Convergence of CSR, Business Ethics, and CG

According to Rowe (2006), even though CSR and business ethics have evolved separately, there are signs that they are converging because (a) the boundaries between organizations that are collaborating strategically have become more blurred due to globalization; (b) the evolution of supply chains to value chains and to value constellations/networks; (c) the increasing importance of intangibles; and (d) the increasing prominence of bribery and corruption in emerging economies. CSR and CG have more in common than previously assumed. CSR goes beyond the agency model and the notion of responsibility of managers or directors to shareholders only and emanates from an acknowledgment of some corporate responsibility toward stakeholders in general. Thus, CSR and CG can be said to be converging. Further support for the view that CSR and CG are converging was reported in a study by Fassin, Van Rossem, and Buelens (2011) on Lebanese small- business owner-managers’ perceptions of business ethics and 11 CSR-related concepts that made use of the Repertory Grid Technique.⁴¹ It was found that opinion leaders did not consider business ethics and CSR to be interchangeable concepts. The study also found that sustainability and CSR were closely associated in the minds of the respondents. It should be noted in this context that sustainable development was considered the real objective of CSR in the European Commission’s 2001 definition. In light of their findings, Fassin, Van Rossem, and Buelens (2011) proposed that corporate responsibility (without the social) seems a more appropriate term (p. 441).

In this context, Aggarwal (2011) also argued that, while CG has shifted from its focus on agency conflicts to address issues of ethics, transparency, and disclosure, CSR has focused on CG as a vehicle for incorporating social and environmental concerns into the business decision-making process, benefiting financial investors but also a broader group of stakeholders such as employees, consumers, and communities. On the basis of a study of 11 companies in India, Aggarwal argued that CSR, CG, and business ethics are converging.

Further empirical support for the view that CSR and CG are converging has been reported by Jamali, Safieddie, and Rabbath (2008) who surveyed top managers of eight corporations operating in Lebanon and found that the respondents conceived of the CG as a necessary pillar for sustainable CSR. Further empirical support that CSR and CG are converging has been reported in a Canadian study of 13 thought leaders from business networks, sustainability think tanks, rating agencies, environmental groups, and so forth (Strandberg 2005). Two divergent perspectives emerged from the interviews: one group believed that CSR connects to governance at the level of values, determining the boundaries and accountabilities of the company in relation to a broad universe of stakeholders and its social and environmental responsibilities and opportunities, another group perceived CSR and governance to be an operational risk issue. Most respondents, however, believed that convergence between CSR and CG will grow at a modest but constant pace for the foreseeable future (p. 2). Finally, a word of caution about the convergence of CSR and CG: the evidence thus far is that it has been visible in companies within strong economies but not those within weak economies (Rahim and Alam 2014).⁴²