No.

48-2007 ICCSR Research Paper Series – ISSN 1479-5124

Investigating Instrumental Corporate Social

Responsibility through the Mafia Metaphor

Jean-Pascal Gond, Guido Palazzo & Kunal Basu

Research Paper Series

International Centre for Corporate Social Responsibility
ISSN 1479-5124

Editor: Jean-Pascal Gond

International Centre for Corporate Social Responsibility

Nottingham University Business School
Nottingham University
Jubilee Campus
Wollaton Road
Nottingham NG8 1BB
United Kingdom
Tel: +44 (0) 115 951 4781
Fax: +44 (0) 115 84 68074
Email: jean-pascal.gond@nottingham.ac.uk
http://www.nottingham.ac.uk/business/ICCSR
Investigating Instrumental Corporate Social Responsibility
through the Mafia Metaphor

Jean-Pascal GOND

Guido PALAZZO

Kunal BASU

Abstract

The purpose of this paper is to critically evaluate the instrumental perspective on

corporate social responsibility by relying on sociological analyses of a well known
organization: the Sicilian Mafia. Legal businesses might share features of the Mafia,
such as the propensity to exploit a governance vacuum in society, a strong culture that
demarcates the inside from the outside, and an extreme form of the profit motive.
Instrumental CSR has the power to accelerate a firm’s transition to Mafia status
through its own pathologies. Lessons for future CSR research are derived, with specific
emphasis on understanding a firm’s social embeddedness, acknowledging limitations in
regulating corporate behaviour in the global economy, and most critically, the risk of
viewing CSR simply as a means rather than as an end.

Key-words

Corporate Social Responsibility, Instrumentality, Sicilian Mafia, Stakeholder

Management , Metaphor

Paper presented at the European Group for Organization Studies (EGOS)

Conference, Vienna, Austria, July 5-7, 2007.
Addresses for Correspondence

Jean-Pascal GOND
ICCSR – University of Nottingham
Nottingham University Business School
Jubilee Campus, Wollaton Road
Nottingham, NG8 1BB, United Kingdom
Tel: +44 115 846 6976
Fax: +44 115 8468074
Email: jean-pascal.gond@nottingham.ac.uk

Guido PALAZZO
HEC Lausanne
Switzerland
Ecole des HEC
Université de Lausanne
CH-1015 Dorigny, BFSH1
Email: guido.palazzo@unil.ch

Kunal BASU
Said Business School
University of Oxford
Egrove Park, Oxford OX1 5NY
United Kingdom
Tel: +44 1865 422717
Fax: +44 1865 422501
Email: kunal.basu@sbs.ox.ac.uk
Introduction

The purpose of this paper is to critically evaluate the instrumental perspective on

Corporate Social Responsibility (CSR), relying on sociological analyses of a well known
organization: the Sicilian Mafia. As postulated by Friedman (1962), an instrumentalist
view of CSR justifies socially responsible behaviours solely on economic grounds, that
is, considers such to be appropriate only when their underlying motivation is the
attainment of superior financial performance (see Vogel, 2005). Focussing on strategic
manoeuvring and the use of appropriate marketing tools, instrumental CSR is
synonymous with profit maximization (Garriga & Melé, 2004), and seen to be gaining
currency under the current climate of corporate scrutiny (e.g. Lee & Kotler, 2005;
Maignan & Ferrell, 2003; McWilliams & Siegel, 2001; McWilliams, Wright & Siegel,
2006; Porter & Kramer, 2002, 2006).

Corrupt organizations that collapse in financial scandals or multinationals that are

notorious for systematic violations of human rights or collaboration with repressive
regimes might be viewed similarly to organizations such as the Mafia. Indeed, as
argued by Gerber (2000), there is no fundamental distinction between organized crime
and organizational crime. Instead, a very thin borderline separates the normal
behaviours of illegal and immoral organizations (such as the Mafia) and the illegal and
immoral behaviours of normal and legitimate business firms. Further, in the extreme,
adoption of an instrumentalist view of CSR could even qualify certain activities of the
Mafia as being socially responsible. A corrupt but legal firm and the Mafia might be
seen as quite similar, sharing an extreme profit motive with significant overlaps in
organizational cultures. The metaphor of the Mafia might in fact highlight potential
moral pathologies that are embedded in mainstream economic theory and management
behaviours (see Ferraro, Pfeffer & Sutton, 2005; Ghoshal, 2005; Pfeffer, 2005).
Further, as the example of Enron demonstrates, the status of a corporation could
change from “most admired” to “most despised”, thereby rendering possible the
metamorphosis of a business firm into a Mafia in terms of its intrinsic character.
Current discussions on the new Russian Robber Barons show that such a
metamorphosis might occur even in the reverse (Rawlinson, 2002), whereby a despised
firm comes to be admired in society.
The Mafia has mainly been portrayed as evil in the management literature or as the
extreme antithesis of an ethical organization. For instance, Husted (1998) invokes the
Mafia in evaluating the ethical constraints of trust, whereas Gallager and Goodstein
(2002: 439) or Wood, MacDermott and Swan (2002) refer to it in describing the
limitations of certain business practices such as partnerships. However, such
references avoid a full analysis of the Mafia in organizational terms and succeed in
reducing it to utter irrelevance (e.g., Colle & Gonella, 2002; Wood et al., 2002). In
contrast to the above, we suggest analysing the Mafia, both as a metaphor and as a
particular organizational form, investigating the Sicilian Mafia in particular to draw
inferences regarding socially responsible behaviour. Following Gambetta (1993), one
might consider the Mafia as a ‘business’ dealing in a very specific commodity: the
protection of people. In societies with inadequate governance and/or a low level of
mutual trust (e.g., underdeveloped or emerging economies characterized by ‘weak
states’), both parties involved in a market transaction might opt for mafia protection as
guarantee, investing it thus with the role of a profit making intermediary. Gambetta’s
(1993) analysis clearly highlights the economic and managerial mechanisms underlying
the Mafia’s functioning and its relevance to known forms of business behaviours.

