Corporate Citizenship Blog

CSR voices weigh in on professor’s remarks in Wall Street Journal commentary

Posted by Tim Wilson on Aug 30, 2010 4:47:26 AM

It may not have the impact of a screaming headline in the New York Post but the cover story proclaiming “The Case Against Corporate Social Responsibility” in a Wall Street Journal special section has sparked the kind of outrage Rupert Murdoch could love.

The CSR world is atwitter (literally and figuratively) about the opinion piece by Dr. Aneel Karnani, an associate professor of strategy at the University of Michigan. The headline alone was enough to prompt sharp responses to Karnani. But he really drew fire with remarks that the notion companies can pursue profits and seek to serve the public interest is an “illusion” that is “potentially dangerous;” and that when profit and public interest align “the idea of corporate social responsibility is irrelevant.”

Karnani sees government regulations as the “ultimate solution” to balancing profits and the public good and argues that CSR can in fact distract from more effective initiatives. “The only sure way to influence corporate decision making,” Karnani wrote, “is to impose an unacceptable cost—regulatory mandates, taxes, punitive fines, public embarrassment—on socially unacceptable behavior.”

To no surprise, shortly after the special section of the WSJ hit the street, virtual steam could be seen rising from the CSR regions of the blogosphere and twitterverse. Some initial responses to Karnani’s comments may even have had Michigan officials expecting an angry mob descending on the Ann Arbor campus with torches and pitchforks.

Fortunately, cooler heads have prevailed among the corporate citizenry. What follows is a sampling of comments, rebuttals and criticisms from bloggers and others offering more thoughtful responses to Dr. Karnani.

Aman Singh: Vault CSR blog
Singh contends that Karnani misrepresents the work of CSR professionals and displays an outdated point of view. Singh collected thoughts on Karnani’s comments from a number of professionals including Dave Stangis of Campbell Soup and Brian Wasson of SAP.

Leon Kaye: triplepundit
Kaye takes issue with Karnani calling regulation the ultimate solution for balancing profits and public good, noting that regulation can have devastating consequences for communities it is intended to help when businesses respond by moving out of town.

Dave Douglas:
Douglas points out that Karnani’s position ignores CSR’s role as a tool to identify risks and opportunities for the business, and that it is CSR professionals who often flag potential environmental risks and advocate market opportunities that otherwise might be missed.

Mallen Baker: Ethical Corporation
Baker questions Karnani’s argument that pits the pursuit of profit vs. corporate social responsibility as a goal, and notes that businesses have been successful without and with a commitment to social responsibility. He disputes the notion of CSR as a distraction and sees it as a means to promote the kind of healthy society, economy and environment that allows business to thrive.

Doug Bannerman:
Bannerman disputes Karnani’s contention that a focus on anything other than maximizing profits, such as CSR issues, is shirking fiduciary duty to shareholder interest. He raises the argument that, on the contrary, investors consider CSR issues to be relevant to financial performance and good governance as they can be tied to significant risks and opportunities for the business.

Click here to see our own blog response from executive director Katherine Smith.

Topics: Corporate Citizenship

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