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Corporate Social Responsibility: A Three-Domain Approach

Author(s): Mark S. Schwartz and Archie B. Carroll


Source: Business Ethics Quarterly, Vol. 13, No. 4 (Oct., 2003), pp. 503-530
Published by: Philosophy Documentation Center
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CORPORATESOCIALRESPONSIBILITY:
A THREE-DOMAIN
APPROACH

MarkS. SchwartzandArchieB. Carroll

A6stract:Extrapolating
fromCarroll'sfourdomainsof corporatesocial
responsibility (1979)and Pyramidof CSR(1991),an alternativeapS
proach to conceptualizingcorporate social responsibility (CSR)is
proposed. A threeSdomainapproachis presented in whichthe three
core domainsof economic,legal, and ethical responsibilities are deH
picted in a Vennmodel framework. TheVennframework yields seven
CSRcategories resultingfromthe overlapof the three core domains.
Corporateexamples are suggested and classified accordingto the
new model, followed by a discussion of limitationsand teachingand
researchimplications.

Eor the past several decades, the debate over the properrelationshipbetween
r business and society has focused on the topic of corporatesocial responsi-
bility (CSR) (Klonoski 1991). In the modernera, the stage was set for this debate
by Keith Davis, who posed two intriguingquestions in the 1960s: "Whatdoes
the businessperson owe society?" (Davis 1967) and "Can business afford to
ignore its social responsibilities?"(Davis 1960). Althoughmanyhave attempted
to define CSR over the years, the concept has remainedvague and ambiguousto
some (Makower 1994: 12). Definitions of CSR fall into two general schools of
thought, those that argue that business is obligated only to maximize profits
withinthe boundariesof the law andminimalethicalconstraints(Friedman1970;
Levitt 1958), and those that have suggested a broaderrange of obligations to-
wardsociety (Andrews 1973; Carroll1979; Davis andBlomstrom1975; Epstein
1987; McGuire 1963).
An importantattemptto bridge the gap between economics and otherexpec-
tations was offered by Archie Carroll (1979). His efforts culminated in the
following proposed definition of corporatesocial responsibility:
The social responsibilityof businessencompassesthe economic,legal,ethi-
cal, and discretionary expectations that society has of organizationsat a
given point in time. (1979: 500, emphasis added)
As a helpful way of graphicallydepictingthe componentsof his CSR defini-
tion andexpoundinguponthem,he laterincorporatedhis four-partcategorization
into a "Pyramidof CorporateSocial Responsibility" (1991; 1993). Carroll's
Pyramidof CSR is presentedin Figure 1.

C)2003. Business Ethics Quarterly,Volume 13, Issue 4. ISSN 1052-1SOX. pp. 503-530
504 BUSINESS ETHICS QUARTERLY

Figure 1
Carroll's (1991) Pyramid of Corporate Social Responsibility

Be a good < Desired


corporate citizen / thropic \

Be ethical / Ethical \ Expected


/ \

Obey the law / Legal \ Required

Be profitablf Economic \ Required

Source: A. B. Carroll, "The Pyramid of Corporate Social Responsibility: Toward the Moral
Management of Organizational Stakeholders," Business Horizons (July-August
1991): 39-48.

Carroll'sfour categoriesor domainsof CSR have been utilized by numerous


theorists (Wartickand Cochran 1985; Wood 1991; Swanson 1995, 1999) and
empiricalresearchers(Aupperle1984;Aupperle,Carroll,andHatfield1985;Bur-
ton and Hegarty1999; Clarkson1995; IbrahimandAngelidis 1993, 1994, 1995;
Mallott 1993; O'Neill, Saunders,andMcCarthy1989;PinkstonandCarroll1996;
Smith,Wokutch,Harrington,and Dennis 2001; Spencerand Butler 1987; Strong
and Meyer 1992). Several business and society and business ethics texts have
incorporatedCarroll'sCSRdomains(Boatright1993;Buchholz1995;Weiss 1994)
or have depictedthe CSR Pyramid(Carrolland Buchholtz2000, 2003; Jackson,
Miller, and Miller 1997; Sexty 1995; Trevino and Nelson 1995). According to
WoodandJones (1996: 45), Carroll'sfour domainshave "enjoyedwide popular-
ity among SIM (Social Issues in Management)scholars."Such use suggests that
Carroll'sCSR domains and pyramidframeworkremain a leading paradigmof
CSR in the social issues in managementfield. Due to the acceptanceand impact
of Carroll'sCSR contributions,it may be appropriateto re-examinehis model to
determinewhetherit can be modifiedor improvedor if thereis a possible alterna-
tive approachto conceptualizingcorporatesocial responsibility.
In a quest to propose an alternativeapproachto CSR that strives to augment
and amendthe Carrollmodel, the following paperwill consist of four parts:(1)
a brief discussion of some issues or limitationsof Carroll'smodel; (2) a presen-
tation of the new alternativemodel, the "Three-DomainModel of CSR";(3) a
discussion of the limitations of the new model; and (4) future teaching and re-
search implications of the new model.
CORPORATESOCIALRESPONSIBILITY sos

Issues with Carroll's Model


Threeissues with respectto the Carrollmodel are identified and discussed as
they are items upon which the proposedthree-domainmodel proposes changes.
The three issues include: (1) the use of a pyramidto depict the relationships
amongthe four componentsof the model; (2) the role of philanthropyas a sepa-
rate componentin the model; and (3) the incompletetheoreticaldevelopmentof
the economic, legal, and ethical domains.
Use of a Pyramid Framework
Although there is considerablevalue in Carroll'sfour-partmodel, his use of
a pyramidframeworkto depict his CSR domainsmay be confusing or inappro-
priate for some applications.First, to some, the pyramidframeworksuggests a
hierarchyof CSR domains. One may be led to conclude that the domain at the
top of the pyramid,philanthropicresponsibilities,is the most importantor highly
valued domain, that should be strived for by all corporations,while the eco-
nomic domain at the base of the pyramidis the least valued CSR domain. For
example, Reidenbachand Robin (1991: 274) use a pyramidto depict their con-
ceptual model of corporatemoral development,and suggest that the top of the
pyramidrepresentsthe highest or most advanced stage of moral development
(i.e., the "ethical"corporation),while the base of the pyramidportraysthe low-
est or least advancedstage (i.e., the "amoral"corporation).This is clearly not
the perspectiveof the pyramid'srankingsof CSR prioritiesthatCarrollintended,
since he stipulatesthat the economic and legal domainsare the most fundamen-
tal while philanthropicresponsibilities are considered less importantthan the
other three domains (1991: 42). However, the pyramidframeworkcould lead
one to misunderstandthe prioritiesof the four CSR domains.
Second, a pyramidframeworkcannotfully capturethe overlappingnatureof
the CSR domains, a disadvantagerecognizedby Carroll(1993: 34). Such mutu-
ality is an integral characteristicof CSR (Clarkson 1991: 349) and of such
fundamentalimportancethat it must be included and clearly depicted in any
proposedCSR model. Carroll'suse of dotted lines separatingthe domainsdoes
not fully capturethe non-mutuallyexclusive natureof the domains, nor does it
denotetwo of the criticaltensionpointsamongthem,the tensionbetweenthe eco-
nomic andethicalandthe economicandphilanthropicdomains(Carroll1993: 34).
Use of a Separate Philanthropic Category
In addition to the possible misunderstandingsinherentin using a pyramid,
Carroll'suse of a "philanthropic/discretionary" category can be confusing and
may be seen as unnecessaryto some. Carrollacknowledges that it may in fact
be "inaccurate"(1979: 500) or a "misnomer"(1993: 33) to call such activities
"responsibilities"due to their voluntary or discretionarynature. Others agree
that philanthropycannotbe considereda responsibilityin itself (L'Etang1994;
Stone 1975). In this respect, philanthropyis not considered a duty or social
BTTOT\TE22 TT^O nTr A DTEDT v
506 UOllML L1n1tJ yUARlLALl

