders. Thus, following the principles of ethics, corporates should not disregard their social responsibilities while pursuing their economic goals (Baden, 2016 ; Sachs et al., 2009 ), and is essential for firms to consider ‘environmental and social imperatives’ along with the economic considerations (Keith, 2010 ). As Carroll ( 2016 ) suggests, ‘Business is expected to operate in an ethical fashion. This means that business has the expectation and obligation, that it will do what is right, just, fair and to avoid or minimise harm to all the stakeholders with whom it interacts’.

Concepts of corporate citizenship, sustainability, and stakeholder interests are used to demonstrate the need for social responsibility of corporates. Dahlsrud ( 2008 ) examined 37 definitions of CSR, and suggests that the most common element of it is the acknowledgement of business having responsibility towards society or community while engaging in socially benefitting activities. CSR literature has widely acknowledged that corporates and society are interlinked, and that corporates must act for the benefit of society.

However, the lack of clarity, direction, and voluntarism have led to random picking of free choices of responsibilities rather than targeting community needs (Okoye, 2009 ; Okoye 2016 ). To cite a few cases, some corporates contribute to HIV services, some to environment and others to community work based on their individual preferences (Freeman & Hasnaoui, 2011 ) while ignoring the immediate adverse impacts of their production processes on environment or their corporate practices on employees’ health. Furthermore, under current CSR practices, companies benefit by mere propagation regarding their CSR activities without actual compliance (Vos, 2009 ). They may easily avoid social responsibility if they see no benefit or ‘business case’ or incorporate only those aspects that benefit their corporation (Barnett, 2016 ). In the current context, social responsibility is self-enforcing, has no sanction, and no enforcement (McInerney, 2007 ). Thus, the absence of clarity on social obligations of corporations has led to voluntary initiatives to meet obligatory responsibilities. Often, this voluntarism leads to core required obligations being considered as mere instruments for serving businesses resulting in misleading perception of responsibility while raising questions on the effectiveness of CSR practices.

Voluntary codes of conduct have been adopted by some corporates. As noted by Sobczak ( 2006 ), these codes have some legal force and can be enforced by the courts. However, as these codes are voluntary, the choice of adopting a code of conduct depends on the free choice of corporates. Furthermore, the framing of the content in the codes is dependent on the will of corporates in the absence of specific guidelines. For these reasons, corporates may adopt codes according to their whims rather than the minimal requirements, and they may have CSR codes that are not necessarily indicative of actual CSR practice (Bondy et al., 2008 ).

Voluntarism has also paved the way for companies to propagate CSR practices for strategic interests while blatantly violating human rights. For example, Volkswagen has a long list of reported CSR practices but the recent scandal over diesel emissions reveals how corporates disguise themselves as good businesses under voluntarism. The Rana plaza incident and the Coca-Cola case demonstrate the weakness of voluntarism, and draw attention to expedient need to address the existing gaps through a systematic approach.

The voluntary status accorded to CSR has impeded companies from taking proactive measures towards CSR. Several initiatives were taken by international organizations to make CSR more effective. Some of the major developments include the United Nations Global Compact, Global Reporting, Transnational’s Draft Code, and Organisation for Economic Co-operation and Development (OECD) guidelines amongst others. The Global Compact provides a common platform for companies to report their CSR related policies and practices. It embeds many of the normative debates into its ambit (Berliner & Prakash, 2012 ) to make corporates more proactive in accepting their social responsibilities (Schembera, 2018 ). However, it is rooted in voluntary reporting that depends on the initiatives of the participating corporations. Berliner and Prakash ( 2012 ) point out the observations of Compact’s 2008 Annual Review indicating that ‘not all Global Compact principles are covered with the same level of detail,’ that ‘there is a wide disparity with regard to information available per principle,’ and that ‘reported information is not comprehensive, communications on progress focusing more on commitments and management systems than on materiality, performance and achievements’. Even the recent report submitted by corporations on Global Compact suggests that the situation has more or less remained the same till date. Unwittingly, the Global Compact has facilitated the process of corporations using it for ‘propaganda and logos of the initiative without having to comply with their commitments, or truly strive to improve their human rights records’ (Rivera, 2013 ). It lacks a proper monitoring mechanism and therefore, it is difficult to say if all the reporting corporations are actually implementing their CSR policies as reported.

OECD provides mere guidelines for responsible business conduct but does not have a mechanism to verify if corporates adhere to those guidelines. Global Reporting Initiatives (GRI) were introduced as set of guidelines for producing voluntary sustainability reports worldwide on economic, environmental and social performance by businesses. These guidelines remain within the ambit of voluntarism having no force of law and, thus, have similar limitations like the Global Compact for CSR practices. GRI was criticized for its focus on quantity than quality and could not achieve its goals (Vigneau, Humphreys, & Moon, 2015 ). Parsa, et al. ( 2018 ) suggest that even the disclosures under the requirements of Global Reporting Initiative (GRI) were motivated by Transnational Corporations (TNCs) need for enhancing their legitimacy. The wide range of disparities among corporations in their reporting has led to the movement towards integrated reporting (Eccles & Krzus, 2010 , 2014 ; Eccles, Krzus, & Ribot, 2015 ; Eccles, Krzus, & Solano, 2019 ). The main purpose of integrated reporting “is to explain to providers of financial capital how an organization creates value over time” (IIRC, 2013 ). However, even these integrated reporting requirements are in the voluntary domain.

The tremendous shift of economic power towards dominant MNCs coupled with states’ weaknesses to regulate has significantly compounded the problem of missing corporate accountability in the face of voluntarism. McInerney ( 2007 ) suggests that voluntary approaches to promote corporate compliance with norms is not sufficient to protect citizens while a ‘structure is needed for corporates to be accountable’. Without accountability, responsibilities take the shape of mere voluntary practices that in turn dilute the obligatory nature of responsibilities to voluntary choices or subsequent delegation of core responsibilities.

The Triple Bottom Line (TBL) framework suggests that company performance on sustainability goals should be measured based on the value added by company’s societal, environmental and economic dimensions. The framework emerged as a response to the calls for corporate accountability (Elkington, 1998a ). As Elkington ( 2018 ) states the framework “was supposed to offer a radical new way forward” with businesses going beyond their focus on profits to “improving the lives of people and the health of the planet.” It became a widely used tool to measure companies’ CSR activities, and offers partnerships between firms as a potential solution for transitioning into sustainability (Elkington, 1998b ). However, there are several emerging critical views on the effectiveness of the TBL paradigm. As Norman and MacDonald ( 2004 ) assert, the TBL paradigm may “provide a smokescreen behind which firms can avoid truly effective social and environmental reporting and performance”. Elkington ( 2018 ) recalled his TBL framework 25 years after introducing the concept, stating that “this radical goal has been largely forgotten, and “triple bottom line” thinking has been reduced to a mere accounting tool, a way of balancing tradeoffs instead of actually doing things differently”.

Schrempf-Stirling and Wettstein ( 2017 ) observe that the corporates learn their lessons once litigations are filed against them and term it as ‘education function of human rights’. They assert that companies take active measures in documenting their human rights policy and CSR policies immediately after litigations for human rights abuses are filed against them. They suggest that this influences other companies in framing CSR and human rights policies for their businesses. Under the current CSR regime, companies need not have any mechanisms or policies for acting more responsibly. They have complete autonomy until they are prosecuted for violation of rights. A pertinent question here is whether society can afford to wait for a change in how corporations function with respect to CSR until negative impacts become evident? Furthermore, the process of other companies getting influenced by observing litigations of violating corporations to adopt appropriate CSR policies cannot be a universally standardised mechanism for corporate accountability. The social role and function of corporations together with their power and capacity provide strong reasons for recognising their obligations to society. This can be achieved by looking at CSR through regulation. Thus, there is a compelling need to have a proper framework of regulatory policies for companies to minimise their adverse impacts on society.

Furthermore, although CSR has mostly been a voluntary construct in scholarly discourse, market forces, non-governmental organisations (Alamgir & Banerjee, 2019 ) and institutions (Demirbag, Wood, Makhmadshoev, & Rymkevich, 2017 ; Zuo, Schwartz, & Wu, 2017 ) may compel corporates to act in a socially responsible manner. For example, consumers may refuse to buy the products or services of a firm that is known be producing them unethically or if they have “green skepticism” (Leonidou and Skarmeas 2017 ). While appropriate regulation is necessary to ensure that corporates’ social responsibilities are effectively fulfilled, these institutions may encourage firms to act responsibly. However, market forces cannot be relied upon for accountability (Wright & Nyberg, 2017 ) because there may not adequately protect stakeholders’ interests in the face of information asymmetry or when such institutions are not sufficiently developed. Hence appropriate regulation is required for CSR to be effectively discharged.

