By Chris Pinney, Director of Research and Policy, Boston College Center

Dr. Aneel Karnani’s commentary in the Wall Street Journal,  “The Case Against Corporate Social Responsibility” is a good illustration of the challenge facing the business management strategy field in the 21^st century — namely to comprehend the changing role and impact of business in society and integrate this understanding into contemporary management theory.

Like many critics of CSR, Dr. Karnani’s world view remains firmly rooted in the 20^th century social contract where governments (supposedly) took care of social responsibility and business took care of business.  For Dr. Karnani, corporate social responsibility at its core is nothing more than a misguided distraction for business leaders and managers who should be focused on “profit maximization.”

While he acknowledges that companies sometimes can do well by doing good, his view is more often that they can’t, and furthermore postulates that this “makes it more likely that we’ll ignore the real solutions to these problems.” He argues that if business had a meaningful role to play then societies’ pervasive and persistent problems would have been solved long ago by companies seeking to maximize their profits.” In his view the “real” solution to societal problems is a return to a world of more government regulation and intervention. As he notes, government regulation’s “greatest appeal is that it is binding. Government has the power to enforce regulation. No need to rely on anyone’s best intentions.”   

While one can appreciate Dr Karnani’s desire for a simpler time where governments take care of society and business takes care of business, in reality we live in a much more complex world.

We are in an age where half of the world’s top economies and most influential institutions are now businesses. The power and speed of business far exceed the capacity of governments to keep pace on the regulatory front as the current global financial crisis clearly illustrates. When it comes to solving social challenges, again the capacity of governments to respond is increasingly limited. Governments struggling under mounting deficits are barely able to keep entitlement commitments they have to their constituents, never mind innovating to meet the complex social and environmental challenges of a global economy.

Indeed, if government intervention alone was sufficient to solve these problems then applying Dr. Karnani’s own logic we could assume they would have “been solved long ago by governments doing the job they were elected for.” In reality, through the work we do at the Boston College Center for Corporate Citizenship at the Carroll School of Management, we know the only way to find “real solutions” to complex social problems of the 21^st century is through new forms of collaboration between business, government and civil society.

Far from a distraction, corporate social responsibility is in fact the new essential for business strategy and success in the 21^st century. It is a strategic response to a business environment in which companies must earn their license to operate from a wide variety of well-informed publics and stakeholders whose expectations for social responsibility continue to grow. Failure to meet these expectations can result in loss of reputation and market share. Finally, it is a response to a vested interest in ensuring a trained and educated work force, safe communities and a stable global economy. The challenge for management strategists such as Dr. Karnani is to catch up to the real-world corporate social responsibility challenges that companies must now manage as an integrated part of business strategy and practice.

Tags: CSR, Karnani, Wall Street Journal, WSJ
This entry was posted by Chris Pinney, Director of Research and Policy, Boston College Center on Tuesday, August 31st, 2010 at 4:29 PM, and is filed under Center News & Features. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.