responsibility of business ti.e. an expected act based on what Kantiansmight


refer to as a 4iperfect"duty) but something that is merely desirable or beyond
what duty requires (e.g., a supererogatoryact based on what Kantiansmight
refer to as an "imperfect"duty)*
The new model proposes that such a categorySif it were believed to exist7
would better be subsumedunder ethical and/oreconomic responsibilities.The
centralreasons for this placementare that, first it is sometimes difficult to dis-
tinguish between "philanthropic'and "ethical activities on both a theoretical
and practicallevel7 and second, philanthropicactivities might simply be based
on economic interests.
At the theoreticallevels the ethical principleof utilitarianismcan be used to
justify manyphilanthropicactivities,includingall of the examplesCarroll(1993:
33) refersto (e.g. giving to charity,adoptinga school, providinga day-carecen-
ter for working mothers,conductingin-house programsfor drug abusers).For
example, Shaw and Post (1993: 746) arguethat rule utilitarianismsupportscor-
poratephilanthropyas a meansof complyingwith a 4;rule"which maximizesthe
public welfare.
In this vein, it could be arguedthat philanthropicactivities are simply an ex-
ample of an ethically motivatedactivity. One formulationof Kant's categorical
imperativeis thatone shouldtreatpeople as an end in themselvesandnot merely
as a means to an end. If a companyprovidesa day-carecenterfor workingmoth-
ers or conductsin-houseprogramsfor drugabusers,is it not possible thatthey are
treatingtheiremployees as ends in themselves and not merely as a means?
When Carroll says that the essence of these philanthropicactivities is that
they are "not generally expectedof business in an ethical sense' (1993: 33,
emphasis added) this raises the question of exactly when an activity can be
consideredethical as opposed to philanthropicaccordingto Carrolls treatment
of these two domains. For example, is a corporation'scontributionto a chari-
tableorganizationan ethical activity (i.e*,expectedby society) or a philanthropic
activity (i.e., merely desired by society)? Evidence currentlyindicates that the
majorityof companies donate to charitableorganizations(Carroll 1993: 387),
with a majority of the population expecting that companies make charitable
donations (Sexty 1995: 274). Do these findings not suggest that society now
expectscorporatephilanthropiccontributions?According to Carroll's defini-
tions, the paramountexample of a philanthropicactivity, giving to charitable
organizations,could arguablyfall underthe ethical domain,ratherthanneeding
to be separatedinto a philanthropicdomain as currentlydefined.
Even if one is able to make a theoreticaldistinctionbetween ethical and phil-
anthropicactivities,thereis still an issue as to whethersuch a distinctioncould be
appliedby empiricalresearchersin the field. Clarkson(1995: 95) for example,
raises concernsover the ability to define and measurediscretionaryactivities in
the actualcorpoxateworld.Aupperle,Carroll,and Hatfield(1985: 455) state that
Carroll'sphilanthropicdomainis '4difficultto ascertainandevaluate."Strongand
Meyer conclude in their study that while there was strong supportfor the exist-
ence of the economic, legalS and ethical components of corporate social
SOCIALRESPONSIBILITY
CORPORATE 507

responsibility,it may be appropriatefor the philanthropiccategoryto be removed


from Carroll'sframeworkwhen attemptingto measuremanagerialperceptionsof
responsibility.They state:"Theresultsfor discretionary(philanthropic)responsi-
bility do not supportthe survey'suse as a generalmeasureof managerialperception
of responsibilityof this componentof social responsibility"(1992: 92, emphasis
added).Althoughmanyresearchershave found supportfor a philanthropiccom-
ponent,the concernsraisedby otherresearcherssuggest that its use as a distinct
componentof CSR might be re-examined.
In addition to ethical reasons, corporatephilanthropymight also be based
primarilyon economic motives (Shaw and Post 1993: 748), often referredto as
"strategicgiving" or "strategicphilanthropy"(Yankee 1996: 9-10). Whetherto
increase sales, help improvepublic image or to improveemployee morale,cor-
porate communityinvolvement or corporategiving to charitableorganizations
can help sustain the bottom line for business in the long-term.When corpora-
tions engage in philanthropyfor these reasons, they are simply acting out of
economic motives, based on their economic responsibility,as opposed to a dis-
tinct philanthropicobligation.
Incomplete Development of Economic, Legal, and Ethical Domains
Anotherissue with Carroll'smodel is the incomplete discussion and inclu-
sion of criteriafor assessing corporateactivities or motives as falling into each
of the domains, especially the legal and ethical domains. Carrollprovides little
discussion of how corporationsmay engage in multiple domains other than by
suggesting that a toy manufacturermaking safe toys would be complying si-
multaneouslywith its economic, legal, and ethical responsibilities(1979: 501).
Such a cursorydiscussion limits the theoreticalfoundationthat is necessary to
utilize the model for certainkinds of empiricalstudy and for teachingpurposes.
The economic, legal, and ethical domains will now be expoundedupon.
Economacdomain. Carrolldefines the economic domain of CSR as follows
(1991: 40A2): '4Performin a mannerconsistent with maximizing earningsper
share,being as profitableas possible, maintaininga strongcompetitiveposition
and high level of operating efficiency." It may be that this definition fails to
capturecertain economic activities. The new model will clarify the economic
domain below.
Legal domain. Carroll'scategory of legal responsibility is defined as obey-
ing or complying with the law (1979, 500; 1993: 33). The legal responsibilityis
depicted as reflecting a view of "codifiedethics"in the sense thatlaw embodies
basic notions of fairness as establishedby our lawmakers.It is stressedthatit is
business's responsibility to comply with these laws. A broaderappreciationof
the legal system and its influence on corporateactivities indicates a muchwider
range of legally-based activities that ought to be discussed. For example, legal-
ity may be broken down into three general categories: (i) compliance; (ii)
avoidance of civil litigation;and (iii) anticipationof the law. Each of these will
be more fully discussed in the presentationof the new model.
508 ETHICS QUARTERLY
BUSINESS

that are
Ethicaldomain.The ethical domainof CSR includes those activities
or principles.
basedon their adherenceto a set of ethical or moral standards
not broadly developed (1991: 41).
Carroll'sdefinition of the ethical domain is
or practices that are
Hedefines the ethical domain of CSR as any activities They
into law.
expected or prohibitedby society membersalthoughnot codified
expectations that
responsibilitieswhich "embodythose standards,normsor
are
and the com-
reflecta concern for what consumers, employees, shareholders, of
in keeping with the respect or protection
munityregard as fair, just, or
are the
stakeholders' moral rights."Superimposedon such ethical expectations
by consideration "of the great
impliedlevels of ethical performancesuggested
(1991: 4042). Though
ethicalprinciplesof . . . justice, rights,andutilitarianism"
discussed.In
Carrollnames the variousethical postures,they are not completely
ethical categoriesof
short,though Carrollappropriatelyidentifies the legal and
as they need to be
CSR,he does not flesh them out as broadlyor as completely
articulated.