The absence of regulation poses significant challenges for corporates to realize and implement their CSR obligations. Voluntarism has led to blurred conceptions of the extent of social responsibility of corporations. As Osuji ( 2011 ) suggests, the ‘lack of regulatory intervention had led to stultification of independent development of CSR by trying social issues to financial performance’. For these reasons, several scholars see CSR in its present form as having major flaws. As Aaronson ( 2005 ) suggests, ‘responsible corporate behavior in the developing world is an issue that cannot be left to the voluntary discretion of business people but needs to be addressed by more stringent regulation’ and therefore, ‘legally mandated accountability is where attention should really be focused’. An emerging body of scholarship seeks to establish the need for regulating CSR for corporate accountability (Abah, 2016 ; Amao, 2013 ; Buhmann, 2011 ; Okoye, 2016 ; Osuji, 2011 ; Osuji, 2015 ; Thirarungrueang, 2013 ). As Osuji ( 2011 ) suggests ‘regulation is neither incompatible nor irreconcilable with ethical CSR’. This literature suggests that in the absence of regulation, CSR may not be implemented by firms while stakeholders may be vulnerable to the negative externalities arising from irresponsible activities of firms.

These emerging voices on CSR regulation may have encouraged some countries to formally legislate CSR obligations, as in case of India’s mandatory CSR Law (Companies Act 2013), France legislating compulsory sustainable reporting for public listed companies (Chauvey, Giordano-Spring, Cho, & Patten, 2015 ), EU mandating non-financial disclosures (Szabó and Sørensen 2015 ) or regulating CSR through its policy based approach or by identifying the regulatory opportunities through international human rights law (Buhmann, 2011 ), and context dependent measures in UK and US (Knudsen, 2018 ). However, these approaches to CSR regulation have several limitations. For example, India’s mandatory CSR law does not address the concerns of immediate stakeholders while corporates can treat CSR as a charitable activity while not explicitly stating it to be so (Singh et al., 2018 ; Subramaniam et al., 2017 ). In case of France, the goal of achieving increased transparency remains unfulfilled (Chauvey et al., 2015 ).

Furthermore, lack of conceptual clarity on the optimal nature of such regulation poses significant challenges in framing such legislation. Given the wide scope of how CSR is defined, regulation can be ad-hoc and ineffective in protecting immediate interests of stakeholders while firms get away with window dressing (Jamali, Lund-Thomsen, & Khara, 2017 ) or greenwashing (Alves, 2009 ). In light of these issues, we develop a new framework to demonstrate CSR as an obligation related to the primary functions of business as well as to its causal impacts, particularly with regard to endangering the rights of others and unjustifiably getting benefitted while pursuing their primary functions. This new framework underpins the need for accountability through CSR regulation.

A new framework for regulating CSR

We propose that going into the foundations of responsibility and its link with accountability using the legal theory of morality can provide a solid basis for underscoring the obligatory nature of CSR, and determining the nature of optimal CSR regulation.

Legal and moral responsibilities

Responsibility is an obligation and a duty to perform what is one supposed to do. Such an obligation may be ineffectively effected if it does not come with accountability for its non-performance or breach. Responsibility is important in the context of law and accountability. Barry and Shaw ( 1979 ) has defined responsibility as ‘a sphere of duty or obligation assigned to a person by the nature of that person’s position, function, or work’. In this sense, responsibility includes obligations associated with a job or function in addition to the primary functions of a role. Thus, as part of responsibility, moral obligations may be related to functional obligations of a role (Bivins, 2006 ). Consequently, moral responsibility ‘refers to the multiple facets of that function--both processes and outcomes (and the consequences of the acts performed as part of that bundle of obligations)’ (Bivins 2006 ). As Jansen ( 2013 ) suggests, responsibility includes whatever is required under law as well as whatever is morally indispensable. According to him, there is a moral responsibility to act in a manner that prevents unjustifiably getting befitted by endangering the rights of others (even if such acts are not illegal per se). This empowers victims of wrongs to obtain redress from wrong doers while getting justice (Goldberg & Zipursky, 2006 ). For these reasons, there is responsibility towards obligations to safeguard the rights of others. Such responsibilities are often linked to tort laws and principles of corrective justice.

As one example, a contractor who is assigned a contract to build a bridge has the responsibility of constructing the bridge to meet the legal requirements under the contract. This primary function of the role is a legal responsibility imposed upon the contractor. A breach or non-performance of this legal responsibility invokes provisions of accountability. However, in addition to this legal responsibility, the contractor has a moral responsibility to ensure that the people in the vicinity are not adversely impacted during the process of the construction of the bridge, and that workers are safe. These are moral obligations that are closely related to the primary functions of the contractor’s role. These moral obligations arise concurrently with the legal obligations that are associated with the discharge of the primary functions.

Primary functions are associated with a bundle of responsibilities. While some of these responsibilities have legal sanction and backing, others may not have such a backing but have intrinsic moral foundations and arise concurrently during the discharge of the primary functions. Thus, these latter responsibilities are closely intertwined with the legal responsibilities that are associated with the primary functions. As Green ( 2008 ) suggests, “.. where there is a union of primary and secondary rules—that is to say, wherever there is law—new moral risks emerge as a matter of necessity.” For example, if the contractor has a factory, it is her responsibility to ensure that the factory has a decent working environment so that the employee’s rights related to their working lives are not adversely impacted. This moral responsibility arises naturally and concurrently with the legal responsibility associated with the primary function of production. In such cases, the intertwined nature of the naturally arising moral obligations that are associated with legal responsibilities, and the inherent relationship of legal responsibilities with accountability suggests that accountability has to be linked with moral responsibilities for the bundle of responsibilities to be fulfilled. As Lord Devlin ( 1965 ) suggested, “Society may use the law to preserve morality in the same way it uses it to safeguard anything else if it is essential to its existence.” The approach developed here is consistent with Devlin’s theory linking morality with law (Dworkin 1966 , Dworkin, 1998 ).

Moral responsibility has a broad scope. In particular, as Eabrasu ( 2012 ) suggests, moral pluralism and the inherent complexity in deciding what is moral or immoral complicates the assessment of the morality of various sets of products, services or industries. This broad scope of moral responsibility makes it difficult to define enforcement channels or provide a structure for its fulfilment. However, in this paper, we are concerned with moral responsibilities that are closely intertwined with legal responsibilities that are associated with the discharge of the primary functions of a role. It is for these moral responsibilities that accountability is equally related because of them arising concurrently with legal responsibilities when discharging the primary functions of a role.

Figure  1 presents the legal and moral aspects of responsibility. The primary functions assigned to a role are associated with legal responsibilities . Registrations for the purpose of doing business, selling goods or services, meeting requirements under the law for performing the assigned role are legal responsibilities. They are rooted in duties imposed by law as well as from obligations that emerge from the terms of contractual engagements. These obligations come with the primary functions of a role. Here, parties are answerable for breach of their legal duties. However, moral responsibility entails moral obligations that relate to the primary functions of a role and the potential impacts of these functions. These moral obligations are intertwined with legal responsibilities associated with the discharge of the primary functions of a role. Thus, they are not purely rooted in morality or ethics but are closely intertwined with legal responsibilities associated with the primary functions.

figure 1

Core elements of responsibility. The figure shows the relationship between different elements of responsibility such as legal responsibility and moral responsibility

Legal and moral responsibilities are related to each other, mainly, through three channels. Firstly, through the duties relating to the functions of a role. Both legal and moral responsibilities relate to each other for discharging responsibilities of the functions of a role. Legal responsibility involves discharging obligations that are primary functions of a role and moral responsibility involves discharging obligations that are associated functions of the role . Secondly, legal responsibility is related to moral responsibility as both seek to assume obligations against unjustified enrichment by infringing the rights of others. Hence, moral and legal responsibilities are related to causation -- the impact that a given function entails. Both legal and moral responsibilities have the obligation to refrain from causing harm while proactively engaging in the protection of rights of stakeholders. Thirdly, legal rules emerge principally from moral compulsions and needs. Legal responsibilities are associated with primary functions of business whose discharge involves interaction with legal rules. Thus, moral and legal responsibilities are interconnected as they are intertwined with the functions that are obligated to them by their role. These obligations together form the bundle of obligations under the functions of a role. For these reasons, legal and moral responsibilities must be considered together for effective discharge of functions.

  • Accountability

Accountability is ‘a moral or institutional relation in which entitlements are accorded to one agent (or group of agents) to question, direct, sanction or constrain the exercise of power by another’ (Macdonald, 2014 ). In the absence of accountability, there is no mechanism to question irresponsible behaviour and the actors are not answerable for their actions. Hence, accountability is a necessary element for an effective discharge of functions. Frink and Klimoski ( 1998 ) define accountability as ‘perceived need to justify or defend a decision or action to some audience(s) which has potential reward and sanctions power, and where such rewards and sanctions are perceived as contingent on accountability conditions’. Accountability, thus, keeps a check on the actions of the actors who have the responsibility or obligation to discharge their functions under a role.