In addition to invoking the Mafia metaphor (Morgan, 1980) to capture certain

dimensions of modern corporations and their actions related to social responsibility, our
analysis might also point at weaknesses inherent in the functionalist and positivist
strain of CSR research (Scherer & Palazzo, 2007). Not only does the latter, culminating
in an instrumentalist view of CSR, parrot the limited logic of economic theory, it might
by the same token even enshrine the Mafia as a socially responsible organization.

The aim of the paper is to outline some the potential pathologies of instrumental CSR
by linking together two streams of research: the sociological and historical analysis of
the Sicilian Mafia (relying primarily on the work of Diego Gambetta, 1993, as well as
the recent literature on organized and organizational crime) to contemporary discourse
on the nature and value of instrumental forms of Corporate Social Responsibility (e.g.
Kotler and Lee, 2005; McWilliams et al., 2006; critically: Vogel, 2005).

The paper is organized as follows: first, we parallel Mafia and business corporations to
demonstrate that the former could serve as a powerful metaphor to analyze corporate
deviances as well as describe an organizational type that a corporation might
metamorphose into under given contexts. These premises are next explored to reveal
shortcomings of instrumental CSR. Finally, we discuss some key lessons that could be
learned from analyzing the Mafia for purposes of enriching organizational research on
CSR.

The Mafia and the Corporation: Paralleling Two

Organizational Forms

Metaphor: The Sicilian Mafia as a Business Firm

Morgan (1980) suggests the use of metaphors in investigating ‘taken-for-granted’

hypotheses or to question theoretical assumptions. He argues that an effective
metaphor is one that links two phenomena that are perceived as somewhat overlapping
but with significant differences between them (Morgan, 1980: 612). Thus, the Mafia
appears to be a potentially powerful metaphor for a business firm: it shares the profit
motive with a corporation, but differs from it in many respects such as the use of
violence and systematic illegality.

Studying the Mafia’s social organization in parts of Sicily – namely the Cosa Nostra – as
it had existed over several centuries, Gambetta (1993) has adopted the lens of
economic analysis in describing its essential character and the typical contexts within
which it operates most successfully. The latter are characterized by mutually observed
low-trust expectations – as in the famous case of the ‘market for lemons’ described by
Akerlof (1970) where the buyer fails to ascertain the quality of the car he/she wishes to
purchase while the seller remains sceptical of receiving the payment reflecting the true
quality of the car. Consequently, both the buyer and the seller might agree to pay a
third party to guarantee the transaction, provided the added cost is lower than the
potential transaction loss expected by both parties. By paying such a premium, both
the buyer and the seller signal their respective credibility and benefit from the
transaction, although its potential value to both sides remains lower than one that could
be expected in a situation of perfect information and perfect trust. The viability of the
Mafia is thus directly related to the ‘demand for protection’ and the Mafia could be
viewed from an economic perspective as the ‘supplier of protection’. Gambetta
(1993:17) explains that the Mafia could best be understood as a profit maximizing
corporation acting on the market of private protection (see also the recent analysis of
the Camorra organization by Saviano, 2006) and concludes that “the main market for
Mafia service is to be found in unstable transactions in which trust is scarce and fragile.
Such in the case, for instance, with illegal transaction in which no legitimate
enforcement agency – in other words, the state – is available”.

It follows then, that the development of mafia-type activities is more likely where state
authorities have failed to enforce rules protecting property rights. Such a situation
might emerge when a nation or a region switches from one political regime to another,
for example, one that was characterized by feudalism (with a small number of owners)
or socialism to one where private capital becomes a key element of the economic order
(e.g., the transition of Russia from its Soviet past to its capitalist present) leading to an
increase in the demand for protection. Following Gambetta one might argue that the
Mafia operates in weak governance contexts in which it replaces the third party
enforcement power of the state to a certain degree through private and limited delivery
of protection.