The Three-DomainModel of CSR


responsibilityar-
The three-domainmodel of CSR is composed of the three
categoriesaredefined
eas:economic, legal, andethical. In general,these domain
the exception that
in a mannerconsistent with Carroll'sfour-partmodel, with
and/oreconomic do-
thephilanthropiccategory is subsumedunder the ethical
activities.
mains,reflecting the possible differing motivationsfor philanthropic both in
more completely
Further,in our discussion, the domains are developed
overlappingcategories
termsof what each means or implies and in terms of the
a Venn diagramfor-
thatare identified when the three domains are depicted in
that none of the
mat. By using a Venn diagram,the model initially suggests
facie more impor-
threeCSR domains(i.e., economic, legal, or ethical) is prima
of the model's
tant or significant relative to the others. Following a discussion
will be presented. Figure 2 pre-
components,a brief treatmentof its limitations
sents the three-domainmodel of CSR.
EconomicDomain
domain captures
For the purposesof the three-domainmodel, the economic
indirectpositive eco-
those activitieswhich areintendedto have eithera director
it is similar to the
nomic impact on the corporationin question. In this sense,
is based on two dis-
Carrollformulationof this component.The positive impact
the maximization of profitsand/or(ii)
tinct but relatedcriteria(Poitras1994): (i)
of direct economic activities include
the maximizationof sharevalue. Examples
Examples of possible indi-
actions intendedto increase sales or avoid litigation.
to improve employee
rect economic activitiesinclude activitiesthatare designed
pursued with improv-
moraleor the company'spublic image. Any activitythatis
motivated.
ing profits and/orsharevalue in mind is deemedto be economically
CORPORATE
SOCIALRESPONSIBILITY so9

Figure 2:
The Three-Domain Model of Corporate Social Responsibility

/ <
/ (iii) PurelyEthical X

,4conomi (vi) Le2\


/ \ Ethical/ \Ethical / \

/ \ / (vii) Economic/\ / \
( \/ Legal/Ethi:,</ 5

\ (i) Purely \ (v)Economic/ / (ii) Purely /


\ Economic \ Legal / Legal /

It is to be expected that the vast majorityof corporateactivities will be eco-


nomic in nature. However, there may be some activities that would not be
included.A corporation'sactions would fall outside of the economic domainif
(i) they are not intended to maximize profit (or minimize loss) when a more
profitablealternativeexists, or (ii) they are engaged in without any real consid-
eration of the possible economic consequences to the firm. In terms of the
outcome or results, if the activity produces a decline in profits or share value,
this may be an indicationof a non-economicmotive, but may also merely repre-
sent a flawed business decision (and the action would still be consideredto fall
within the economic domain).
Legal Domain
The legal category of CSR pertainsto the business firm's responsiveness to
legal expectations mandatedand expected by society in the form of federal,
state, and local jurisdictions, or throughlegal principles as developed in case
law. In this context, legality may be viewed in termsof three generalcategories:
(1) compliance, (2) avoidanceof civil litigation, and (3) anticipationof the law.
The first legal category,compliance,can be furthersub-dividedinto threetypes:
passive,restrictive,and opportunistic. The first type of complianceis of a pas-
sive or accidentalnature the companyis doing what it wants andjust happens
to be complying with the law. For example, if the speed limit is fifty-five miles
per hour and one drives at or below fifty-five miles per hour because one be-
lieves it is safer to do so and not because of the speed limit, one is passively
BUSINESSETHICSQUARTERLY
510

complying with the law. If there is a safety standardfor a certainproductthat a


companywould have adheredto even if the legal requirementdid not exist, the
companyis in a passive compliance mode. If the motivations of the corporation
are being analyzed by the newly proposed model, passive compliance by the
corporation,due to its unintentionalnature,would place it outside of the legal
domain.This would be the case despite such motives being potentially labeled
as legal underCarroll'sPyramidModel. If outcomes were being analyzed, the
corporationwould fall within the legal domain even if it passively or acciden-
tally complied with the law.
The second type of compliance, referredto as restrictive compliance,occurs
when a corporationis legally compelled to do somethingthatit would not other-
wise want to do. If one is in a hurryand would like to drive sixty-five miles per
hourbut one does not do so because of the fifty-five miles per hour speed limit,
one is restrictavely or intentionally complying with the law. The payment of
taxes, tariffs or duties is often done reluctantly and, therefore, restrictively.
Although a company may want to pollute at higher levels or sell goods with
fewer safety warnings,the law may prohibitit from doing so, leading to restric-
tive compliance. The adjective restrictive is used to reflect the idea that the
legal system is limiting, constraining,or modifying otherwise intendedbehav-
ior in a restrictivefashion.
The third tyE>e of compliance is that of opportunistic compliance. There are
two general modes of opportunisticcompliance. First, a corporationmay ac-
tively seek out and take advantageof loopholes in the legislation to be able to
engage in certain activities. In such cases one typically finds that the corpora-
tion is abiding by the letter of the law but not the spirit of the law. Second, a
corporationmay choose to operate in a particularjurisdiction because of its
weakerlegal standards.In such a case, the corporationhas based its decision on

Table 1: Examples of Legal Motives and Possible Responses


Type of Legal Motive Typical Corporate/Managerial Response
Passive Compliance (Outside "Well, looking back on it, we did happen to comply
Legal Domain) with the law."
Restrictive Compliance "We wanted to do something else but the law
prevented us."
"We did it in order to comply with the law."
Opportunistic Compliance "Well the law allows us to do it."
4'Weoperate in that jurisdiction because of the less
stringent legal standards."
Avoidance of Civil Litigation "We did it because we might get sued otherwise."
"Lawsuits will be dropped."
Anticipation of the Law "The law is going to be changed soon.'
"We wanted to pre-empt the need for legislation."
CORPORATESOCIALRESPONSIBILITY 511