Legal responsibilities come with accountability. An actor may be held liable for the breach of a duty or non-performance of a duty that he is obligated to do under the law. Moral responsibility considers that individuals are rational and can be held accountable for their actions (Barrett, 2004 ; Bivins 2006 ) as ‘moral agency entails responsibility, in that autonomous rational agents are in principle capable of responding to moral reasons, accountability is a necessary feature of morality’ (Barrett, 2004 ). As Bivins ( 2006 ) suggests, to ‘be accountable- one should be functionally and/or morally responsible for an action, some harm occurred due to that action, and the responsible person had no legitimate excuse for the action’. For these reasons, legal and moral responsibilities are closely connected to accountability in the context of a meaningful discharge of functions.

Dhiman, Sen, and Bhardwaj ( 2018 ) suggest that for social norms that are ought in nature, self-accountability will regulate individual’s behaviour in the absence of external accountability conditions. Likewise, for moral responsibility that is ought in nature, self-accountability will regulate behaviour in the absence of external accountability conditions. In particular, this can be seen in the context of missing tort law. In the presence of a developed tort law system, accountability assumes direct significance for moral responsibility. However, in case of self-accountability, individuals confronted with the expectations of assuming responsibility may simply reject the idea of responsibility itself while asking a simple question: ‘why answer?’ (Jansen, 2013 ). For these reasons, accountability having the force of law is required to fulfil reasonable expectations of responsibilities. Furthermore, accountability by itself has no value in the absence of expected responsibilities.

Figure  2 shows the inter relationship between moral responsibility, legal responsibility and accountability. As discussed earlier, moral responsibility is related to legal responsibility through its immediate relation with the primary functions of a role. Both legal and moral responsibilities give rise to the obligations of not endangering the legal rights of others and unjustifiably getting benefitted as both have an intertwined relation with ethics. This makes moral obligations ought in nature because of their immediate relation with legal responsibilities. Furthermore, legal responsibility seeks accountability by rooting responsibility in contracts and wider body of law while moral responsibility, through its immediate connection with the functional and causal aspects associated with the discharge of primary functions, seeks either self-accountability or accountability under torts. Thus, both moral and legal responsibilities are incomplete and ineffective in the absence of accountability. Accountability is indispensably required for effective discharge of both moral and legal responsibilities. Likewise, accountability considers in more substantive terms what roles, responsibilities and behavioural rules constitute accountability relationships. Hence, accountability can exit only if there are corresponding responsibilities (moral and legal) that are recognised. For these reasons, responsibility and accountability are mutually connected for effective discharge of functions. In the following section, the nexus between responsibility and accountability is used to derive the intrinsically obligatory nature of CSR along with the need for appropriate CSR regulation for corporate accountability.

figure 2

Linking legal responsibility, moral responsibility, and accountability. The figure shows the relationship between legal responsibility, moral responsibility, and accountability

CSR, accountability and regulation

Over the last several decades, CSR has mainly been considered as a moral and normative responsibility that corporates can voluntarily pursue. However, more recently there are calls for bringing legal backing for CSR (Kara, 2018 ; Okoye, 2016 ; Rahim, 2013 ). These include scholarly attempts to examine the role of tort law, private law and international law for CSR and corporate accountability (Amao, 2013 ; Beckers, 2019 ; Rühmkorf, 2015 ; Van Calster, 2016 ; Zerk, 2006 ) along with formal CSR legislations in several countries around the world. In this context, this paper suggests that considering CSR a moral responsibility has given it a wide scope and attempts to enforce it through legal backing for corporate accountability are not being effective because of this wide scope accorded to CSR (Amodu, 2017 ). By recasting CSR as consisting of those moral responsibilities that arise in the process of discharging corporates’ legal responsibilities, the paper offers a new approach to linking CSR with moral responsibility and legal responsibility for corporate accountability. The literature has so far investigated whether, why, and how CSR should be regulated. As McInerney ( 2007 ) suggests, “Empowering domestic regulators is an essential component of the struggle to realize the positive benefits of capitalist development while limiting its negative effects.” This paper goes beyond the questions of whether, why and how CSR should be regulated to examine what social responsibilities of corporates’ need to be regulated. Thus, in addition to providing an analytical foundation for CSR regulation, the paper identifies corporates’ social responsibilities that have to be regulated by attempting to answer the what question. In the process, the paper defines the boundaries of CSR to provide a basis for CSR regulation.

This paper develops two essential grounds for linking corporate social responsibility to accountability, through functional roles and impacts of businesses. The first is ‘business relation’ and the second is ‘ impact relation’ . Business relation arises as conducting business is possible only when companies can have required resources, customers, employees and others who are a part of the society or the community where the business operates. Firms have direct relation with these stakeholders to carry on the business functions. This compels them to be responsible towards stakeholders involved in their business operations. Business relation involves obligations that embody those standards, norms, expectations that reflect a concern for what consumers, employees, shareholders, and community regard as fair and just. These are the first set of moral obligations that are associated with the primary functions of business.

The ‘impact relation’ explains the relation between business operations and the potential impacts that they can make. A number of cases illustrate the negative impacts that corporates have on society. The BHRRC in its annual briefing in 2017 tracked 450 cases on human rights abuses by corporates (BHRC, 2017 ). Such impacts are ongoing especially in developing countries that offer a provision for transnationals to operate their business activities while having weak corporate accountability laws. This paves way for corporates taking undue advantage of weak governance systems resulting in a trade-off between honouring rights and profit making. Their actions may not be illegal in the jurisdictions they operate but may endanger the rights of others. Developing country sweatshops in supply chains are typical examples of this issue. Although their activities are not illegal with the local laws per se , they negatively impact the rights of others while benefiting TNCs by reducing their cost of production to maximise profit. Likewise, corporate generation of harmful environmental externalities is an unsurprising result of wealth maximization model (Susson, 2012 ). Thus, there are distinct calls for moral responsibility of business entities for the impacts of their business operations.

The case against Shell operations is a classic example to understand the negative impacts that corporates have on the rights of others while maximising their profits (Aurora & Helen, 2011 ). According to the 2009 Amnesty International report, ‘Shell in the Niger Delta had brought human rights abuses, conflict, impoverishment and despair to a majority of people in the oil producing area’ (Aurora & Helen, 2011 ). The report noted that ‘decades of pollution and environment damage caused by Multinational Corporations (MNCs) in the oil sector have led to violations of rights to adequate standards of living, rights to food and water, rights to gain a living through work and rights to health’ (Aurora & Helen, 2011 ). Years of litigation made Shell accountable by compelling it to recognise the moral responsibility of business for their ‘impact relation’. The impact relation, as part of the firm’s moral responsibility, necessitates their responsibility to refrain from causing such impacts and unduly benefit. These impact related obligations are a second set of moral obligations that are associated with the primary functions of business.

As Dillard ( 2013 ) suggests, the “ethics of accountability” and “ethics of human rights accountability” demonstrate corporate obligations. According to this view, society and corporates have respective and interdependent rights and duties towards each other for being part of the society and for their constant interactions with each other. The duty that corporates have is fiduciary and this ethical obligation binds corporates with regard to social responsibility and business human rights (Dillard, 2013 ). They have a responsibility in relation to injustice (Young, 2006 ) and such unjustified enrichment by violations that cause harm to the rights of others. As one example, advertisement of a cosmetic product may have several negative externalities. Making the right disclosures and providing accurate instructions are corporate obligations towards the consumers. This involves their business relation . Along with these, the firm has an obligation to ensure it does not cause environmental damage while manufacturing the product. This involves their impact relation . While legal responsibility requires firms to conduct the business in consistency with local laws, moral responsibility requires them to meet the obligations of business relation and impact relation. CSR is directly related to this moral responsibility through business relation and impact relation. Footnote 3

Figure  3 demonstrates the core character of CSR. It represents its link to moral obligations that are associated with legal responsibilities for its functional role and potential impacts. It demonstrates the nexus of such obligations with accountability. The left side of Fig.  3 shows the links between responsibility and accountability. As discussed earlier, moral responsibility is related to the functional role as well as to the causation of impacts when discharging the primary functions under legal responsibility, and through these, to accountability. As self-regulation may not always be realised and tort law may not be adequately developed, Fig. 3 suggests that regulation is essential to ensure accountability in case of moral responsibility. The right side of Fig. 3 shows the corresponding links between CSR and corporate accountability using a parallel model. Using business relation and impact relation in the case of corporations, the framework suggests that regulation is essential to ensure accountability and effective delivery of CSR. Thus, Fig. 3 demonstrates that CSR should be regulated for an effective discharge of corporates’ bundle of obligations by drawing a parallel with the responsibility-accountability presented in Fig.  2 .

