Why Social Responsibility Doesn’t Work

Social responsibility (SR) does not work, or at least doesn’t work very well, in many companies, because certain things are done wrong.

Photo by DAVID ILIFF. License: CC-BY-SA 3.0
Photo by DAVID ILIFF. License: CC-BY-SA 3.0
  • Those higher up, at the head of the company, do not believe in it, starting with higher management. Well, sometimes they believe in it, but not as true SR, but rather as a collection of actions that they have to take at the behest of clients, employees or investors (do we seriously think that those who value profitability above all else would choose SR as a means to protect their investments?), society or other interested parties, or simply because “everyone is doing it” so, obviously, we have to too.
  • If higher management do not believe in it, those lower down will see it very clearly: this is not important. The acid test is this: have upper management said they are prepared to take losses of however many hundreds of thousands of euros in order to be a socially responsible company? No? If the boss doesn’t believe in it, how are the rest meant to?
  • Another acid test: where is the SR in the mission, the policies, the objectives and, very importantly, in the incentives established for meeting objectives? It’s not there? Well those higher up don’t believe in it, or they just pretend to but actually don’t. It is there? Good, but is it there for appearances sake, or is it really the most important thing? Has the CEO ever said that they would never under any circumstance pay an official to win a contract, or that we should never ever mislead a customer in order to make a sale? No? Then they don’t believe in it.
  • This manifests itself in a very concrete way. When second or third level managers are faced with an SR problem, how do they react? Do they ask themselves: what do I always have to do, especially now in this particular case, in order to comply with SR? Or do they ask themselves “what does my boss really want”? That I am socially responsible, or that I do what my boss wants me to do? I am afraid that this is what happens in a lot of cases.

About Antonio Argandoña

Antonio Argandoña is Emeritus Professor of Economics and holder of the "la Caixa" Chair of Corporate Social Responsibility and Corporate Governance at IESE. He teaches mainly in the areas of macroeconomics, monetary economics and international economics, and publishes research on business ethics, corporate social responsibility and organizational governance.

5 thoughts on “Why Social Responsibility Doesn’t Work

  1. We all have a role to play in making things better. Yes, companies should try to act more responsibly, but unfortunately the market isn’t going to necessarily reward them or punish their less responsible competitors for acting irresponsible.

  2. It is true that the market will not always punish the way companies approach the SR issue. Nonetheless, if responsibility requires incentives to keep working, then it is probably not responsible at all. I believe that kind of commitment is proven when one makes the right decision, even if things go bad. Well, especially when things go bad.

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