the legal system, and is still technically complying with the law. Corporations
which decide to operate in developing nations because of less stringent envi-
ronmental, employee-welfare, or consumer-protection legislation are
opportunisticallycomplying with the law. The decision to test drive one's new
sports car on a highway because of its higher speed limit entails opportunisti-
cally complying with the law. The decision has been based in this case on a
considerationof the legal system.
Carroll's treatmentof the legal domain appearsto embrace these types of
legal motives althoughhe does not distinguishbetween or elaborateupon them.
There are, however, other legal dimensions as well. The second general legal
category, avoidance,relates to corporate activities that are motivated by the
desire to avoid possible currentor future civil litigation for negligent conduct.
In responseto such fears, corporationsmay,for example,disengagein the manu-
facture of dangerous products, voluntarily recall products, or cease
non-environmentallyfriendlyactivities.Companiesthatact in ways despitebeing
aware that they will most likely be sued as a result (e.g., for negligent activity)
would fall outside of the legal domain, despite being in compliance with laws
and regulations. Often these companies engage in a legal defensive strategy
whereby they attemptto settle all lawsuits.
The third legal category consists of the anticipationof changes to legisla-
tion. The legal process is often slow in nature, and corporationsmay wish to
engagein activitiesthatwill resultin immediatecomplianceuponthe legislation's
eventual enactment.Changes to legislation in otherjurisdictionsoften serve as
an indication of forthcoming similar legislation in one's own jurisdiction. If
laws are anticipated,companiesmay engage in voluntaryactivities to help pre-
vent, modify, or slow down the pace of new legislation being enacted, and are
thus acting based on a considerationof the legal system.
Activities would fall outside of the legal domain when they take place de-
spite (i) an awarenessof non-compliancewith the law, (ii) an awarenessof actual
or potential civil negligence, or (iii) merely passive compliance with the law.
Table 1 indicates examples of the varioustypes of legal motives and the typical
responses one might hear from a corporation.
EthicalDomain
The ethical domainof the three-domainmodel refers to the ethical responsi-
bilities of business as expected by the general population and relevant
stakeholders.This domainincludes responsivenessto both domestic and global
ethical imperatives. Based on this general definition, the three-domainmodel
both broadensand refines Carroll'sconcept of the ethical domainby including
only three general ethical standards:(a) conventional;(b) consequentialist;and
(c) deontological.
(a) Conventional standard:The standardof conventions can be explainedby
the moralphilosophy known as ethical relativism (Pojman 1995: 31). The man-
ner by which Carrolldefines the standardof conventionsas noted above appears
512 BUSINESS ETHICS QUARTERLY

to limit it to a concern for justice or moral rights. For the purposes of the new
model, the standardof conventions will be defined as those standardsor norms
which have been accepted by the organization,the industry,the profession, or
society as necessary for the properfunctioning of business. Society is defined
as embodying the corporation'sstakeholders,including shareholders,employ-
ees, consumers,competitors,suppliers,and the local community,in additionto
general citizens. Societal norms can vary depending on one's reference point
(i.e., different stakeholdergroups).To minimize this limitation, and to enhance
the standard'spractical application,reference should be made to formal codes
of conduct or ethics (e.g., organizational,industrial,professional, or interna-
tional) to establish whether a company is acting ethically according to the
conventional standard.
Many objections and concernshave been raisedby philosophersto the use of
relativism in providing a moral justification to the actions of an individual or
organization.As a result, the conventionalstandardis relevantfor the purposes
of the ethical domain with respect to only those formal codes of conduct or
ethics thatremaingroundedin (or at least do not directlyconflict with) either or
both of the ethical standards discussed below (i.e., consequentialist or
deontological).This approachis similarto those who suggest thatalthough"con-
text matterswhen deciding what is right and what is wrong,"actions must still
comply with a set of "minimumethical standards"(Donaldson 1996: 6-7). Per-
sonal standards are rejected as representing an ethical principle that is too
relativistic and arbitraryto stand as an ethical standard(De George 1986; Free-
man and Gilbert 1988; Pojman 1995).
(b) Consequentialist standard:The consequentialiststandard(sometimesre-
ferredto as "teleological")focuses on ends or consequences.Althoughthere are
several types of consequentialism,the form that is relevant for the purposesof
the ethical domainsuggests that "themorally right thing to do is to promotethe
good of persons"(Hoffman,Frederick,and Schwartz2001: 26). In this respect,
consequentialismincludes both egoism (promotingthe good of an individual)
andutilitarianism(promotingthe good of society). Althoughegoism can be used
as a moraljustification for the economic domain, only utilitarianismis consid-
ered relevant for the purposesof the ethical domainunderthe consequentialist
standard.As a result, an action is consideredethical accordingto consequential-
ism when it promotesthe good of society, or more specifically, when the action
is intended to produce the greatest net benefit (or lowest net cost) to society
when comparedto all of the other alternatives(Velasquez2002: 75).
(c) Deontologicalstandard:The deontological standard,as opposed to fo-
cusing on consequences, is defined as embodyingthose activities which reflect
a considerationof one's duty or obligation (De George 1999: 80). This category
wouldembracetwo of Carroll'sethicalprinciples,moralrightsandjustice. Rights
are defined as an individual's "entitlementto something"(De George 1986: 79)
and can be of a positive or negative nature(Feinberg 1973: 59-61). Justice can
be of several different types, distributive(whether benefits and burdenshave
CORPORATESOCIALRESPONSIBILITY 513

been distributedequitably), compensatory,or retributive(Velasquez 1992: 90).


Instead of only relying on the principles of moral rights andjustice, the three-
domain model utilizes the category of deontological principles because it has
the potential to more specifically capture a broaderrange of potential ethical
justifications that have been suggested in the literatureas duty-basedin nature.
Examples include: religious doctrine(see Herman1997; De George 1999: 80);
Kant'scategoricalimperative(Kant 1988); Ross's primafacie obligations (Ross
1930); or more specific core values such as trustworthiness(i.e., honesty,integ-
rity, reliability, loyalty); responsibility (i.e., accountability);caring (i.e., avoid
unnecessaryharm);and citizenship (i.e., assist the community,protectthe envi-
ronment)(Josephson 1997).
Activities would fall outside of the ethical domain when they (i) are amoral
in nature (i.e., with an unawarenessor indifference to the morality of the ac-
tion), (ii) take place despite an awarenessthat the action conflicts with certain
moral principles (i.e., are unethical), or (iii) are only intendedto producea net
benefit for the corporationand not for the affected stakeholders(i.e., are only
supportedby egoism) (De George 1986: 45; Freemanand Gilbert 1988: 72).

Overlapping Domains
A majorfeatureof the three-domainmodel is the depictionof economic,legal,
andethicaldomainsof responsibilityin a Venndiagramwhichhighlightsthe over-
lapping natureof the domains and the resultantcreationof seven categories in
which CSR may be conceptualized,analyzed, and illustrated.The ideal overlap
resides at the centerof the model whereeconomic, legal, andethicalresponsibili-
ties are simultaneouslyfulfilled, but otherpure and overlappingsegmentsof the
model createsituationswhich also mustbe exploredand illustratedbecausethey
representsituationsdecision makersmay face in the business world.
For purposes of better understandingthe model and for illustration,several
corporateexamples entailing business ethics will be describedand categorized
as best falling within each of these seven CSR categories. The three-domain
model is especially useful for analyses that focus on the forces that come into
play in ethical decision makingas opposed to more generaldiscussions of CSR,
where philanthropymight assume a more prominentrole.
Each of the seven segments will be described and illustrated.It should be
kept in mind that it is extremely difficult to identify examples that ideally and
perfectly illustrateeach theoretical segment of the model. In spite of this, it is
helpful to suggest examples that may very well fit and illustrate the tensions
inherentin the various model segments.
i) Purely Economic
Activities which are purelyeconomic in naturemust have a director indirect
economic benefit, be illegal (criminallyor civilly) or passively comply with the
law, and be consideredamoralor unethical(otherthanbased on egoism, i.e., the
corporation'sbest interests).Manyof the mosthighlycriticizedcorporateactivities
514 BUSINESS ETHICS QUARTERLY