figure 3

Linking CSR to legal responsibility and accountability . The figure draws a parallel between moral responsibility and CSR through business relation and impact relation to demonstrate the corresponding links with legal responsibility and accountability in a corporate setting

Figure  4 presents an integrated framework for CSR regulation. Firm’s activities are associated with a bundle of responsibilities. On the left side are the legal responsibilities that arise when the firm discharges its primary functions. These include the economic responsibilities of running the firm. On the right side are the moral responsibilities that concurrently arise with these legal responsibilities. This paper suggests that the remit of CSR should be within this set of moral responsibilities. As these are tightly coupled with the legal responsibilities that are enforced through accountability, accountability has to exist for CSR in order to ensure the fulfilment of the responsibilities on the right side of Fig.  4 . Thus, any regulation should be targeted to the fulfilment of these moral responsibilities that are concurrently arising with the legal responsibilities associated with the discharge of the primary functions by the firm. Such CSR regulation will be optimal because it will ensure that these moral responsibilities that involve business relation and impact relation are fulfilled, and their fulfilment is prioritised by law as mandatory.

figure 4

A Framework for CSR Regulation . The figure presents a new framework for CSR regulation by a. identifying the boundaries of CSR as those moral responsibilities that are intertwined with the legal responsibilities associated with the discharge of primary functions by a firm. Such legal responsibilities are defined here to include economic responsibilities such as pursuit of profit. b. demonstrating that accountability is connected with such CSR that arises in the form of business relation and impact relation as developed in the paper c. requiring regulation to ensure that such CSR is mandatorily discharged

Responsibilities under CSR are associated with its business and impact relations that follow from the primary functions of the business. Together they form a bundle of obligations of corporations for effective discharge of corporate functions. These are core obligations that businesses have to abide and adopt in their business practices. The social contract theory (Donaldson, 1982 ) complements the ‘business relation’ obligations of businesses towards society. The theory suggests an interdependence between business and stakeholders that necessitates ethical obligations towards society. As businesses use resources that a given society provides, they are obliged to give back to that society as their moral obligation. Giving back to the society is a moral obligation that results from social contracts. However, the social contract theory overlooks the fact that these obligations are related to the business relations as such obligations arising from the very existence of business are dependant on the existence of its business relation. Although social contract theorists have rightly suggested that the business have an obligation towards society, they have not considered the fundamental aspect of business relation to the primary functions of business. Furthermore, impact relation emerges as a consequence of business activities when firms are pursuing their primary functions, and firms have obligations to ensure they do not cause harm while pursuing their primary functions.

For these reasons, CSR consisting of both business relation and impact relation are closely linked with the corporates’ legal responsibilities and, as a consequence, their fulfilment is dependent on accountability. As one example, the duty of an accountant in an accounting firm is to maintain the records of the finances of the firm. The duty implores her to maintain fair accounts and calculations, report of any misleading transactions, conflicting interests among others. In case of a breach of such duty, the accountant is answerable for her actions. However, unless there is provision for accountability, it is difficult to take any action against her or to make her liable. Particularly, in the absence of accountability, it is difficult to assess who, to what, to whom and to what extent she is liable. Holding someone accountable for breaching responsibility is important as it acts as a deterrent and compels others to act legally and morally. The framework in Fig. 4 suggests that corporate accountability is essential for the fulfilment of obligations of business relation and impact relation of businesses that form their CSR.

Corporates are needed to proactively engage in CSR practices than considering their business relation as optional or curing the adverse effects of ignoring their impact relation. Such responsibility is in relation to the injustice that may arise as a consequence of their actions and, hence, CSR is closely connected to accountability towards their stakeholders. As discussed here, for this accountability to materialise, regulation is essential as firms may not fulfil their moral responsibilities in its absence. For these reasons, a systematic approach towards meaningful CSR can be achieved by linking it with corporate accountability through regulation.

The framework presented here accomplishes two goals. Firstly, it draws boundaries on what should ideally constitute CSR. The ambiguity in the CSR scholarship with regard to its nature has significantly inhibited the scope for CSR regulation and enforcing corporate accountability for irresponsible activities. By construing CSR as a bundle of moral responsibilities that concurrently arise when discharging legal responsibilities associated the primary functions of the firm, this paper constructs clear boundaries for CSR. This approach to CSR limits the scope of window dressing and other forms of pretentious CSR activities that corporates may design for strategic reasons (or for evading their moral responsibilities that are closely linked to their activities). Secondly, it provides a framework for developing optimal CSR regulation that prioritises moral responsibilities that arise concurrently with legal responsibilities while discharging the primary functions and holds corporates accountable for them. Thus, the paper offers a novel approach that underscores the obligatory nature of CSR, the need for regulation, and a solid basis for developing CSR regulation.

Companies have responsibilities towards society, particular in the context of their business location and activities. To a large extent, CSR has remained a corporate strategy tool that does not impose mandatory obligations on corporates. In the absence of accountability through direct regulation, this vast literature on corporate social responsibility has wrongly assumed voluntarism and diluted the obligations that are otherwise unavoidable in nature. Furthermore, unstandardized terms of corporate accountability have encouraged businesses to pursue CSR while disregarding or completely evading accountability.

The theoretical foundation developed here suggests that CSR is a mandatory obligation and not an optional voluntary provision for corporates as it is closely related to the primary functions of businesses. It has direct link to the legal obligations and accountability. Regulation is pre-requisite for effective discharge of the bundle of obligations of businesses for corporate accountability without which both legal and moral responsibilities have weak foundations. Corporates’ moral responsibility through business relation and impact relation as developed here strengthens the argument that CSR is an obligation towards society through its relation to the primary functions of the business that are mandated upon the corporates.

The paper discusses the intrinsic connection between responsibility and accountability as a natural foundation for the nexus between CSR and corporate accountability. This paper sets out to develop a formal structure by linking responsibility with accountability. The CSR regulation framework developed here links obligations under CSR with legal responsibilities of business. It suggests that social obligations and economic goals are akin to moral and legal responsibilities that are intrinsically linked to each other. As firms are unlikely to fulfil these responsibilities in the absence of accountability, the paper proposes a novel theoretical foundation linking responsibility with accountability as a basis for regulating CSR. The responsibilities under the CSR must be seen as the moral responsibilities that are related to the functional role of businesses and to the potential impacts that businesses can have. The concept of CSR developed here, as an indispensable moral obligation rooted in business relation and impact relation, provides a clear grounding for regulating CSR. This identifies the microfoundations of responsibility, and demonstrates that accountability through regulation is essential for fulfilling moral obligations.

In summary, this article makes several compelling contributions to the scholarship on ethics and CSR. It provides a foundation for developing a framework of social obligations regarding what , to whom , and the extent of responsibilities while underscoring the role of obligations in proactively engaging business in socially benefitting duties in addition to refraining them from activities that cause harm to the society. Furthermore, it suggests that the legal and moral responsibilities should be taken together as the bundle of obligations of businesses to effectively discharge their functions with accountability inevitably linked to moral responsibility, thus, underscoring the need for regulating CSR for accountability. Furthermore, the paper provides a compelling new approach towards CSR by identifying it with immediate moral obligations that arise through business relation and impact relation while discharging the primary functions and the associated legal responsibilities. Through this, the paper constructs boundaries for CSR and enables the development of an effective regulatory regime for CSR around the world.

Availability of data and materials

Not Applicable.

Section 135, Companies Act 2013, Government of India

Throughout this paper, regulation is legal regulation unless specified otherwise.

Such moral responsibilities include protecting the interests of stakeholders (Laplume, Sonpar, & Litz, 2008 ), preventing adverse impacts on environment, or having consideration for the health and safety of employees among others.


Business and Human Rights Resource Centre

Corporate Social Responsibility

Global Reporting Initiatives

Multinational Corporations

Organisation for Economic Co-operation and Development

Triple Bottom Line

Transnational Corporations

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The author thanks the editor Samuel Idowu, two anonymous referees, and Onyeka Osuji for their constructive suggestions. An earlier draft of the paper was awarded the best paper award at the Erasmus Early-Career Scholars Conference 'New business models and globalised markets: Rethinking public and private responsibilities' at Erasmus University in 2018. The author thanks the participants at this Conference and at a Essex Law School Seminar for their comments.

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Tamvada, M. Corporate social responsibility and accountability: a new theoretical foundation for regulating CSR. Int J Corporate Soc Responsibility 5 , 2 (2020).