As a business organization that operates in the market for private protection, the Mafia
requires and has developed its own corporate culture with specific rules and discernible
forms of behaviour. According to Gambetta (1993) the most important Mafia rule is the
Omertà which prescribes absolute silence that insiders must observe with respect to
outsiders. Mentioning even the name of the organization to outsiders is strictly
forbidden. The effective enforcement of Omertà on its members allows the Mafia to
blur its public presence. The power of the Mafia organization is thus built upon a
knowledge imbalance: the Mafia itself systematically gathers information on relevant
outsiders, while remaining shrouded in secrecy. The Omertà and the contributing
knowledge imbalance create a strong corporate culture with a clear view of the inside
and the outside. The outside, including all non-Mafia actors, is reduced simply to a
means for achieving the organization’s objectives. The Mafia can be understood as the
extreme form of organizational self-referentiality, intentionally strengthened by the use
of quasi-religious rituals during the initiation ceremony (Falcone, 1991). The
consequence, of course, of such an organizational self-referentiality is its social dis-
embeddedness described by John Dewey in his metaphor of the robber band:
 The robber band cannot interact flexibly with other groups; it can act only
through isolating itself. It must prevent the operation of all interests save
those which circumscribe it in its separateness (Dewey, 1954: 148).

Mafia organizations are disembedded from their societal context even when they find
acceptance within their local contexts of operation. The Mafia is focused on its own
values, its own goals, its own methods, its own people, and its own language. All
actors outside of that system are mere means and never ends in themselves. They are
protected, promoted or simply left alone as long as they serve the self interest of the
Mafia. If outsiders become a threat, the Mafia organization will act against them. The
clear distinction between “us” and “them” serves as a source of legitimacy for the use
of violence. In order to avoid violence, it is important for the Mafia to cultivate a
certain image within its domain of operation. Thus, the enhancement of its own
trademark (making it synonymous with the promise of ‘effective and reliable
protection’) – undoubtedly the most vital asset of the organization – constitutes a key
organizational challenge (Gambetta, 1993: 127-155). In a rotten societal context, such
as a failed state, the Mafia is often perceived as the only reliable political actor, the
main or even the only employer and the only investor in public life and public
infrastructure through calculated infusions of philanthropy (see Dickie, 2004; La Licata,
1993; Falcone, 1991; Saviano, 2006; Stille, 1995).

Metamorphosis: From Organizational to Organized Crime

In pursuit of profit maximization, Mafia organizations engage in a broad range of illegal

and immoral activities. A comparable mix of deviant behaviour is at times exhibited by
legal business firms – those that are involved in violating the human rights of their
employees, murdering union representatives, money laundering, manipulating financial
statements, polluting the environment, corrupting local business partners, engaging in
child and/or slave labour, or collaborating with repressive regimes. The Mafia, on its
part, invests illegal money in legal businesses such as the construction industry in the
USA, waste disposal in Italy or aluminium and banking in Russia, thus blurring the line
between legal and illegal economic transactions (Williams & Godson, 2002).

Deviant activities of legal business firms are based on three preconditions that
demonstrate a striking parallel with the Mafia. First, such businesses tend to reap
advantage in contexts of weak governance. The absence or weakness of a third party
enforcer (hard law) as well as the absence of shared norms (soft law) can be found in
deregulated markets (Levine, 2005), unregulated markets in transformation economies
(Rawlinson, 2002; Rossouw, 1998) and in global markets that are not embedded within
stable political institutions (Seidman, 2003). In each of these cases, corporations
navigate in a governance vacuum that offers considerable incentives for morally
opportunistic and legally deviant behaviour. Second, organizational crime succeeds
best when it is supported by a strong corporate culture with clear values that direct the
behaviours of employees. Third, deviant business firms follow the same pathological
interpretation of the profit motive as the Mafia. Despite being an advocate for profit
maximization, even Milton Friedman (1970) had argued that such had to be framed and
tamed by legal rules and moral custom. As our following discussion shows, the absence
of both forms of regulation, hard and soft, create the environment in which deviant
firms engage in unbridled profit maximization leading often to striking parallels with
criminal organizations.

1. Deregulated Markets

While deregulation does not necessarily lead to deviant behaviour, the reduction of
rules and enlargement of autonomy of the actors increase the risk of deviance
significantly. The rising number of corporate scandals in the 90s, particularly the
collapse of Enron, illustrates the deviance risk of unregulated or deregulated business
operations. Enron positioned itself as a firm that would revolutionize the natural gas
industry, turning it from a slow and traditional business into a fast moving and
competitive sector. For Enron managers, who believed “in the virtues of deregulation”
(Levine, 2005: 726), beating the (weak) regulatory system and exploiting its gaps was
considered a paramount duty. As its CEO Jeff Skilling once argued: “We adhere to
rules. If the government sets up rules, we adhere to them. It’s like the tax code. No
one expects you to pay more taxes than you owe” (Tonge, Greer & Lawton, 2003: 12).
Levine has described the behaviour of Enron as the systematic attempt to disconnect
itself from societal norms (Levine, 2005). Combined with a strong corporate culture
that rewarded short term success and personal greed (Sims & Brinkmann, 2003), the
Enron case highlights the three conditions (mentioned above) of metamorphosing a
normal corporation into a Mafia-like organization.
2. Transition economies