fall into this category. For example, Film Recovery Systems, a company in-
volved in the extraction of silver from old x-ray film, failed to take legally
required steps which would have prevented the death of an employee in the
early 1980s. The employee died of cyanide toxicity despite the companyhaving
been previously warned of its gross violations of worker safety standards
(Reidenbachand Robin 1991: 276). Othercompaniesfalling within this domain
by intentionally breakingthe law include General Electric, which engaged in
illegal price fixing duringthe 1950s (Velasquez 1992: 199-206), and Lockheed
Aircraft, which made secret payments to Japanese governmentofficials from
1972-1975 in order to obtain business (Velasquez 1992: 207-209). One could
well argue that the recently revealed actions and decisions of Enron such as
deceiving its stakeholdersby shifting debt from its balance sheet- -and Arthur
Andersen orderingthe shreddingof documents- illustrate business decision
making which took only the economic domain of responsibility into consider-
ation (FinancialTimes 2002).
Othercorporationsfalling within this category are passively complying with
the law, but are acting unethically for economic motives. For example, Nestle
continued selling infant formulain the third world, despite knowledge that the
use of the productwas increasing infant mortality.Nestle was passively com-
plying with the law and appearedto act based purely on economic motives
(Velasquez 1992: 304). The Johns Manville Corporationappearedto be operat-
ing in this category when it "legally" allowed employees to continue working
despite the company'sknowledge of the health hazardsof asbestos (Silverstein
1987). Chisso, a Japanese industrialcorporation,dischargedmercuryinto the
ocean during the 1970s knowing it posed a danger to local residents, but re-
mainingsecurein the knowledgethatits emission levels compliedwith Japanese
governmentguidelines (Donaldson 1982: 1-2). The FordMotor Companycon-
tinued to manufactureits Pinto model car duringthe 1970s despite knowledge
of its dangerousdefect andknowing thatit would be sued as a result (Velasquez
1992: 110-114).
More recently, Firestone, as well as Ford, appearsto fall within the purely
economic domainbased on tire blowouts androllovers involving Firestonetires
placed on Ford Explorers(Naughtonand Hosenball 2000). Tobacco companies
may have fallen within this domain for decades, in knowingly producing and
marketinga dangerousand addictive productwithout providingfull disclosure
to smokers.Anothercorporateexample might include Dow Corning,which al-
legedly for economic gain "failed to fully apprisewomen of the known risks of
breast implants,"irrespective of the obligations stipulated in its own code of
ethics (Byrne 1996: 10). This category could relate to what Reidenbach and
Robin (1991: 275) call the "amoral"corporation,meaninga corporationuncon-
cerned about the law or ethics, or what Carroll terms "amoralmanagement"
(Carroll 1987: 9).
CORPORATESOCIALRESPONSIBILITY 515

ii) Purely Legal


Corporateactions that are not consideredethical and have no direct or indi-
rect economic benefit fall into this category.The activity musttakeplace because
of the legal system and not in spite of it. A response that one of the reasons for
the act was "becauseit's the law" might be enough to supporta degree of con-
sideration for the legal system. Very few activities can be considered purely
legal as most activities that are consideredlegal are also consideredethical. In
addition, most activities which are legally requiredalso possess an economic
incentive (Posner1986). Companiesthathesitantlyplace warningson theirprod-
ucts (e.g., tobacco manufacturers),or abide by holiday shopping legislation
despite financial loss, could conceivably fall into this category.
The activities of Napster, at least in its early stages, may fall within this
domain, in that its actions were legal, yet not intendedto producerevenue and
undertakendespite the ethical concerns raised. The founder, Shawn Fanning,
establisheda website allowing users to sharemusic files. The programwas given
away for free and users were not chargedanything,and thus the initial actions
of Napster fall outside of the economic domain. Fanning argued that Napster
"was not doing anythingillegal," andin this respecthe appearsto have opportu-
nistically taken advantageof the law (althoughthe service was later declaredto
be legally problematic).Fanningappearedto be acting despite an awarenessof
the ethical concerns, in that the service was providingits users with the oppor-
tunity to infringe copyright(a violation of moral rights) held by musicians and
music companies (Velasquez2002: 61-63).
iii) Purely Ethical
Any purely ethical activity that has no direct or indirect economic or legal
implications would fall into this theoretical category. Such activities are per-
formedbecause they are consideredethical based on at least one moralprinciple
(e.g., conventions, deontological, consequential)despite their lack of positive
economic impact.Otherthancorporatephilanthropicactivities thatarenot based
on economic interests, few corporateactivities currentlyfall into this category.
The primaryreasonis thatmany activities that are consideredethical can some-
how be linked to long term, indirect economic benefits.
A number of corporateexamples falling within the purely ethical domain
may be suggested, however. For example, 3M's decision to retire its pollution
creditsdespiteeconomic loss mightbe viewed as a purelyethical activity(Carroll
1993: 343). When Sir Cadburydecided to honour a contractto supply English
soldiers in the Boer Warwith chocolates at cost (indicatinga passive or neutral
economic motive), despite his personalopposition to the war, he was making a
purely ethical decision (Cadbury1987; Reidenbachand Robin 1991). Restau-
rant chain Chick-fil-A, which does not operate on Sundays, is abiding by a
religious deontological principlewhile forgoing additionalrevenue, and can be
considered purely ethical (Zigarelli, 2000). Although debatable,the act of im-
mediatelyrecalling millions of bottles of Tylenol in 1982 by Johnson& Johnson
BUSINESS ETHICS QUARTERLY
516
uponbeing informedof several deaths,despite
facing significanteconomic loss,
appearsto have been based on ethical motives
alone due to its corporatecredo
that placed the safety of the users of its
productsbefore stockholderinterests
(Davis and Frederick 1984:549-560; Reidenbach
and Robin 1991: 280). The
decision by Levi StraussandTimberlandin 1993 to
pull out of Chinain protest
of human rights abuses, despite the loss of
potential profits, appearsto place
these companies within this category
(Kaltenheuser1995: 21). Merck and Co.
engaged in an ethical act during the 1980s by
developing and distributingfor
free a pill curing millions of people living in
developing nations of river blind-
ness, despite an awareness that no sales
revenue would be generated (Bollier
andWeiss 1991). In the final analysis, it is
difficult to find and defend corporate
practicesor decisions that illustratepurely ethical
motives because it is impos-
sible to fully know all the motives that went
into a decision and the resulting
consequences.
iv) Economic/Ethical
In this category the corporateactivity is not
based on legal considerations,
butis ethical and economic simultaneously.
This category would include many
corporateactivities motivatedby the often repeated
maxim, "goodethics is good
business."To be consideredethical, the activity must
go beyond rationalegois-
ticconcerns and be based on conventionalist,
consequentialist,or deontological
principles.Virtuallyall activities in this category will
ancewith the law because almost all illegal involve passive compli-
activities would be considered
unethical.Corporationswhich give to charity for
both economic and ethical
reasons(Carroll1993: 382) would fall within this
category.Corporationsin the
environmental sector (Smith 1990), the "social"or
industry "environmental"mutualfund
(Ellmen 1996; Lowry 1991), or involved in the sale
ucts, of "green"prod-
such as The Body Shop (Shearer1990), canbe
considereddirectlyeconomic
whilesimultaneouslyethical. The decision by
StarKist,a unit of H. J. Heinz, to
usedolphin-safe nets (Rice 1990), or 3M's
introductionof a waste-reduction
program (Carroll1993: 356), could be consideredethical
rect while providingindi-
economic benefits.
Following a severe fire destroying several of its
factory buildings, textile
manufacturer Malden Mills remained in Massachusettsand
its
employees their wages and health benefits until the continued paying
despite factories were rebuilt,
no legal obligation to do so. The CEO of
Malden Mills appearedto be
actingon the basis of both ethical (i.e.,
deontological) and indirect economic
reasons(e.g., retainingquality employees, improving
morale and productivity,
etc.)
(Teal 1996).
Many "social marketing"activities fall within
this domain. For example, in
describingBen & Jerry'spolicy of giving away free ice
cream,the formerCEO
describes
the simultaneousethical and economic
for motivations:"Themotivation
giving back had always been genuine.At the same
an time, it was provingto be
effective marketingstrategy.There was no doubt
that our customers were
CORPORATESOCIALRESPONSIBILITY 517