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Business Ethics and Corporate Social Responsibility: Translating Theory into Action

  • Anastasia Sofia Alexiadou   ORCID: 6 , 7  
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Ethics in business embodying fairness, justice, and human rights principles has the potential to unlock, reveal, and address the unethical, unfair, and obscure business practices that constitute barriers to the development of sustainable societies and economies. Hence, corporate social responsibility, following the significant value of business ethics, constitutes a critical determinant of promoting the key ethical features of a company’s culture, such as transparency, diversity, inclusion, and equality; governance; volunteerism; and philanthropy in the market. Through this lens, this chapter seeks to articulate the crucial role of ethics in framing responsible business conduct that is translated into action through corporate social responsibility schemes. To this end, the chapter elaborates on the concept of ethics and its key components, as well as on the two predominant ethical theories facilitating the deployment of corporate social responsibility within the framework of business ethics. Looking ahead, as a way of effectively addressing unethical and unjust corporate practices, this chapter concedes that ethics can serve as a stepping stone for voluntary initiatives for corporate self-regulation, primarily involving corporate social responsibility.

  • Business ethics
  • Corporate social responsibility
  • Deontological/Kantian ethics
  • Ethics/Ethical theories
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It should be noted that business ethics and professional ethics are closely related, in that professional ethics concerns (1) the professional conduct, namely the conduct of a professional actor toward a client, a consumer, or a patient, and (2) the ethical issues arising in a business environment regarding the rights and duties, the rightness, or wrongness of an action. To exemplify, if we resort to the conduct of a healthcare professional toward a patient, then the ethically appropriate conduct could be determined by the application of a set of four core principles that guide the actions and behavior of a healthcare professional, namely (1) respect for patient autonomy; (2) beneficence; (3) non-maleficence; and (4) justice. Specifically, a variety of substantive ethical concerns could be defined by one or some combination of the above principles, such as patient’s rights and claims, human well-being, loss of life, consultation, benefits and harms, the system of justice (distributive or discriminatory), public safety, and patient’s autonomy (Beauchamp & Childress, 2001 ; Gewirth, 1986 ; Chadwick, 1997 ; Gillon, 2003 ; Mason & Laurie, 2006 ).

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Alexiadou, A.S. (2023). Business Ethics and Corporate Social Responsibility: Translating Theory into Action. In: Arte, P., Wang, Y., Dowie, C., Elo, M., Laasonen, S. (eds) Sustainable International Business. Contributions to Management Science. Springer, Cham.

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The Role of Social Responsibility and Ethics in Employees’ Wellbeing

Claudiu george bocean.

1 Department of Management, Marketing and Business Administration, Faculty of Economics and Business Administration, University of Craiova, 13 AI Cuza Street, 200585 Craiova, Romania

Michael Marian Nicolescu

2 Doctoral School, University of Craiova, 13 AI Cuza Street, 200585 Craiova, Romania; moc.liamg@nairamleahcimucselocin (M.M.N.); moc.liamg@mbtnairamucazac (M.C.); moc.liamg@9691uirtimudanomis (S.D.)

Marian Cazacu

Simona dumitriu, associated data.

Not applicable.

Social responsibility (SR) is a concept or practice by which organizations take into account the interest of society by taking responsibility for the impact of their activities on all stakeholders. The SR of organizations implies ethical behavior concerning all stakeholders and a company’s commitment to the sustainable economic development of society. Organizational ethics is a set of written and unwritten codes of principles and values that govern decisions and actions within an organization. Ethics has a rather internal perspective, while social responsibility has a rather external perspective. This study examines the impact of social responsibility and organizational ethics on employees’ wellbeing. To perform the empirical analysis, we conducted a survey among 423 employees from Romanian organizations. Using the structural equation modeling, we analyzed the relationships between social responsibility, organizational ethics, and employees’ wellbeing, emphasizing the positive impact of ethical and responsible behavior of the organization on the employees’ wellbeing. The organization’s employees play a dual role: firstly, they are all internal stakeholders, and secondly, they are constituents of an external stakeholder essential for the organization—the community. The results show a significant positive influence of social responsibility and organizational ethics on employees’ wellbeing as a result of a responsible and ethical behavior in relation to the organizational stakeholders.

1. Introduction

The modern organization is an entity with a substantial social impact due to its ability to mobilize productive resources and create new wealth. However, the organization’s legitimacy depends not only on success in creating wealth but also on its ability to meet the expectations of the various stakeholders that contribute to its existence and success.

Social responsibility (SR) concerns implementing ethical behavior and attitude in the organization, providing a perspective on core values and organizational culture to promote responsible behavior towards staff. Organizational ethics (OE) influence practices in the field of social responsibility. It is in the interest of every organization to develop and incorporate elements of both OE and SR into its agenda, as the challenges of an increasingly globalized economy with stringent sustainability requirements will require an integrated approach of OE and SR to support the sustainable development of organizations [ 1 , 2 ].

To be sustainable, organizations need to identify innovative ways to balance the social and environmental needs of internal and external stakeholders (employees, unions, community) with the economic (financial) needs of internal and external stakeholders (shareholders, employees, suppliers, customers, tax administrations) [ 3 , 4 , 5 ]. External SR extends to the community and society, including environmental concerns, while internal SR addresses the organization’s human resources [ 6 ]. In addition, internal SR focuses on strategies and practices to improve employee health and wellbeing (WB) [ 7 ], human rights [ 8 ], training and development [ 9 , 10 ], ensuring equal opportunities in business [ 11 ], and work–life balance [ 12 ].

Although most studies show a significant relationship between SR and OE practices, these relationships are neither universal nor consistent [ 13 ]. Therefore, investigating the different dimensions of SR practices concerning the dimensions of OE is necessary to integrate the two concepts and evaluate the combined effects on the employees’ WB and the community in which the organization operates.

Although the impact of SR and OE on economic, social, and environmental performance has long been analyzed, not many studies examine the effects of SR and OE on employees’ WB. Despite the awareness that employees are a key internal stakeholder whose motivation depends on the organizational success, being at the same time a constituent part of a critical external stakeholder (the community in which the organization operates), there are a few studies in the area.

The research gap that the paper aims to cover comes from the lack of work to study the combined effect of OE and SR on employees’ WB. Since organizational employees are an essential category of internal stakeholders, the organization must pay special attention to SR and OE; these significantly affect employees’ WB. This study’s objectives involve analyzing the direct relationships among employees’ perceptions of SR, OE, and WB, and the mediation effects between the variables considered. By studying these objectives, this study aims to understand better cause-and-effect relationships on how SR and OE can influence employee WB. The paper structure has six sections. The introduction and literature review approach the research topic from a theoretical point of view. Section 3 and Section 4 describe the research design and results. The last two sections provide discussions and conclusions of the research.

2. Literature Review

2.1. social responsibility.

SR is the moral responsibility of an organization toward the community in which it operates in particular and towards society in general [ 4 , 14 ]. SR is a concept that has received multiple definitions, and there are various classifications of its dimensions: the economic, legal, ethical, and philanthropic dimensions [ 15 ] and the economic, social, environmental, stakeholder, and volunteer dimensions [ 16 ]. Davis and Blomstrom argue that the substance of SR stems from the ethical “obligation” of the organization to assess the effects of its decisions and actions on the entire social system [ 17 ]. At the same time, [ 18 ] identifies the gap between the concept of SR and practice. Other authors [ 15 , 19 , 20 ] looked at SR in terms of organizational efforts to meet the needs of different categories of stakeholders. For example, McWilliams and Siegel [ 21 ] saw in SR an increase in the social interests of business organizations or a commitment to increase the reputation and improve the image by diminishing the community’s negative perception of the organization [ 22 ]. Matten and Moon considered SR to be a component of the organization’s strategic policy that illustrates its interest in social issues, not just the primary goal of profit maximization [ 13 ]. Aguinis considers that SR represents those actions and policies that meet stakeholders’ expectations to maximize results in three areas: economic, social, and environmental [ 6 ].

An issue increasingly addressed by an employer is employee involvement in SR actions [ 23 ]. Such employer behavior brings social benefits and plays an essential role in ensuring employees’ WB, directly affecting the satisfaction, commitment, and loyalty of current employees and leading to greater motivation, increased productivity, and a greater propensity to innovate [ 24 , 25 ]. In addition, when employees identify the organization’s commitment to socially responsible behavior, they tend to have more responsible attitudes that correlate with better performance due to improved relationships between employees and other stakeholders [ 26 ].