Rossouw (1998) has pointed out that white collar crime more than doubled in South
Africa in the first year of transition from the Apartheid regime to the democratically
formed government. Likewise in Russia, the post-communist era was dominated by an
uncontrolled “gangster capitalism” (Rawlinson 2002, 301). Rossouw (1998: 1564) has
further claimed that “Unethical business practices can transform these young political
democracies and market economies of newly formed democracies into kleptocraties”.
In Russia as well as in South Africa, the new market economies overemphasized self-
interest as the main driving force of business transactions (Rawlinson, 2002; Rossouw,
1998) and both transition economies were dominated by a legally and morally unbridled
form of the profit motive. The latter derived from the broad assumption that liberal
market economies and Robber Baronism were in essence synonymous, that uncivilized
business practices were an unavoidable precondition for creating free markets
(Rossouw, 1998). Self-referentiality, the third element that links organized and
organizational crime, was also manifested through the self-centred behaviour of the
new corporations who chose to be unencumbered by broader societal responsibilities.
In fact, as described by Rossouw (1998: 1567), in the case of Russia “there seemed to
be a lack of commitment to curb unethical behaviour that might harm the new society”.

3. Globalized markets

In the ongoing process of globalization, the power of (national) political authorities to

regulate the behaviour of corporations is eroding (Habermas, 2001). Beyond the
nation-state, there are few governance institutions or frameworks that could regulate
global business either through enforceable laws or through a set of shared values
(Donaldson, 1996; Zyglidopoulos, 2002). As a result, multinationals tend to operate in
largely unregulated contexts (Beck, 2000; Scherer, Palazzo & Baumann, 2006), and
such a regulatory vacuum is at times exploited by some of them who display Mafia-like
behaviours. Corporations such as De Beers have, for instance, been accused of
profiting from the legal vacuum created in the wake of the West African civil wars
(Roberts, 2003). The mining giant Rio Tinto has been accused of collaborating with the
corrupt military regime in Indonesia and elsewhere (ICEM, 1998). Multinationals in
general have been accused of forcing nation states to compete with each other to set
the lowest social and environmental standards as well as the lowest tax rates and
labour regulations (Scherer et al. 2006). Sethi has argued that multinationals
sometimes tend to operate with a clear differentiation between the inside and the
outside. They behave responsibly in societies of which they feel a part of, but engage
in deviant behaviours in those which they simply regard as their external field of
operation (Sethi, 1975), thereby increasing the risk of becoming metamorphosed into
Mafia types of organizations.

Instrumental Corporate Social Responsility: Pathologies of

a Panacea

CSR Instrumentation

In his historical review, Vogel (2005) argues that the main difference between the last
wave of CSR (in the 1960’s and the 1970’s) and the most recent (since the late 1990’s)
is the new economic focus. The new ‘CSR entrepreneurs’ are primarily interested in the
construction of markets – the ‘markets of virtue’ (Vogel, 2005) – and their discourses
are strongly shaped by the economic rationale: establishing the “business case” for CSR
by demonstrating that financial benefits could result from socially responsible
behaviours. Such an approach isn’t, of course, new in concept – even Milton Friedman
(1962 & 1970) saw no fault with a profit maximizing variety of CSR – and a very large
number of empirical investigations have striven to establish a (positive) correlation
between social and financial performance (more than 130 studies, according to Margolis
& Walsh, 2003; also see Margolis & Walsh, 2003; Walsh, Weber & Margolis, 2003;
Rowley & Berman, 2000). What is in fact new is the widespread adoption of the “CSR
for profit” theme by practitioners.

A CSR-led thrust to enhance corporate reputation with salutary impact on economic

performance has permeated the academic literature as well. Maignan and Ferrell
(2003), for instance, or Bhattacharya and Sen (2004) suggest relying on CSR as a
marketing tool for generating market-related benefits to corporations, whereas several
authors (McWilliams, Siegel and Wright, 2006; Husted and Allen, 2001; Kotler and Lee,
2005; McWilliams and Siegel, 2001; Porter and Kramer, 2006) provide rationale for
ensuring competitive advantage and strategic gains arising out of successful CSR.
The new instrumental CSR is thus portrayed as a panacea to solve negative perceptions
regarding corporate malpractices, and therefore as being naturally good.
Consequently, the fundamental relationship between a firm and the society in which it
operates is left largely unexplored. This, however, is the key to understanding the real
basis of a firm’s CSR commitment as well as the vital lever that holds the potential for
transformation (Banerjee, 2003; Kuhn & Deetz, 2007; Jones, 1996).