more inclined to buy our ice cream and supportour business because of how
we, in turn, supportedthe community"(Lager 1994: 126). This domain would
probablycontain a high level of corporateactivity and might be equated with
Reidenbachand Robin's (1991) "emergentethical"corporation,which they de-
scribe as a corporationin which management"actively seeks a greaterbalance
between profits and ethics" (1991: 279).
v) Economic/Legal
Very few activities which corporationsengage in are both economic and le-
gal, while also consideredunethical.The reasonis thatactivities which arebased
on a concern for the legal system (i.e., restrictive compliance, avoidance of
civil litigation, or anticipationof the law) would most likely be consideredethi-
cal as well. The exception might be those companies that opportunistically
comply with the law, searchingfor andusing legislative andadministrativeloop-
holes for economic gain. Such opportunistic activities are often considered
unethical. For example, althoughthe use of bankruptcylaws is not inherently
unethical, and can sometimes lead to the saving of jobs, some companiesmight
try to use such laws in an opportunisticmannerthat can be consideredethically
inappropriate.Dow Corninghas been criticized for using protectivebankruptcy
laws to avoid massive litigation due to its breast implants (Reisch 1994). The
Canadianretailing giant Eaton's was criticized for using bankruptcyprotection
in a mannerwhich was not ethical (Brooks 1997: 1).
Othercompanies operatein thirdworld countriesbecause of lower environ-
mental (i.e., "eco-dumping"),workersafety (i.e., "social dumping"),or product
safety standards(Brooke 1995: B8; Nicholson 1997: 292). By doing so these
companiesareopportunisticallytakingadvantageof the law. Forexample,Union
Carbideacted opportunisticallyby operatinga pesticide plant in Bhopal, India,
accordingto India's relatively weak legal safety standards,despite operatinga
similar plant in the U.S. accordingto much more stringentstandards.As a re-
sult, a poisonous leak in 1984 led to the deaths of over 2,500 people and the
injuries of 300,000 others (Trevino and Nelson 1995:188).
An example of restrictivelegal compliance would be a company abidingby
a country'sboycott for economic gain such as Pepsi's refusal to sell its product
to Israel in orderto maintainits sales in Arab countries(Reingold and Lansing
1994). Companies operatingin China such as ChryslerCorporationare being
askedto obey laws thatoften deny basic freedomsto Chinese citizens. Although
such companies may prefer not to obey such laws, they do so because of their
desire to continuedoing business in the country(Freemanand Gilbert 1988: 37;
Kaltenheuser1995: 20-23).
All of the above activities might be consideredunethical, economic, and le-
gal in the opportunisticor restrictivecompliance sense. This categoryis similar
to Sethi's (1979: 65) "social obligation"corporation,inwhichcorporatebehav-
ior is "inresponseto marketforces or legal constraints,"ReidenbachandRobin's
(1991: 276) "legalistic"corporation,in which managementis preoccupiedwith
518 BUSINESS ETHICS QUARTERLY

compliancewith the letter of the law, or with Carroll'sconcept of "amoralman-


agement"(1987: 11). Unlike Reidenbach and Robin's approachhowever, the
three-domainmodel would not consider a corporationwhich merely passively
complied with the law to be a legalistic corporation.
vi) Legal/Ethical
Certaincorporateactivities occur not because of any economic benefit, but
because they are both legally required and ethical. Activities that are both
ethical and legal often provide indirect economic benefits meaning that few
corporate activities will fall into this category. The activity of installing an
anti-pollution device because it is legally required (i.e., restrictive compli-
ance) and considered ethical even if there is no long term economic benefit
would fall within this category.
The decision by GeneralElectric to finally supportthe cost of dredgingthe
Hudson River of PCBs that were released by the company decades ago (at a
time when it was legal to do so) might indicate a shift from the purelyeconomic
domainto the legal/ethical domain.The companyappearsto be respondingdue
to legal pressures,from both the U.S. governmentas well as civil lawsuits. The
decision may also reflect a recognition by the company that the action is mor-
ally requiredbased on a past injustice, regardlessof the additionalcost that is
required(Hudsonvoice 2002). The pharmaceuticalcompanies that are provid-
ing HIV/AIDS drugs at below cost (i.e., non-economic) to African countries
might also be considered to be acting ethically (CNN 2000). At the same time
their actions also appearto fall within the legal domainin that these companies
are tryingto avoid patentinfringementlegislation being enactedthatwould per-
mit generic manufacturersto make the same drugs (DeYoung 2001: A13). The
example of Smith & Wesson adding safety features to its handgunsappearsto
have been based on ethical motives (i.e., the CEO arguedthat the decision was
"the right thing to do") and legal motives (i.e., avoidance of governmentlaw-
suits). The decision was taken despite harshcriticism from the gun industryas
well as consumers,placing it within the legal/ethical domain (Paulson, 2000).
vii) Economic/Legal/Ethical
An activity which is motivatedsimultaneouslyby the bottom line, the legal
system, and ethical principles would fall into this category. The decision by
Procter& Gambleto pull its Rely tamponsfrom the shelves due to the potential
link with toxic shock syndromemay have been motivatedby all three CSR do-
mains (Reidenbach and Robin 1991: 278-279). Wal-Mart'sdecision to stop
selling cigarettesin its Canadianstores appearsto have been motivatedby eco-
nomic concerns (e.g., public relations), anticipationof changes to legislation,
and ethical concerns (Heinzl 1994). This category conformsto Carroll's"moral
management,"accordingto which managementdesires "profitability,but only
within the confines of obeying the law and being sensitive to ethical standards"
(1987: 10). It also conforms to Lynn SharpPaine's "integritystrategy"(Paine
CORPORATESOCIALRESPONSIBILITY 519

1994). Paine's integrity strategyenvisions ethics as the driving force in the or-
ganization althoughprofits and legal obedience are obviously relevant factors.
Carrolland Buchholtz arguethat caution is needed in many of the overlapping
segments of economics, law, and ethics, but in this centralsegment the manage-
ment recommendation is to "go for it," because all three categories of
responsibility are met (Carroll and Buchholtz 2003: 175). From a normative
point of view, this centralsegment(economic/legal/ethical)is wherefirmsshould
seek to operatewheneverpossible, or in the economic/ethicalsegment (as long
as the companyis passively complying with the law). Figure 3 provides a sum-
maryof a numberof corporateexamples discussed above andwhere they would
be situatedwithin the three-domainmodel.

