by Rami Kaplan & Daniel Kinderman*
Why do firms adopt Corporate Social Responsibility (CSR) practices? How does CSR spread across the globe? Our paper “The Business-Led Globalization of CSR” provides surprising answers to these most fundamental questions, based on the comparative historical study of the world’s earliest non-U.S. countries where CSR has become a diffused, institutionalized practice: Venezuela and Britain.
Why do firms adopt CSR?
CSR is widely recognized as a “nonmarket strategy” that addresses challenges in the firm’s sociopolitical environment. We expand this notion by distinguishing between reactive CSR strategies, in which the individual firm conforms to external expectations of it to become socially responsible (e.g., as transmitted through activists’ attacks or certification schemes), and proactive CSR strategies that shape the external environment. With the latter, as we show, corporations try to gain control over social change based on collective adoptions of selected CSR practices.
Thus, we show that, in the mid-1960s Venezuela, hundreds of corporations confronted existential threats to corporate capitalism by collectively adopting community development practices. CSR practices were instrumentalized to undercut communist insurgency, check governmental intervention in the economy, and improve the public image of the business community.
Similarly, in the late-1970s Britain, corporations engaged in urban development and unemployment mitigation because they were facing social unrest, political radicalization, and labor militancy. With the rise of the Thatcher administration, the threat turned into an opportunity. Following lobbying by a group of multinationals led by Shell, the Thatcher government integrated CSR into its revamped, neoliberal employment policy. It was in the context of this neoliberal revolution that Business in the Community (BITC) and modern British CSR emerged.
How does CSR spread globally?
While scholars tend to assume that CSR diffusion is driven by isomorphic pressure exerted by the institutional environment of firms, we advance an alternative view of the global diffusion of CSR. We understand CSR adoption as originating from “channels of diffusion” that transmit the aforementioned inter-firm proactive CSR strategies from one country to the other.
These channels are composed of business elites and experts who function as “exporters” and “importers” of the strategy. The importers learn from the exporters about the utility of the strategy and about how to implement it. The channels are driven by the interests of the actors composing them. For example, the solicitation and instruction of American oil multinationals acting as exporters was highly instrumental for the adoption of CSR by the Venezuelan business community. Similarly, among multiple other channels of diffusion that we trace, IBM UK was the pioneer organizer of inter-firm collective action on CSR in Britain. In both cases, the source country of CSR (of modern CSR, that is) was the U.S.
Notably, in both Venezuela and Britain, the exporters-importers established CSR-specialized national business associations (NCSRAs)—the Venezuelan Dividendo and the British BITC—to organize the diffusion of CSR practices throughout the importing country. Remarkably, Dividendo and BITC were world pioneering embodiments of what would become a world-spanning institution (by 2010, NCSRAs existed in 72 countries). This suggests the likely importance of our channels of diffusion theory to the understanding of how CSR has entered many other countries and become a global phenomenon.
More generally, our paper implies a grand perspective on the global rise of CSR, as a business-led process originating from the U.S. whereby global corporate capitalism as a whole has strategically reshaped itself and its environment so as to bolster and extend corporate hegemony in our societies.
— Kaplan, Rami and Daniel Kinderman. 2020. “The Business-Led Globalization of CSR: Channels of Diffusion From the United States Into Venezuela and Britain, 1962-1981.” Business & Society 59(3): 439-488.
* Rami Kaplan (Tel Aviv University) is an organizational and economic sociologist studying CSR and sustainable development. Daniel Kinderman (University of Delaware) specializes in comparative political economy and CSR, with a focus on Europe. This post was originally published on Business & Society blog on April 28, 2020. The emphases added by the editor.