Pathologies of Instrumental CSR

If the instrumental perspective on CSR was the only yardstick employed to assess
corporate performance in the domain social responsibility, the Sicilian Mafia could well
qualify as a socially responsible organization, indeed as a real CSR champion, in many
respects. A number of practices employed by the Mafia can be paralleled with the very
best of instrumental CSR practices worldwide. Table 1 provides illustrations by
comparing certain Mafia practices with those that are benchmarked as superior in the
CSR literature. The following three examples draw direct parallels between
instrumental CSR and time honoured Mafia practices.

------------------------------------------------------

INSERT TABLE 1 ABOUT HERE

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1. Constructing the license to operate

Achieving the “license to operate” in under-developed countries through stakeholder

management is seen as a key objective of instrumental CSR, with concomitant
techniques to enhance control over stakeholders’ behaviours (Kuhn & Deetz, 2007) –
an exercise the Sicilian Mafia has excelled in for more than a century. The latter has
managed to develop strong relationships with key influencers such as the Catholic
Church and received endorsements of their reprehensible actions from local
communities (Gambetta, 1993). However, such a constructed social acceptance does
not for a moment imply that the goal of the Sicilian Mafia is one of legitimate social
development. Likewise, Banerjee (2003, 2004) has questioned the corporate quest for
license to operate in underdeveloped countries, maintaining that the actions of MNCs
(such as a professed emphasis on sustainable development) is often little more than
attempts to seek legitimacy for exploitation of resources for the benefit of their
shareholders in developed countries. As recent studies show, the results of the CSR
engagement in underdeveloped countries are quite questionable, bringing sometimes
more harm than benefit to the local stakeholders (Blowfield & Frynas, 2005; Frynas,
2005; Livesey, 2001).

2. Adopting Strategic Philanthropy

Strategic philanthropy – a term coined by Porter and Kramer (2002) – is aimed at

achieving a convergence between corporate performance and social welfare (see also
Porter and Kramer, 2006; Kanter, 1999; Kotler and Lee, 2005). In a very similar vein,
the Sicilian Mafia has been known for providing free services to its potential ‘customers’
of private protection in order to create a syndrome of dependency and an obligation for
reciprocity among local stakeholders. Strategic philanthropy or cause-related
marketing practices to highlight CSR could as well enhance the dependency of even the
most strident of all stakeholders, namely the civil society organizations who might
stand to benefit from such programmes.

3. Implementing a code of conduct

Implementation an employee’s code of conduct is often portrayed as a good practice to

improve CSR by reinforcing the corporate esprit de corps (e.g. Maignan & Ferrell, 2001,
2004). The Sicilian Mafia has proved itself to be extremely efficient in this regard. The
tradition of Omertà, previously mentioned, guarantees the secrecy around its activities
through a scrupulously observed code of honour (for illustrations of this practice in
novels, see Sciascia, 2003, 2004). However, as the example of the Mafia
demonstrates, not even a strong code of conduct or the embeddedness of the
organization in its own societal context (Weaver et al., 1999) is enough to ensure true
human development and welfare, especially when the driving motive is none other than
profit maximization.

The above practices reveal how a mindset of instrumental CSR might potentially
contribute in the transformation of a legal business entity into a mafia-type
organization. Such a trend is illustrated in the third column of the Table 1, with
examples of how each of the instrumental CSR practices could be perverted into
irresponsible and damaging forms of managerial action. It is significant to note that
some of these perverted practices have in the past led to infamous CSR controversies.
For instance, the creation of customer dependency through (an apparently
philanthropic) free sampling of powered milk products by Nestlé had led to the
controversy over infant formula.

Agle and Kelley (1997) have suggested that an excessive focus on the outcomes of a
CSR programme designed with instrumental ends in mind could in fact encourage
deviant behaviours. They have shown how processes to manage CSR (in their case,
political fund raising) could easily come to transgress the basic principles of social
responsibility (for instance by stigmatizing non donors) and simply come to rest on
generating economic benefits. Further, as the case of the Mafia demonstrates, CSR
programmes should not be taken at face value, but attention focussed on their
underlying drivers.

In addition to relying on the Mafia metaphor to illuminate the pathologies of

instrumental CSR, our understanding of such an organization could also be used to
derive more general lessons concerning CSR analysis that we turn to next.

Lessons from the Mafia for CSR and Organization Studies

Our account of the Mafia delivers three specific insights for both CSR analysis and
organization studies: (1) it points to the risks associated with viewing CSR simply as a
means rather than as an end; (2) it highlights the importance of a corporation’s social
embeddedness in achieving its CSR objectives; and (3) it invites a carefully
consideration of problems faced by multinationals in a global context. In the following
sections we discuss each of these in light of future research.