Figure 3
The Three-Domain Model of Corporate Social Responsibility:
Corporate Examples
520 BUSINESS ETHICS QUARTERLY

Limitationsof the Three-DomainModel


Though the proposed model addresses some of the issues raised with the
Carrollfour-partconstruct,therealso arelimitationswith the three-domainmodel
that should be stated. The following reflects some of the importantconcerns.
The new model is based on several majorassumptions.The model assumes
that the three domains of CSR are somewhat distinct, and that they are all-en-
compassing.In termsof being somewhatdistinct, some might question whether
any action can be identified as "purelyeconomic," "purelylegal," or "purely
ethical."In other words, one might arguethat economic, legal, and ethical sys-
tems are all interwovenand inseparable.Although our model attemptsto create
distinctionsthroughthe establishmentof the "pure"domains,it shouldbe noted
that each of these three domains is only "pure"in certain respects. There will
still be an overlap with the other domains at least to some extent.
For example, a "purelyeconomic" action can still be in accordancewith the
law (althoughnot intendedto) and could still be supportedby the ethical stan-
dardof egoism (i.e., in the best financialinterestsof the corporation).A "purely
legal" action, even if restrictivein nature,would still involve economic conse-
quences (such as a loss to the corporation)and would still be supportedby the
ethical standardof culturalrelativism.In fact, many arguethat"businesseshave
a moral obligation to respect legitimate law" (Orts and Strudler2002: 226). A
"purelyethical"action will still have economic consequences (e.g., negative or
break-even) and will still either be passively legal or illegal. As opposed to
egoism or cultural relativism, however, the action will be supportedby other
conventional, consequentialist,or deontological moral principles.
In terms of the three-domainmodel being all encompassing, it is not clear
whetherthere are corporateactivities which are engaged in withoutreferenceto
at least their economic impact, the legal system, or ethical principles. If there
are such activities, the model would have to be adjustedto account for them. It
is our assumption, however, that the model embraces all relevant aspects of
CSR. It is also assumed that philanthropicactivities, assumed to be a separate
category in the Carrollmodel, would be seen as part of the ethical and/oreco-
nomic categories in the three-domainmodel.
The inherentlyconflicting natureof the various ethical principles could re-
sult in seriousdifficultiesin attemptingto classify motives or activitiesas ethical.
For example, activities such as affirmativeaction and insider tradinghave re-
ceived significant debate as to their ethical nature. There may also be other
ethical considerationswhich should be included in the ethical domain, such as
moral character(Solomon 1992). These problems are continuously faced by
business ethics academicswho continueto strugglewith methodsto resolve the
often conflicting principles (Derry and Green 1989).
The complications of internationalbusiness confound both the ethical and
legal domains in terms of which ethical and legal standardsto apply. For ex-
ample, if the motivations of a multinationalcorporationare being evaluated,
CORPORATESOCIALRESPONSIBILITY 521

should the standardsof the home countrybe considered,or the host countryin
which the corporationis operating?The use of the opportunisticlegal compli-
ance category and the conventions ethical category address most of these
concerns. In such instances, the company is often operating within the legal
domain by opportunisticallycomplying with the law, and could be acting ethi-
cally basedon nationalconventions.Otherethicalprinciples,such as moralrights
or utilitarianism,may be violated in such cases, however. The complexities of
internationalbusiness ethics continue to be addressed by numerousbusiness
ethicists (e.g., De George 1993; Donaldson 1989; DonaldsonandDunfee 1999).
Finally, it is expected that certainCSR categories (e.g., purely legal, purely
ethical, and economic/legal) will rarely apply, thus limiting the conceptual or
practicalapplicationof some segments of the model. The majorreason for this
is due to the presumablyhigh correlationbetween activities that are both eco-
nomic and legal, and those that are both legal and ethical. The fact that some
reasonableexamples can still be providedfor each of the seven CSR categories,
however, suggests that all of the categories shouldbe includedin the conceptual
framework,even though several of them will be less importantfrom a practical
applicationpoint-of-view.

Implications for Teaching and Research


The three-domainmodel should be useful both for teaching and researchin
the businessethics andsocial issues in managementfields. As a conceptualmodel,
its primaryusefulness will be in the realm of pedagogy helping othersto con-
ceptualize the components of CSR and the nuances involved in their
understandingand application.From a researchstandpoint,the model creates a
definition and overlappingsegments that may be furtherexplored.Following is
a brief discussion of each of these areas.
Teaching Social Issues in Management and Business Ethics
There is an ongoing debate as to appropriatemethods for teaching business
and society, social issues in management,andbusiness ethics. It is proposedthat
the three-domainmodel of CSR providesa scheme for conceptualizingthe major
issues in one or more of these literatures.Once the model is describedand dis-
cussed in some detail in a classroom setting, studentscan apply the model by
engaging in practicalexercises. Instructorscan provide or ask studentsto find
articlesin the generalor business media which discuss a certaincorporatedeci-
sion or activity. The activity can then be classified by the studentor groups of
students.This can lead to class discussions on whetherstudentsagree with the
classificationandthe implicationsfor the corporationactingin its chosenmanner.
The model helps to classify many of the majorcase studies which have been
presented in business ethics literature, for example, the Ford Pinto, Johns
Manville and asbestos, Johnson& Johnsonand Tylenol, Procter& Gambleand
the Rely tampon,Union Carbideand Bhopal, and the activities of Ben & Jerry's
522 BUSINESSETHICSQUARTERLY

and The Body Shop. Studentscan debate, for example, whetherit is really the
case thatJohnson& Johnsonshould fall within the purely ethical domain.Were
there not economic or legal motives as well for their actions? Has Ford shifted
out of the purely economic domain following its Pinto disaster with respect to
its actions involving Firestone tires? What activities of Ben & Jerry's or The
Body Shop might be considered purely ethical, if any? The model can also be
used as a measureof testing students'understandingof the different CSR do-
mains by providingpast or currentexamples of corporateactivities and asking
studentsto justify theirclassiElcations
of the exampleswithinthe CSR framework.
In a related vein, the model should be valuable in the process of analyzing
case studies in a classroom setting. The three-domainmodel assists the student
in identifying and analyzing the competing forces at work in a business deci-
sion and in assessing the relative mix of economic, legal, and ethical forces and
motivationsthat are at work and ought to be at work. In this context, the model
helps the studentto describe and understandwhat is going on and also from a
normativeperspectiveto suggest what ought to be takingplace. Thus, the model
has both diagnostic and normativeproperties.
Although it is not being proposedthat the three-domainmodel provides de-
finitive answers to the following questions, the model may provide a useful
constructfor beginning to engage in many of the majordebates, such as: What
is corporatesocial responsibility? Should it involve dimensions beyond eco-
nomic, legal, and ethical responsibility? What is the relationship between
economics, law, and ethics?Are they ever distinct?Why should corporationsbe
socially responsible? How does one determine social responsibility? Should
philanthropybe considered a distinct social obligation of business, or consid-
eredto be subsumedunderethical and/oreconomicresponsibilities?Whatshould
be included in the ethical domain?Should companies avoid actions when they
know they will be subjectedto lawsuits as a result?Whatexamples demonstrate
that good business ethics is good business? Are there examples of good busi-
ness ethics being bad business? What is more important,the motivations of
companies or the results of their activities and practices?
The model might also be used to help analyze and discuss growing trendsin
the business and society field including:business ethics, corporatecitizenship,
social investment, social auditing, sustainability,triple bottom-line, social- or
cause-relatedmarketing,strategic philanthropy,and stakeholdermanagement.
Each of these concepts involves, to some extent, aspects of economics, law, and
ethics (including societal impact), such that the three-domainmodel might pro-
vide an initial frameworkto betterunderstandthese new developmentsandtheir
relationshipto each other.
Research Implications
In additionto teachingapplicationsandimplications,the three-domainmodel
could be used in a variety of ways with respect to empirical research. Three
future research uses of the model include: (1) the development of a research
CORPORATESOCIALRESPONSIBILITY 523