2.2. Relationships between Organizational Ethics and Social Responsibility

According to [ 27 ], philanthropic responsibilities stem from the philosophical, ethical tradition of concern for what is good for society and justify organizations to help improve the quality of life of different stakeholders and the community. Reich points out that SR is nothing more than intelligent management covered by the language of morality and ethics. Only organizations which aim to adhere to all universally accepted ethical standards can expect a positive attitude and support from society [ 26 , 28 ]. Moreover, solving the problems that affect the community and society leads to competitive advantages for the organization. Nord and Fuller saw corporate SR as a matter of higher-level strategy. They linked it to the conceptualization of organizational change, raising awareness of an alternative model that would complement the strategic vision and add an ethical dimension [ 23 , 24 , 29 ].

At the same time, managers have developed practices related to OE and SR within their organizations. There are many reasons why organizations implement these practices: reducing costs, mitigating risks, gaining legitimacy, gaining a competitive advantage, and creating new value [ 30 ]. In addition, researchers and managers have recommended aligning these practices within organizations [ 23 , 24 , 26 , 31 , 32 , 33 , 34 ]. Still, there is little empirical research exploring the impact of alignment or why it has not become a common practice within organizations. Based on these considerations, we formulated the following research hypothesis:

Employees’ perception of OE directly positively affects employees’ perception of SR.

2.3. Employees’ WB

The community includes individuals in constant interaction in a particular space where they live and work [ 35 ]. In addition to the spatial dimension, a community may be determined by the common interest of its members [ 36 ]. Given that interactions between individuals within the community include several dimensions (psychological, cultural, spiritual, social, economic, and natural) [ 37 ], meeting all the needs of individuals related to these dimensions confers a WB status. Consequently, WB also includes the social, economic, environmental, cultural, and political dimensions [ 38 ].

The concepts of health and WB are often used together and sometimes even interchangeably. However, health refers to an individual’s physiological or psychological indicators [ 39 ], while WB is a more comprehensive concept that aim to describe the individual’s general condition in a social context [ 40 , 41 ]. Therefore, WB consists appropriately of non-contextual measures of life (e.g., life satisfaction, happiness), general considerations (e.g., job satisfaction), and more specific dimensions (e.g., salary satisfaction, good workplace).

WB includes the individual’s general satisfaction regarding privacy, social relationships, work environment, and reduced stress [ 42 , 43 , 44 ]. Therefore, employers’ concern for ensuring a better job for their employees and a WB status was considered a component of SR, which is part of ethical behavior.

The concept of WB has therefore been approached in the paradigm of the multidimensionality of human, social, and economic capital [ 45 ]; physical, psychological, social, and economic WB [ 46 ]; and social, environmental, economic, health, political, physical, and residential dimensions [ 47 ]. The economic dimension is manifested by providing sufficient income, job stability, and existing opportunities in the labor market [ 47 , 48 ]. The social dimension includes income and profession that offer a certain social status [ 37 , 49 ] and concepts such as security, community spirit, cohesion, trust, reciprocity, involvement, and informal interaction [ 5 , 37 , 47 ].

Employers want to improve employee wellbeing because lowering WB can lead to unhappiness, decreased productivity, and increased stress and anxiety, eventually leading to a high turnover [ 44 , 50 , 51 , 52 ]. Therefore, as a dimension of relationships and social status, employees’ WB can be considered an objective of SR concerning its human resources and work environment [ 53 ].

The WB concept integrates employees’ status at and outside the workplace: job satisfaction or dissatisfaction, reward, working relationships, working conditions, friendly work environment, promotion opportunities, care for the environment, and interest in the general health community. WB is a complex and multifaceted construct [ 54 ], balancing between objective indicators (life standards) and subjective measures (psychological, social, and spiritual aspects) [ 55 ].

Other authors have added to the social dimension the interaction between individuals in the family, at home, and in neighborhoods [ 56 ] or education [ 38 ]. The environmental dimension includes the perception of individuals about the place where they live, with a solid psychological load for individuals. McCrea et al. [ 47 ] suggested that environmental satisfaction, green areas, transport, air quality, energy quality, and sustainability are crucial indicators of WB [ 37 , 45 , 47 , 57 , 58 , 59 ].

2.4. Relationships between Employees’ WB, SR, and OE

SR is a social obligation of the organizations to decide and act responsibly following the objectives and values of society [ 60 ]. Currently, SR is perceived as a continuous commitment of organizations to behave ethically and contribute to the economic development of the community and society in which the organization operates by improving the quality of human WB, through involvement in the local community and society. SR is the basis of sustainability, competitiveness, and innovation and is a strategic advantage of any organization [ 61 , 62 , 63 , 64 ]

Due to the potential impact of organizations on WB employees and the community in which they operate, ethical behavior and SR programs are of great importance for overall WB [ 65 ]. In this context, Chowdhury et al. proposed an SR and OE reporting on stakeholder health and WB [ 66 ], based on the Global Reporting Initiative (GRI) sustainability reporting standards. Cheng et al. [ 67 ] suggest that if SR activities do not live up to employees’ expectations, they generate mistrust of organizations, leading to reduced commitment [ 34 , 67 , 68 ] and WB and increasing turnover rates [ 67 ]. Various authors [ 67 , 68 , 69 , 70 , 71 ] have studied the impact of employees’ perceptions regarding CSR and organizational ethics on outcome measures: employee satisfaction, turnover rates, and overall organization sustainability. Consequently, examining and monitoring employees’ perceptions regarding SR and OE is beneficial for the organization’s human resources management and strategic management to meet the expectations of all stakeholders, especially employees [ 67 , 68 , 69 , 72 ].

Based on the relationships between OE, SR, and WB described in the literature, we formulated the following research hypothesis:

Employees’ perception of SR and OE directly positively affects employees’ perception of WB.

Internal stakeholder-oriented SR programs target WB employees by obtaining employee satisfaction based on meeting the expectations of their organizations [ 73 ]. Employees have an ethical expectation towards their organizations in terms of job stability, recognition and appreciation, fairness of rewards, opportunities for professional and personal development, freedom of association in trade unions, work–life balance, involvement in decisions, autonomy, participation in organizational decisions, and involvement of the organization in the community [ 74 ]. In addition, organizations will invest in ethical health and safety management practices that impact the company’s performance [ 75 ].

Occupational health and safety (OHS) promote human resource management, safety, occupational safety, physical and mental health, and in general, an essential part of the WB of human resources [ 76 , 77 , 78 , 79 ]. WB incorporates the employee’s physical, emotional, and mental wellbeing, exerting a significant positive impact on achieving objectives [ 74 , 77 , 80 , 81 ]. However, several authors [ 82 , 83 ] have highlighted the need to see the health and wellbeing of employees beyond the work environment by taking into account other ethical factors related to other areas of human resources: the process of training and development [ 9 , 10 ], ensuring equal opportunities in business [ 11 ], work–life balance [ 12 ], job stability, and existing options in the labor market [ 47 , 48 ].

Researching employees’ perceptions and attitudes towards SR, OE, and WB is important [ 34 , 84 , 85 ] because it can lead to seeking opportunities for better implementation of responsible and ethical social practices and initiatives. In addition, companies are increasingly recognizing the strategic importance of OE and SR in ensuring employees’ WB and the sustainability of their business [ 69 , 84 , 86 ], as well as employee satisfaction in implementing SR programs and ethical conduct.

Based on these considerations, we formulated the following research hypothesis:

Employees’ perception of OE has significant indirect positive effects on their perception of WB, mediating their perceptions of SR.

Figure 1 shows the conceptual model of the research on the relations between SR, OE, and WB.

An external file that holds a picture, illustration, etc.
Object name is ijerph-19-08838-g001.jpg

Conceptual model. Source: designed by authors.

3. Methodology

3.1. research design.

To study the impact of SR and OE on employees’ WB, we conducted quantitative research in a survey among employees of Romanian companies.

The data collected in a database were subjected to descriptive and inferential statistical analyses. To determine the intensity and meaning of the relationships between the research variables, we used structural equation modeling and artificial neural network analysis. Finally, the obtained results confirmed the hypotheses’ validity based on the literature. Figure 2 illustrates the research process.

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Object name is ijerph-19-08838-g002.jpg

Research process. Source: own construction.

3.2. Selected Sample

To perform the empirical analysis, we conducted a survey based on a questionnaire filled by 423 employees from Romanian organizations, small and medium enterprises, and large corporations between March 2022 and May 2022. The sampling method chosen was random stratified sampling. The target population of the research is the employees in Romanian private companies, comprising 4,500,000 individuals. The sample of 423 individuals was selected with a level of confidence of 95%, with a margin of error of 4.762%. Table 1 describes the descriptive statistics for the selected sample.

Descriptive statistics.

Source: designed by authors using SPSS v.20 (SPSS Inc., Chicago, IL, USA).