Lesson 1: Differentiate between CSR as a means and CSR as an end

As the case of the Mafia clearly demonstrates, the adoption of ‘CSR best practices’ do
not necessarily guarantee socially responsible behaviour. A number of authors have
argued that several organizational factors might immunize managers from ethical
reasoning (see Swanson, 1995, 1999), with impression management helping to create
a symbolic shield around the company in order to guard it from external pressures
(Weaver et al. 1999).
Our analysis strengthens such insights by suggesting that CSR, if solely perceived as a
means employed towards instrumental ends, could reinforce corporate immunization
and create an ethical myopia among managers. Yet, the growing popularity of such a
means-driven view among practitioners is exemplified by Crane (2000) for green
marketing in the UK, for the French investment sector (Déjean, Gond & Leca, 2004),
and for NGOs in Israel (Shamir, 2005). Chatterji and Levine (2006) have recently
advocated that tools such as a code of conduct, often perceived as a way of enhancing
corporate responsibility, can in fact be counter-productive, immunizing corporations
from outsiders’ evaluations. In their view, the increasing number of social performance
metrics can paradoxically decrease corporate social performance. In a similar vein, our
research suggests evaluating CSR in ways that would differentiate firms simply using
CSR as a means and erecting a façade of social responsibility to those that actually
consider it to be the end goal. In this regard, the case of Enron appears to be the most
apt.

“Now, when most people hear the word ‘Enron’ they think of corruption
on a colossal scale... Not long ago, the same company had been heralded
as a paragon of corporate responsibility and ethics - successful, driven,
focused, philanthropic and environmentally responsible” (Sims &
Brinkmann, 2003: 243).

Management scholars themselves have at times failed to make the above

st
differentiation, joining in praise of Enron as a 21 century beacon of corporate
behaviour (see Eisenhardt & Sull, 2001, as well as its critique: Whittington et al. 2003)
obviating the need to identify and recognize ethically inspired CSR. More research is
needed to provide an accurate analysis of practices used in the burgeoning field of CSR
evaluation.

Lesson 2: Recognize CSR as arising out of social embeddedness

A unidimensional approach to a firm’s role in society, one that takes the legitimacy of
its activities for granted and focuses merely on the instrumental value of its CSR,
threatens to disembed the corporation and its decision-makers from interests other
than the maximization of profit. In the extreme case, it might even turn the
corporation into a mafia type of organization. Similar to the Mafia, if the firm’s
relationship with society is strictly based on a set of self-centred calculations, then it
risks isolating itself from external expectation and values. Oestreich has pointed at the
widening gap between internal and external perceptions of a firm: where external critics
might for instance see “families uprooted and lives destroyed” as a result of certain
corporate actions, managers might only see “the end of an old inefficient industry”
(Oestreich, 2002: 215).

Our analysis calls for empirical research to understand how corporations might re-
embed themselves into their relevant societal contexts and go beyond an instrumental
CSR orientation. If, as suggested by previous research, purely economic reasoning
should act as a barrier to such processes, it might be worthwhile to investigate how
managers or corporations could adopt alternatives modes of reasoning (e.g., ethical or
that oriented towards social responsibility) and/or balance self-interest with other
norms (see Rocha and Ghoshal, 2006).

Lesson 3: Acknowledge instrumental CSR’s limitation in regulating

corporate behaviour in the global economy

The problems derived from an instrumental approach to CSR are further exacerbated by
the global expansion of corporate activities. Globalization has lead to conflicts between
national governments and corporations that operate multinationally (Habermas, 2001).
Such conflicts render it difficult to regulate corporate behaviour. Within the space
dominated by multinationals, there is often no global law, no sanction mechanisms, no
cross-cultural code of ethics, and no global government. Thus, globally active
corporations operate in a legal and moral vacuum were they themselves have to define
the limiting parameters of their own behaviours. Self-regulation of self-interested
actors, however, could turn out to be problematic. As King and Lenox (200) have
shown in their analysis of the Responsible Care Program of the chemical industry, self-
regulation without external monitoring can lead to opportunism. Instrumental CSR in
fact heightens the problems resulting from corporations attempting to replace the state
in terms of its political responsibilities. The key research question here, of course, is to
what extent the practice of instrumental CSR impedes the development of industry-
wide governance frameworks, given its own variety of social performance analysis.
Conclusion