instrumentfor measurementof CSR and its componentdomains, (2) use of the


model and instrumentto develop CSR "portraits,"and (3) use of the model and
instrumentto investigate futureresearchquestions.
Development of a Research Instrument.The three-domainCSR model, as
presented,representsthe conceptualizationstage in the researchprocess. In this
stage, the meaning of the concepts to be studied was described.Two additional
decisions needed in the researchprocess include operationalizationof the vari-
ables under considerationand choice of research method to be used (Babbie
1992: 104). The most logical next step in future researchwould be the opera-
tionalizationof the variablesandthe creationof a valid andreliabledatagathering
instrumentby which data regardingthe model could be gathered.Then, this
researchinstrumentcould be used primarilythroughsurvey research.
It is beyond the scope of this paper to present a research instrumentthat
would enable the measurementof CSR in the three-domainmodel. This is a task
for futureresearch.In general terms, however, we can describethat it would be
composed of several partswhich operationalizethe economic, legal, andethical
domains. These could then be used individually to pursue research questions
concerningtheir particularrole in CSR, theirrelationshipswith othervariables,
or collectively as an overall measurementof CSR. This procedurewould follow
the patternestablishedby Aupperle(1984) in his researchinstrumentdesigned
to collect data on Carroll'sfour categories of CSR. That instrumenthas been
used in many empirical studies of CSR and it is anticipatedthat the research
instrumentpatternedafter the three-domainmodel would likewise be useful in
exploring a numberof interestingand importantresearchquestions.
Development of Corporate Social Responsibility tCSR) "Portraits." Once
the research instrumentis developed, one objective might be to establish the
emphasis respondentsplace on each of the CSR domains (including overlap-
ping domains). Once this takes place, "CSR Portraits" (i.e., graphical
representationsof one's CSR prioritizations)might be generatedfor whichever
entity is being analyzed (e.g., individuals, stakeholders,corporations).
Individualemployee CSR Portraitscould be aggregatedtogetherto generate
a CSR Portraitfor a functional area or a company as a whole. CSR Portraits
could also be established for stakeholder groups based on the domains they
believe the corporationis currentlyemphasizing("actual"CSRPortrait)or would
preferthe corporationto operatewithin ("desired"CSR Portrait).Portraitscould
also be created for the corporation'sBoard of Directors, subsidiary corpora-
tions, orjoint venturepartners.If CSR Portraitsare obtainedfrom several firms
in a specific industry,it may be possible to constructan industryCSR Portrait
by weighting each firm's portraitby its marketshareor otherfinancialmeasure,
andthen aggregatingthem together.For instance, a CSR portraitfor the tobacco
industrymight look very differentfrom a CSR portraitfor the toy industry.Fig-
ure 4 provides a possible way to depict CSR Portraitsof a hypothetical toy
company. The greater the emphasis placed on a given domain, the larger the
area which will be depicted in the CSR Portrait.
524 BUSINESSETHICSQUARTERLY

Figure 4
Corporate Social Responsibility "Portraits"

4'S/"/ W
Economic
(e.g.,
CEO
OrientationLegal
ofAcme
Orientation Ethical
ToyCo.) (e.g.,
Legal
Dept.)
OrientationBalanced
(e.g.,
Consumers' (e.g.,
Orientation
ToyIndusty)
"Desired"
ToyCo.)

InvestigatingFutureResearchQuestions.The three-domainmodel of CSR


might be used to furtheranswera numberof possible researchquestions. Some
possible researchquestions include:
1. What aspects within each of the three domains are, or should be con-
sidered, more importantrelative to each other (e.g., profits vs. share
value; legal compliance vs. avoid civil litigation vs. anticipate law;
conventions vs. deontological vs. consequences).
2. To whatextent do corporateactivities fall withineach of the seven CSR
categories?
3. Are corporateexamplesused in teachingbusinessmoreprevalentwithin
certaindomains?
4. Is there a difference between those corporateexamples used in busi-
ness ethics courses as opposed to other business school courses with
respect to the domains?If there is a difference, might this have an im-
pact on students'perceptionsof the responsibilitiesof business?
5. Do corporationstend to shift from one domainto another(i.e., change
their emphasis) following a significant corporatescandal?
6. Do studentstend to shift their preferencefrom one domain to another
after taking a business ethics or social issues in managementcourse?
7. Do corporateemployees tend to shift theirpreferencefrom one domain
to anotherfollowing legal compliance or ethics training?
8. Is CSR performance(i.e., acting within certain CSR domains such as
the economic/legal/ethicalcategory)associatedwith firm financialper-
formance?Does it lead or lag financialperformance?(CSRperformance
is also referredto as CSP corporatesocial performance).
Futureresearchcan be greatly facilitatedfollowing the three-domainmodel.
One issue is the creation of an instrumentdesigned to measure CSR and its
component domains. A second issue is the possible creation of CSR Portraits
using data gatheredvia the researchinstrument.A thirdissue is the exploration
of existing and future research questions. With the creation and testing of a
researchinstrument,the researchprocess will be greatly advancedas a number
of differentpopulationsand samples may be studied.
CORPORATE
SOCIALRESPONSIBILITY 525

Conclusion
The proposedmodel, the "Three-DomainModel of CSR,"extrapolatedfrom
the foundationalwork of Carroll, is proposed as an alternativemeans of de-
scribing CSR activity and orientationswhich pervadethe business community.
The proposed model eliminates the separate philanthropiccategory and sub-
sumes it within the economic and/or ethical spheres. It is considered that this
treatmentmore appropriatelydepicts the placement of philanthropy,particu-
larly for business ethics applications.It is proposed that the new model more
completely and accuratelyportraysthe relationshipsbetween the three central
CSR domains:economic, legal, and ethical. The three-domainmodel also helps
eliminate the inherentassumptionof a hierarchicalrelationshipamong the do-
mains which some perceived in Carroll's pyramidal depiction of CSR. The
broadeningof the domains' descriptionsprovides a more complete constructby
which to better classify corporateactivities. One of the difficulties faced by
researchersis the ability to properly classify corporationsand their activities
within a CSR construct(Clarkson1995: 96). The new model is intendedto pro-
vide a more appropriatemeansandtheoreticalframeworkby which to categorize
CSR activities. It is anticipatedthat as corporatemanagers and business stu-
dents reflect on corporateactions and wherethey shouldbe classified within the
three-domainmodel, an improved understandingof the relationship between
business and society and more specifically between economics, law, and ethics,
might take place.

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