Employees were selected in the sample using the economic sector criterion: 9.9% in agriculture, 29.8% in industry, and 60.3% in services (including technology and communications). The sample structure according to the size of the companies from which the employees come is as follows: 40% of the employees come from small and medium companies, 40.2% come from large companies, and 19.8% come from multinational companies. Within the sample, 68.15% are male and 31.85% are female. Regarding the age, 9.95% are under 30 years old, 69.93% are between 31 and 55 years old, and 20.12% are over 55. In addition, 19.8% of respondents have received secondary education, and 80.2% have studied a higher degree. Over 60.3% of respondents have more than ten years of work experience, and over 60.2% have more than ten years of experience in the organization. Most respondents are subordinates, with only 19.81% being managers. Depending on the income category, over 43.32% of respondents have a net income above the average net salary in the economy.

3.3. Research Tools and Methods

The design of this study involved conducting a survey based on a questionnaire applied to employees of Romanian organizations. The questionnaire contains the socio-economic-demographic variables that characterize SR, OE, and WB. We evaluated the impact of SR and OE on WB empirically by using statistical methods for modeling structural equations (SEMs) in the partial least squares (PLS) variant using a procedure described by [ 87 , 88 ], similarly used by [ 89 , 90 ]. The initial literature review established measures for each construct and the reliability and validity of variables using various statistical tests (Cronbach’s Alpha, Composite Reliability, and Average Variance Extracted). We built items for SR and OE based on previous research. SR includes five dimensions describing the levels of responsibility: responsibilities to shareholders (increasing the organizational value); responsibilities to employees, unions, customers, and suppliers (societal welfare, organizational SR philosophy); responsibilities to central and local public authorities and the community (organizational citizenship); and responsibilities to society (societal contribution). The items concerning SR, which define the levels of responsibility, were defined based on [ 15 , 91 , 92 , 93 ]. OE includes five dimensions describing the ethical principles in the organization: transparency, fair competition, respect for the customer, employees’ wellness, and sustainability, as stated in other research [ 8 , 15 , 33 , 89 ]. The WB scale was established based on the TINYpulse questionnaire [ 94 ], using the eight dimensions for WB: general WB, emotional WB, environmental wellness, intellectual WB, occupational WB, physical health, and social WB. To measure the variables SR, OE, and WB, we used a five-level Likert scale (5—total agreement, 4—partial agreement, 3—agreement, 2—partial disagreement, 1—total disagreement).

The exogenous variables (the items of the questionnaire) which characterize SR, OE, and WB are presented in Table 2 .

Exogenous variables.

Source: designed by authors based on [ 75 , 76 , 77 , 78 ].

The self-administered questionnaire results can be affected by common method bias (CMB) [ 95 ]. We tested all variables using Harman’s single-factor test using principal component analysis. The extracted variance was below 50% (45.329%), attesting to no significant common method bias effects [ 95 ].

We used structural equation modeling (SEM) in the partial least square variant (SmartPLS 3.0 software: SmartPLS GmbH, Oststeinbek, Germany) to validate the three hypotheses. The model has three unobservable latent variables: SR, OE, and WB. Each of the three latent variables depends on a series of observable exogenous variables defined by the items in the questionnaire. Figure 3 shows the exogenous variables for each latent variable.

An external file that holds a picture, illustration, etc.
Object name is ijerph-19-08838-g003.jpg

Preliminary model. Source: designed by authors using SmartPLS 3.0 (SmartPLS GmbH, Oststeinbek, Germany).

Following the methodology described by [ 88 ], we eliminated from the model those items that have an outer loading below 0.7, considering the lower influence of these items on the latent determinant variables. Figure 4 presents the resulting model.

An external file that holds a picture, illustration, etc.
Object name is ijerph-19-08838-g004.jpg

Model applied. Source: designed by authors using SmartPLS 3.0 (SmartPLS GmbH, Oststeinbek, Germany).

The validity and reliability of the model were tested following the procedure described in [ 87 , 88 ]. All three indicators, namely Cronbach’s Alpha, Composite Reliability, and Average Variance Extracted), recorded good values ( Table 3 ). In the model, SRMR recorded a value of 0.048, and NFI recorded a value of 0.934.

Validity and reliability.

Source: designed by authors using SmartPLS 3.0 (SmartPLS GmbH, Oststeinbek, Germany).

Finally, running a bootstrapping process, we determined the path coefficients and specific indirect effects in our model for assessing the role of SR and OE in ensuring employees’ WB ( Table 4 ).

Path coefficients and specific indirect effects.

Analyzing the path coefficients and specific indirect effects in Table 4 , we affirm that all three hypotheses are valid. The organizations’ ethical practices positively affect SR programs in employees’ perception. The two sustainability constructs (OE and SR) positively impact employees’ WB. In addition to the direct effect on WB, the organization’s ethical behavior has substantial indirect effects on WB, with an SR program based on ethical principles and values as a mediating variable.

5. Discussions

The relationship between SR, OE, and WB has not frequently been subject to an evaluation process in the literature on SR and OE. However, there is a recognition that this relationship can contribute to establishing sustainable jobs to ensure WB at the individual level and welfare at the societal level. In recent years, several researchers have conducted empirical studies to determine the impact of SR programs on work results from the perspective of stakeholders (including employees) [ 34 , 96 , 97 , 98 , 99 ]. Employees are key stakeholders who, once satisfied, can positively influence the implementation of SR programs [ 97 ]. Therefore, employees’ perceptions of SR shape the community’s view of organizations [ 96 ]. In addition, employees with a good level of WB can improve and stimulate SR programs and ethical behavior that promotes all stakeholders’ wellbeing, including employees [ 34 ].

Employers improve employee WB because low WB can produce unhappiness, lower productivity, and increased stress and anxiety, eventually leading to a high turnover rate [ 44 , 50 , 51 , 52 , 67 ]. Therefore, employees’ WB is an objective of SR programs concerning its human resources and work environment [ 53 ], ensuring employee commitment [ 68 ]. Researching the relationships between the variables of the researched model, SR and OE can contribute to increasing economic, social, and environmental performance and the health and wellbeing of employees, as we have demonstrated by confirming the validity of the H2 hypothesis.

The conceptual model in this study, which reveals the relationship between corporate SR and OE, also aims to help integrate and facilitate the implementation of SR activities and tools to ensure ethical conduct in organizations. Various authors have pointed out the need for a unified theory regarding SR and OE because there is much confusion and redundancy between the dimensions of the two concepts [ 27 , 30 , 33 , 89 ]. In our research, we tested the relationship established between SR and OE by confirming the validity of the H1 hypothesis. Combining these two areas can provide sustainability to organizations and ensure employees’ WB and that of the community they operate in [ 20 ].

Many studies have attempted to understand the impact of SR and ethical practices on employees’ satisfaction, a constituent of employees’ WB [ 34 , 84 , 85 , 100 , 101 , 102 , 103 , 104 , 105 , 106 , 107 ]. Researching employees’ perceptions and attitudes towards SR, OE, and WB is important [ 34 , 84 , 85 ] because it can lead to seeking opportunities for better implementation of responsible and ethical social practices and initiatives. In addition, employees’ satisfaction provides an insight into the emotional state of work experience and environment [ 108 ], directly contributing to organizational performance [ 73 ]. Although employees’ satisfaction is an essential component of employee WB, it is not just about satisfaction. There are several areas of SR that address job satisfaction aspects: job stability; employee status; fair pay; social benefits; occupational safety and health; work–life balance and employment opportunities; training and personal development; cordial labor relations; and a work environment characterized by communication, transparency and social dialogue, equal treatment, and equal opportunities [ 34 , 75 , 84 , 109 ]. Satisfaction is directly related to work, while WB also covers general aspects of general physical and mental health, relationships in the social environment, social status, care for the environment in which they live, and the individual’s connection to the community and society in general.

Programs in the SR area stimulate the improvement of health, the environment, and involvement in educational activities, acting as an essential mechanism for mediating between the organization’s ethical practices and improving employees’ and communities’ WB [ 110 ], as demonstrated by the confirmation of the validity of Hypothesis H3. Companies are increasingly recognizing the strategic importance of OE and SR in ensuring employees’ WB and the sustainability of their business [ 69 , 84 , 86 ], as well as employee satisfaction in implementing SR programs and ethical conduct. Organizations that promote health and safety management practices and ensure an adequate work environment [ 88 ] benefit from increased employee engagement, as the organization demonstrates an interest in employees’ WB. Rela et al. showed that other factors, such as community capacity and motivation, government policy, and other stakeholders’ contributions, influenced WB [ 5 ].

The results of our research are in line with the results of previous research showing that ethical issues can have a significant impact on physical health and spiritual wellbeing.