The rising interest in CSR has led to the popularity of an instrumental approach that
reduces social responsibility to a handmaiden of profit maximization. The risk of
adopting such an approach lies in an emphasis on the means of achieving CSR
reputation rather than the end of social welfare. The instrumental view renders a
business firm culpable to similar illegal and immoral acts as the Mafia, particularly as
there might be significant parallels between their chosen acts and driving motivations.
Given particular contexts of operations, such parallels might indeed appear striking,
raising the danger of corporate scandals. Studying the pathologies of the Mafia, then,
might hold lessons for a legal business firm in terms of its contextual behaviours,
organizational culture, and its driving objective with respect to the maximization of
profit and the achievement of social welfare.
Table 1: Paralleling Mafia and Instrumental CSR Best Practices
Instrumental CSR best
practices
Developing good relationships
with the local community and
local stakeholders to increase
social acceptance and obtain a
‘license to operate’
Engaging in strategic
philanthropy,
cause-related marketing and
providing free products and
services to the local
community dubbed as beta-
sites
Developing a code of conduct
to reinforce employees’
identification with the
organization
Using emotional forms of
leadership to motivate
employees and reinforce their
CSR commitment
Using CSR as a management
technique to increase
corporate reputation and
branding
Practicing marketing
communications through CSR
communications to increase
social acceptance
Mafia best practices
Engendering endorsement for
illegitimate actions from the
local community within which
the organization is based
Giving as a way to obligate
stakeholders to engage in
reciprocity
Fostering a strong code of
honour based on secrecy
Using quasi-religious symbols
and rituals during the process
of initiation
Building reputation as
guarantor of assets
Recruiting through indirect
means showcasing bravery and
community service
Potential perversions of
instrumental CSR best
practices
ƒ Obtaining the support of local
community leaders through
bribes and deal-making for
questionable practices
ƒ Garnering the ‘License to
Operate’ as an informal
monopoly through
connivance with the local
mafia
ƒ Creating a strong
dependency among
stakeholders through tied
grants/gifts
ƒ Encouraging ‘forced buying’
as a result of previous giving
ƒ Buying reputation, e.g., the
tobacco industry’s ploy to
buy favourable scientific
research results
ƒ Using a code of conduct to
protect the corporation from
external scrutiny rather than
encouraging authentic
actions (i.e., a compliance-
based approach to ethics)
ƒ Developing corporate
culture-based norms for
guarding business objectives
ƒ Suppressing dissent and
‘whistle-blowing’.
ƒ Projecting market power and
the ability to create rules for
the entire industry
ƒ Using CSR baits to open
doors, and access scarce
resources
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 Research Paper Series
International Centre for Corporate Social Responsibility
ISSN 1479-5124

Editor: Jean-Pascal Gond

The ICCSR Research Papers Series is intended as a first-hand outlet for research output
of ICCSR. These include papers presented at symposiums and seminars, first drafts of
papers intended for submission in journals and other reports on ongoing or completed
research projects.
The objective of the ICCSR Research Papers Series is twofold: First, there is a time
goal: Given the quality of ICCSR publication, the targeted journals normally require
large time spans between submission and publication. Consequently, the ICCSR
Research Papers Series serves as a preliminary airing to working papers of ICCSR staff
and affiliates which are intended for subsequent publication. By this, research output
can be made available for a selected public which will not only establish ICCSR’s lead in
advancing and developing innovative research in CSR but will also open the opportunity
to expose ideas to debate and peer scrutiny prior to submission and/or subsequent
publication. Second, the ICCSR Research Papers Series offers the opportunity of
publishing more extensive works of research than the usual space constraints of
journals would normally allow. In particular, these papers will include research reports,
data analysis, literature reviews, work by postgraduate students etc. which could serve
as a primary data resource for further publications. Publication in the ICCSR Research
Paper Series does not preclude publication in refereed journals.
The ICCSR Research Papers Series consequently is interested in assuring high quality
and broad visibility in the field. The quality aspect will be assured by establishing a
process of peer review, which will normally include the Editor of the ICCSR Research
Papers Series and one further academic in the field. In order to achieve a reasonable
visibility the ICCSR Research Papers Series has full ISSN recognition and is listed in
major library catalogues worldwide. All papers can also be downloaded at the ICCSR
website.

Published Papers

No. 01-2003 Wendy Chapple & Richard Harris

Accounting for solid waste generation in measures of regional productivity
growth
No. 02-2003 Christine Coupland
Corporate identities on the web: An exercise in the construction and
deployment of ‘morality’
No. 03-2003 David L. Owen
Recent developments in European social and environmental reporting and
auditing practice – A critical evaluation and tentative prognosis
No. 04-2003 Dirk Matten & Andrew Crane
Corporate Citizenship: Towards an extended theoretical conceptualization
No. 05-2003 Karen Williams, Mike Geppert & Dirk Matten
Challenges for the German model of employee relations in the era of
globalization
No. 06-2003 Iain A. Davies & Andrew Crane
Ethical Decision Making in Fair Trade Companies
No. 07-2003 Robert J. Caruana
Morality in consumption: Towards a sociological perspective
No. 08-2003 Edd de Coverly, Lisa O’Malley & Maurice Patterson
Hidden mountain: The social avoidance of waste
No. 09-2003 Eleanor Chambers, Wendy Chapple, Jeremy Moon & Michael Sullivan
CSR in Asia: A seven country study of CSR website reporting
No. 10-2003 Anita Fernandez Young & Robert Young
Corporate Social Responsibility: the effects of the Federal Corporate
Sentencing Guidelines on a representative self-interested corporation
No. 11-2003 Simon Ashby, Swee Hoon Chuah & Robert Hoffmann
Industry self-regulation: A game-theoretic typology of strategic voluntary
compliance
No. 12-2003 David A. Waldman, Donald Siegel & Mansour Javidan
Transformational leadership and CSR: A meso level approach
No. 13-2003 Jeremy Moon, Andrew Crane & Dirk Matten
Can corporations be citizens? Corporate citizenship as a metaphor for
business participation in society (2nd Edition)
No. 14-2003 Anita Fernandez Young, Jeremy Moon & Robert Young
The UK Corporate Social Responsibility consultancy industry: a
phenomenological approach
No. 15-2003 Andrew Crane
In the company of spies: The ethics of industrial espionage
No. 16-2004 Jan Jonker, Jacqueline Cramer and Angela van der Heijden
Developing Meaning in Action: (Re)Constructing the Process of Embedding
Corporate Social Responsibility (CSR) in Companies
No. 17-2004 Wendy Chapple, Catherine J. Morrison Paul & Richard Harris
Manufacturing and Corporate Environmental Responsibility: Cost Implications
of Voluntary Waste Minimisation
No. 18-2004 Brendan O’Dwyer
Stakeholder Democracy: Challenges and Contributions from Accountancy
No. 19-2004 James A. Fitchett
Buyers be Wary: Marketing Stakeholder Values and the Consumer
No. 20-2004 Jeremy Moon
Government as a Driver of Corporate Social Responsibility: The UK in
Comparative Perspective
No. 21-2004 Andrew Crane and Dirk Matten
Questioning the Domain of the Business Ethics Curriculum: Where the Law
ends or Where it Starts?
No. 22-2004 Jem Bendell
Flags of inconvenience? The global compact and the future of United Nations
No. 23-2004 David Owen and Brendan O’Dwyer
Assurance Statement Quality in Environmental, Social and Sustainability
Reporting: a Critical Evaluation of Leading Edge Practice
No. 24-2004 Robert J. Caruana
Morality in consumption: towards a multidisciplinary perspective
No. 25-2004 Krista Bondy, Andy Crane & Laura Browne
Doing the Business: A film series programmed by ICCSR in conjunction with
Broadway Cinema
No. 26-2004 Stanley Chapman
Socially Responsible Supply Chains: Marks & Spencer in Historic Perspective
No. 27-2004 Kate Grosser and Jeremy Moon
Gender Mainstreaming and Corporate Social Responsibility: Reporting
Workplace Issues
No. 28-2004 Jacqueline Cramer, Angela van der Heijden and Jan Jonker
Corporate Social Responsibility: Balancing Between Thinking and Acting
No. 29-2004 Dirk Matten and Jeremy Moon
'Implicit' and 'Explicit' CSR: A conceptual framework for understanding CSR in
Europe
No. 30-2005 Nigel Roome and Jan Jonker
Whistling in the Dark
No. 31-2005 Christine Hemingway
The Role of Personal Values in Corporate Social Entrepreneurship
No. 32-2005 David Owen
Corporate Social Reporting and Stakeholder Accountability The Missing Link
No. 33-2005 David Owen
CSR After Enron: A Role for the Academic Accounting Profession?
No. 34-2006 Judy Muthuri, Jeremy Moon and Dirk Matten
Employee Volunteering And The Creation Of Social Capital
No. 35-2006 Jeremy Moon and Kate Grosser
Best Practice on Gender Equality in the UK: Data, Drivers and Reporting
Choices
No. 36-2006 Amanda Ball
Environmental Accounting as ‘Workplace Activism’
No. 37–2006 Kenneth M. Amaeshi & Bongo Adi
Reconstructing the corporate social responsibility construct in Utlish
No. 38-2006 Aly Salama
The ICCSR UK Environmental & Financial Dataset 1991-2002
No. 39-2006 Kenneth M Amaeshi, Bongo C Adi, Chris Ogbechie and Olufemi O Amao
Corporate Social Responsibility (CSR) in Nigeria: western mimicry or
indigenous practices?
No. 40-2006 Krista Bondy, Dirk Matten and Jeremy Moon
MNC Codes of Conduct: CSR or Corporate Governance?
No. 41-2006 Jan Jonker and Michel van Pijkeren
In Search of Business Strategies for CSR
No. 42-2006 Stephanos Anastasiadis
Understanding corporate lobbying on its own terms
No. 43-2006 Nahee Kang
Analysing ‘System Change’: The Role of Institutional Complementarity in
Corporate Governance
No. 44-2006 M. Shahid Ebrahim and Ehsan Ahmed
Cooperative Home Financing
No. 45-2006 Nahee Kang
A Critique of the “Varieties of Capitalism” Approach
No. 46-2007 Kenneth Amaeshi, Onyeka Kingsley Osuji and Paul Nnodim
Corporate Control and Accountability in supply chains of Multinational
Corporations: Clarifications and Managerial Implications
No. 47-2007 Geoffrey Williams and John Zinkin
Managing Company Stakeholder Responsibility: Why it might be easier within
countries than between countries
No. 48-2007 Jean-Pascal Gond, Guido Palazzo and Kunal Basu
Investigating Instrumental Corporate Social Responsibility through the Mafia
Metaphor.