6. Conclusions

The research results indicate that the variables SR and OE have significant and positive influences on WB dimensions, consistent with previous studies showing a significant relationship between these constructs [ 4 , 111 , 112 , 113 , 114 , 115 , 116 , 117 ]. SR contributes to the satisfaction of employees’ interests related to WB dimensions (health, education, economy) and OE by inducing ethical behavior and attitudes that contribute to increasing WB. Research results confirm that SR programs and ethical behavior contribute to the employees’ wellbeing.

6.1. Practical Implications

Although OE activities and SR programs target both stakeholders, the present research focused on critical internal stakeholders (employees), given their dual nature. Employees are also constituents of an essential category of external stakeholders—the community. The research results confirmed the importance of SR and OE for improving employee wellbeing, SR being a mediating factor between OE and WB. These results support an essential mechanism by which OE activities and SR programs can increase WB, especially when the organization does not have sufficient resources to motivate employees and ensure job satisfaction. Employee satisfaction with job stability issues, guaranteeing a friendly work environment, caring for the environment in which they live, and organizational involvement in community social causes can all contribute to the overall WB of employees.

6.2. Theoretical Implications

Three issues can be highlighted as theoretical implications of this research. First, most studies have focused on external stakeholders [ 118 , 119 , 120 , 121 ], with few focusing on the positive effect of OE activities and SR programs on internal stakeholders. Second, while many types of research have addressed various facets of wellbeing (psychological, health, occupational wellbeing, etc.) [ 118 , 122 , 123 , 124 ], this study aimed at a holistic approach to the concept of WB. Although SR depends on the macroeconomic and organizational context, the main expectations for organizations are reducing poverty in the community and society in general, caring for the environment, improving public health, increasing employee WB, and an increasingly efficient educational process.

6.3. Limitations and Recommendations for Future Research

The analysis revealed a direct positive effect of SR and OE on employees’ WB. However, organizational ethics have a significant indirect positive impact on WB through SR programs that induce ethical conduct and the attitude of employees. These results should take into account various limitations of the research. First, the research only targets a category of stakeholders (employees) with a dual nature (internal and external) by their presence in the organization’s community. Secondly, the research was carried out only among the employees of some Romanian organizations, making it impossible to consider cultural differences between employees from different countries. Finally, the transversal approach to research provides more information through the results obtained, but does not offer a perspective on the evolutions of perceptions over time as a longitudinal approach.

Future research may address some of these limitations. In addition, future research may focus on studying the effects of moderating factors, such as communication, reputation, and organizational culture. Furthermore, there is a need for a deep investigation of the OE practices’ integration and alignment with SR programs to support a more synergistic impact on WB.

Funding Statement

This research received no external funding.

Author Contributions

Conceptualization, C.G.B., M.M.N., M.C., and S.D.; methodology, C.G.B.; software, C.G.B.; validation, C.G.B., M.M.N., M.C., and S.D.; formal analysis, C.G.B.; investigation, C.G.B., M.M.N., M.C., and S.D.; writing—original draft preparation, C.G.B., M.M.N., M.C., and S.D.; writing—review and editing, C.G.B., M.M.N., M.C., and S.D.; project administration, C.G.B. All authors have read and agreed to the published version of the manuscript.

Institutional Review Board Statement

Informed consent statement, data availability statement, conflicts of interest.

The authors declare no conflict of interest.

Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

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    In spite of accruing concerted scholarly and managerial interest since the 1950s in corporate social responsibility (CSR), its implementation is still a growing topic as most of it remains academically unexplored. As CSR continues to establish a stronger foothold in organizational strategies, understanding its implementation is needed for both academia and industry. In an attempt to respond to ...

  6. The effects of business ethics and corporate social responsibility on

    In this respect, interest in the development of business ethics (BE) and corporate social responsibility (CSR) in accounting, evaluation and management has gained increasing attention in the academic literature (Nahapiet and Ghoshal, 1998), and the last 20 years (or even more) of empirical research on these issues have generated vast literature ...

  7. Corporate Social Responsibility Research in the

    This introduction to the Thematic Collection on Corporate Social Responsibility (CSR) tracks the evolution of CSR research published in the Journal of Management Studies from 2006 until 2021. Alongside the mainstreaming of CSR within management studies, CSR research in JMS has progressed from a business-centric to a society-centric focus. The business-centric focus centres on the financial ...

  8. Quantitative Research on Corporate Social Responsibility: A Quest for

    In this article, the co-editors of the corporate responsibility: quantitative issues section of the journal provide an overview of the quantitative CSR field and offer some new perspectives on where the field is going. They highlight key issues in developing impactful, theory-driven, and ethically grounded research and call for research that examines complex problems facing businesses and the ...

  9. Business ethics and corporate social responsibility

    Corporate social responsibility (CSR) has become a mainstream business practice, attracting broad attention from business, consumers, academics, and policymakers, leading firms to account for the social and environmental footprints of their activities.

  10. Research on Corporate Social Responsibility: Insights and Future ...

    The idea of corporate social responsibility (CSR)—that is, businesses acting responsibly towards society and a broader set of stakeholders beyond its shareholders—was first introduced in the 1960s (H. Wang et al. 2016).Since then, and in the years following the financial crisis in 2008, it has become one of the most hotly debated topics among both academic and professional communities.

  11. The Relationship of Corporate Social Responsibility and Firm

    The mission to establish the impact of Corporate Social Responsibility (CSR) on a firm's performance in the literature has been the focus of many past research studies (Orlitzky et al., 2003; Waddock & Graves, 1997).Exploring and analyzing the effect of corporations being socially responsible on their performance have been explained using various theoretical and conceptual underpinnings.

  12. Exploring the factors affecting the implementation of corporate social

    Therefore, corporate social responsibility (CSR) has become an important research topic in recent years (Yuan et al., 2020). The motivation for CSR implementation changes with the social ...

  13. Corporate social responsibility and accountability: a new theoretical

    The absence of consensus on what should constitute Corporate Social Responsibility has inhibited consistent CSR legislation around the world. This paper poses a fundamental question on what should constitute CSR and what should be the nature of CSR regulation? By constructing the boundaries of CSR, the paper offers scope for consistently developing CSR regulation around the world.

  14. Leadership, Ethics and Corporate Social Responsibility

    Ethics, culture, climate and social responsibility. From leadership, ethics, and voice, we move to the issue of ethical culture and climate and social responsibility. We know that organisational contexts are critical in shaping organisational behaviours (see Johns, Reference Johns 2006). This means that the context of ethical behaviours rests ...

  15. Sustainability in Business Ethics and Corporate Social Responsibility

    Further analysis shows that under the governance of executives with environmental experience, the improvement of CEP is conducive to strengthening corporate social responsibility and enhancing enterprise value. The research conclusions provide direct evidence for improving CEP and achieving sustainable development for enterprises and society.

  16. PDF Business ethics, corporate social responsibility and corporate

    European Research Studies Volume VI, Issue (1-2), 2003 Business ethics, corporate social responsibility and corporate governance: a review and summary critique John Donaldson ∗∗∗∗ Irene Fafaliou ∗∗∗ Abstract ∗∗∗∗ The success of modern business is apparent, but recently there is much

  17. Business Ethics and Corporate Social Responsibility: Translating Theory

    Abstract. Ethics in business embodying fairness, justice, and human rights principles has the potential to unlock, reveal, and address the unethical, unfair, and obscure business practices that constitute barriers to the development of sustainable societies and economies. Hence, corporate social responsibility, following the significant value ...

  18. Ethical Theories in Business Ethics: A Critical Review

    Abstract. Numerous ethical theories have been proposed as a foundation of business ethics, and this often brings about appreciable perplexity. This article seeks to identify specific problems for a sound foundation of this discipline. A first problem is this multiplicity of ethical theories, each with its own metaethics, often accepted without ...

  19. Business Ethics and Corporate Social Responsibility Reciprocity

    The paper addresses the concept of business ethics and CSR in the context in relation to selected diverse companies based on the perspectives of the employees working in the companies. We examined if and how the surveyed companies implemented the ethical code in their business practice; and what benefits flowed there from.

  20. The Role of Social Responsibility and Ethics in Employees' Wellbeing

    The research gap that the paper aims to cover comes from the lack of work to study the combined effect of OE and SR on employees' WB. ... The Nature and Management of Ethical Corporate Identity: A Commentary on Corporate Identity, Corporate Social Responsibility, and Ethics. J. Bus. Ethics. 2007; 76:7-15. doi: 10.1007/s10551-006-9278-z. ...

  21. Business Ethics and Corporate Social Responsibility

    It is argued that proactive policy is a responsible policy and that, in the long run, it serves the best interests of all stakeholders: Internet intermediaries, Netusers and society at large. The paper endorses Corporate Social Responsibility (CSR) that takes ethical considerations seriously.